2. Certain statements contained in this presentation which are not historical
facts are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements address the Company’s plans, activities or
events which the Company expects will or may occur in the future.
A number of important factors could cause actual results to differ materially
from those expressed in any forward-looking statements. Such factors,
risks and uncertainties are set forth under the heading “Cautionary
Statement Regarding Forward-Looking Statements“ or “Risk Factors” in
"Management’s Discussion and Analysis of Financial Condition and Results
of Operation" in the Company’s annual report on Form 10-K and quarterly
report on Form 10-Q filed or to be filed, respectively, and which are
expressly incorporated herein by reference.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of January 13, 2014. The Company does
not undertake to update or revise its forward-looking statements even if
experience or future changes make it clear that projected results expressed
or implied in such statements will not be realized, except as may be required
by law.
®
3. • Founder: Leon Levine
• First stored opened in
November 1959 in
Charlotte, NC
• Self-service
• Value and
convenience
®
4. 8,000+ Locations in 46 States
New Hampshire – 35
Vermont – 15
18
1
76
41
144
25
29
335
413
36
43
307
32
68
250
138
98
51
155
112
132
117
121
247
211
412
253
113
225
158
1,018
475
212
169
391
284
579
Denotes distribution center
Store counts as of November 30, 2013
®
61
Massachusetts – 112
Rhode Island – 28
Connecticut – 58
New Jersey – 113
Delaware – 23
Maryland – 102
Washington DC – 3
6. 56%
Earn less than
$40K a year
50%
46%
Rely on government
assistance
Older than 55
68%
44%
Regularly use
coupons
Have a
smartphone
31%
Have kids under 18
®
Source: WSL/Strategic Retail, How America Shops® MegaTrends 2012, National
Internet Survey and internal FDO data
7. Offer Customers Great Values and a
Convenient Shopping Experience
Convenience
Value
• Consumables and
discretionary items
•
Small, easy-to-shop
stores
• Nationally recognized
brands
•
Quick, fill-in trip
•
Average basket
around $10
• Quality, private label
merchandise
• Most items priced at
$10 or less
®
8. Earnings Before Income Taxes*
$800
$700
$600
(millions)
$500
$400
9/11
$300
Housing /
Subprime
$200
Manufacturing
$100
$0
®
OPEC
Iran
Recessionary periods
FY73 FY75 FY77 FY79 FY81 FY83 FY85 FY87 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13
*FY06 excludes litigation charge of $45 million or $0.18 per share
*FY12 excludes litigation charge of $11.5 million or $0.06 per share
*FY13 is a 53-week year
9. • Economic pressures
facing our customers
• More promotional
environment
• Digesting significant
business changes
®
10. Trips per FDO Shopper
in Total Market
185
• Elevated
unemployment levels
184
• Higher taxes
180
175
173
• Reductions to key
government
assistance programs
• Healthcare
uncertainties
170
Source: Nielsen Homescan Data, 52 weeks ending
®
10
11. Circular Growth
2012 vs. 2013
November and December Combined
19%
8%
12%
9%
10%
4%
-4%
-13%
Drug
Food
Pages
Source: MarketTrack: Circular Volume Report
®
Department
Stores
Inserts
Mass
12. • 1,000 new Food
and HBA SKUs
• Tobacco
• Significant fixture
and layout
changes
• Capturing more trips
• Greater share of
wallet
• Margin pressure
• Store manager
turnover
• Shrink
• Inventory
productivity
®
12
13. Mix Shift of Consumables
(basis points)
Gross Margin Trends
(basis points)
88
491
332
362
14
364
-17
171
105
-113
-114
-145
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
®
4Q12 1Q13 2Q13 3Q13 4Q13* 1Q14
*4Q13 excludes a one-time $5.0 million favorable adjustment
related to a change in accounting for certain vendor
allowances
14. Comparable Store Sales
6.6%
EPS Growth
14.7%
13.6%
5.4%
2.9% 2.9%
4.8%
0.0%
2.0%
-2.8%
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
®
®
-1.1%
-1.9%
4Q12* 1Q13 2Q13* 3Q13 4Q13* 1Q14
*4Q12 excludes a litigation charge of $11.5M
*2Q13 includes an extra week
*4Q13 excludes a one-time $5.0 million favorable adjustment
related to a change in accounting for certain vendor allowances
15. • Re-accelerate traffic
• Invest in key traffic-driving consumables
• Strengthen our value proposition
• Enhance marketing efforts
• Reduce costs and enhance productivity
• Invest in long-term growth while returning
capital to shareholders
®
17. • Food
• Pepsi
• Grocery & cooler expansion
• McLane partnership
• Health & Beauty Aids
• Beauty
• Over-the-counter
• Personal care
• Tobacco
17
®
17
18. • Food
• Refresh assortment
• Redeploy space
• Realign adjacencies and product flow
• Household
• Expand space
• Leverage innovation
®
19. • Getting back to our roots
• Commitment to everyday
low prices and great values
• Select price investments
®
20. Number of Circulars
33
30
• Optimize
marketing tools
24
22
12
FY09
®
FY10
FY11
• Reinforce value
proposition
FY12
FY13
21. • Re-accelerate traffic
• Invest in key traffic-driving consumables
• Strengthen our value proposition
• Enhance marketing efforts
• Reduce costs and enhance productivity
• Invest in long-term growth while returning
capital to shareholders
®
22. Percent of Annual
Purchases*
4%
11%
• Accelerate conversion
of replenishment
programs
13%
8%
15%
70%
• Expand international
presence
11%
• Enhance global
logistics capabilities
68%
• Expand into new
businesses
FY12
US
FY15P
Domestic Importer
Agent
*Purchases at retail
®
Direct
23. • Improved quality
standards
Private Brands as a
Percentage of Net Sales
25%
• 20% growth in private
brand consumables
in FY13
25%
25%
22%
17%
17%
18%
14%
• 500 new private
brand consumables
SKUs in FY13
FY10
FY11
FY12
FY13
Total PB Penetration
Consumables PB Penetration
®
25. • Re-accelerate traffic
• Invest in key traffic-driving consumables
• Strengthen our value proposition
• Enhance marketing efforts
• Reduce costs and enhance productivity
• Invest in long-term growth while returning
capital to shareholders
®
26. (millions)
$890 $941
$821
$748
$617
$671
$75
$332
$83
$71
$73
$155
FY09
$108
$91
$79
$345
$212
FY10
$192
FY11
1) Re-invest back into
business
• FY14 CapEx plan:
$450-500M
2) Support dividend
program
$399
$243
FY12*
Net CapEx
Dividends
Share Buyback
3) Share repurchases
FY13**
• FY14 plan: $250M
EBITDA
*Excludes a litigation charge of $11.5 million in 4Q12
**FY13 was a 53-week year and results are adjusted for a one-time $5.0 million favorable adjustment related to a
change in accounting for certain vendor allowances in 4Q13
®
Note: Net capex is capital expenditures net of sale leaseback proceeds
27. • New process to ship and
deliver good to our stores
• Improves supply chain
efficiency
• Simplifies unloading and
replenishing for our Team
Members
• Plan to roll-out to four
distribution centers in FY14
®
28. BEFORE
• Create a more
consistent customer
experience
• Improve our
competitiveness
• Establish a
foundation for future
assortment
expansion
®
31. New Store Opportunities
19,000
• Expanding
customer base
• Improving store
productivity
• New markets
7,916
End of
FY13
®
New Store
Opportunities
Total Store
Potential
32. 10%
• Opened 500 new
stores in fiscal
2013
8%
6%
• Plan to open 525
new stores in fiscal
2014
4%
2%
0%
FY09
FY10
FY11
Gross Store Growth
®
FY12
FY13
FY14
Net Store Growth