SMRT Jan 2016 Investor Presentation

8/20/2019 SMRT Jan 2016 Investor Presentation

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In the course of this presentation and in response to

your questions, statements may be made as to certain

matters that constitute forward-looking information thatis subject to certain risk and uncertainties. Additional

information concerning those factors that could cause

actual results to differ from those in the forward-looking statements can be found in the company’s annual report on Form 10-K for the year ended January 31,

2015 and most recent quarterly report on Form 10-Q.

2

Forward-Looking Statement


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• Sales growth opportunities will increase bottom line

− Proven initiatives are driving organic growth

Enhanced brand penetration

Credit card program

Ecommerce

− Accelerated store unit expansion

− Well positioned to capitalize on market trends Off-mall

Off-price

Mature customer is a growing

demographic

Stores located where growth will be the

strongest

• Low market valuation and 4% dividend

3

Key Messages


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COMPANY OVERVIEW


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• National retailer of fashionapparel for women and men,

home, accessories and shoes

• Positioned between off-priceand department/ specialty

stores

• 278 stores in 30 states, plussteinmart.com

• Loyal, mature customer withhousehold income of nearly$100,000

5

Stein Mart Facts

National Store Footprint

70% of chain in SE and TX


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• Focus on designer and national brands

(65% of mix) at a great value

− Prices up to 60% off for brand-name

and specialty merchandise

− Assortment continually enhanced and

penetrated for new and hot brands

• Sourcing focused on trends and pricing,complemented by opportunistic buying

− 1,200 vendors

− 165 associates in buying organization

• Private label and exclusive

merchandise are only 10% of mix

• Shoe department supplied by DSW

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Our Merchandise and Buying

Sales by category

%

11%

'

1%

1%

*

%

%

*Shoe department is leased.


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!Adrienne Vittadini Eileen Tracy Kasper Riedel

Alberto Makali Etienne Aigner Kenneth Cole Robert Graham

Anne Klein Evan Picone Kut from the Cloth Robert Talbott

Ashworth Fairway & Greene Laundry by Shelli Segal Romeo & Juliet

August Silk Free People Lenox (Linens) Seven 7 Jeans

Avanti Towels Godiva London Fog Sonny LeighBCBG MAXAZRIA Greg Norman Golf Lucky Brand Spanx

Betsy Johnson Hartmarx Luigi Bormioli Steve Madden

Big Buddha Hazel Maggie London Super Dry

Bobby Jones Hickey Freeman Margaritaville Sweet Shop

Buffalo Jeans HOBO Max Studio T Tahari

Bulova Watches Hollander Metrocane Tahari

Callaway Hudson Michael Kors TalliaCalvin Klein HUE Muse Ted Baker

Carlos Santana Igloo Nautica The Sak

Coach Ike Behar Nicole Thomas Dean

Columbia Issac Mizrahi Nike Tommy Bahama

Core Bamboo Ivanka Trump Nine West Tommy Hilfiger

Daniel Rainn Izod Not Your Daughters Jeans Vaklco

Democracy “J” by Jones Original Penguin Vera Bradley

Dooney and Bourke Jack Nicklaus OXO Vince Camuto

DVF Jessica Howard Polo Vineyard Vines

Eagle Jessica Simpson Quicksilver Wacoal

Echo Jhane Barnes Ralph Lauren (Intimates) WRK

ECI Joan Vass Raymond Waites (Linens) XMI

Eileen West (Bath) Joseph A. Report Collection Yankee Candles

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Exceptional Designer & National Brands


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• Off-mall in better regional, community

and neighborhood shopping centers

• Optimal co-tenants are higher-end

grocers, other apparel retailers, better

restaurants

• New stores average 32,000 gross and

28,000 selling sq ft

• Regional broker network helps identifylocations

New stores approved by senior

executives

Note: All stores are leased

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Our Stores


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2005 Avg. store sales peak at $6.1M

2006-2007 Changed merch. strategy

• Became more moderate

• Lost 6% of sales

2008-2009 The Recession

• Additional 15% decline in sales

2009 Returned to profitability

• Closed underperforming stores

• Reduced annual expenses by over$30 million to match lower sales

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Recent History

2010-2011 New merchandising team

• Increased brand penetration from33% to 65% of mix

• Reinvented Home area

• Improved margins through highermarkup and AUR

Sept. 2011 Jay Stein returns as CEO

• Reduced regular priced couponsand changed marketing from priceto product-driven

2012 Sales trends turned positive

2012 Launched private label card

2013 Ecommerce launch


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FINANCIAL HIGHLIGHTS


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• Returned to positive

comps in December

• Warm weather

challenged cold-weather

items, particularly in the

East and Southeast

• New stores added 3.1%

to total sales

• Ecommerce added 0.7%

to comp sales

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Holiday Sales*

2015 Total Comp

December 4.7% 1.8%Nov ember -1.2% -4.8%

Nov/Dec 2.3% -0.8%

Sales % Change

*Holiday is November/December 9-week period ended January 2, 2016.


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*EBITDA in these calculations has been adjusted to exclude the following special items:• 2010 - $8.5M gift card cumulative breakage gain.• 2012 to 2014 - adjusted for the items detailed in the non-GAAP reconciliation table included in our 3/12/15 earnings release.

*Excludes 53rd week in fiscal 2012.

6.6%

5.4%

1.5%

3.3%

4.4%5.4%

4.3% 5.1%

6.5% 6.6%

.0%

.0%

0.0%

.0%

.0%

.0%

.0%

0 0 0 0 0 10* 11 1* 1* 1*

EBITDA Percentage of Sales*

$6,123 $6,079

$5,737

$5,113

$4,845 $4,813 $4,796$4,949

$5,085 $5,217

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

05 06 07 08 09 10 11 12* 13 14

Average Sales Per Store

Increasing EBITDA and Average Store Sales


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• Strong cash flow from operations

• $5 per share recapitalization dividend (Feb. 2015)

$170 of $226 million funded with debt

Balance sheet more efficient

Increases return on equity

• $275 million credit facility (Feb. 2015)

Debt will be $150M to $200M in 2015

Unused availability of $75M to $140M

• Continuing $0.30 annual dividend

• Enterprise Value - $482M (at 12/31/15)

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Financial Position and Valuation


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2013 2014 2015 Est.

Maintenance capital expenditures:

Existing stores $10,800 $13,000 $13,200

Information systems

Other

17,700

500

15,700

800

13,600

2,200

Total maintenance capital expenditures 29,000 29,500 29,000

New and relocated stores (1) 7,300 10,700 17,800

Tenant improvement allowances (2) -3,100 -4,300 -10,500

New store net expenditures 4,200 6,400 7,300

Net total capital expenditures $33,200 $35,900 $36,300

Capital Expenditures, Net of TIA*

*TIA – Tenant improvement allowances(1) Year 2015 includes expenditures for stores opening in Spring 2016.(2) Includes TIA received or to be received for current year expenditures.

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Growth Investments – Capital Spending


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GROWTH INITIATIVES

- Organic- New Stores


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Annual Comparable Store Sales:

Historical Comparable Store Sales

Recession

Quarterly Comps Since 2012

* 2, 2016.

0.%

1.%

.0%

10.%

.%

1.% 1.1%

.%.%

.%

1.%

1.0%

10.0%

.0%

.0%

.0%

.0%

0.0%

.0%

.0%

00 00 00 00 00 010 011 01 01 01 01*

0.%

1.%

.1%

.0%

1.%

.%

.%

.1%.%

1.%

.1%

.%

.%

.0%

.%

0.%

4.0%

2.0%

0.0%

2.0%

4.0%

6.0%

8.0%


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• Private label card (launched in

2012)

• Co-branded MasterCard (2006)

• Cardholders spend 35% more

than before having card

• Penetration has grown

substantially since PLCC launch

• Cards issued by Synchrony

Financial, which bears credit risk

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Credit Card Program - Increasing Penetration

Credit Card Penetration (% of Sales)

PLCC launched June 2012.

.1%

.0%

.%

11.%

1.%

0.0%

.0%

.0%

.0%

.0%

10.0%

1.0%

1.0%

1.0%

011 01 01 01

01*


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• Significant selection (~80%) of stores’

merchandise, plus unique items

• Marketing tool reaches customers

and drives in-store sales

• Increases customer’s spend with

multi-channel approach

• 1.6 percent of sales YTD-2015

1 percent of sales in fiscal 2014

• Outsourced technology and

fulfillment

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E-commerce


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Focus on Store Growth

00 00 00 00 010 011 01 01 01 0101

*

262 268 280 276 267 264 262 263 264 270 278

12 14 6 2 2 3 6 4 9 10 12*

(6) (2) (10) (11) (5) (5) (5) (3) (3) (2) (2)

0 0

0 0 1 0 5 4 4 4 7 1 1

* 12, 2016.

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Stores opened by state2014: CA-3 FL-2 DC-1 NM-1 NV-1 VA-1

2015: CA-3 FL-2 AZ-1 GA-1 MI-1 NY-1 VA-12016: States not announced. 25% in newer markets.


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Store Unit Expansion - 3 to 4% Annual

100 to 125 Large Under-Penetrated Market Opportunities

2016 store opening markets:Large under-penetrated 3

Smaller & existing 9Total 12


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New Store Economics

STORE SIZE Average 32,000 gross square feet (28,000 selling)

NEW STORE INVESTMENT Leaseholds(1) $500,000Fixtures and equipment 500,000

Inventory, net of accounts payable 400,000

Pre-opening expenses (2) 100,000

Total initial investment(3) $1,500,000

UNIT ECONOMICS(4) Sales $5,250,000+

Min. planned contribution % of sales 8%

Payback period 3 years

(1) Net of Landlord Allowance

(2) Excludes rent during pre-opening period which can range to $200,000

(3) Varies depending on whether site is new construction or existing remodel

(4) Year 3


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POSITIONINGADVANTAGES


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Strong Customer and Geographic Focus

SMRT age from credit cardholder & Preferred Customer data.SDSR = Specialty and Department Store Retailers.

* Population change data by 2025 from U.S. Census Bureau.

Desirable Customer• Higher income than Specialty &

Department Store Retailers (SDSR)SMRT $95,000SDSR $79,000Avg U.S. $54,000

• Older and proportionatelyunderserved

Growing Customer Demographic• U.S. median age is trending older • 65+ group projected to increase 38%

by 2025

Strength in Growth States• States with highest growth of females

65+ coincide with our top existing &target markets

States w/greatest 65+ growth

#

% .

*

44 43%

44 51%

26 38%. 20 36%

15 37%

14 39%

11 62%

1

1% 1%

%

%

%

%

%%

65

5064

3549

35


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• 300 store chain by 2017

4 to 5% annual unit growth

• 25% credit card penetration by 2020

• Ecommerce - profitable & sizeable

Operations will be in house

Ability to pick up in certain stores

• Significant pay-down of debt

• Supply Chain secondary-distribution ability

Improve inventory turn and increase sales

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The Next 5 Years


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KEY MESSAGES

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Summary – An Investment Opportunity

• Sales growth opportunities will drive bottom line

− Proven initiatives are driving organic growth

Enhanced brand penetration

Credit card program

Ecommerce

− Accelerated store unit expansion

− Well positioned to capitalize on market trends

Off-mall

Off-price

Mature customer is a growing

demographic

Stores located where growth will be the

strongest

• Low market valuation and 4% dividend


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Linda Tasseff, Director of Investor RelationsOffice: 904-858-2639

Cell: 904-910-1867E-mail: [email protected]

Greg Kleffner, EVP, Chief Financial Officer Office: 904-346-1500E-mail: [email protected]

Contact Information

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Documents

SMRT Jan 2016 Investor Presentation