$cwtr coldwater creek jan 2012 corporate investor icr presentation slides deck ppt pdf

7/29/2019 $CWTR Coldwater Creek Jan 2012 Corporate Investor ICR Presentation Slides Deck PPT PDF

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14thAnnual ICR XChange Conference 2012

Jill Dean, President and Chief Merchandising Officer

Jim Bell, Senior Vice President and Chief Financial Officer


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SAFE HARBOR

2

The following information contains forward-looking statements, including statements regarding our

plans to revitalize our product appeal and improve our financial performance. These forward-looking

statements are based on Managements current expectations and beliefs, as well as a number of

assumptions, estimates and projections concerning future events. These statements are subject torisks, uncertainties, assumptions and other important factors, many of which are outside

Managements control, that could cause actual results to differ materially from the results discussed

in the forward-looking statements. You are cautioned to review the risks identified in our SEC

reports and not to put undue reliance on such forward-looking statements because actual results

may vary materially from those expressed or implied.

All forward-looking statements are based on information available to Management on this date, and

Coldwater Creek Inc. assumes no obligation to, and expressly disclaims any obligation to, update or

revise any forward-looking statements, whether as a result of new information, future events or

otherwise. We operate on a fiscal calendar widely used in the retail industry that results in a given

fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of

the following year. For example, references to fiscal 2010 refer to the fiscal year ended January

29, 2011.


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PREMIUM MULTI-CHANNEL SPECIALTY RETAILER

Retail

Catalog

E-Commerce 77% of total sales in Q3

2011

414 locations (1)

366 Premium

39 Outlets

9 Day Spas

LTM Q3 2011 circulationof 65 million

Key traffic driver forstores and e-commerce

21% of total sales in Q32011

Best in class performance

www.coldwatercreek.com

3

Coldwater Creek iscommitted to

creating a unique

and personal brand

experience that

reflects the multiplefacets of our

customers lifestyle,

recognizes her

individuality, and

delights her wi th

meaning andinspiration.

Coldwater Creek Today

Coldwater Creek Today


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Typically between the ages of 45-65

Her average household incomeexceeds $75,000

She is college educated

She sees age as an attitude, not a

numberShe loves print, pattern and colorin her wardrobe

She is looking for fits that flatter

and styles that are age appropriate

OUR CUSTOMER


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OUR HISTORY

5

Opened firs tpremium retail stores

Reached $1 billion insales and $520 in SSF

1999 2006

Successful store

growth period20092000

Product offering lost

focus2010 2011

Hired new managementteam to execute

turnaround

Historical TimelineHistorical Timeline

Note: Our fiscal year ends on the Saturday closest to January 31 of the following year.

Premium Store Sales Per Square FootPremium Store Sales Per Square Foot

Business outgrewdirect modelinfrastructure

$516 $520$456

$350 $336 $303

$-

$200$400

$600

FY 2005 FY 2006 FY 2007 FY2008 FY 2009 FY 2010


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Phase 2

Revitalize productappeal

Restore the brandimage

Improve financialperformance

ROADMAP TO A TURNAROUND

Phase 1

Implemented inventorymanagement

disciplines

Begin to implementnew merchandisingdirection

Begin to roll out storeoptimization program

2011 2012 2013 & Beyond

6

Phase 3

Leverage supplychain efficiencies

Expand implementationof Made For Outletproduct strategy

Evaluate opportuni tyto grow out let storebase

Reevaluate smallermarket growth

opportunity


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Revitalizing the ProductJill Dean, President and Chief Merchandising Officer


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STRATEGIC ASSORTMENT ARCHITECTURE

Create collections with lifestyle focus

Offer the appropriate balance of fashionand novelty

Build penetration of opening pricepoints

Increase seasonal investment in color,print and pattern

Grow dresses, skirts, outerwear, andaccessories categories

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Broaden Customer Appeal


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Maximize top 30 styles and provenwinners

Invest in franchise fabrications andyarns

Consistently offer fashion essentialsthat are updated every season

Develop and execute against a rigoroustesting process

Maintain open to buy and ability tochase

BALANCE CATEGORYINVESTMENTS

Reduce Assortment Volatili ty


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10

INVENTORY PRODUCTIVITY

Plan and execute to a higher regularpriced sell through

Reduce inventory depth

Narrow size offering in store

Increase freshness by adding miniflows

Full time in-store sale section toimprove inventory turnover

Increase Inventory Turnover


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CROSS CHANNEL MERCHANDISING

Align brand-right messagingacross channels

Seasonal marketing campaigns

Major merchandise promotionsfocused on the Top 30 styles

Consistent execution of

compelling outfits with focus onthe target customer

Enhanced shopping experienceboth in store and online

Improved navigation throughmerchandising by lifestyle

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BUILD SUPPLY CHAIN CAPABILITY

Grow direct sourcing penetration

Broaden vendor and country of origin base, reduce dependency on China

Improve speed to market and reduce cycle time

Design & develop into franchise fabrications & yarns, projected over multiple seasons

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Reduce Unit Cost and Shorten Lead Times


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Financial Highlights

Jim Bell, Chief Financial Officer


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1414

Drive Gross MarginExpansion

Improve Cash Flow

Leverage Our Current CostModel

Optimize Store Fleet

KEY FINANCIAL INITIATIVES

Change Financial Architectureto Improve Performance


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Restore gross margins via leaner inventory buys and higher regular price sell through

Mitigate costs and reduce sourcing cycle time by refining supply chain strategies

Deliver refined promotional and markdown strategy

Leverage realized reduction in occupancy and buying expenses

INITIATIVES TO DRIVE GROSS

MARGIN EXPANSION

15


GROSS MARGIN44.6%39.1%

34.2%32.2% 31.3%

27.1%

20.0%

25.6%

31.3%

36.9%

42.6%

48.2%

FY 2006 FY 2007 FY2008 FY 2009 FY 2010 LTM Q3 2011


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INVENTORY MANAGEMENT STRATEGY

Strategy for more frequent product flows and a renewed focus on product lifecyclesand seasonal timelines

Maintain open-to-buy positions and fill with trending categories

Maintain permanent sales section to speed inventory turn

Better buying = better inventory turns = better cash flow

Goal to increase inventory turnsto approach 5x per year.

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INVENTORY TURNS

4.7 4.7 4.8 4.6

3.9

2.0

3.0

4.0

5.0

6.0

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010


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Removed approximately $125 million of SG&A from model from FY 2007 to LTM Q32011

Expect to reduce expenses an additional $5-10 million in Q4 2011

Highly leveragable expense structure provides significant opportunity for salesflow through to earnings with modest top line growth

HIGHLY LEVERAGABLE MODEL

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$124.4Mreductionin SG&A

20072010SalesCAGR: (5.2%)

20072010SG&ACAGR: (8.7%)

($ in millions)


TOTAL OPERATING EXPENSES

$387.1

$460.9

$396.8$373.5

$350.7

$336.5

36.7%

40.0%38.7%

36.0% 35.7% 42.0%

$250.0

$300.0

$350.0

$400.0

$450.0

$500.0

FY 2006 FY 2007 FY2008 FY 2009 FY 2010 LTM Q3 2011

30.0%

35.0%

40.0%

45.0%

50.0%

OperatingExpenses %toSales


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OPTIMIZE STORE FLEET

Young retail fleet average ageis approximately 6 years

Opportunistically relocate and/orremodel to optimize store size

Close ~10% or 35-45underperforming stores in the nexttwo years

Store optimization program isexpected to yield approx $8M - $12Mincrease in pre-tax income

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110 stores1120 stores

2130 stores30+ stores

8

4

9

4011

8

2

28

14

5

2

20 9

33

4

9

7

4

12

11

11

2

3

12

2

3

2

15

2

3

14

16

3

8

17

2

7

10

35

4

11

2

9

9

3

31

Current Store Locations

2011 2013 & Beyond2012

5 new stores / close 15 stores Close 15 stores Close up to 15 stores


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Premium retail comparable salesdeclined 9% for November andDecember

Gross margin to improve 200 to 400basis points

Net loss per share of $0.18 to $0.24

Inventory to be down high teens

Q4 2011 OUTLOOK


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COMPANY HIGHLIGHTS

New talent in place with extensive industryexperience to execute revitalized merchandisingstrategy

Proven multi-channel distribution model

Significant margin expansion opportunity as a resultof highly leveragable infrastructure

Significant investments made in people, processesand systems designed to drive future sales growthand margin improvement

High brand awareness developed through long historyof great product and stellar customer service

Exceptionally loyal and distinguished customerbase

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$cwtr coldwater creek jan 2012 corporate investor icr presentation slides deck ppt pdf

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