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14th Annual ICR XChange Conference 2012

Jill Dean, President and Chief Merchandising Officer


Jim Bell, Senior Vice President and Chief Financial Officer

SAFE HARBOR
The following information contains forward-looking statements, including statements regarding our
plans to revitalize our product appeal and improve our financial performance. These forward-looking
statements are based on Managements current expectations and beliefs, as well as a number of
assumptions, estimates and projections concerning future events. These statements are subject to
risks, uncertainties, assumptions and other important factors, many of which are outside
Managements control, that could cause actual results to differ materially from the results discussed
in the forward-looking statements. You are cautioned to review the risks identified in our SEC
reports and not to put undue reliance on such forward-looking statements because actual results
may vary materially from those expressed or implied.
All forward-looking statements are based on information available to Management on this date, and
Coldwater Creek Inc. assumes no obligation to, and expressly disclaims any obligation to, update or
revise any forward-looking statements, whether as a result of new information, future events or
otherwise. We operate on a fiscal calendar widely used in the retail industry that results in a given
fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of
the following year. For example, references to fiscal 2010 refer to the fiscal year ended January
29, 2011.

PREMIUM MULTI-CHANNEL SPECIALTY RETAILER


Coldwater
Coldwater Creek
Creek Today
Today

Coldwater Creek is
committed to
creating a unique
and personal brand
experience that
reflects the multiple
facets of our
customers lifestyle,
recognizes her
individuality, and
delights her with
meaning and
inspiration.

Retail

E-Commerce

77% of total sales in Q3


21% of total sales in Q3
2011
2011
414 locations (1)
Best in class performance
366 Premium
39 Outlets

www.coldwatercreek.com

9 Day Spas

Catalog
LTM Q3 2011 circulation
of 65 million
Key traffic driver for
stores and e-commerce

OUR CUSTOMER
Typically between the ages of 45-65
Her average household income
exceeds $75,000
She is college educated
She sees age as an attitude, not a
number
She loves print, pattern and color
in her wardrobe
She is looking for fits that flatter
and styles that are age appropriate

OUR HISTORY
Historical
Historical Timeline
Timeline

Successful store
growth period
1999
Opened first
premium retail stores

2000

2006
Reached $1 billion in
sales and $520 in SSF

Product offering lost


focus
2009
Business outgrew
direct model
infrastructure

2010
2011
Hired new management
team to execute
turnaround

Premium
Premium Store
Store Sales
Sales Per
Per Square
Square Foot
Foot
$600

$516

$520

$456

$400

$350

$336

$303

FY2008

FY 2009

FY 2010

$200
$FY 2005

FY 2006

FY 2007

Note: Our fiscal year ends on the Saturday closest to January 31 of the following year.

ROADMAP TO A TURNAROUND
Phase 1

Phase 2

Phase 3

Implemented inventory
management
disciplines

Revitalize product
appeal

Leverage supply
chain efficiencies

Begin to implement
new merchandising
direction

Begin to roll out store


optimization program

Restore the brand


image

Improve financial
performance

Expand implementation
of Made For Outlet
product strategy
Evaluate opportunity
to grow outlet store
base
Reevaluate smaller
market growth
opportunity

2011

2012

2013 & Beyond

Revitalizing the Product


Jill Dean, President and Chief Merchandising Officer

STRATEGIC ASSORTMENT ARCHITECTURE

Broaden Customer Appeal

Create collections with lifestyle focus

Offer the appropriate balance of fashion


and novelty

Build penetration of opening price


points

Increase seasonal investment in color,


print and pattern

Grow dresses, skirts, outerwear, and


accessories categories

BALANCE CATEGORY
INVESTMENTS
Reduce Assortment Volatility

Maximize top 30 styles and proven


winners

Invest in franchise fabrications and


yarns

Consistently offer fashion essentials


that are updated every season

Develop and execute against a rigorous


testing process

Maintain open to buy and ability to


chase

INVENTORY PRODUCTIVITY

Increase Inventory Turnover

Plan and execute to a higher regular


priced sell through

Reduce inventory depth

Narrow size offering in store

Increase freshness by adding mini


flows

Full time in-store sale section to


improve inventory turnover

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CROSS CHANNEL MERCHANDISING

Align brand-right messaging


across channels

Seasonal marketing campaigns

Major merchandise promotions


focused on the Top 30 styles

Consistent execution of
compelling outfits with focus on
the target customer

Enhanced shopping experience


both in store and online

Improved navigation through


merchandising by lifestyle

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BUILD SUPPLY CHAIN CAPABILITY


Reduce Unit Cost and Shorten Lead Times

Grow direct sourcing penetration

Broaden vendor and country of origin base, reduce dependency on China

Improve speed to market and reduce cycle time

Design & develop into franchise fabrications & yarns, projected over multiple seasons

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Financial Highlights
Jim Bell, Chief Financial Officer

KEY FINANCIAL INITIATIVES


Change Financial Architecture
to Improve Performance
Drive Gross Margin
Expansion
Improve Cash Flow
Leverage Our Current Cost
Model
Optimize Store Fleet

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INITIATIVES TO DRIVE GROSS


MARGIN EXPANSION

Restore gross margins via leaner inventory buys and higher regular price sell through

Mitigate costs and reduce sourcing cycle time by refining supply chain strategies

Deliver refined promotional and markdown strategy

Leverage realized reduction in occupancy and buying expenses

48.2%

GROSS MARGIN

44.6%
39.1%

42.6%

34.2%

36.9%

32.2%

31.3%
27.1%

31.3%
25.6%
20.0%
FY 2006

FY 2007

FY2008

FY 2009

FY 2010

LTM Q3 2011

Note: Our fiscal year ends on the Saturday closest to January 31 of the following year.

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INVENTORY MANAGEMENT STRATEGY

Strategy for more frequent product flows and a renewed focus on product lifecycles
and seasonal timelines

Maintain open-to-buy positions and fill with trending categories

Maintain permanent sales section to speed inventory turn

Better buying = better inventory turns = better cash flow

INVENTORY TURNS
6.0
5.0

4.7

4.7

4.8

4.6
3.9

4.0

Goal to increase inventory turns


to approach 5x per year.

3.0
2.0
FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

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HIGHLY LEVERAGABLE MODEL

Removed approximately $125 million of SG&A from model from FY 2007 to LTM Q3
2011

Expect to reduce expenses an additional $5-10 million in Q4 2011

Highly leveragable expense structure provides significant opportunity for sales


flow through to earnings with modest top line growth

TOTAL OPERATING EXPENSES


($ in millions)

$500.0

$460.9

2007
2
2007 010 Sales
C
2010
SG&A AGR: (5.2
%
CAGR
: (8.7 )
%)

50.0%

$450.0
$400.0
$350.0
$300.0

$396.8

$387.1
40.0%

$336.5
$373.5

$350.7

38.7%

36.7%

36.0%

35.7%

FY 2009

FY 2010

45.0%
40.0%

42.0%

$250.0

$124.4M
reduction
in SG&A

35.0%
30.0%

FY 2006

FY 2007

FY2008

OperatingExpenses

LTM Q3 2011

%toSales

Note: Our fiscal year ends on the Saturday closest to January 31 of the following year.

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OPTIMIZE STORE FLEET

Young retail fleet average age


is approximately 6 years

Current Store Locations


9

Opportunistically relocate and/or


remodel to optimize store size

3
8

Close ~10% or 35-45


underperforming stores in the next
two years

4
40

Store optimization program is


expected to yield approx $8M - $12M
increase in pre-tax income

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12
17

5
20

11
11
3

11
12

10
4

2
8
15

2
7

7
2

35

16
9
3

3
9

1
3

2
2

11
2
3

14

4
28

110 stores
1120 stores
2130 stores
30+ stores

2011
5 new stores / close 15 stores

2012
Close 15 stores

2013 & Beyond


Close up to 15 stores
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Q4 2011 OUTLOOK

Premium retail comparable sales


declined 9% for November and
December
Gross margin to improve 200 to 400
basis points
Net loss per share of $0.18 to $0.24
Inventory to be down high teens

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COMPANY HIGHLIGHTS
New talent in place with extensive industry
experience to execute revitalized merchandising
strategy
Proven multi-channel distribution model
Significant margin expansion opportunity as a result
of highly leveragable infrastructure
Significant investments made in people, processes
and systems designed to drive future sales growth
and margin improvement
High brand awareness developed through long history
of great product and stellar customer service
Exceptionally loyal and distinguished customer
base
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