Attached files
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| EX-99.1 - PRESS RELEASE DATED SEPT. 12, 2011 - CHARMING SHOPPES INC | exh99-1sept12_2011.htm |
| 8-K - FORM 8-K DATED SEPT. 12, 2011 - CHARMING SHOPPES INC | form8ksept12_2011.htm |
EXHIBIT 99.2
September 14, 2011
Anthony M. Romano
President
President
Anthony M. Romano
President
President
and Chief Executive Officer
and Chief Executive Officer
Eric M. Specter
Executive Vice President
Executive Vice President
Eric M. Specter
Executive Vice President
Executive Vice President
and Chief Financial Officer
and Chief Financial Officer
2
Forward Looking Statements
The Company’s presentation may contain certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 concerning the Company's operations, performance, and financial condition. Such forward-
looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from
those indicated. Such risks and uncertainties may include, but are not limited to: the failure to successfully execute our
business plans could result in lower than planned sales and profitability, the failure to realize the benefits from the
operation of our credit card program by our third-party provider, the impact of changes in laws and regulations governing
credit cards could limit the availability of, or increase the cost of, credit to our customers, the failure to enhance the
Company's merchandise and marketing and accurately predict fashion trends, customer preferences and other fashion-
related factors, the failure of growth in the women's plus apparel market, the failure to continue receiving financing at an
affordable cost through the availability of credit we receive from our bankers, suppliers and their agents, the failure to
effectively implement our planned store closing plans, the failure to continue receiving accurate and compliant e-commerce
and third-party processing services, the failure to achieve improvement in the Company's competitive position, the failure
to maintain efficient and uninterrupted order-taking and fulfillment in our e-commerce and direct-to-consumer businesses,
extreme or unseasonable weather conditions, economic downturns, escalation of energy and transportation costs, adverse
changes in the costs or availability of fabrics and raw materials, a weakness in overall consumer demand, the failure to find
suitable store locations, increases in wage rates, the ability to hire and train associates, trade and security restrictions and
political or financial instability in countries where goods are manufactured, the failure of our vendors to deliver quality and
timely shipments in compliance with applicable laws and regulations, the interruption of merchandise flow from the
Company's centralized distribution facilities and third-party distribution providers, inadequate systems capacity, inability to
protect trademarks or other intellectual property, competitive pressures, and the adverse effects of natural disasters, war,
acts of terrorism or threats of either, or other armed conflict, on the United States and international economies. These, and
other risks and uncertainties, are detailed in the Company's filings with the Securities and Exchange Commission, including
the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Company filings with the Securities
and Exchange Commission. Charming Shoppes assumes no duty to update or revise its forward-looking statements even if
experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
Litigation Reform Act of 1995 concerning the Company's operations, performance, and financial condition. Such forward-
looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from
those indicated. Such risks and uncertainties may include, but are not limited to: the failure to successfully execute our
business plans could result in lower than planned sales and profitability, the failure to realize the benefits from the
operation of our credit card program by our third-party provider, the impact of changes in laws and regulations governing
credit cards could limit the availability of, or increase the cost of, credit to our customers, the failure to enhance the
Company's merchandise and marketing and accurately predict fashion trends, customer preferences and other fashion-
related factors, the failure of growth in the women's plus apparel market, the failure to continue receiving financing at an
affordable cost through the availability of credit we receive from our bankers, suppliers and their agents, the failure to
effectively implement our planned store closing plans, the failure to continue receiving accurate and compliant e-commerce
and third-party processing services, the failure to achieve improvement in the Company's competitive position, the failure
to maintain efficient and uninterrupted order-taking and fulfillment in our e-commerce and direct-to-consumer businesses,
extreme or unseasonable weather conditions, economic downturns, escalation of energy and transportation costs, adverse
changes in the costs or availability of fabrics and raw materials, a weakness in overall consumer demand, the failure to find
suitable store locations, increases in wage rates, the ability to hire and train associates, trade and security restrictions and
political or financial instability in countries where goods are manufactured, the failure of our vendors to deliver quality and
timely shipments in compliance with applicable laws and regulations, the interruption of merchandise flow from the
Company's centralized distribution facilities and third-party distribution providers, inadequate systems capacity, inability to
protect trademarks or other intellectual property, competitive pressures, and the adverse effects of natural disasters, war,
acts of terrorism or threats of either, or other armed conflict, on the United States and international economies. These, and
other risks and uncertainties, are detailed in the Company's filings with the Securities and Exchange Commission, including
the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Company filings with the Securities
and Exchange Commission. Charming Shoppes assumes no duty to update or revise its forward-looking statements even if
experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
3
Through our brands Lane Bryant, Cacique, Catherines and Fashion
Bug, Charming Shoppes offers fashion, fit and value in women’s
plus-size apparel, as well as shoes, accessories and jewelry to
provide a “head-to-toe” shopping solution for women
Bug, Charming Shoppes offers fashion, fit and value in women’s
plus-size apparel, as well as shoes, accessories and jewelry to
provide a “head-to-toe” shopping solution for women
Our Market And Leadership Positions
• We are the largest women’s
specialty plus-size apparel
retailer in the U.S.* with $2.0
billion in annual sales
specialty plus-size apparel
retailer in the U.S.* with $2.0
billion in annual sales
• More than half of American
women wear size 14 or larger
women wear size 14 or larger
• Charming Shoppes ranks #2*
in the United States in the
women’s plus-size apparel
market, a $17.4B* market
in the United States in the
women’s plus-size apparel
market, a $17.4B* market
• Lane Bryant’s Cacique brand
ranks #3* in the United States
in the women’s plus size
intimate apparel market, a
$3.2B* market
ranks #3* in the United States
in the women’s plus size
intimate apparel market, a
$3.2B* market
•According to The NPD Group, Inc., a leading provider of global market information, during the twelve month period ended July 2011.
5
Our Continuing Progress
• Our customer has favorably received our
product offerings with improved full price
selling, higher conversion rates and
average unit retail prices
product offerings with improved full price
selling, higher conversion rates and
average unit retail prices
• Inventories are in a much cleaner position,
are more productive, and are consistently
delivering improvements in the gross
margin
are more productive, and are consistently
delivering improvements in the gross
margin
• Notwithstanding the expense reductions
related to closed stores, expenses have
decreased and leveraged on modest comp
store sales increases
related to closed stores, expenses have
decreased and leveraged on modest comp
store sales increases
• We are generating strong free cash flow,
and are in a net cash position
and are in a net cash position
• Our first half Adjusted EBITDA has already
exceeded last year’s results
exceeded last year’s results
• Distorting resources to our
higher margining Lane
Bryant and Cacique brands
higher margining Lane
Bryant and Cacique brands
• We will continue to
capitalize on Lane Bryant’s
and Cacique’s strong
brand and market
positions to accelerate
sales and operating results
capitalize on Lane Bryant’s
and Cacique’s strong
brand and market
positions to accelerate
sales and operating results
Distorting Our Resources To Lane Bryant
7
Cacique Intimates
>Strengthening Merchandise
Offerings
Offerings
> Fit, fashion and comfort
> Elevated colors, prints and
patterns
patterns
> Novelty core / fashion
> Upgraded talent in design,
product development and
merchandising
product development and
merchandising
8
T3 - Tighter Tummy Technology
• This month, Lane Bryant
launched its
“Technology Just Got
Sexy” campaign,
including our
revolutionary “Tighter
Tummy Technology” line
of trousers and jeans
launched its
“Technology Just Got
Sexy” campaign,
including our
revolutionary “Tighter
Tummy Technology” line
of trousers and jeans
9
Migrating Mall Locations To Lifestyle Centers
> Compelling store
economics
economics
> $250K average investment
> Drives sales increase
> Reduction in occupancy
costs
costs
> Higher EBITDA %
10
We continually test and implement digital technology
and customer service enhancements in order to
further drive sales growth
and customer service enhancements in order to
further drive sales growth
Growth in Digital Sales
11
Historical Profitability
Significant Progress Made During 1st Half 2011
*Refer to GAAP to non-GAAP reconciliation at http://www.charmingshoppes.com/investors/manage/index.asp
12
Financial Review - 1st Half 2011
|
($ in millions, except EPS)
|
1st Half 2011
|
1st Half 2010
|
|
Net Sales
|
$1,003.6
|
$1,002.4
|
|
Same Store Sales
|
+1%
|
-1%
|
|
Gross Profit
|
$531.2
|
$525.7
|
|
Gross Margin
|
52.9%
|
51.4%
|
|
Total Operating Expenses*
|
$501.0
|
$524.0
|
|
Expense to Sales
|
49.9%
|
51.3%
|
|
Adjusted EBITDA*
|
$59.1
|
$35.5
|
|
EBITDA to Sales
|
5.9%
|
3.5%
|
|
GAAP income (loss) per diluted share
|
$0.20
|
$(0.04)
|
|
Non-GAAP income (loss) per diluted share*
|
$0.16
|
$(0.04)
|
|
Cash
|
$227.4
|
$210.0
|
|
Net Cash
|
$63.3
|
$42.4
|
*Refer to GAAP to non-GAAP reconciliation at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioarchives
13
>We continued to strengthen our balance sheet and
generated $47 million in cash during the second quarter
and $110 million during the first half
generated $47 million in cash during the second quarter
and $110 million during the first half
>Ended the period with total cash of $227 million, and
net cash of $63 million
net cash of $63 million
>Liquidity of $392 million, including $165 million
available on our fully committed and undrawn revolving
line of credit
available on our fully committed and undrawn revolving
line of credit
Balance Sheet and Liquidity at July 30, 2011
14
>Long-term debt
– Principally $140.5 million of 1.125% senior convertible
notes due 2014
notes due 2014
– Over the past two years, we have repurchased $134.5
million (principal amount) at an average 34% discount
million (principal amount) at an average 34% discount
>We renewed a $200 million senior secured revolving
credit facility with a five-year maturity on more
favorable terms
credit facility with a five-year maturity on more
favorable terms
Balance Sheet and Liquidity at July 30, 2011
15
• 1,953 stores at July 30, 2011
• Capital for store growth being distorted to Lane Bryant
– 5-7 new, and 10-13 relocations for Lane Bryant and Lane
Bryant Outlet locations
Bryant Outlet locations
– Continue to migrate from unprofitable malls to lifestyle
strip centers
strip centers
• Eliminating negative EBITDA stores
– Generated $6 million in negative EBITDA in 2010
– 240 stores closing in 2011 (114 closed as of 7/30/11)
Stores
16
Summary
• Leading market share in women’s plus-size specialty apparel
• Strong brand recognition in an under-served and growing
market
market
• Uptrending 1st Half 2011 performance
• Consistent, significant liquidity
• Continue to build Lane Bryant into a high performing brand
• Consistent, improving performance will be the measure of our
success
success
• We remain committed to:
– Intensifying brand focus on each primary target customer
– Improving profitability at both the corporate and brand level
– Increasing inventory productivity
– Building a winning corporate culture by attracting and retaining key
talent
talent
17
T3 - The Commercial
18
September 14, 2011
Financial Review - 2nd Quarter 2011
|
($ in millions, except EPS)
|
2nd Quarter 2011
|
2nd Quarter
2010 |
|
Net Sales
|
$499.2
|
$517.6
|
|
Same Store Sales
|
+1%
|
+1%
|
|
Gross Profit
|
$245.9
|
$249.1
|
|
Gross Margin
|
49.3%
|
48.1%
|
|
Total Operating Expenses*
|
$241.9
|
$255.8
|
|
Expense to Sales
|
48.5%
|
49.4%
|
|
Adjusted EBITDA*
|
$18.5
|
$10.3
|
|
EBITDA to Sales
|
3.7%
|
2.0%
|
|
GAAP (loss) per diluted share
|
$(0.02)
|
$(0.07)
|
|
Non-GAAP (loss) per diluted share*
|
$(0.01)
|
$(0.09)
|
|
Cash
|
$227.4
|
$210.0
|
|
Net Cash
|
$63.3
|
$42.4
|
*Refer to GAAP to non-GAAP reconciliation at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioarchives
21
Financial Review - Fiscal Year 2010
|
($ in millions, except EPS)
|
2010
|
2009
|
|
Net Sales
|
$2,061.8
|
$2,064.6
|
|
Same Store Sales
|
+3%
|
-13%
|
|
Gross Profit
|
$1,015.0
|
$1,023.6
|
|
Gross Margin
|
49.2%
|
49.6%
|
|
Total Operating Expenses*
|
$1,033.2
|
$1,049.5
|
|
Expense to Sales
|
50.1%
|
50.8%
|
|
Adjusted EBITDA*
|
$50.2
|
$50.5
|
|
EBITDA to Sales
|
2.4%
|
2.4%
|
|
GAAP (loss) per diluted share
|
$(0.47)
|
$(0.67)
|
|
Non-GAAP (loss) per diluted share*
|
$(0.26)
|
$(0.52)
|
|
Cash
|
$117.5
|
$186.6
|
|
Net (Debt)
|
$(47.0)
|
$(33.3)
|
*Refer to GAAP to non-GAAP reconciliation at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioarchives
22
www.lanebryant.com
She is 35-55 years old
She is a woman of many
lifestyles - work, casual, active
lifestyles - work, casual, active
Likes to experiment with fashion
She shops frequently and likes
to buy clothes with good quality
at a reasonable price
to buy clothes with good quality
at a reasonable price
She is brand-conscious and
prefers retailers that offer
fashionable choices
prefers retailers that offer
fashionable choices
23
www.cacique.com
Known for solutions, fit,
quality, fashion and style
quality, fashion and style
Represents 31% of sales
from the full-line
Lane Bryant chain
from the full-line
Lane Bryant chain
Offers key intimates
categories and
complementary products
categories and
complementary products
Introducing caciquebody
24
www.catherines.com
She’s our baby-boomer, 45+
years old
years old
Classic styling with an
emphasis on fit and comfort
emphasis on fit and comfort
Offering styling for the woman
wearing extended sizes
wearing extended sizes
She prefers clothing that is
more appropriate for her age -
she does not want to dress
“younger” than she is
more appropriate for her age -
she does not want to dress
“younger” than she is
Likes to look “put together”
25
She is 30-50 years old
She is value-minded
Loves the challenge of finding
a great deal with coupons and
store promotions that are easy
to understand
a great deal with coupons and
store promotions that are easy
to understand
Likes to shop for complete
outfits
outfits
www.fashionbug.com
26
www.loop18.com
27
Loop 18 is the ultimate fashion brand
for the trendy-savvy, value-minded
American woman
for the trendy-savvy, value-minded
American woman
Developed exclusively for
junior plus sizes 13-27
junior plus sizes 13-27
Competes with the most successful
fast fashion brands
fast fashion brands
Targeted to the 18-30 year old
woman who is confident in her
personal style and her physical
appearance
woman who is confident in her
personal style and her physical
appearance
Styles will be all fashion with a focus
on tops and dresses
on tops and dresses
September 14, 2011
September 14, 2011