Caleres, Inc. · NYSE:CAL
Caleres — Brown Shoe — Investor Presentation (November 2006)
31 slides from Caleres's investor presentation, Nov 29, 2006
Slide 1: Brown Shoe Company, Inc. Investor Update
Brown Shoe Company, Inc. Investor Update Winter 2006
Slide 2: Forward-looking statements
This document contains certain forward-looking statements and expectations regarding the Company's future performance and the future performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include (i) the p
Slide 3: Agenda – NYSE: BWS
Agenda – NYSE: BWS 1) Brown Shoe At A Glance 2) Shaping Our Platform 3) Strategies for Long-Term Growth * Note: Guidance was issued on November 21, 2006 and has not been updated. 3
Slide 4: Brown Shoe At A Glance
Brown Shoe At A Glance Brown Shoe Today -- $2.5 Billion in Sales Projected for 2006 „ Integrated wholesale-retail platform. Consumer-driven enterprise that builds brands and retail concepts while gaining market share Mass Merchandisers 39% Wholesale $300 million 61% Retail § 80 million pairs § Appx.
Slide 5: Brown Shoe At A Glance: Our Rank among Wholesalers and Retailers
Brown Shoe At A Glance $600 Our Rank among Our Rank Among Top Footwear Wholesalers Retailers Women’s Fashion Footwear Sales in U.S. Share of Footwear Sales by Retailer* $500 Department Stores* Ranked by Parent Company 7 ($ in millions) $400 6 5 $300 % Share of Dollars 4 $200 3 2 $100 1 $0 0 W t hl's
Slide 6: Brown Shoe Company Portfolio
Brown Shoe Company Portfolio Salon Bridge Impulse Better Comfort Moderate Junior Mass FASHION = $32.0B MIA SPIGA No. 10 ORS @ETIENNE AIGNER no. 2 No. 12 ww vigiuas $$ maturalizer beantzaor No. 1 ATHLETIC = $11.4B a} shoes.cony No. 3 Pureplay Ecommerce Footwear Famous @ Footwear. No, 1 Branded Family
Slide 7: Review of BWS Financials
Review of BWS Financials (all $’s in millions except EPS) Q3 06 Q3 05 % Chg. Sales $676.8 $617.7 + 9.6% Net Earnings GAAP $26.9 $19.8 + 36.1% Adjusted $28.3 $23.0 + 23.1% EPS GAAP $0.93 $0.70 + 32.9% Adjusted $0.97 $0.81 + 19.8% Gross Margin 39.9% 38.8% Debt/Cap 25.4% 39.0% Cash Flow from Operations
Slide 8: Review of BWS Financials by Segment
Review of BWS Financials (all $’s in millions except EPS) Q3 06 Q3 05 % Chg. Famous Footwear Sales $366.3 $328.1 + 11.6% Operating Profit $39.6 $26.2 + 51.1% Wholesale Sales $242.3 $226.5 + 6.9% Operating Profit $20.0 $19.2 + 4.2% Adj. Op. Profit* $22.3 $19.2 + 16.1% *Adjusted to exclude costs assoc
Slide 9: Fourth Quarter 2006 & Full Year Guidance
Fourth Quarter 2006 & Full Year Guidance Fourth Quarter 2006: GAAP $0.48 to $0.53 Adjusted $0.65 to $0.70 Full Year 2006: GAAP $2.28 to $2.33 Adjusted $2.38 to $2.43 9
Slide 10: Brown Shoe 2006 YTD Performance
Brown Shoe 2006 YTD Performance 2006 Priorities and Growth Drivers Success Metrics 1) Increased traction at Famous Footwear 1) Comp-store sales for Year-to-Date were up 3.5% § Comp-store sales planned at 2%-3% and Operating Profit increased 29.6% 2) Potential of new Wholesale "sell-through" business
Slide 11: Shaping our Platform for Growth
Shaping our Platform for Growth Sales and Operating Operating Margin Department Store Earnings Improvement at Market Share Improvement for Famous Footwear Improvement at BWS (millions $) Wholesale* 12.5% 2,500 120 Sales Operating 7.0% Earnings 100 10.0% 2,000 6.0% 5.0% 80 7.5% 1,500 4.0% 12.2% 60 7.
Slide 12: Brown Shoe Vision
Brown Shoe Vision: Brown Shoe Company is THE leading footwear marketer, winning loyal customers with compelling brands 12
Slide 13: Brown Shoe Pillars
Brown Shoe Pillars Growth 2 Great Brown Shoe is THE leading footwear marketer winning loyal customers with compelling brands Enabling Strategies Growth Strategies Partnership Operational Portfolio Brand Model Excellence Optimization Power Partnership Consumer Platform Market Initiatives Driven Optim
Slide 14: Brown Shoe Vision
Brown Shoe Vision „ Partnership Model „ Continue path towards being a world-class partner holistically in the industry: Vendor, Supplier, Customer, Consumer, Real Estate, Investor „ Operational Excellence „ Disciplined approach to profitability enhancement, efficiency and effectiveness „ Portfolio O
Slide 15: Brand Power
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 1. Developed Brown Brand Building Model 2. Developing premier product and design capabilities New York Design Studio 3. Making investments in marketing, research and talent 4. Refining Consumer-Driven Model: S
Slide 16: Brands targeting key consumer segments
Brands targeting key consumer segments… BWS Consumer Brown Shoe Style Profile Segment Needs Buying Power Brands (% Total female spend) Explorer Seeks expressive, Sexy, eye-catching, youthful brands. styles that she can Wants to experiment wear with 16% with fashion at an everything from affordable p
Slide 17: Brand Power
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 1. • Sell-through model; Fresh trend-right product • Extended brand essence to new categories and consumer touchpoints • Tightly-targeted consumer communications • Improved product delivered when she wants to
Slide 18: Brand Power: Brown New York
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 2. Brown New York • Allows us to play in new zones reaching new consumers • Strong emotional connection with consumer • Fashion/Style Credibility/Talent • Brand extension potential • Brown New York Transition
Slide 19: Brand Power
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 3. • High brand recognition and strong equity • 97% brand awareness driven insole TV and print advertising • Partnerships with Wal-Mart and Schering-Plough • Extend asset into new categories and channels • Gro
Slide 20: Brand Power: Direct-to-Consumer
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 4. Direct-to-Consumer • pure play • Branded web sites and multi-channel opportunities • Growth by winning in new and emerging markets $6.3 $5.5 $4.8 $4.2 $3.7 $3.2 $ Billions Online Footwear: Projected to $2.8
Slide 21: Brand Power: Creating Differentiation
Brand Power „ Building differentiated, market-leading brands driven by consumer preference 5. Ø Creating Differentiation is key Ø Technology/redefining service 21
Slide 22: Brown Shoe Pillars
Brown Shoe Pillars Growth 2 Great Brown Shoe is THE leading footwear marketer winning loyal customers with compelling brands Enabling Strategies Growth Strategies Partnership Operational Portfolio Brand Model Excellence Optimization Power Partnership Consumer Platform Market Initiatives Driven Optim
Slide 23: Share Price: Positioning for Growth
Positioning for Growth Growth • Growing portfolio • Bennett acquisition Increasing • Earnings Enhancement Plan Prospects for Profitability Improving • Focus on best brands and market opportunities Core • Consumer-Driven Rebuild Competencies • Wholesale Model Integrated, efficient business model • St
Slide 24: Appendix
Appendix THE LEADER IN FOOTWEARS BROWN SHOE 24
Slide 25: Sales and EPS – 2001 to Estimated 2006
Sales and EPS – 2001 to Estimated 2006* Sales in Billions Earnings Per Share $2.5 $2.38 – $2.5 Billion $2.50 $2.43* $2.22 $2.28 – $2.33 $2.0 $2.00 $1.70 $1.64 $1.66 Adjusted EPS $1.5 $1.50 $1.53 GAAP EPS $1.45 $1.0 $1.00 $0.5 $0.50 -$0.20 $0.0 $0.00 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004
Slide 26: Distinct Wholesale Portfolio - Projected for 2006
Distinct Wholesale Portfolio - Projected for 2006 26
Slide 27: Famous Footwear -- Sales by category
Famous Footwear -- Sales by category Based on 12 months ended January 2006 Accessories 4% 4% 5% 5% Athletic 9% 9% Kid’s 29% 29% 17% 17% Women’s Men’s Athletic 15% 15% Athletic 21% 21% 27
Slide 28: Strategic Earnings Enhancement Plan
Strategic Earnings Enhancement Plan Estimated ranges for costs and benefits were as follows: § In 2006, benefits related to the strategic initiatives are expected to be minor with after-tax implementation costs estimated at $5 million; § In 2007, after-tax benefits are estimated to be $10 million to
Slide 29: Debt to Capital Ratio
Debt to Capital Ratio (Millions of dollars, except for Debt to Capital Ratio) Debt to Capital Ratio Oct-06 2005 2004 2003 2002 2001 Total Debt Obligations* $ 171 $ 200 $ 142 $ 120 $ 152 $ 216 Total Shareholders' Equity 500 434 391 350 292 253 Total Capital $ 671 $ 634 $ 533 $ 470 $ 444 $ 469 Debt to
Slide 30: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: Nine Months
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 1st Nine Months 2006 v. 1st Nine Months 2005 Nine Months 2006* Nine Months 2005 Per diluted Per diluted After-tax $ share After-tax $ share Net earnings $52,129 $1.80 $27,634 $0.97 Strategic initiatives costs 1,231 0.04 Insurance recoveri
Slide 31: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 2004–2006
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 2004 – 2006 Estimated** * 2006 Estimated Range Low - High 2005 2004 Net Net Net (in millions, except EPS data) Earnings EPS Earnings EPS Earnings EPS GAAP Results $ 66.2 - 67.7 $ 2.28 - 2.33 $ 41.0 $ 1.45 $ 43.3 $ 1.53 Special Charges and