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June 6, 2019 37TH Annual William Blair Growth Stock Conference
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
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June 6, 2019 37TH Annual William Blair Growth Stock Conference
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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
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
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;
expectations; risks related to the loss or disruption of our distribution and/or fulfillment operations; continuation
fluctuation of our comparable sales and quarterly financial performance; risks related to the loss or disruption of
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
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.
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POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER
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UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS
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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
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ACQUIRED IN Q2 2018 #1 WOMEN’S FOOTWEAR RETAILER IN CANADA DOMINATE KIDS CATEGORY 112 SMALL DOOR LOCATIONS IN CANADA IMMATURE DIGITAL & LOYALTY EXPERIENCES
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DESIGN, SOURCE & WHOLESALE LEADER IN PRIVATE BRAND FOOTWEAR, DESIGN & SOURCING IMMATURE DTC CAPABILITY
POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER
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UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS
and seasonal
through loyalty, innovation
13% OPERATING INCOME CAGR OVER NEXT 3 YEARS
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CAMUTO PRODUCED BRAND GROWTH
CAMUTO PRODUCED BRANDS SALES TO REACH ~$725M IN 2021
Leverage Camuto Group expertise to drive increased penetration
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$725M
2021 2021 2018 2018
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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
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Focus on seasonal as “best at” category Placing more receipts into sandals and boots Integrating with key items strategies
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program in 2018
transactional ways to earn and use points
to communities via Soles4Souls
Loyalty Members – Represent 90% of Customer Base
Innovative Customer Loyalty Program (Shopify & Loyalty360)
Growing members, retaining at higher rate, increasing average spend
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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
Delivering differentiated experiences to enhance engagement and conversion
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Increase focus on key items Improved in-stock delivers conversion Fulfillment optimization drives savings and improves in-stocks
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POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER
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UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS
19% OPERATING INCOME CAGR OVER THE NEXT 3 YEARS
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penetration and new stores
PHASE 1
Launch DSW VIP in Canada in Q2 2019
PHASE 2
Create and launch banner specific loyalty program by end of year
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Optimizing cross-banner inventory Increasing buying power with vendors Leveraging shared services
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ATG Platform driving e-commerce growth
2021 DIGITAL DEMAND >2x 2018
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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
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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
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POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER
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UNLOCKING SUBSTANTIAL SHAREHOLDER VALUE BY LEVERAGING OUR STRENGTHS
GROW OPERATING INCOME BY $26M IN THE NEXT 3 YEARS
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$1 Billion
TOTAL RETAIL SALES
12 Million
TOTAL PAIRS PRODUCED
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33M 23M 28M 40+M DSW PRIVATE BRAND
PEAK 2019 2020 2021
33M ~23M ~32M ~28M
TOTAL PAIRS PRODUCED BY CAMUTO GROUP
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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
Increased drop ship Increase VinceCamuto.com digital penetration
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Product Sketch Prototyped In Brazil 2-3 weeks Test at DSW Mass Production Sold at DSW + Nordstrom, Macys, And Dillards
in retail segment
gross profit
Adjusted EPS
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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
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FY 2019
Revenue Low double-digit growth Comparable sales Low single-digit growth Tax rate ~27% Shares outstanding ~77M
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$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
POWERFUL LAST-MILE SOLUTION WORLD-CLASS DESIGN AND SOURCING CAPABILITIES WORLD-CLASS RETAILER
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FY 2018 FY 2017
Reported net income (loss) (20,466) 67,452 Pre-tax Adjustments:
5,300
23,041
60,760 89,440
9,257
27,929 677
1,017 3,093
(32,747)
5,613 1,176
33,988
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
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
amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company’s business and operations.
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