Caleres, Inc. · NYSE:CAL
Caleres — Brown Shoe — Investor Presentation (September 2007)
30 slides from Caleres's investor presentation, Sep 18, 2007
Slide 1: Brown Shoe Company, Inc. Investor Update
Brown Shoe Company, Inc. Investor Update September 2007 1
Slide 2: Forward-looking statements
This document contains certain forward-looking statements and expectations regarding the Company's future performance and the future performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include (i) the p
Slide 3: Brown Shoe At A Glance
Brown Shoe At A Glance BROWN SHOE TODAY - $2.5 Billion in Sales for 2006 Integrated wholesale-retail platform Consumer-driven enterprise that builds brands and retail concepts while gaining market share Mass Merchandisers $300 million 38% Wholesale 62% Retail Department & Specialty Stores $650 milli
Slide 4: Brown Shoe At A Glance
Brown Shoe At A Glance Ranked 3rd Among Top Footwear Ranked 2nd in Wholesale Women’s Superior Operator Retailers* Fashion Footwear Sales** $’s in mm # Stores $’s in mm $7,000 5,000 • 130 million store visits per 4,500 $6,000 4,000 $800 year $700 $5,000 3,500 $600 3,000 • 91 million pairs sourced $4,
Slide 5: Brown Shoe Company Portfolio
*Dept Store Zone rank according to NPD 12 months ending April 30 Brown Shoe Company Portfolio Fashion = $33.3 B Athletic = $11.5 B Salon Bridge No. 3 Pureplay Ecommerce Footwear Impulse Better Moderate Junior No. 1 Branded Family Footwear Comfort Dr. Scholl’s Inside Mass Private Label / Brand 5
Slide 6: Review of BWS Financials
Review of BWS Financials (all $’s in millions except EPS) 26 Weeks Ending 26 Weeks Ending 8/4/2007 7/29/2006 % Chg. Sales $1,142.9 $1,154.9 -1.0% Net Earnings GAAP $19.5 $25.2 -22.8% Adjusted* $26.4 $22.0 20.0% EPS GAAP $0.44 $0.58 -24.1% Adjusted* $0.59 $0.50 18.0% Gross Margin 40.3% 38.7% Debt/Cap
Slide 7: Review of BWS Financials
Review of BWS Financials 26 Weeks Ended 26 Weeks Ended August 4, 2007 July 29, 2006 % Chg. Famous Footwear Sales $641.4 $595.0 7.8% Operating Profit $40.0 $27.8 43.6% Same-Store Sales 3.5% 0.9% Specialty Retail Sales $122.3 $115.9 5.6% Operating Profit* -$4.5 -$4.4 2.3% Same-Store Sales 0.9% -1.1% *
Slide 8: Third Quarter 2007 & Full Year Guidance
Third Quarter 2007 & Full Year Guidance As of August 29, 2007 and has not been updated Third Quarter 2007 EPS: GAAP $0.62 to $0.67 Adjusted* $0.70 to $0.75 Full Year 2007 EPS: GAAP $1.58 to $1.63 Adjusted* $1.83 to $1.88 *See Appendix for reconciliation Other Annual Estimates: Consolidated Sales: $2
Slide 9: Recent Activities
Recent Activities EXPANSION OF BRANDS INTO CHINA • Brown Shoe owns 51% equity stake in joint venture with Hongguo International Holdings Limited • Through joint venture Brown Shoe is partnering with one of China’s leading footwear companies to open 400 stores and department store shops for Naturaliz
Slide 10: Brown Shoe Vision
Brown Shoe Vision: Brown Shoe Company is the leading fashion footwear marketer, winning loyal customers with compelling global brands. Doubling our sales while doubling our rate of profitability over the next five years. 10
Slide 11: Brown Shoe Pillars
Brown Shoe Pillars ENABLING STRATEGIES GROWTH STRATEGIES Partnership Platform Market Consumer-Driven Initiatives Optimization Intelligence Model CROSS-COMPANY SYNERGIES [VERTICAL AND HORIZONTAL] SYSTEMS AND PROCESSES BEST PRACTICES THOUGHTFUL PLANNING AND RIGOROUS EXECUTION TALENT AND LEADERSHIP 11
Slide 12: Brown Shoe Pillars
Brown Shoe Pillars PARTNERSHIP MODEL Continue path towards being a world-class partner holistically in the industry: Vendor, Supplier, Customer, Consumer, Real Estate, Investor OPERATIONAL EXCELLENCE Disciplined approach to profitability enhancement, efficiency and effectiveness PORTFOLIO OPTIMIZATI
Slide 13: Brown Shoe Platform
Brown Shoe Platform RETAIL WHOLESALE ● 1,300 total retail doors – 1,000+ ● World class global sourcing network. Famous Footwear, 250+ Naturalizer, Sourced 91 million pairs at wholesale Brown Shoe Closet, FX LaSalle, and and sold another 40 million at retail branded concepts. 130 million consumer vis
Slide 14: Brown Shoe Platform
Brown Shoe Platform Power of the Integrated Wholesale / Retail Model x Driving Growth, Profitability, and Value Creation • Fragmentation of the consumer has significantly expanded the Control the matrix of style preferences and retail options Customer • Integrated model allows a wide variety of bran
Slide 15: Marketing Initiatives
Marketing Initiatives – investing in our flagship brands and increasing understanding of our consumers through addition of CMO and updated market research FAMOUS FOOTWEAR ● Partnering with Ogilvy to refine brand positioning ● Broadcast media and CRM focus ● Using consumer database to drive Rewards p
Slide 16: Famous Footwear: Trend-right product and market optimization
Profitable Market More Shoes, Optimization More Ways (Real Estate) Merchant Localization (Tailoring Inventory Assortment Optimization by Region) Balance & Value ● Trend-right product - Differentiating mix of athletic, men’s and women’s casual, and young attitude brands ● Leveraging multi-channel pla
Slide 17: Product & Design Initiatives
Product & Design Initiatives – investments into enhancing and broadening our product development, design, and sourcing capabilities ● Test & Learn ● Via Spiga Design Team ● Broadening Designer Inputs ● New York Design Studio ● Style & Trend ● Design Internship Program 17
Slide 18: Sell-through model; fresh trend-right product
$125-$300 $60-180 In te rn at io na Accessories/Other Categories l $30-$80 ● Sell-through model; Fresh trend-right product ● Extended brand essence to new categories and consumer touchpoints ● Tightly-targeted consumer communications ● Improved product delivered when she wants to buy ● Model to be l
Slide 19: Brown New York
Brown New York ● Allows us to play in new zones reaching new consumers ● Strong emotional connection with consumer ● Fashion/Style Credibility/Talent ● Brand extension potential 19
Slide 20: Dr. Scholl's brand recognition and strong equity
● High brand recognition and strong equity ● 97% brand awareness driven by insole TV and print advertising ● Partnerships with Wal-Mart and Schering-Plough ● Extend asset into new categories and channels ● Growth through vertical model 20
Slide 21: Direct-to-Consumer
Direct-to-Consumer pure play ● Branded web sites and multi-channel opportunities $6.3 $5.5 ● Growth by winning in new and emerging markets $4.2 $4.8 $3.7 $2.8 $3.2 $ Billions Online Footwear: Projected to be $1.7 over $6B market by 2011* $1.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Source: Fo
Slide 22: Share Price
Positioning for Growth Sustainable Growth Increasing Prospects for • Growing portfolio Profitability •Organic Improving •Consolidation Core • Earnings • Focus on best brands Enhancement Plan Competencies and market • Brown NY integration opportunities • Accelerating Famous • Consumer-Driven growth R
Slide 23: Appendix
Appendix Ly < Ni@ % THE LEADER IN FOOTWEAR® BROWN SHOE 23
Slide 24: Sales and EPS – 2001 to Estimated 2007
Adjusted EPS Sales and EPS – 2001 to Estimated 2007* GAAP EPS Sales in Billions Earnings Per Share $1.83 – $1.88 $2.44 - $2.46 $1.63 $2.5 Billion $1.48 $1.51 $1.50 $1.58 – $1.63 $2.0 $1.13 $1.09 $1.10 $1.5 $1.00 $1.02 $0.96 $1.0 $0.50 $0.5 $0.0 $0.00 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005
Slide 25: Distinct Wholesale Portfolio - 2006
Distinct Wholesale Portfolio - 2006 Private Label / Private Brand Children’s Other 25
Slide 26: Famous Footwear -- Sales by category 2006
Famous Footwear -- Sales by category 2006 Accessories 7% 14% 6% 6% Athletic Athletic Kid’s Women’s 17% Men’s 30% Athletic 20% 26
Slide 27: Strategic Earnings Enhancement Plan
Strategic Earnings Enhancement Plan During the second quarter of 2006, the Company introduced a strategic earnings enhancement plan designed to increase earnings and reallocate resources, through i) restructuring administrative and support areas; ii) redesigning logistics and distribution platforms;
Slide 28: Debt to Capital Ratio
Debt to Capital Ratio (Millions of dollars, except for Debt to Capital Ratio) Debt to Capital Ratio August-07 2006 2005 2004 2003 2002 Total Debt Obligations* $ 150 $ 151 $ 200 $ 142 $ 120 $ 152 Total Shareholders' Equity 560 524 434 391 350 292 Total Capital $ 710 $ 675 $ 634 $ 533 $ 470 $ 444 Debt
Slide 29: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 1st Half
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 1st Half 2007 v. 1st Half 2006 1st Half 2007 1st Half 2006 After-tax Net After-tax Net Earnings EPS Earnings EPS Net earnings $19,466 $0.44 $25,222 $0.58 Charges/Other Items: Strategic initiatives costs 6,914 0.15 1,231 0.03 Insurance Rec
Slide 30: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 2005–2007
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 2005 – 2007 Estimated** 2007 Estimated Range Low - High 2006* 2005 Full Year 3rd Quarter Diluted Net Diluted Net Diluted (in millions, except EPS data) Diluted EPS EPS Earnings EPS Earnings EPS GAAP Results $0.62 - 0.67 $1.58 - 1.63 $ 65.