Oppenheimer Conference TSA (NYSE) September 3, 2005
Note: As of /29/05; excludes name changes due to rebranding Merger Completed August 2003 95 Stores 97 Stores 0 2 3 8 6 2 4 20 48 25 2 4 5 2 30 2 3 2 392 Total Stores 5 5 7 3 2 8 6 0 0 5 2 2 2 42 2 6 7 6 2 store in Alaska 3 stores in Hawaii
Created National Sporting Goods Retailer Leverage the Sports Authority brand with the goal of creating a unified national brand across the country 3 59 3 4 392 Total Stores (as of 7/30/05) 6 4 2 4 25 4 3 2 2 8 6 2 3 2 32 2 6 3 2 6 0 5 3 44 6 2 6 7 6
Strategic Initiatives # Changing culture to focus on Driving Sales. Creating a Sports Authority First mentality Drive newness in the stores Create more excitement! Make stores more shoppable shoppable #2 Focusing on our identified Destination businesses: Golf, Fitness, Team Sports, Active Apparel, Winter Sports and Footwear
Process & Discipline Improvements #3 Improve Supply Chain to reduce Inventory and Debt SDQ, Musicals, expanded Back-stock and Intactix Assortment Planning will ensure we have the right product by size & color, in our stores quicker Evaluate assortments in Good, Better & Best categories and align offerings according to market Commit to sku rationalization in all departments These important initiatives will reduce year-end inventories by $50 million and Debt by $35 million!
Strategic Initiatives #4 Improve Advertising & Re-Brand all stores to the Sports Authority nameplate #5 Continue Remodeling program TSA legacy stores (additional 60 this year) Footwear Statement Walls (275 by year-end) Expansion of Golf Days #6 Continue New Store Expansion 7 New Stores in Key Markets
Destination Category - Golf
Destination Category - Golf 33 stores remodeled to Golf Days in 2004 (66 total at the end of 2004) Experienced a 20%+ comp sales lift in Golf Sales 2005 Plans call for 8 New Golf Day store locations & 47 additional remodels to Golf Day formats Consistent Assortment in Top 75 Doors 2005 Plan focuses on growing our Premium brand businesses
Destination Category - Fitness Implement strategy of building & expanding assortments in Better / Best and Raising AUR s Added Bowflex,, Horizon, Proform & Reebok Treadmills Added Hoist Gyms Added 40 Certified Fitness Specialists Consistent assortment in over 300 doors
Gold s Gym Power Axis Smith Gym - March 2005
Destination Category - Team Consistent assortments chain wide Rationalize sku assortments and leverage larger buys against fewer skus Reducing sku count by 7% Re-Allocate product toward premium assortments... Raise AUR
Assortment Baseball with Dramatic Decrease in Sku s 64 Baseball Glove SKUs Rationalized (35%) 23 Baseball Bats Styles Rationalized (23%) 3 Batting Glove Styles Rationalized (60%) Number of SKUs 200 50 00 50 0 83 40 Best 9 8 62 Better Good 37 43 39 Number of SKUs 20 00 80 60 40 20 0 00 37 77 Best 44 35 28 Better Good 22 Number of SKUs 60 50 40 30 20 0 0 52 4 28 0 Best Better Good 2 7 3 2004 2005 2004 2005 2004 2005
Destination Category - Active Apparel Increase penetration of better brands (Under Armour,, Nike, and Adidas) Continue to grow the Performance categories Expand Women s business Build and flow assortments to match geographic climates especially within seasonal classifications Complete private label consolidation
Double-digit Sales increases realized in Northeast during Q4 2004 Focus on top six vendors Destination Category - Winter Sports Reduce apparel vendors by 50% & Ski & Snowboard vendors by 0% Flow merchandise based on rate of sale Create a culture of doing more business with less, fresher inventory Create cold weather accessory centers
Footwear Statement Walls
Footwear Statement Walls These full-service footwear walls allow us access to higher-end Nike footwear products We believe the full-service walls combined with an open-stock environment provides the best selling format Phase I Completed 222 Stores in September 2004 Phase II - Expand to 275 Stores by end of 2005
Advertising Initiatives Increased Print Reach & Frequency Consistent Print Format Increased Spend on Radio and TV Regionalized Ad Plans Committed to driving Ad In-Stocks to 00% Expansion of Direct Mail Strong Category Statements Improved Visual Navigation
2004 Improved Layout and Design 2005
Direct Mail Focus on Driving Better Product & Image
Rebranding to the Sports Authority 50+ Stores in initial phase Allows consistent Nameplate Produces Synergies
Financials, Remodels & New Stores
2nd Qtr 2005 Results ($ ($MM s) 2004 Actuals Street Actuals Sales $67.0 $624.3 $605.0 Comp % 0.2%.7% -3.8% GM% 28.2% 27.9% 27.8% Op. Exp. % 23.6% 23.7% 23.9% Pre-Tax Income $23.5 $2.3 $9.5 Net Income $4.2 $2.9 $.9 EPS $0.53 $0.49 $0.45 EBITDA $45.7 $4.2 $37.7 EBITDA % 7.4% 7.3% 6.2% Note: All Years Include Lease Accounting Impact and Exclude Integration Expense
2nd Qtr. 2005 Balance Sheet ($MM's) 2005 Act 2004 Act Inventory $738.4 $77.4 -$33.0 Other Current 66.4 95.7 PP&E & Other LT 573.9 53.4 Total Assets $,478.7 $,498.5 Bank Debt $344.4 $ 389.8 -$45.4 Accounts Payable 303.9 349.6 % to Inventory 4.% 45.3% Other Liabilities 35. 298.6 Total Liabilities $963.4 $,038.0 Equity 55.3 460.5 Total Equity/Liabs $,478.7 $,498.5 Debt to Capital 40.% 45.7%
Third Quarter Fiscal 2005 Full Year Fiscal 2005 Company Guidance EPS $0.09 vs. $0.0 EPS LY; Comp Sales +% to +2% Gross Margin improvement of +40 bp s vs. 2004 SG&A expenses flat to up +0 bp s vs. 2004 EPS for 2005 of $.97 - $2.0; vs. $.77 L.Y. Comp sales approximately +.5% New Store Openings expected to be 3, 4 relocations and 7 closings Inventories down approx. $50MM Debt at Y.E. of approx. $270MM (Vs. $305MM in 04) NOL s available at Q2 2005 are $69MM+
998 to 2005 Sales Growth (+2% Compounded Annual Growth) $MM s $3,000 $2,500 $2,435 $2,525 $2,000 $,500 $,000 $500 $658 $68 $75 $936 $,05 $,760 $0 998 999 2000 200 2002 2003 2004 2005* * Guidance
998 to 2005 EPS Growth (+82% Compounded Annual Growth) $2.50 $2.00 $.50 $.8 $.5 $.85 $2.2 $.77 $.99 $.00 $0.50 $0.23 $0.03 $0.00 998 999 2000 200 2002 2003 2004 2005* Note: Merger integration costs & non-recurring items excluded from applicable years *Guidance of $.97 - $2.0 EPS
Gross Margin Performance We Continue to Leverage Our Size, Experience from Mergers, Private Label Programs and Infrastructure 29.0% 28.0% 27.0% 26.0% 25.0% 24.0% 23.0% 22.0% 2.0% 25.4% 25.6% 27.6% 27.9% 26.2% 24.0% 23.4% 998 999 2000 200 2002 2003 2004
TSA Remodel Strategy Total TSA Stores 205 Closed due to Overlap/profitability (25) Stores to Remodel 80 FY04 Stores Fixtured 73 FY04 Stores Remodeled 47 FY05 Stores to be Remodeled 60 80 Sales Lift Req d for 30% ROI +4.0% Remodels to date are producing a +4 to +5% Lift
Remodel Initiative
Remodel Initiative
National Distribution Network Distribution infrastructure with capacity to support & leverage future growth plans Denver, CO 39,000 sq. ft. Woodbridge, IL 260,000 sq. ft. Burlington, NJ 46,000 sq. ft. Fontana, CA 66,000 sq. ft. Houston, TX 269,000 sq. ft. Atlanta, GA 300,000 sq. ft.
2005 New & Relocated Stores 7 Total Stores We ve focused our growth in the fastest growing markets where we can also leverage our current infrastructures! 3 2 Minnesota New York PA 3 - Mass. 2 - NJ California Arizona Colorado Texas 2 Florida As of 7/30/05
New Store - Garden State Plaza
Summary Initiatives appear On Track Comp Sales positive in Q and Q2 We continue to make progress in our Five Destination Categories Supply-Chain Initiatives are Improving! Year-end Inventories will decrease by $50 million! Year-end Debt will decrease by $35 million! Stores are being Re-branded Store Remodels, Footwear Statement Walls & Golf Day Initiatives are also driving comp sales New Store Expansion Continues
Oppenheimer Conference TSA (NYSE) September 3, 2005