management presentation

MANAGEMENT PRESENTATION
January 2015
Strictly Private and Confidential
OVERVIEW
•
Established in1976, bebe is an
iconic contemporary accessible
brand with a distinct offering of
apparel and accessories
•
Designs, develops and produces
contemporary women’s apparel
and accessories under the bebe,
BEBE SPORT / bbsp brand names
•
Operates approximately165 bebe
retail stores and 35 bebe outlet
stores in the U.S., U.S. Virgin Islands,
Puerto Rico and Canada
•
Runs e-commerce business
@bebe.com
•
Distributes and sells bebe branded
product through licensees in
approximately 25 countries
2
INVESTMENT HIGHLIGHTS
Historically high margin and bottom-line accretive vertical apparel business in the process of
turnaround and with ample future growth potential
Distinctly positioned with merchandise designed to suit the lifestyle of a
confident and feminine woman
Upgraded and empowered management team led by highly experienced
executives and strong design and merchandising talent
Turnaround strategy underway with tangible progress
Solid and Scalable retail store operations, technology and supply chain
Premier store locations primarily in A and B malls
Focus on ROI driven growth strategies with acceleration in e-commerce
3
BRAND POSITIONING
bebe skews trendier and more fashion-forward than most of its competitors, and strives to
provide value
4
THE BEBE WOMAN
• Wears her confidence – it requires a
confident attitude to wear bebe and at the
same time it instills confidence in the woman
who wears it
• Lives a “24/7” lifestyle, constantly juggling
work and her social life
• Embodies power and glamour, is ageless and
stands out from the crowd
• Considers herself a trendsetter and puts her
own spin on the latest fashions
• Prefers clothing that accentuates her curves;
bebe is sexy
• Looks for value and uniqueness when she
shops
• Diverse customer demographics including
fast growing ethnicities
5
EXPERIENCED MANAGEMENT TEAM
Elevated and empowered executive team with upgraded design and merchandising front-end
leadership
Year Joined bebe
Prior Experience
Years in Industry
Jim Wiggett – CEO
2014
Founder of The Jackson Hole Group, prior retail
experience in Macys, Duty Free and managing
multiple brands under LVMH
40+
Liyuan Woo – CFO
2010
M&A and financial advisory to private equity and
strategic corporations at Deloitte
17+
Brigitte Bogart –EVP, Design
Re-joined 2013
Design director during bebe peak years, prior
entrepreneur and experience with many brands
such as Laundry by Shelli Segal and Guess etc.
25+
Mary Jimenez –SVP, GMM
Re-joined 2014
Head of bbsp during bebe peak years, prior head
of merchandising at Marciano, a division of Guess
and previously worked for LVMH
25+
Denise Cox –SVP , Production
2009
SVP at Haggar Clothing Co.; production and
sourcing positions at VF Corporation
25+
Susan Powers – SVP, Stores
2007
VP of store operations at chico's/White House
black market, Wet Seal and BCBG
25+
Erik Lautier – EVP, Chief Digital Officer
2014
Head of ecommerce at Lacoste and Edun
(LVMH); significant experience in startups and
digital strategy consulting
15+
Richard Pierson – SVP, International
2010
VP of International at Tommy Hilfiger and Guess
prior to joining bebe with 17 years of international
expansion experience
23+
Name & Title
6
STRONG BRAND HERITAGE WITH AMPLE UPSIDE
For over 40 years, bebe has been a well known value oriented fashion brand. Brand messaging has
been inconsistent , which confirms upside potential
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Strategic Initiatives
SIX PRONGED TURNAROUND STRATEGY
1. Product Distinction
Increase product distinction with a contemporary,
accessible, fashion merchandised offering
designed to suit the lifestyle of this confident,
sexy, feminine and sophisticated woman
6. Long term growth
ROI-based investment for sustained
long-term growth
5. International
Maintain international presence through company
turnaround
Strategically plan growth initiatives as we learn from our US
successes
2. Brand messaging
Align our marketing campaign from
traditional to new media, focused on
messaging that speaks to the bebe
woman
3. Omni-channel
Growth through social media,
digital marketing and strong CRM
focus
4. Outlets
Refine outlets so product and messaging better
align with the bebe brand
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PRODUCT DISTINCTION
•
•
•
Merchandising team to revamp the design, merchandising,
production and marketing processes to ensure we consistently
deliver a cohesive fashion assortment that speaks to the
multiple dimensions of her lifestyle needs
–
Distinct offering falls into lifestyle categories: Business Chic, Party,
Special Occasion, Dressy Casual, Weekend casual, Logo and BEBE
SPORT
–
Maintain core competency in dresses and party while building out
the tops assortment and accessories
–
Focus on outfits, layers, and special occasion. Expanding her
special occasion offerings will improve AUR, UPT and ADS
–
Continue to build on the success of accessories and seeking other
incremental opportunities
Newly established calendar assumes 6-weeks design / buy and
marketing approval on outfitting process, which will ensure
coherent offering, messaging and cost savings
–
Initiating the full roll out of lifestyle outfitting
―
Consistency in planning, designing, merchandising and floor
presentation
Shifting IMU focused pricing to quality and value oriented
pricing
10
BRAND MESSAGING
•
Redefining brand message to reflect the essence
of the bebe woman across all channels
•
Building brand relevance in social media through
Facebook, Instagram and Pinterest
•
•
―
Act as a fashion resource
―
Starting a social impact campaign
Upgrading loyalty and CRM platforms
―
Using an email service that enables one –to-one
cross-channel marketing
―
Outlet CRM:
Reconnect with outlet marketing team
Align messaging to ensure consistency with bebe
brand
Launching standalone iPad/iPhone version of
digital catalog
11
OMNI CHANNEL
•
Refining the online presence and establish a true omnichannel relationship with our consumer from messaging to
promotions to logistics
•
Improved product and site conversion metrics to drive
higher yield from our digital marketing
•
Integrate in-store into digital experience to offer greater
level of service and interaction
•
―
Using technology to access full inventory even in smaller stores
―
Ownership and management of “virtual” locations to drive foot
traffic as well as traditional digital marketing traffic drivers
―
More sophisticated “find in store” functionality including pick
up in store
―
Enhanced merchandising functions to ensure sale is completed
regardless of channel
Opportunities:
―
Testing and optimization
―
Personalization and CRM
―
Elevate shipping, returns and packaging
―
Re-engage lapsed customers with strong brand affinity
―
Social and UGC
―
International business
12
NEW STORE CONCEPT DRIVES SALES AND MARGIN
• bebe is currently positioned in 170 of the
312 defined A and B volume malls
• Elevate the bebe brand and shopping
experience through windows and in store
merchandising
• New store concept currently rolled out to
7 bebe stores. Comparable performance
indicates 5-8% margin gain and increase
in sales per SF
• Plan to roll out the concept to all new stores
and relocated stores
• Strategically pre-plan floor sets, fixture and
marketing needs by partnering with
merchandising, marketing and design teams
• Improve window display and in-store
marketing in partnership with marketing team
• Non-apparel table testing successfully with
planned 50% rollout by March 2015
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OUTLETS
•
Realign outlet product offering with the outlet customer
―
•
Maintain the casual successes under the bebe label
―
•
•
Maximize the made for outlet opportunity: with brand
approved bebe product that increases customer awareness
while delivering incremental revenue
Strategically incorporate non-apparel product into
outlets
―
•
Eliminated 2b product and determine the optimal mix
between bebe MFO, logo and clearance transfers
Goal of 20% store penetration by 2016
Increase top line and bottom line while retaining brand
equity and integrity
―
Increase Average AUR, IMU% and GM%
―
Pop-up locations to eliminate MDs
5-year goal is to add 38 new outlets by FY 2018 for a
total outlet portfolio of approximately 70 outlet locations
14
INTERNATIONAL GROWTH
•
The bebe brand has found success internationally by serving a sophisticated,
branded customer, and offering an aspirational product
•
Enhanced our product assortments. Branding efforts are receiving a positive response
from the consumer
•
Currently in 25 countries with 10 partnerships and working to maintain store count
through our brand transition
―
Position our partners for future success when brand has strategy and positioning back in
alignment
―
Monitor US selling and successes and then build on those internationally
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Financial Highlights
Strictly Private and Confidential
FISCAL YEAR FINANCIAL HIGHLIGHTS
FY14
FY13
FY12
July 5, 2014
July 3, 2013
June 30, 2012
$425.1
$463.2
$519.8
32.5%
33.3%
40.2%
46.5%
42.6%
36.0%
($59.7)
($43.0)
$21.8
($59.2)
($69.1)
$13.2
($0.75)
($0.84)
$0.16
($28.7)
($7.2)
$41.8
Stores at end of period
207
242
252
Actual to 40% Margin Delta
$31.9
$31.1
Net Sales
Gross Margin
SG&A as % of sales
Operating I ncome (Loss)
I ncome (Loss) from Continuing Operations
EPS from Continuing Operations
EBI TDA after one-time items
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1Q15 FINANCIAL HIGHLIGHTS
1Q15
1Q14
October 4, 2014
October 5, 2013
Net Sales
Gross Margin
SG&A as % of sales
Operating I ncome (Loss)
Loss from Continuing Operations
$102.2
$109.3
32.1%
36.3%
41.2%
43.8%
($9.4)
($8.2)
($9.0)
($7.9)
EPS from Continuing Operations
EBI TDA
($0.12)
($0.11)
($5.8)
($3.5)
Guidance for 2Q15 Sales comp is expected to be in the flat to low single digit positive range; actualized at
approximately +8%
The net loss per share is expected to be in the range of low to mid-single digit range; revised to be
in the low-single digit range
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Balance Sheet and Cash Flow Summary
October 4,
2014
July 5,
2014
(In millions) (unaudited)
(In millions)
$93.3
$125.0
Merchandise Inventories
34.7
31.7
Property and Equipment, net
96.3
93.6
$248.4
$270.4
76.2
85.2
$172.2
$185.1
Cash and Investments
Total Assets
Total Liabilities
Shareholders’ Equity
• Planned CapEx of $16M
• Planned Dividends payment of $4.8M, 40%
reduction from historical payment
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SHORT TERM TURNAROUND & LONG TERM GROWTH
•
Driving increased store productivity through focused merchandising and marketing initiatives as
well as new store concept rollout and visual presentation
•
Focusing on high quality sales through improved product offering, better managed promotions
and disciplined approach to inventory management
•
Managing and planning for investments in inventory, SG&A and CapEx
•
Headcount reduction and restructuring steps took place in July, coupled with a $10 million
marketing spend reduction for fiscal 2015
benefit SG&A beginning the first fiscal quarter
Continued profitable investments in e-commerce and CRM to enhance the relationship with
customers and drive growth
Invest in less capital intensive and revenue enhancing areas in CapEx to leverage our new
store concept
Continue to monitor and right-size unproductive bebe stores while growing e-comm. outlets and
international
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