Operational Excellence Greg Sparks, EVP, Store Operations 2012 Investor Conference June 26, 2012

Transcription

1 Operational Excellence Greg Sparks, EVP, Store Operations 2012 Investor Conference June 26, 2012 Please refer to accompanying Safe Harbor Statement and non-gaap reconciliations

2 Opening New Doors Operational Excellence

3 Improve In-Stock Completed: Seven-Day Workflow Introduced Measure Number of Out-of-Stocks Tied Out-of-Stocks to Performance Incentives Invested in Technology In Process: Data Mining Opportunities Stocking Enhancements and Efficiencies Further Investment in Technology

4 Improve In-Stock In-Stock Performance: Solid Improvement and Opportunity 98.0% 95.5% 94.1% 91.7% 92.6% Q Long-Term Goal Note: Number of out-of-stocks on date of inventory

5 Improve In-Stock Same-Store Sales: +1 to 2% Long-Term Opportunity 8.5% 7.5% 5.3% 6.0% 6.3% 6.7% Q SSS Data is as of Q > < 145 Out-of-Stock

6 Build Customer Connection 2008: Mystery Shops Merchandising and Customer Greeting Evaluations Four Evaluations per Store Per Year 2009: Customer Connection Correlation of Sales Increase to Customer Connection Identified Key Attributes to Drive Customer Connection Standards Checkout service In-stock Customer Surveys Prompted by Checkout Receipt 300 Customer Evaluations per Store per Year Stores are Rated on a Scale 1-5 Scores Include Only Extremely Satisfied (5)

7 Build Customer Connection: Store Standards Score 59.2% 59.4% 57.7% 56.1% Q Note: Extremely Satisfied Scores only

8 Build Customer Connection: Checkout Service Score 61.2% 57.2% 55.5% 53.9% Q Note: Extremely Satisfied Scores only

9 Build Customer Connection: In-Stock Score 56.4% 60.3% 60.2% 47.0% Q Note: Extremely Satisfied Scores only

10 Build Customer Connection: Overall Customer Satisfaction Score 70.0% 65.0% 56.3% 57.5% 58.4% 59.5% Q Short-Term Goal Long-Term Goal Note: Extremely Satisfied Scores only

11 Build Customer Connection Same-Store Sales: +1 to 2% Long-Term Opportunity 7.5% 3.8% 5.2% 6.2% 6.0% 2011 SSS 50% or less 60% 65% 70% Short-Term Goal Long-Term Goal Based on 2011 results Customer Connection Scores

12 Continuous Shrink Improvement Training and Development Retail Shrink as % of Sales Link Incentives to Shrink Improvement 100 Full Implementation of Closed Circuit Television Defensive Merchandising Enhanced Shrink Reporting Through Data Mining Indexed to 2008

13 Continuous Shrink Improvement Improved Exception-Based Tools Focus on undesirable operational behaviors Transactional and inventory metrics Updated Store Formats 18% reduction in shrink rate to control sites Format selection aligns with risk Scan-Based Trading Shrink Optimization Utilizing Statistical Modeling

14 Continuous Shrink Improvement Shrink Optimization Determines Expected Shrink Based on Store-Specific Location Based on Attributes with High Correlation to Shrink: Crime index External market demographics Customer demographics 100 Retail Shrink as % of Sales Improvement is Based on Executing Operations to Shrink Optimized Goal vs. Annual Improvement Optimized Goal Indexed to 2008

15 Leverage Workforce Management Integrated Labor System Forecast Labor Based on Engineered Standards Allocation of Work on Store-Specific Basis Productivity Management Time and attendance to track compliance Coordinate tasks such as planograms and ad execution

16 Leverage Workforce Management Updated and tested engineered labor standards Implemented engineered labor standards WFM scheduling implemented Time and attendance productivity Productivity Task Management Refine productivity measures Exception management Key performance indicators Store walks

17 Leverage Workforce Management Sales per Labor Hour 1% Productivity Improvement 4% Productivity Improvement Indexed to sales per labor hour

18 Leverage Workforce Management Before

19 Leverage Workforce Management After

20 Leverage Workforce Management 2%+ Productivity Improvement Merchandising Task Execution Focused Store Walks Link KPIs to Exception Mgmt 7-Day Workflow Time and Attendance Multi-Year Productivity Gains

21 Invest in Talent Development Develop Talent for Future Store Growth More than 1.2 Million Training Hours in 2011 Utilization of Talent Development Centers to Develop High Potential Leaders Ongoing Computer-Based Learning Positive Employee Relations Training Continue to Focus on District Manager and Store Manager Training Creating More Formalized Assistant Store Manager Training

22 Invest in Talent Development Training Hours Increased 3x Since 2009 Computer-Based Learning Training Hours 1,231 Total Training Hours Training Modules Note: Hours in thousands

23 Invest in Talent Development Increased Internal Promotion Rates 85% 47% 50% 56% 53% 47% 58% 62% 21% 25% Store Manager District Manager Regional Director Long-Term Goal

24 Invest in Talent Development Sales Volume Shrink EBITDA W/Turn WO/Turn W/Turn WO/Turn W/Turn WO/Turn 3-Year Average of Stores without Store Manager Turnover vs. Stores with Store Manager Turnover

25 Invest in Talent Development 450 Store Managers Identified as District Manager Candidates Over the Next Year 25 District Managers Identified as Regional Director Candidates Over the Next Year Development is the Cornerstone to Our Success

26 Opportunities for Sustainable Growth Long-Term Goals Improve In-Stock Build Customer Connection Continuous Shrink Improvement Leverage Workforce Management 1 to 2% Increase in Sales from Operational Excellence Reduce Shrink Rate by 20% Generate Labor Productivity Annually Build Talent Pipeline for Store Growth Invest in Talent Development

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