SCOTIABANK BACK TO SCHOOL CONFERENCE. September 15, 2015

Transcription

1 SCOTIABANK BACK TO SCHOOL CONFERENCE September 15, 2015

2 DISCLAIMER STATEMENT Forward Looking Information This presentation contains information about Hudson s Bay Company including its direct and indirect subsidiaries (collectively, HBC or the Company ) and should be read in conjunction with the Company s public filings available at and at The content of this presentation is not to be construed as legal, financial or tax advice. Any reader should contact his, her or its own professional advisors for legal, financial, tax or other advice. Certain statements made in this presentation constitute forward-looking statements within the meaning of applicable securities laws, including, without limitation, statements regarding the contemplated acquisition of Galeria Holding ( Kaufhof ) and the anticipated sale of at least 40 Kaufhof owned or partially owned properties in Germany to the Simon-HBC JV, constitute forward-looking statements. The words may, will, would, should, could, expects, plans, intends, trends, indications, anticipates, believes, estimates, predicts, likely or potential, or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. Forward-looking statements are based on current estimates and assumptions made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that it believes are appropriate and reasonable in the current circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: (a) the failure to complete the second tranche of the RioCan-HBC JV, or at all; (b) the risk that a condition to completion of the Kaufhof acquisition may not be satisfied; (c) the risk that definitive agreements are not settled and/or that acceptable financing is not secured for the anticipated sale of Kaufhof properties to the Simon-HBC JV and (d) the risk that the anticipated benefits of the joint venture transactions are not realized. We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. For more information on the risks, uncertainties and assumptions that could cause HBC s actual results to differ from current expectations, please refer to the "Risk Factors" section of our Annual Information Form dated April 30, 2015, as well as HBC s other public filings, available at and at including the Company s management discussion & analysis (MD&A) for the second fiscal quarter. Readers should not place undue reliance on forward-looking statements made herein. Unless otherwise stated, the forward-looking statements contained in this presentation are made as of the date of this presentation, and HBC has no intention and undertake no obligation to update or revise any forward-looking statements, except as required by applicable securities law. All forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. Non-IFRS Measures The pro forma information set forth in this presentation should not be considered to be what the actual financial position or other results of operations would have necessarily been had the joint venture transactions, the Kaufhof acquisition and/or the Kaufhof properties sale been completed, as, at, or for the periods stated. We have included non-ifrs measures, including Adjusted EBITDA, to provide investors and others with additional information to complement IFRS measures by providing further understanding of the Company s results of operations from management s perspective. As other companies may calculate such non-ifrs measures differently than we do, these metrics are not comparable to similarly titled measures reported by other companies. We refer readers to the definitions and reconciliations of such non-ifrs measures to the relevant reported measures to this presentation and the Company s public filings, including the MD&A for the second fiscal quarter, available at and at 2

3 2006 NRDC acquires Lord & Taylor for US$1.2billion 2011 HBC sells Zellers leases to Target for C$1.8 billion 2013 HBC acquires Saks Fifth Avenue for US$2.9 billion 2014 Independent appraisal values Saks Fifth Avenue flagship property at US$3.7 billion 2015 HBC announces agreement to acquire Kaufhof for 2.4 billion (1) A NEW ADVENTURE BEGINS Real Estate JVs Simon- HBC JV 2008 NRDC acquires HBC for C$1.3 billion 2014 Completes IPO on TSX at $17.00 a share 2014 Sale of Queen Street flagship property for C$650 million 2015 HBC closes two real estate JVs with C$3.8 billion of total property value (2) 2015 HBC announces its intention to sell 40+ Kaufhof properties for 2.4+ billion (1) Calculated as cash purchase price of 2.21 billion, plus 141 million of capital leases and 69 million of minority interest; excludes 405 million of pension liabilities. (2) Represents implied real estate value based on close of RioCan-HBC Joint Venture and HBC-Simon Joint Venture. Does not include YSS properties. 3

4 WINNING AND PROVEN FORMULA Operating Retail Companies Geography Creating Value with Real Estate Creating Synergies through M&A 4

5 CREATING VALUE WITH REAL ESTATE Saks 5 th Ave Mortgage Joint Ventures with Simon and RioCan 20 year US $1.25 Billion mortgage at very attractive terms Independent appraisal valued property at US $3.7 Billion Cash interest savings of approximately C$5 million per year Operating Retail Critical component Geography of HBC s unique Companies real estate strategy Transactions value HBC properties at more than C$4 Billion Creates a platform for growth and diversification Proceeds used to meaningfully de-lever HBC Structure conducive to facilitating future acquisitions Creating Synergies through M&A 5

6 CREATING SYNERGIES THROUGH M&A Millions Kaufhof Adjusted EBITDA C$391 Cash Rent on Kaufhof Properties Sold to the Simon-HBC JV Increase in Cash Distributions from the Simon-HBC JV Incremental Adjusted EBITDA to HBC (1) (C$201) C$10+ C$200+ (1) Based on management estimates and assumptions, including with respect to HBC s pro forma ownership in the Simon-HBC JV; refer to the reconciliation of Adjusted EBITDA in the Acquisition of Galeria Holding presentation on June 15. Kaufhof Adjusted EBITDA based on trailing twelve months as of March 31,

7 KEY RETAIL GROWTH DRIVERS 1 ALL-Channel 2 OFF-Price 3 Globally 4 ACROSS Banners 7

8 ALL CHANNEL GROWTH Assortment blank Service Environment Digital 8

9 ALL CHANNEL GROWTH -EXCITING ENVIRONMENTS ALL BANNERS Create enhanced and consistent store environments through major and minor renovations Drive store traffic through exciting events and impactful visual Implement new store and merchandising concepts 9

10 ALL CHANNEL GROWTH -EXCITING ENVIRONMENTS SAKS FIFTH AVENUE FLAGSHIP RENOVATION 10

11 ALL CHANNEL GROWTH UNLIMITED DIGITAL OPPORTUNITY HBC DIGITAL Strategically expand digital assortment through new and extended categories Back end synergies across banners Meaningful opportunity to improve fulfillment and leverage increasing scale Digital Sales Growth Constant Currency 29% 30% 27% 27% 26% 24% 30% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q

12 ALL CHANNEL GROWTH SEAMLESS SERVICE ALL BANNERS Deliver service excellence across all touch points aligned to our customers wants and needs Focus on cross channel lifetime value of customer through clienteling Continue to elevate our store amenities and create curated customer experiences 12

13 ALL CHANNEL GROWTH DOMINANT ASSORTMENT ALL BANNERS Grow Private Brands and collaborate across HBC to identify additional opportunities Maximize current exclusive brands and secure additional brands Leverage buying power of combined banners to improve product mix and assortment 13

14 OFF PRICE RAPID GROWTH OF SAKS OFF 5TH Opened nine stores YTD, with another six scheduled during the remainder of the year Growing urban presence no longer relegated to outlet and strip malls Significant opportunity both in Canada and Germany OFF 5TH Same Store Sales Comps Number of OFF 5TH Stores 7.9% 15.2% 14.9% 19.2% 12.1% 10.3% 12.7% Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 FY 15 (1) (1) Based on Company Guidance 14

15 GLOBALLY ENTRY OF SAKS FIFTH AVENUE AND SAKS OFF 5 TH IN CANADA Significant Luxury and Off Price opportunity in Canada Opportunity for up to 7 Saks Fifth Avenue stores and 25 Saks OFF 5TH Ability to leverage existing infrastructure and operating knowledge ANNOUNCED OPENINGS Queen Street, Toronto Outlet Collection at Niagara Vaughan Mills, Vaughan Sherway Gardens, Toronto Tanger Outlets, Ottawa CrossIron Mills, Calgary 15

16 GLOBALLY Extension of Kaufhof brand matrix Aggressively grow Kaufhof ecommerce Optimize key merchandise categories CLOSING OF KAUFHOF TRANSACTION 16

17 ACROSS BANNERS SYNERGIES AND EFFICIENCIES $100MM in annual synergies by 2016 Realized $79M to date Procurement IT HR Additional program launched to identify and implement operational efficiencies within and across businesses Benefits expected to be realized beginning in third quarter of Fiscal 15 17

18 DYNAMIC GROWTH COMPANY RETAIL & REAL ESTATE Hudson s Bay Galeria Kaufhof Lord & Taylor Saks Fifth Avenue OFF 5TH RioCan HBC Joint Venture Galeria Inno HBC Simon Joint Venture 18

19 SIGNIFICANT VALUE FOR HBC SHAREHOLDERS HBC Real Estate Value Plus the value of 4 profitable retail banners USDCAD: 1.30 $10.0 $9.0 $8.0 $7.0 Gross Value Net Value $2.2 B $1.3 B $1.0 B $1.2 B $0.8 B $9.5 B Canadian Billions $6.0 $5.0 $4.0 $3.0 $2.0 $4.8 B $3.2 B $1.4 B $6.4 B $4.1 B $1.0 $0.0 Saks 5th Ave Flagship HBC Simon JV RioCan HBC JV Other Properties (1) (1) (2) Total HBC Real Estate HBC Market (3) Cap (1) As of the initial close of these transactions. HBC s ownership shares of JVs = to 99.9% for HBC-Simon JV and 86.6% for RioCan-HBC JV. (2) Includes L&T flagship store and three mall properties expected to be contributed to the RioCan-HBC Joint Venture. (3) As of Close September 11,

20 CONCLUDING REMARKS Strong Leadership Team Dynamic Company with Multiple Growth Engines Sales Growth and Margin Enhancement Initiatives Significant Real Estate Value backed by 3 rd Parties Leverage Scale, Extract Synergies, Drive Efficiencies Unique Retailer with Expanding Footprint 20

21 THANK-YOU 21