37 TH Annual William Blair Growth Stock Conference June 6, 2019 104 - - PowerPoint PPT Presentation

37 th annual william blair growth stock conference
SMART_READER_LITE
LIVE PREVIEW

37 TH Annual William Blair Growth Stock Conference June 6, 2019 104 - - PowerPoint PPT Presentation

37 TH Annual William Blair Growth Stock Conference June 6, 2019 104 1 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Any statements in this presentation that are not historical facts, including the statements


slide-1
SLIDE 1

1 104

June 6, 2019 37TH Annual William Blair Growth Stock Conference

slide-2
SLIDE 2

2

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements in this presentation that are not historical facts, including the statements regarding our fiscal 2021 goals and fiscal 2019 outlook, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of forward-looking words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. These statements are based

  • n the Company's current views and expectations and involve known and unknown risks, uncertainties and
  • ther factors that may cause actual results, performance or achievements to be materially different from any

future results, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: our success in growing our store base and digital demand; risks related to

  • ur acquisitions of Camuto Group and TSL, including the possibility that the anticipated benefits of the

acquisitions are not realized when expected or at all; our ability to protect our reputation and to maintain the brands we license; maintaining strong relationships with our vendors, manufacturers and wholesale customers;

  • ur ability to anticipate and respond to fashion trends, consumer preferences and changing customer

expectations; risks related to the loss or disruption of our distribution and/or fulfillment operations; continuation

  • f agreements with and our reliance on the financial condition of Stein Mart; our ability to execute our strategies;

fluctuation of our comparable sales and quarterly financial performance; risks related to the loss or disruption of

  • ur information systems and data; our ability to prevent or mitigate breaches of our information security and the

compromise of sensitive and confidential data; failure to retain our key executives or attract qualified new personnel; our reliance on our loyalty program and marketing to drive traffic, sales and customer loyalty; risks related to leases of our properties; our competitiveness with respect to style, price, brand availability and customer service; our reliance on foreign sources for merchandise and risks inherent to international trade, including escalating trade tensions between the U.S. and other countries, as well as U.S. laws affecting the importation of goods, such as recent tariffs imposed on Chinese goods imported to the U.S.; uncertainty related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation, including the impact of the Tax Cuts and Jobs Act; uncertain general economic conditions; risks related to holdings of cash and investments and access to liquidity; and fluctuations in foreign currency exchange rates. Risks and

  • ther factors that could cause our actual results to differ materially from our forward-looking statements are

described in the Company's latest Annual Report on Form 10-K or other reports filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to update or revise the forward-looking statements included in this presentation to reflect any future events or circumstances.

2

slide-3
SLIDE 3

WHO IS DBI?

3

slide-4
SLIDE 4

POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER

4

UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS

UNIQUE BUSINESS MODEL

slide-5
SLIDE 5

5 5

slide-6
SLIDE 6

6 6

DESTINATION FOR BRAND NAME & DESINGER FOOTWEAR 27 CONSECUTIVE YEARS OF SALES GROWTH 500+ WAREHOUSES WITHIN 20 MINUTES OF 70% OF POPULATION AWARD WINNING LOYALTY WITH 27M MEMBERS LEADER IN DIGTAL AND OMNI-CHANNEL EXPERIENCE

slide-7
SLIDE 7

7

slide-8
SLIDE 8

8

ACQUIRED IN Q2 2018 #1 WOMEN’S FOOTWEAR RETAILER IN CANADA DOMINATE KIDS CATEGORY 112 SMALL DOOR LOCATIONS IN CANADA IMMATURE DIGITAL & LOYALTY EXPERIENCES

slide-9
SLIDE 9

9 9

slide-10
SLIDE 10

10

DESIGN, SOURCE & WHOLESALE LEADER IN PRIVATE BRAND FOOTWEAR, DESIGN & SOURCING IMMATURE DTC CAPABILITY

slide-11
SLIDE 11

POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER

11

UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS

HOW WE WIN

slide-12
SLIDE 12

HOW HOW WE WIN WE WIN

  • Grow Camuto produced brands, kids

and seasonal

  • Deliver differentiated experiences

through loyalty, innovation

  • Drive conversion

13% OPERATING INCOME CAGR OVER NEXT 3 YEARS

12

slide-13
SLIDE 13

GROW GROW CAM CAMUTO UTO PRODUCED PRODUCED BRA BRANDS NDS

CAMUTO PRODUCED BRAND GROWTH

CAMUTO PRODUCED BRANDS SALES TO REACH ~$725M IN 2021

Leverage Camuto Group expertise to drive increased penetration

13

$725M

725M

2021 2021 2018 2018

13

slide-14
SLIDE 14

EXPAND EXPAND KIDS KIDS

Fastest growing retailer in category with significant runway

KIDS SALES TO REACH ~$300M IN 2021

30 66 115 150 2016 2017 2018 2019 (est.)

KIDS FOOTWEAR | $ IN MILLIONS

14

slide-15
SLIDE 15

LEVERA LEVERAGING GING SEASONAL SEASONAL PRODUCT PRODUCT

Focus on seasonal as “best at” category Placing more receipts into sandals and boots Integrating with key items strategies

15

slide-16
SLIDE 16

AWAR AWARD-WINNIN WINNING G LOYALTY PR LOYALTY PROGRAM OGRAM

  • Re-launched DSW VIP loyalty

program in 2018

  • Simplified while increasing non-

transactional ways to earn and use points

  • Offered opportunity to give back

to communities via Soles4Souls

27M

Loyalty Members – Represent 90% of Customer Base

#1

Innovative Customer Loyalty Program (Shopify & Loyalty360)

Growing members, retaining at higher rate, increasing average spend

16

slide-17
SLIDE 17

Creating connections with consumers as a destination Continue rolling out services to engage customers and increase traffic New store designs replicating Innovation Lab

W Nail Bar Orthotics Shoe Repair Shoe Concierge Subscription Models

DRIV DRIVE INNOVATION E INNOVATION

Delivering differentiated experiences to enhance engagement and conversion

17

slide-18
SLIDE 18

OPTIMIZE OPTIMIZE INVENTORY INVENTORY MA MANAGEM NAGEMENT ENT

Increase focus on key items Improved in-stock delivers conversion Fulfillment optimization drives savings and improves in-stocks

18

slide-19
SLIDE 19

POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER

19

UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS

HOW WE WIN

slide-20
SLIDE 20

19% OPERATING INCOME CAGR OVER THE NEXT 3 YEARS

20

HOW HOW WE WIN WE WIN

  • Differentiated experiences
  • Leverage scale
  • Drive growth through increased digital

penetration and new stores

slide-21
SLIDE 21

LAUNCH LAUNCH BANNER BANNER SPECIFIC SPECIFIC LOYALTY LOYALTY PROGR PROGRAM AMS

PHASE 1

Launch DSW VIP in Canada in Q2 2019

PHASE 2

Create and launch banner specific loyalty program by end of year

21

slide-22
SLIDE 22

LEVERA LEVERAGING GING SCALE SCALE

Optimizing cross-banner inventory Increasing buying power with vendors Leveraging shared services

22

slide-23
SLIDE 23

ATG Platform driving e-commerce growth

INCREASE INCREASE DIGITAL DIGITAL PENETRATION PENETRATION

2021 DIGITAL DEMAND >2x 2018

1 2 3 4 5 6

Canadian Sites DSW

DESKTOP CONVERSION 1 2 3 4 5 6

Canadian Sites DSW

MOBILE CONVERSION CANADIAN DIGITAL DEMAND

2016 2017 2018 2019F 2020F 2021F

+38% CAGR

23

slide-24
SLIDE 24

EXPAND EXPAND IN IN CANA CANADA DA

22 1

Quebec British Columbia Alberta Saskatchewan Nova Scotia Ontario Manitoba Newfoundland Prince Edward Island New Brunswick

28 3 1 # # 4 8 42 2 1 2 3 6 1 14 1

50+ NEW LOCATIONS IN CANADA

22 1

24

slide-25
SLIDE 25

POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER

25

HOW WE WIN

UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS

slide-26
SLIDE 26
  • Grow DSW Private Brand
  • Grow DTC
  • Increase speed to market

GROW OPERATING INCOME BY $26M IN THE NEXT 3 YEARS

26

HOW HOW WE WIN WE WIN

slide-27
SLIDE 27

LEADER LEADER IN IN PRIVA PRIVATE BR TE BRAND AND

$1 Billion

TOTAL RETAIL SALES

12 Million

TOTAL PAIRS PRODUCED

27

slide-28
SLIDE 28

WE WILL GROW PRIVATE BRANDS

33M 23M 28M 40+M DSW PRIVATE BRAND

PEAK 2019 2020 2021

33M ~23M ~32M ~28M

TOTAL PAIRS PRODUCED BY CAMUTO GROUP

28

slide-29
SLIDE 29

DIRECT TO CONSUMER OPPORTUNITY

1 2 3 4 5 6 Camuto DSW 1 2 3 4 5 6 Camuto DSW DESKTOP CONVERSION MOBILE CONVERSION

10 10-15% 15%

Total Brand Penetration

Enhanced loyalty program Increased assortment Leverage DSW #1

  • mni-channel

Increased drop ship Increase VinceCamuto.com digital penetration

29

slide-30
SLIDE 30

30

TEST TEST AT AT DSW DSW

Product Sketch Prototyped In Brazil 2-3 weeks Test at DSW Mass Production Sold at DSW + Nordstrom, Macys, And Dillards

slide-31
SLIDE 31

RESULTS

slide-32
SLIDE 32

2021 FINANCIAL GOALS

  • Consistent positive comps

in retail segment

  • Meaningful accretion in

gross profit

  • Achieve $2.65 to $2.75

Adjusted EPS

  • 17% CAGR Cash Flow

32

slide-33
SLIDE 33

33

FY 2018 FY 2017

Cash and investments

$169 million

$301 million Inventories

$645 million

$502 million Net working capital

$492 million

$543 million Total assets

$1.6 billion

$1.4 billion Debt

$160 million

$0

STRONG BALANCE SHEET

slide-34
SLIDE 34

34

FY 2019

Revenue Low double-digit growth Comparable sales Low single-digit growth Tax rate ~27% Shares outstanding ~77M

FY 2019 OUTLOOK

slide-35
SLIDE 35

35

SOLID TRACK RECORD OF CAPITAL RETURN

$0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 2015 2016 2017 2018

Dividends Share Repurchases

CAPITAL RETURN TO SHAREHOLDERS (millions)

$1B

RETURNED TO SHAREHOLDERS OVER PAST 8 YEARS

$800M

CUMULATIVE CASH FLOW GENERATION FROM 2019-2021

slide-36
SLIDE 36

POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER

36

slide-37
SLIDE 37

37104

slide-38
SLIDE 38

38

Appendix ppendix

104

slide-39
SLIDE 39

Non Non-GAAP Reconciliation

39

FY 2018 FY 2017

Reported net income (loss) (20,466) 67,452 Pre-tax Adjustments:

  • Camuto Group inventory step-up

5,300

  • Lease exit and other termination costs

23,041

  • Impairment charges

60,760 89,440

  • Ebuys inventory write-downs

9,257

  • Acquisition-related costs and target acquisition costs

27,929 677

  • Amortization of intangible assets

1,017 3,093

  • Change in fair value of Ebuys contingent consideration liability

(32,747)

  • Restructuring expenses

5,613 1,176

  • Fair value adjustments of TSL’s previously held assets

33,988

  • Foreign currency transaction losses (gains)

15,389 1,106 Total pre-tax adjustments 173,037 72,002 Tax effect of adjustments (22,125) (26,630) Tax expense impact as a result of Ebuys exit 2,265 Net tax expense impact of implementing the U.S. Tax Reform 2,144 10,079 Total adjustments, after tax 155,321 55,451 Adjusted net income (loss) $134,855 $122,903 Reported diluted earnings (loss) per share $(0.26) $0.84 Adjusted diluted earnings (loss) per share $1.66 $1.52

Unaudited and in thousands, except per share amounts

slide-40
SLIDE 40

Non Non-GAAP GAAP Measur Measures es

In addition to earnings (loss) per share and net income (loss) determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses adjusted earnings (loss) per share and net income (loss), which adjust for (i) the effects of the lease exit and other termination costs; (ii) costs and charges associated with acquisition-related activity, including target acquisition efforts; (iii) impairment charges; (iv) restructuring expenses; (v) amortization expense of intangible assets; (vi) inventory write-downs, the change in fair value of contingent consideration liability and tax expense impact related to the Ebuys exit; (vii) foreign currency losses, including the reclassification from accumulated other comprehensive loss as a result of the TSL acquisition; and (viii) the net tax expense impact of implementing the U.S. Tax Reform. The unaudited reconciliation of adjusted results should not be construed as an alternative to the reported results determined in accordance with GAAP. These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior periods by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company

  • n a comparable basis, when reviewed in conjunction with the Company’s GAAP statements. These

amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company’s business and operations.

40