TWTR CIBC 2003
Transcript of TWTR CIBC 2003
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Business EthicsFiscal Responsibility
Moral Correctness
Living With Integrity
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HistoryHistory
1996 1997 1998
Acquired BrynMawr Stereo,
13 stores $28million, Mid-Atlantic
Acquired HiFiBuys, 10 s tores
$95 m illion,Southeast
Built 2 newstores, 1relocation
Built 4 newstores, 1relocation
Annual Revenue $81 million Annual Revenue $132 million Annual Revenue $232 million
Completed IPO,raised $46
million
Built 5 newstores, 2relocations
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HistoryHistory
1999 2000 2001
Acquired HomeEntertainment,7 s tores, $25
million, Texas
Acquired DOWStereo/Video, 9stores, $38
million, San Diego
Built 5 newstores, 3relocations
Built 10 newstores, 1relocation
Annual Revenue $283 million Annual Revenue $404 million Annual Revenue $540 million
Built 14 newstores, 1relocation
Acquired UnitedAudio, 7 stores,$49 million,
Chicago, IL
Acquired DouglasTV, 4 stores, $27million, Chicago,
IL
Acquired BigScreen City, 4stores $16 million,
San Diego, CA
Acquired AudioVideo Systems, 3stores $15 million,
Charlotte, NC
Acquired SoundAdvice, 32 stores$200 million,
Florida
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Five Year Revenue GrowthFive Year Revenue Growth
5-Yr
2003 2002 2001 2000 1999 1998 CAGR
BBY 6.9% 27.9% 22.7% 24.1% 20.7% 7.5% 21.4%
CC -24.1% -0.7% 3.2% 16.9% 22.4% 16.7% 3.2%
ULTE 21.4% 19.8% 25.8% 17.0% 10.3% 17.2% 17.7%
GGUY -8.5% -6.2% 2.8% -7.1% -1.4% 4.3% -5.1%
TWTR -1.8% 47.4% 35.1% 43.1% 22.1% 75.1% 35.6%
(estimate)
Fiscal Year
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Income from Operations GrowthIncome from Operations Growth
2003 2002 2001 2000 1999 1998 1997
BBY 10.2% 55.1% 12.1% 53.6% 111.4% 315.0% -66.7%
CC -98.5% 27.9% -49.3% 49.7% 61.7% -8.6% -20.0%
ULTE -47.4% -18.1% 53.7% 110.6% 154.3% -17.2% -45.9%
GGUY 114.5% -1384.7% 90.4% 65.5% -176.5% 31.2% -219.1%
TWTR -100%+ 11.3% 7.9% 69.0% 26.3% 487.2% 5.1%
(estimate)
TWTR 2002 number is before write-off of goodwill
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Historical Fiscal Year CompsHistorical Fiscal Year Comps
1998 +13.5%
1999 + 5.0%
2000 +12.5%
2001 + .6%
2002 - 3.2%
2003 - 8.0% to -12.0% estimate
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No Computers
Differentiated Business ModelDifferentiated Business Model
Tweeter Ultimate Circuit City Best Buy
Gross Margin 36% 31% 22% 20%
Product Mix AudioVideo
AudioVideo
ComputersSoftware
OfficeEquipment
AudioVideo
ComputersSoftware
OfficeEquipment
Compact Discs
AudioVideo
ComputersSoftware
OfficeEquipment
Compact DiscsAppliances
StorePrototype
10,000 SF 34,000 SF 34,000 SF 45,000 SF
Total Stores 177 58 626 711
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Differentiated BoxDifferentiated Box
10,000 square feet
Store Contribution goal of 12%
Profitable at $3.5 Million Volume
Store Contribution as high as 16% inlarger stores
New Store investment of $1.1 millioncreates $12 million in sales during the
first three years
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16
8
41
14
15 4
6 2
143
9
5
33
4
4
4
216
32
177 Stores
17
21 States
Store Count 9/30/03Store Count 9/30/03
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Eliminate price from sales
conversation 2x per week local market
shops
Backed by AutomaticPrice Protection
Since 1993 Revolutionary price
guarantee
Unique to industry
EDCP & Automatic Price ProtectionEDCP & Automatic Price Protection
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Sales Team EducationSales Team Education
23%
23%
54%
Professional Selling Skills
Company Culture
Product Info
Salesperson
Knowledge+
Customer
Education=
Higher average ticket
Higher Margin
Sales of new technology
Low turnover
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Current Points of Focus
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Current FocusCurrent Focus
Cut expenses to run in current business
conditions; hunker down
Eliminate store openings; cut Capexbudget; conserve Cash
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Cash Conversion Cycle
Focus on ROE
Focus on Profitability
People
Current FocusCurrent Focus
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One Company One Way
Custom Strategy
Flat Panel
Current FocusCurrent Focus
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In Home InstallationIn Home Installation
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In Home InstallationIn Home Installation
A differentiation strategy
A service strategy for people who love music,movies and sports home entertainment -
and want it all at the touch of a button. A margin strategy
An average ticket strategy
A convergence strategy
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The Tweeter Customer
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Our CustomerOur Customer
The more affluent customer = our customer
The early adopter = our customer The technology curious = our customer
A younger car stereo, music loving,technology competent = our customer
Our sales force simplifies the technologyOur sales force simplifies the technologyand explains the benefits of ownership toand explains the benefits of ownership to
these customersthese customers
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Sales Team EducationSales Team Education
23%
23%
4%
Professional Selling Skills
Company Culture
Product Info
Salesperson
Knowledge+
Customer
Education=
Higher average ticket
Higher Margin
Sales of new technology
Low turnover
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Profit DifferentiationProfit Differentiation
Do not chase share, except in new
technologies Gross Margin Focused
Audio focused (in spite of TV growth)
Loud Speaker dominance
New Technologies yield higher GMs early in cycle
Consultative sales approach
High Average Ticket Higher price points
In home installation to be a driver
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228.9279.5
399.9
540.1
796.1 781.6
$0
$100
$200
$300
$400
$500
$600
$700
$800
1998 1999 2000 2001 2002 2003
Mill
ions
CAGR = 28%
Total Revenues
Fiscal Year EndedSeptember 30,
(estim
ate)
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M
illions
Gross Margin
35.2% 35.4% 35.9%36.6%
35.6% 36.0% 35.3%
10%
15%
20%
25%
30%
35%
40%
45%
1997 1998 1999 2000 2001 2002 2003 to
date
Fiscal Year EndedSeptember 30,
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12.115.4
25.727.8
30.1
$0
$5
$10
$15
$20
$25
$30
$35
1998 1999 2000 2001 2002 2003 est
Millions
Operating IncomeOperating Income
Fiscal Year EndedSeptember 30,
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M
illions
Operating Margin
5.1%5.5%
6.4%
5.1%
3.7%
0%
1%
2%
3%
4%
5%
6%
7%
1998 1999 2000 2001 2002 2003 est
Fiscal Year EndedSeptember 30,
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The June quarter finished down 10% comp,
excluding Florida and Arizona, comp saleswere down 11% in April, down 9% in May,and down 4% in June
For the September quarter we are up
against a negative 1.4% We expect a neutral sales environment for
the September quarter.
Current Conditions Sales
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Margins remain relatively stable
Up against weaker comps next 4quarters
Digital is the buzz and were a leader
New products lined up to complement/augment HDTV
Flat Panel Plasma/LCD holy cow!
Some Good News
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02
4
6
8
10
12
14
16
% of Sales
Ju
n01
Flat Panel TV is ExplodingFlat Panel TV is Exploding
Last 9 Quarters
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New Flat Panel Display WallNew Flat Panel Display Wall
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So what does all this mean?
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