Forward-looking statement

Transcription

1 ICR Conference - January 14, 2019

2 Forward-looking statement In the course of this presentation and in response to your questions, statements may be made as to certain matters that constitute forward-looking information that is subject to certain risk and uncertainties. Additional information concerning those factors that could cause actual results to differ from those in the forward-looking statements can be found in the company s fiscal Annual Report on Form 10-K for the year ended February 3, 2018 and other filings with the SEC. 1

3 Summary Company Overview Recent History Where We Are Today Strategic Priorities Merchandising Inventory Management Ecommerce Marketing Improved Financial Position 2

4 Company Overview 3

5 Stein Mart is a national specialty off-price retailer OFFERINGS Fashion apparel for women and men, home décor, accessories, shoes CUSTOMERS Loyal, ageless, household income of nearly $100,000 FOOTPRINT 30 states 288 stores National Store Footprint 70% of chain in SE and TX 4

6 We About differentiate Stein Mart from the competition Vs. Department and Specialty Stores PRICING Prices competitive with off-price LOCATION Convenient off-mall locations OFFERINGS Assortment edited for our customer SHIFTING Vs. Off-Price Retailers ATMOSPHERE Attractive store appearance ORGANIZATION Merchandise displayed by category, brand SERVICE Customer service 5

7 How we got here Positive sales trend 2012 through Private label credit card launched in E-commerce launched in Increased inventory levels - Increased promotional activity Traffic declines began in Fall Challenging retail environment Slow to react to environment and lower traffic - Didn t evolve merchandising or marketing - Inventories built faster than sales 6

8 Leadership New CEO/ CMO appointed Hunt Hawkins named Interim CEO after CEO/CMO resignation MaryAnne Morin appointed President Strategies begin to impact results Spring 2016 Fall 2016 Spring 2017 Fall 2017 Spring 2018 Fall 2018 Rapid change in strategies and marketing alienated core customers Hunt Hawkins named CEO New sales-driving strategies introduced 7

9 2018 8

10 Where we are today Merchandising Ecommerce Marketing Inventory management Financial position Reorganization of buying structure Dramatic growth - nearly 100% Grow Stein Mart brand awareness Increased gross profit rate Controlled expenses New brand selection filter Grow modern & contemporary Increased in season buys Reset stores - Right sized business - Eliminated case lines - Improved signage Expanded categories & assortments Ship from store Find it in store More drop ship Simplified checkout Product recommendation +Much more! Shift media mix New creative agency New messaging Updated look - Direct mail - Website - Instore signs Developing distinctive brand voice Gaining new customers Higher regular price sales Simplified & lowered markdowns Less upfront buying Faster turns Less inventory Implemented cost savings initiatives Reduced capital spending Increased credit card penetration to 19% Extended credit agreements 9

11 Overview First Nine Months Results Dollars in $ millions Change Fav / (Unfav) Net Sales $ $ $ (17.0) Comp Sales % 0.4% -6.0% 6.4% Gross Profit Gross Profit % 26.8% 24.5% 2.3% SG&A Expenses Operating Loss $ (1.7) $ (35.4) $ 33.7 EBITDA, adjusted $ 25.9 $ (7.4) $ 33.3 EBITDA excludes items as detailed in the Adjusted EBITDA table (Note 1) included in our 11/27/18 earnings release. Net Sales Comparable sales +0.4% Ecommerce sales +96% Gross Profit Increased 230 bps - reduced markdowns, higher reg-price selling SG&A Expenses $16.0 million lower due to cost savings initiatives & impact of closed stores EBITDA EBITDA improvements & reduced capex improving financial position 10

12 Holiday Results (9-weeks ended 1/5/2019) Comp Sales down 3.3% (shifted) - Good conversion - Lower traffic Impact of holiday marketing strategy - Higher average unit retail - Ecommerce sales up 20% Gross Profit - Continued rate improvement - Lower markdowns, higher regular-price selling - Better inventory productivity - Expect fiscal 2018 rate higher than last year Inventories - Well controlled SG&A Expenses - Continued cost savings 11

13 Strategic Priorities 12

14 Strategic priorities SALES GROWTH IMPROVED FINANCIAL POSITION INCREASE BRAND AWARENESS INVENTORY MANAGEMENT BUILD ECOMMERCE RELEVANT PRODUCT MIX 13

15 Our product mix is evolving New buying model - Balancing classic offerings while growing modern & contemporary - Adding brands, trends, newness - Reduced duplication to increase productivity Optimizing off-price characteristics - Increased in-season & opportunistic buying - Keeping receipts open to buy into trends - Improved markdown practices Reset selling floor - Improved shopping experience - Right-sized businesses - Eliminated case lines - Streamlined signage 14

16 Increasing inventory profitability/productivity Healthier financial performance starts with inventory management! Change in Quarterly Inventories vs. Sales 15

17 Growing Ecommerce steinmart.com Ecommerce growth (*includes SFS) % % 2017* +52% YTD Q3-2018* +96% Benefits - Value of multi-channel customer - Increases traffic to stores - Drives brand awareness - Supports Omni-Channel Strategy 16

18 How are we doing it? Enhanced assortment - Expanded assortment & exclusives - Drop ship expansion Site improvements - Added Find it in stores - Personalized product recommendation feature - Updated navigation - Simplified checkout steinmart.com RESULTS - More customer visits - Higher conversion - Higher average order value - Increased customer satisfaction - Increased cross-selling Ship-from-store - Driving significant volume - Improved inventory productivity Roll-out of Ship from Store 17

19 2019 Ecommerce initiatives: Growth & profitability Endless Aisle Piloting now, roll-out in spring Save the sale capability Mobile checkout Increase Profitability Adding Smart Fulfillment Logic (Q2-2019) Launching Click & Collect, buy online, pick up in store (Q3-2019) Expected to be 10-15% of web sales Drive stores traffic 18

20 Marketing: Building a compelling brand strategy Needed to reinvent the marketing model Messaging - Hired new award winning creative agency Focus - New modern and contemporary brands at great value while balancing classic fashion for core customers Reach - Shifted mix from direct mail and newspaper to direct mail, broadcast & digital Customer acquisition becomes key 19

21 Marketing: Shift spend to drive brand awareness Percentage of Media Spend Media Type 2018 Change 2016 Broadcast Media 43% 17% 26% Digital 16% 8% 8% Broadcast & Digital 59% 25% 34% ROP 2% -16% 18% Inserts 6% -6% 12% Newspaper 8% -22% 30% Direct Mail 29% -1% 30% 4% -2% 6% 100% 100% 20

22 Marketing: Holiday marketing changes Promotional messaging not as hard hitting as LY TV was branded vs promotional Direct mail was cleaned up Cleaner approach did not work as well as it did in previous periods Reduced spend to LY As planned, TV was down to LY and was 100% national cable Going forward mix to include direct and spot TV Changed media mix Reduced newspaper and direct mail circulation Direct mail was less efficient Should have spent more on digital 21

23 2019 Marketing Initiatives - Leverage technology to mine customer data & enrich media intelligence - Implement Campaign Management tool to personalize & direct mail - Be faster in shifting with changes in how the customer consumes media - Consolidate digital & broadcast agencies 22

24 2019 initiatives to grow sales - SMart Rewards - Introducing Stein Mart SMart Rewards program this fall - Merging credit card & preferred customer programs Simplifying messaging Allows for easier migration of non-credit preferred customers to credit - Reissuing ALL cards with new design Additional marketing will create excitement and greater programawareness 23

25 Improved Financial Position 24

26 Managing cash flow Inventory management Store inventories down 23 percent from 2016 Lowered SG&A expenses Cost savings initiatives reduced expenses by $30 million in 2018 Reduced capital expenditures 2018 capital spend is down $11 million 25

27 Extended credit agreements Successfully negotiated $275 million five-year extended credit agreements (Q3-18) Terms extended to September 2023 Revolver increased to $240M FILO term loan decreased to $35M Lowered interest rate Unused availability at end of 3rd quarter 2018 peak borrowing period was $88 million Includes $13 million from life insurance loan, available as needed 26

28 ICR Conference - January 14, 2019