ASNA 2015 Investor Day - ASNA - Presentation

8/20/2019 ASNA 2015 Investor Day - ASNA - Presentation

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INTRODUCTION


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#ImNoAngel

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CHANGINGTHECONVERSATION

110-year-old brand

Unique experience,capability, and credibility to

serve “her size” customer Reshaping customer andindustry perspectives

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TURNAROUNDJOURNEY

Product

+ Talent

+ Marketing

"The Power ofConvergence"

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REVENUEDRIVERS

Product

Marketing

Channel development

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REVENUE DRIVERSPRODUCT

“Best At” = Fit solutions

- Pants and jeans, bras

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“Win At” = Growth distortions

- Tops, Livi Active, Panties

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Cacique Intimates

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Cacique Intimates

Outfitting vs. Key items

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Cacique Intimates

Outfitting vs. Key items

Designer Collaborations

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REVENUE DRIVERSMARKETING

Rebalancing investments

Focus on fashion first

Reframing the value proposition

Fully leverage credit

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#ImNoAngel ($5M campaign)

- Brand building – own the bodyconscious dialogue

- 15 billion impressions

- Impact on brand awareness andperception

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#ImNoAngel ($5M campaign)

- Brand building – own the bodyconscious dialogue

- 15 billion impressions

- Impact on brand awareness andperception

#PlusIsEqual ($5M campaign)

- Continue the dialogue

- Fashion Week

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REVENUE DRIVERSCHANNEL DEVELOPMENT

ecommerce growth

- Online exclusives

- Re-platform

- Digital marketplaces

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S


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ecommerce growth

- Online exclusives

- Re-platform


Real estate strategy

- Repositioning: 15% of chain

new/renovated in 2 years- Outlets

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REVENUE DRIVERS


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ecommerce growth

- Online exclusives

- Re-platform


Real estate strategy

- Repositioning: 15% of chain

new/renovated in 2 years- Outlets

Omni-channel initiative

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GROSS MARGINEXPANSION

Promotion rationalization

Sourcing, speed

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GROSS MARGIN


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GROSS MARGINPROMOTION RATIONALIZATION

Cacique semi-annual sale

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GROSS MARGIN


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Apparel clearance

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GROSS MARGIN


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Apparel clearance

Reduced storewide eventsand coupon limitations

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GROSS MARGIN


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GROSS MARGINSOURCING

Increased directpenetration

Speed initiative

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EXPENSEINITIATIVES

Store, corporate SG&A

Occupancy

Long-term marketingleverage

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OPERATING MARGIN


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Contribution

FY15 base: (0.1%)

Sales leverage: 4 – 5%

Gross margin rate lift: 2 – 3%

Expense initiatives: 1 – 2%

Total: 7 – 10%

OPERATING MARGINROADMAP

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CLOSING


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CLOSINGCOMMENTS

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Multiple levers to driveoperating margin growth

Consistent fashion andassortment execution

Gross margin upside

Expense leverage andproductivity improvement

Expanding the brand’sappeal and reach


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George Goldfarb | President and CEO

Introduction / overview


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Top-tier industry profits andsignificant growth potential

Unique niche

Customer focus andinnovation

Top talent

Introduction / overview

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Revenue growth – d


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Speed & InnovationNYC Design & Trend Studio

Leveraging factory design capability

product

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Revenue growth – d


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Assortment Expansion

PLUS

Online extensions Accessories

product

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Revenue growth – di h l


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New loyalty program

New platform and

mobile siteDigital attribution /enterprise analytics

Expansion of onlineexclusives

direct channel

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Revenue growth – k i


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Drive new-to-file acquisitionand expand reactivationinitiatives

Leverage personalization andsegmentation capabilities

Drive omni-customer traffic

marketing

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Revenue growth – i


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1,200+ store potential

new store expansion

Strips58%

Malls36%

Outlets5%

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Revenue growth – l t it


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annual opportunity

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Gross margin rate


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Increased internalsourcing penetration

Higher regular pricesell-through

Faster inventory turn

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Operating margin roadmap


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p g g p

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Closing comments


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Unique niche and strongeconomic model

Sales and gross marginlevers to drive continuedoperating margin growth

Strength of team andculture

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Jeff Gerstel President and CEO


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Overview – the journey from a ‘store’ to a ‘brand’


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the journey from a store to a brand

Growth strategy

Challenges / evidence

of progress

Size of the prize

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Growth strategy


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Differentiate merchandise

Drive direct channel

Build brand relevance

Leverage design andsourcing

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Operating margin opportunities


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• Revenue growthMerchandise

Digital channel

Brand relevance

• Gross margin rateDesign / sourcing

Inventory turn / promotionalposition

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Revenue growth – merchandise: core brand differentiators


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create products & experiences for value-minded, 40-ish womenStrategy example: Re-invent the core

be famous for the dress: her #1 dress destinationStrategy example: DRESSBAR

a curated assortment of brands for the many facets of her lifeStrategy example: DB Sunday (refined casual)

be famous for fit: solutions for real women's bodiesStrategy example: Westport 1962 denim

be her go-to place for go to work stylesStrategy example: under development

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Revenue growth – merchandise: sweaters


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Create prod ucts & exper ienc esfor value-m inded, 40-ish wo m en

• Re-invent the core

New merchant / design team

Refined assortment

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Revenue growth – merchandise: dresses


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be fam ous fo r the d ress :her #1 dress d es t inat ion

DRESSBAR

• FY15 Q3 launchDress sales +8% vs. industry -5%;continuing momentum

• FY16 strengthen and expand

Successful guest designer program;new collaboration launch for Spring

Internal design driven margin gain

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Revenue growth – merchandise: casual lounge


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g

a cura ted assor tm ent o f b rands fo rthe m any facets of her l i fe

DB Sunday

• Refined casual lounge collection• FY16 Fall rollout following

successful test

• Outperforming expectations

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Revenue growth – direct channel


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• Conversion opportunitiesSite performanceUser experienceFree ship to store

• Optimize mobile

• Drive traffic – organicsearch performance

• Create omni environmentin stores

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Revenue growth – brand relevance: marketing campaigns


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g p g

#labelmeconfident

• Fall awareness campaign

Shift perceptions

Influence the influencers

• Prepare for Springacquisition campaign

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Revenue growth – brand relevance: direct mail / analytics


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Enhance direct mail effectivenessusing cus tom er l i fet ime value

Identify likely high value new

customers through data mining ofbehavioral patterns

Target reactivation efforts anddirect mail based on predictedprofitability

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Gross margin initiatives


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• Scale internal design andsourcing

Increase product differentiation

Improve technical fit

Reduce product cost

• Inventory managementReduce clearance levels

Faster turns

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Operating margin roadmap


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ContributionFY15 Base 1%

Sales

leverage: 1 – 3%

Gross marginrate lift: 2 – 3%

Total 4 – 7%

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Closing comments


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• Talent in place -- driving journeyfrom a ‘store’ to a ‘brand’

• Wins with major initiatives

Fashion executionBrand awarenessSourcing penetration

• Poised to expand digital

• Ready to drive customeracquisition

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Brett SchneiderPresident

OVERVIEW


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• WE ARE: – Product-focused

– Uniquelypositioned

– Driving results

– Positioned forgrowth

TRANSITIONING FOR CONTINUEDGROWTH


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GROWTH

FY13 – FY15: – Accelerated comp-

driven growth

– Sourcing-drivengross margin rateexpansion

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TRANSITIONING FOR CONTINUEDGROWTH


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GROWTH

FY13 – FY15: – Accelerated comp-

driven growth

– Sourcing-drivengross margin rateexpansion

FY16 – FY20: – Moderating comp

store growth

– Unit growth – Promotion refinement-

driven gross margin

rate expansion

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SALES GROWTHto $500M


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350

400

450

500

2015 2016 2017 2018 2019 2020

Comp Growth

Store Growth

Other Revenue

STORE GROWTH OPPORTUNITY


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• NEW STORES, NEWMARKETS

• REPOSITIONING IN

CURRENT MARKETS• CLOSURE OF NON-

PRODUCTIVE UNITS

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DIRECT GROWTHOPPORTUNITY


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• New platform withenhanced mobile site

• Expanded merchandise

categories and onlineextensions

• Amplifying effect of new

stores in new markets

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OPERATING MARGINROADMAP


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ContributionFY15 Base 9%

Sales

leverage: 1 – 2%Gross marginrate lift: 1.5 – 2.5%

Depreciation: (1%)Total 10 – 12%

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Robb GiammatteoEVP and Chief Financial Officer


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Multiple EBITDA drivers – top line - legacy ASNA


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Cumulative EBITDA opportunity: $150M+

Multiple EBITDA drivers – top line - legacy ANN


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Cumulative EBITDA opportunity: $70M+

Multiple EBITDA drivers – gross margin rate – legacy ASNA


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Justice rate recovery;+$50M

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58%

55%

52%

58-60%

FY13 FY14 FY15 Target

Full Year Justice Gross Margin Rate



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Lane Bryant rateinitiatives; +$30M

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56.3%

1.0-1.5%

0.5-1.0%

0.5% 58-59%+

F Y 1 5

S o u r c i n g

/

S p e e d

P r o m o t i o n a l

R e f i n e m e n t

A d d i t i o n a l

S A S

/ C

l e a r a n c e

R e f i n e m e n t

T a r g e t

Full Year Lane Bryant Gross Margin Rate



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Distributed ordermanagement; +$25M

139 I n t e r n a

l

B e n c h m a r k

R a n g e

L e g a c y

A S N A -

T a r g e t

Omni-Channel

Gross Margin Rate Opportunity

50bp

200bp



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89%

72%

32%

4%

77%

J u s t i c e

L a n e B r y a n t

m a u r i c e s

d r e s s

b a r n

C a t h e r i n e s




Internal sourcing

penetration; +$40M

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Internal Sourcing Penetration* Apparel (%)

* FY15 Spring penetration rates



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Internal sourcing

penetration; +$40M

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Cumulative EBITDA

Opportunity:$145M+

Multiple EBITDA drivers – gross margin rate – legacy ANN


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Justice rate recovery+$50M

Lane Bryant rateinitiatives +$30M

Distributed ordermanagement +$25M

Internal sourcing

penetration +$40MANN rate recovery

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Cumulative EBITDA

Opportunity:$145M+

$25M+

Multiple EBITDA drivers – sales and gross margin


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Incremental EBITDA Opportunity

$295M+

LEGACY ASNA

$150M+

$145M+

$95M+

LEGACY ANN

$70M+

$25M+

EBITDADriver

Top-Line: Gross MarginRate:

Total:

[A] [B]

ANN standalone cost savings /integration synergies*


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$7 $48 $148 $235

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$ Million

* Figures represent run rate at fiscal year-end

[C]

[D]

Expense management


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Recent operating expense growthShared service capacity build-outBrand capability development

Discrete brand initiatives

Steady-state marketing support

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Significant earnings power – $1B+ EBITDA by FY18


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30325

189

513

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80

78 851

150 1,001

F Y 1 5 A S N A

S t a n

d a l o n e

E B I T D A

T o p - l

i n e

/

G r o s s M a r g i n

R a t e G r o w t h

F Y 1 6 C

h a r m i n g

S y n e r g i e s

I n f l a t i o n

/

R e i n v e s t m e n t

F Y 1 8 A S N A

S t a n

d a l o n e

E B I T D A

F Y 1 5 A N N

E B I T D A

T o p - l

i n e

/


R a t e G r o w t h

I n f l a t i o n

/


A N N C o s t

S a v i n g s

A S N A

/ A N N -

E x c

l . S y n e r g i e s

I n t e g r a t i o n

S y n e r g i e s

F Y 1 8 A S N A

E B I T D A

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EBITDA ($ million)

Legacy ascena

Legacy ANN



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374

30325

189

513

246

94

80

78 851

150 1,001

F Y 1 5 A S N A

S t a n

d a l o n e

E B I T D A

T o p - l

i n e

/


R a t e G r o w t h

F Y 1 6 C

h a r m i n g

S y n e r g i e s

I n f l a t i o n

/


F Y 1 8 A S N A

S t a n

d a l o n e

E B I T D A

F Y 1 5 A N N

E B I T D A

T o p - l

i n e

/


R a t e G r o w t h

I n f l a t i o n

/


A N N C o s t

S a v i n g s

A S N A

/ A N N -

E x c



S y n e r g i e s

F Y 1 8 A S N A

E B I T D A

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EBITDA ($ million)

Legacy ascena

Legacy ANN

[A]

[B]



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374

30325

189

513

246

94

80

78 851

150 1,001

F Y 1 5 A S N A

S t a n

d a l o n e

E B I T D A

T o p - l

i n e

/


R a t e G r o w t h

F Y 1 6 C

h a r m i n g

S y n e r g i e s

I n f l a t i o n

/


F Y 1 8 A S N A

S t a n

d a l o n e

E B I T D A

F Y 1 5 A N N

E B I T D A

T o p - l

i n e

/


R a t e G r o w t h

I n f l a t i o n

/


A N N C o s t

S a v i n g s

A S N A

/ A N N -

E x c



S y n e r g i e s

F Y 1 8 A S N A

E B I T D A

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EBITDA ($ million)

Legacy ascena

Legacy ANN

[C][D]

Normalizing capital expenditures


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($ million)

% of operatingcash flow

75% 129% 69% < 50%

Legacy ASNA$225-$250M

Historical capex figures shown are presented on an accrual basis

Free cash flow – FY18 pro-forma


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De-levering balance sheet


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FY16 Debt to EBITDA: 2.6x FY18 Debt to EBITDA: 1.3x

$1,325

$1,001

Projected FY18Average Debt

FY18 EBITDAPro-Forma

$1,750

$685

Projected FY16Average Debt

FY16 EBITDA GuideMiddle of Range



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FY16 Interest Coverage: > 3x FY18 Interest Coverage: > 7x

Investment considerations


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Multiple EBITDA drivers

Significant earnings power

Normalizing CapExAccelerating free cash flow


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Vision


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“Serve our shareholders and create valueby becoming a family of leading brands

with $10 billion in salesand top- tier profitability”

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Breakouts


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Justice Tribeca HubAnn Taylor / LOFT Murray Hill Hub

Lane Bryant Nolita Hub

maurices Soho Hubdressbarn / Catherines / SSG Foyer

CEO / CFO Wharton Forum

ASNA 2015 Investor Day - ASNA - Presentation

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Transcript of ASNA 2015 Investor Day - ASNA - Presentation