Board Meeting Financial Materials FY`13 Year-end Highlights

MANAGEMENT PRESENTATION
June 2015
Strictly Private and Confidential
OVERVIEW
•
Established in1976, bebe is an iconic
contemporary accessible brand with
strong brand equity and a distinct offering
of apparel and accessories
•
Designs, develops and produces
contemporary women’s apparel and
accessories under the bebe, BEBE SPORT
names
•
The Company is currently executing a
turnaround plan and implementing a
number of merchandising and
operational initiatives
•
Operates approximately165 bebe retail
stores and 36 bebe outlet stores in the
U.S., U.S. Virgin Islands, Puerto Rico and
Canada. Company is in advanced
negotiations with landlords to maintain
store locations and rent
•
Runs e-commerce business @bebe.com
•
Distributes and sells bebe branded
product through licensees in
approximately 20 countries
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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 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 growth strategies in international, domestic wholesale, outlets and
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 – likes to be noticed
and 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
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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
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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 marketing campaign from
traditional to new media, focused on
messaging that speaks to the bebe
woman
3. Domestic Wholesale
Expansion of branded product into
other retail operations
4. Outlets
Refine outlets so product and messaging better
align with the bebe brand
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PRODUCT DISTINCTION
•
•
•
Continue to revamp the design, merchandising, production
and marketing processes to ensure consistent delivery of a
cohesive fashion assortment throughout 8 seasons representing
strong collections in multiple lifestyles that reflect our customer
–
Distinct offering falls into lifestyle categories
–
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
Merchandise calendar assumes 6-weeks, 8-seasons design
with collaboration from merchandising and marketing on
outfitting to ensure a coherent offering, consistent messaging,
and cost savings
–
Initiated the full roll out of localized lifestyle outfitting
―
Consistency in planning, designing, merchandising, and floor
presentation
Shift from IMU focused pricing to quality and value oriented
pricing
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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 which
segments customers into distinct groups with
targeted approach in product and messaging
―
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
Launched standalone iPad/iPhone version of
digital catalog
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DOMESTIC WHOLESALE
•
Opportunity to introduce the brand to customer base
with product that is distinct; reinforces the DNA of the
brand, and supports the overall perceptions of the
brand
•
Includes multiple merchandise categories such as
handbags, shoes, intimates, and accessories etc.
•
bebe product will be featured both in branded shopin-shops, as well as within wholesale partners'
presentations
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OUTLETS
•
Rebranded all stores as ‘bebe’ to reinforce the single brand focus
―
•
•
Maintain the casual offering successes under the bebe label
―
Maximize the made for outlet opportunity with brand approved
bebe product that increases customer awareness while delivering
incremental revenue
―
Creates an opening price-point for the bebe line, which leads
into mid-priced product in bebe stores and the higher range of
product in key lines
Strategically incorporate non-apparel product into outlets
―
•
•
Eliminated 2b product and optimized the mix of bebe MFO, logo.
and clearance products transferred from main stores
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
Goal is to add 38 new outlets by FY 2018 for a total outlet
portfolio of approximately 70 outlet locations
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INTERNATIONAL GROWTH
•
The bebe brand has found success internationally by serving a sophisticated,
branded customer, and offering an aspirational product
•
Enhanced product assortments. Branding efforts are receiving a positive response
from the consumer
•
Currently in 20 countries with 10 partnerships and working to build 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
July 5, 2014
$425.1
FY13
July 3, 2013
$463.2
FY12
June 30, 2012
$519.8
Gross Margin
SG&A as % of sales
32.5%
33.3%
40.2%
46.5%
42.6%
36.0%
Operating Income (Loss)
Income (Loss) from Continuing Operations
($59.7)
($43.0)
$21.8
($59.2)
($69.1)
$13.2
EPS from Continuing Operations
EBITDA after one-time items
($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
• Margin drain, significant SG&A increase coupled with sales productivity
issues were main factors for a disappointing FY13 & FY14
• FY15 is a reset year for margin level and store counts
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9-MONTHS FY15 INCOME STATEMENT SUMMARY
From Continuing Operations
April, 3
2015
April 5,
2014
(In millions) (unaudited)
(In millions)
$323.7
$321.5
Gross Margin
108.9
106.1
SG&A
129.0
141.7
Net Loss (Non-GAAP)
$18.4
$32.5
Net Losses Per Share (Non-GAAP)
0.24
0.41
($6.4)
($17.9)
Net Sales
Normalized EBITDA
• Updated guidance of ‘low-single digit sales comp’ and ‘lowsingle digit loss per share range’
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IMAGES EXPLAIN THE NUMBERS - OVERTLY SEXY FY14 & Q1 FY15
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INTRODUCTION OF THE FALL COLLECTION – WEAR YOUR CONFIDENCE!
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FOLLOWED BY HOLIDAY PRESENTATION – NO LABEL REQUIRED
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FOLLOWED BY SPRING COLLECTION – MORE CASUAL LIFESTYLES
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bebe LIFESTYLES - OUTFITTING FOR EVERY ASPECT OF HER DAY
SPECIAL
OCCASSION
PARTY
DRESSY
CASUAL
BUSINESS
CHIC
LOGO
BBSP
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bebe LIFESTYLES MAP
•
•
Largest offering in the Dressy Casual lifestyle - versatile pieces that can be worn day to night
Protecting our heritage of Party and Business Chic at higher price points
Price
High
SP.
OCC.
3%
BUSINESS
CHIC
20%
Core
BBSP
2%
PARTY
20%
DRESSY CASUAL
40%
LOGO
10%
Opening
End Use
Day
Night
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THE NEW EXCITEMENT IN DRESSY CASUAL OFFERINGS FALL 2015
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THE NEW EXCITEMENT IN DRESSY CASUAL OFFERINGS FALL 2015
25
THE NEW SPECIAL OCCASION OFFERINGS FALL 2015
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BUSINESS CHIC LIFESTYLE OFFERINGS FALL 2015
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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
8 bebe stores. Comparable performance
indicates 5-8% margin gain and increase
in sales per SF
• Plan to roll out the concept to all new 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 successful with
planned 50% rollout by March 2015
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NEW STORE CONCEPT – INTRODUCTION SUMMER 2014
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NEW STORE CONCEPT – INTRODUCTION SUMMER 2014
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NEW STORE CONCEPT – INTRODUCTION SUMMER 2014
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NEW STORE CONCEPT – INTRODUCTION SUMMER 2014
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NEW STORE CONCEPT – INTRODUCTION SUMMER 2014
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BALANCE SHEET AND CASH FLOW SUMMARY
April, 4
2015
April 5,
2014
(In millions) (unaudited)
(In millions) (unaudited)
$76.9
$139.0
Merchandise Inventories
32.6
31.9
Property and Equipment, net
93.9
96.1
$225.2
$292.1
69.1
72.8
$156.1
$219.3
Cash and Investments
Total Assets
Total Liabilities
Shareholders’ Equity
• Planned CAPEX of $18M for FY15 and directionally lower for FY16
• Planned Dividend payments of $0 for Q3 and Q4 FY15
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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 to ensure global -level leverage
•
Focus 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

Managing inventory in line with test and react strategy and ensure <30% fashion risk buys

Headcount reduction and restructuring steps took place last July, coupled with a $10 million marketing
spend reduction for fiscal 2015 ($20M for FY15 and FY16)

Continued profitable investments in e-commerce and CRM to enhance the relationship with customers and
drive growth (Conversion focused FY15 / traffic & conversion focused FY16)

Invest in less capital-intensive and revenue-enhancing areas in CapEx to leverage our new store concept
•
Continue to monitor and right-size the unproductive bebe store portfolio while growing e-comm
•
Continue to expand on operational margin accretive channels

Outlets in store counts and offering

International wholesale expansion

Domestic wholesale opportunities
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FORWARD LOOKING STATEMENTS
Certain statements in this presentation are "forward-looking statements" made pursuant to the safeharbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements reflect the Company's current expectations or beliefs concerning future events and are
subject to various risks and uncertainties that may cause actual results to differ materially from those
that we expected. The statements in this presentation, other than historical information, contain
forward-looking statements that involve risks and uncertainties that could cause actual results to differ
from anticipated results. Wherever used, the words “expect,” “plan,” “anticipate,” “believe” and similar
expressions identify forward-looking statements. Any such forward-looking statements are subject to
risks and uncertainties. Some of these risks include, without limitation, miscalculation of the demand for
our products, effective management of our growth, decline in comparable store sales performance,
ongoing competitive pressures in the apparel industry, changes in the level of consumer spending or
preferences in apparel, loss of key personnel, difficulties in manufacturing, disruption of supply, adverse
economic conditions, and/or other factors that may be described in the Company's annual report on
Form 10-K and/or other filings with the Securities and Exchange Commission. We undertake no
obligation to publicly update or revise any forward-looking statement.
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