Final=combined analyst presentation
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WELCOME TO CHICO’S FAS 2014 ANALYST EVENT
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Safe Harbor Statement
Our discussion this morning includes forward-looking statements which are subject to andprotected by the Safe Harbor statement. Theseforward looking statements are subject to a numberof factors and uncertainties that could cause actualresults to differ materially. The company does notundertake to publicly update or revise its forward-looking statements, even if experience or futurechanges make it clear that projected results,expressed, or implied by such statements, will notbe realized.
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Chico’s FAS Management
• Dave Dyer, CEO
• Cinny Murray, Chico’s Brand President
• Donna Noce, White House | Black Market’s Brand President
• Todd Vogensen, CFO
• Jeff Gaul, SVP Real Estate
• Bill Bine, VP International Operations
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Agenda
• Prepared Remarks
– Dave Dyer, Cinny Murray, Donna Noce, Todd Vogensen
• Opportunity for Q&A
• Depart for Yorkdale WH|BM
– Refreshment station / Boxed lunch
• Yorkdale WH|BM tour
• Jeff Gaul presents on bus ride from Yorkdale to Square One
• Square One Chico’s tour
• Depart for Airport
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Chico’s FASWell Positioned for Long-term
• Loyal Customer Base
• Omni-channel Capabilities
• Merchandise Extensions
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Analyst Meeting
September 2014
Dave Dyer, CEO
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Chico’s FAS is a cultivator of brands serving the lifestyle needs of fashion-savvy women
35 years and older.
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Chico’s FAS
FY 2014 YTD Financial Performance
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Chico’s FAS – Omni-channel
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Phases of Omni-channel Investment
1. Infrastructure
2. Store Technology
3. Customer Engagement
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Infrastructure
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Infrastructure
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Store Technology
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Store TechnologyCash Wrap Point of Sale
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Store TechnologyiPad – Customer Book Application
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Store TechnologyTech Table
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Store TechnologyDigital Signage
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Customer Engagement
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Customer Engagement
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Customer Engagement
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Customer Engagement
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Customer Engagement
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Analyst Meeting
September 2014
Cinny Murray
Chico’s Brand PresidentAs of: 9/12/2014 1:29 PM
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Opening
1
Good morning:
Today I am going to cover 3 key points:
1. Update on our business YTD.
2. Share my thoughts on the changing landscape for an apparel shopper.
3. Growth plans for the Chico's Brand.
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Our Mission
Chico's celebrates women who love to express
their unique style, and inspires them to feel
confident and beautiful through exceptional
personal service and expert style advice.
2
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Our Business2014 Results:
• Flat comp
• Profitable business model that
generates strong cash flow
• Customer browse space shifted
• Future Growth Strategies
Product launches
Coordinated future touch points
between digital, stores and
tablets
International
3
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New Category: Retreat
• Extension to Zenergy
franchise
• Spring 2014 launched 229
stores
• Fall 2014 in 478 stores
• Addresses customer
lifestyle shift
4
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New Category: Shoes
• Online initiative
• Testing in 25 boutiques
Fall 2014
• Future growth from
iPad selling
5
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New Category: Golf
• Extension to Zenergy
franchise
• 400 stores
• Completed first
tournament
sponsorship, Patty Berg
Memorial
• Leverage TV for new
customer acquisition
6
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New Category: Swim
• Online initiative
• Swim – 80%
• Cover-ups – 20%
• Future growth from
iPad selling
7
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New Category: Petites
• Online initiative
• Offered in 18% of
missy styles
• Strength is in bottoms
• Testing in Canada
8
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New Category: The Knit Kit
• Introduced in all
boutiques Spring 2014
• Addressed options for
working customers
• Will be expanded in
Spring 2015
9
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What’s Working: Pants
• Growing “So Slimming”
Franchise
• Expanded to “So
Lifting”, currently in
both pants and denim
• Two TV spots for 2014
Legging
Knit pants
10
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Our Marketing - Pants
11
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Our Marketing - Leggings
Needs Update
12
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What’s Working: Woven Tops
• Strongest
Spring business
• Double-digit
comp
• Driven by
Basics
Fashion
13
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What’s Working: Knit Tops
• Strong Spring 2014
business
• Drove mid-single digit
comp
• Working
Prints
Fashion
Updated basics
14
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Key Initiative For Fall: Jackets
• Focus: Fall 2014 Statement
Jackets
Pieced
Duster
Vests
15
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Our Marketing – Statement Jackets
Needs Update
16
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Key Initiative For Fall: Sweaters
• Key category for Fall
• Focus
Novelty
Fashion
Gift giving
17
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18
Chico’s Customer Performance
• Customer file is at an all time high
• Growth is being generated in all customer segments
– Existing customers high-single digit
– Reactivated high-single digit
– New mid-single digit
• Chico’s customers remain the most loyal and engaged in the industry
– Retention rate industry leading
– Outside research results showed we are an industry leader
• Coordinated efforts between selling channels and iPad to strengthen
customer relationships and drive sales
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Our Marketing• 360 approach
• Customer strategy
Targeted and customized
communication
Data and analytics play a
major role
Increase digital/social
investment
Expand brand awareness
though TV, which now
includes Hispanic and golf
Strengthen lifestyle
connection through travel
Established initiatives to
increase outreach and
localization efforts
Direct Mail
Advertising
Social
Public Relations
Events/ Launches
Customer Referrals
Outreach
19
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Our Operational Focus: iPad• Convert paper customer books to digital format
• Drive incremental appointment sales and ADS by expanding
associates visibility of customer’s category of loyalty
• Drive incremental volume by introducing the full breadth of assortment
on Chicos.com
• Utilize Chicos.com to personalize the sale through use of web features
such as ratings and reviews, product videos and on-figure photos
• Utilize Gmail to build customer relationships and support
personalization
20
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Our Operational Focus: iPad
21
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International: Mexico
Screen Shot
23
Store Details:
2 stores
6 shop in shops
Mexico City and
Villahermosa
New store design
22
Shop in Shop
Boutique
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International: Ontario
Store Openings:
Square One: August 22
Upper Canada: August 26
Mapleview: August 29
Launch Outlets: March 2015
23
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Closing
24
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Inspires women to embrace femininity as a source of strength
Analyst MeetingSeptember 2014Donna Noce, WH|BM Brand President
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WH|BM Brand GrowthWH|BM Sales have grown at a 4 year compound annual growth rate (CAGR) of 13%, driven by strong growth across all channels (Comp Sales CAGR +7%)
Growth has been fueled by 3 primary levers:
1) Comp store growth through new business franchises: Workkit (2012), Instantly Slimming (2013), Perfect Form (2013)
2) Omni channel growth fueled through new customer acquisition and online exclusives
3) Store Openings (131 total: 93 Frontline, 38 Outlet)
$591M
$697M
$811M
$859M
400
450
500
550
600
650
700
750
800
850
900
2010 2011 2012 2013
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2014 & BeyondWH|BM continues to focus on growth as we move into the Fall season
2014 YTD Performance Recap:
WHBM comps have been pressured, but improved Q1 into Q2
Re-launch of Loyalty program has been well received by our customer; wins include migration into top tier, retention rates holding steady, and improved new customer assimilation
Customer file is at an all time high and retention and reactivation rates have been increasing
Brand Goals:
Attract new customers through expanded lifestyle offerings and relevant marketing and promotional cadence
Retain loyal customers and increase the share of wallet
Focus on the Omni customer experience
International growth
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Merchandise Initiatives
Merchandise focus will be on a more diversified price architecture, continued expansion of lifestyle, and
innovative franchises
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Diversifying Price Architecture
Lux Price Point is our highest price point focused on delivering couture / aspirational collections
Best Price Point delivers couture like details at our historic price point
Better Price Point is our mid tier price point focused on delivering unique details at a great value
Good Price Point is our entry price point focused on delivering key foundational categories at
an amazing value
Lux
Best
Better
Good
Our expanding breadth of lifestyle has allowed us to reach a broader customer base leading to a more diversified price architecture
Spring 2014 was underpenetrated in the entry and mid tier price points.
The brand is positioned with a balanced mix of good, better, best and lux
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Lifestyle Evolution2010 2011 2012 2013 2014
Occasion
Destination• Polished
Casual
• Sportswear Introduction
Launch of WorkKit
Introduction of Proprietary Franchises:
• Perfect Form
• Instantly Slimming
Expand Portfolio of Brand Franchises:
• St Honore Denim
• Iconic Collection
• Genius Dress
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Lifestyle EvolutionWHBM has migrated from an occasion destination in 2010 to a multi-channel, multi faceted, international lifestyle brand
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Workkit Launched in 2012
Diversified product assortment that is relevant from the classroom to the boardroom
Now the most recognized brand franchise
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New Dresses Omni channel effort to gain market share and become the go to destination for dresses
Online exclusives offer her 65% more options from casual to formal occasion
Diversified the assortment with range of price points and lifestyle options
Innovative Technology (Genius & Instantly Slimming)
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New Dresses
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St Honore - Denim Launched the new franchise in Spring 2014
Highly successful launch and continuing success into Fall
New fabrics, washes, and details
Expanded fashion silhouettes
Diverse price architecture starting at $78
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Iconic Collection Launched Fall 2014
Strong branding franchises
Both categories showing strong positive comp growth
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Iconic Collection Video
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Iconic Collection Video
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Legging Studio Fall 2014 Campaign
Reinforces the breadth of lifestyle and captures the “long over lean” trend of the fall season
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Leggings Studio Video
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Outerwear Fashion inner/outerwear assortment
Range of lifestyles and price points
New & Growing business
Category builds into Q4
Expanded in line assortment
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Shoes & Accessories Elevating the details and quality
Focused on collections that complete the outfit
Fall investment in expanded boot assortment
Online exclusives
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Petites Launched small assortment of work in Spring 2013
2014 expanded the offering to 40% of the collection
Highly successful in acquiring new customers
Continuing to grow assortment in 2015
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Our Customer
The customer file is at an all time high, growing by ~50% over the last 4 years
Customer growth is being generated in all customer segments, with material YTD gains in our most valuable segments
The re-launch of the WH|BM loyalty program is driving increased engagement and spend in our best customer segment
We continue to leverage our data in new ways to refine our targeting and communication with the end goal of increasing our relevancy
The importance of our multi channel customer continues to increase as we strive to deliver a seamless customer experience irrespective of how, when, or where she shops us
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The Experience
As technology becomes an increasingly important part of our customers life, we continue to evolve the customer experience through the enhancement of our website and advances in in-store technology
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CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
STOREFRONT
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CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
ENTRY
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INTERIOR
CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
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INTERIOR
CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
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TECH WALL
CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
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VIP FITTING ROOM
CARARRA DESIGN - MALL AT MILLENIA - ORLANDO, FL
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The ExperienceBeyond technology – the strength of brick and mortar continues to evolve
Relevance to geographic location, local communities, and the customer preference.
STOREFRONT
RESORT CONCEPT - SANTA MONICA, CA
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INTERIOR
RESORT CONCEPT - SANTA MONICA, CA
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INTERIOR
RESORT CONCEPT - SANTA MONICA, CA
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Marketing
The WH|BM marketing approach is evolving to break through the every day clutter, reaching our customer in a more relevant and targeted way
Direct Mail segmentation to speak to our customers in the most effective manner possible based on customer level insights gained from big data
Leverage TV to drive customer awareness and engagement by highlighting the breadth of our assortment and the launch of new collections:
Testing regional intensification
Testing Hispanic television
Digital marketing and social media continues to increase in importance and our penetration of spend continues to increase accordingly
Migrate single channel customers to multi channel customers
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InternationalWH|BM International performance continues to exceed our expectations as we look to expand our store base beyond the Toronto market
Brand awareness has been strong with many of the customers having shopped the brand previously, and we are generating new customer growth as well with 2/3rds of customers new to the file.
Product offering has been well received with strong parallels to the customer shopping patterns experienced in the US
We are very proud to bring our Award winning store design to the Canadian market
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Wrap Up
WH|BM is well positioned to gain increasing market share as we focus on delivering: Incremental new customers through expanding and balancing the price
architecture and launching new collections that serve her different lifestyle needs
Increased loyalty and share of wallet for our existing and best customer segments
A seamless and relevant omni channel approach that surpasses our customers needs/expectations
International Growth
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Analyst Meeting
September 2014
Todd Vogensen, CFO
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Three Things
1. Our Customers
2. Our Use of Cash
3. Return To Double-Digit Operating Income
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Customers
2010
2011
20122013
+10% CAGR
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Social Interactions
Facebook fans2.9 million
Twitter followersUp +200%
PinterestMost widely
utilized social sharing button
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Cross-Channel Purchasing
Average Annual Spend Per Customer
Store-Only Multi-ChannelOnline-Only
5X 2.5X
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86Source: US Census Bureau
Age
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
10-14' 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69
2010
2020 E*
2010 = 31M
2020 = 31M
2010 = 52M
2020 = 52M
2010 = 37M
2020 = 42M
US Female Population (in 000’s)
Boomer Consumer
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Balance Sheet Health
No Debt
Over $208 Million In Cash
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Investment Philosophy
• Long-term growth is the priority
• Capital expenditures in-line with depreciation
• Invest in Omni-channel
• Moderated store openings
• Return excess cash to shareholders
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Dividends and Share Repurchases
Repurchases$567 million
Dividends$145 million
Since 2010$712 million
Remaining Authorized Repurchases$290 million
Over 117% of free cash flow
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Path to Double-Digit Operating Income
6.6%
10%+
2.0-2.5%0.25-0.5%
1.5-2.0%
R12Q2'14
GrossMargin
SG&A GrowthBrands
DoubleDigit +
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Chico’s FASWell Positioned for Long-term
• Loyal Customer Base
• Omni-channel Capabilities
• Merchandise Extensions
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Questions