FISCAL 2014 SALES OBJECTIVES May 12, 2014
The Selling Season …. During the next 90 days we have a long to do list: • Complete MIT line reviews for Spring 2015 shipment • Price increase communication on MIT and T&H • Line review on Inside Out – launch planning • Fall 2015 Planning and previews • Miles from Tomorrowland • The Good Dinosaur • Core line and licenses
A Strong Start …. We began the year with a soft start … • April was very weak on the back half of month. • May looks stronger – but we need to close the deal. • June looks very good -- but not much in order book. Moving into Q2 at or above plan – puts us in good shape to realize our margin enhancement objectives.
Sales Plan for 2014 • Plan for Americas is $311M • Compares to $294M in ‘13 – 5.7% increase • Margin change from 50% to 50.5% • Balanced plan – reasonable objectives
For MIT Three Primary Goals… • Drive sales in focus categories: • Licensed Toddler Feeding $25.0 – 19.2 +30% • Bath & Potty $19.2 – 18.5 +4% • Specialty Brands $54.7 – 51.2 +6.9 • Use brand portfolio and product assortment to address opportunity across all channels • Drive margin from 46.1% to 46.9
For T&H Two Primary Goals… • Build on our base of core brands: • John Deere $86 -- $88 • Pokémon $10.9 -- $14.4 • Chuggington $9.7 -- $11 • Battroborg $15 -- $20.5 • Sell in our new Disney / Pixar brands • Inside Out / Miles / The Good Dinosaur
Wrap up price increase • Objective is to affect a 3% net price increase in top 15 customers by June 30th. • As our costs rise – we have no choice • Individual plans per customer • Part of overall change in pricing execution.
Give Away Less … • At 7% of Sales -- R&A represents over $25 million in payments to customers each year. • Objective is to reduce spending as a percentage of sales by 1.5% • Challenge is that about 4% of R&A is “Fixed” • 1.5% represents a significant reduction in “over & above” funding / promotions / etc. • Budget process vs. open end
Keeping Score .. • Price change & RA budget integrated into scorecard process for sales managers • Track success against objectives monthly
Everyday is a Line Review • Until we hit 100% distribution – everyday is an opportunity to improve assortment and drive sales. • We can’t be content to “manage our set” we need to drive our business.
Stop talking – Start doing • We have talked about improved focus and profitability before – 2014 is the time for action. • No one sits on the bench for this game – everyone plays the whole game. • We succeed as a team.
Walmart US Sales History/Forecast Current 2014 YTD Trade Margin: 43.9%(Toy 46.8% and MIT 43.6%) F2013 R/A %: 3.1% (Toy 3.8% and MIT 2.8%)
Walmart US -Toy & Hobby - 2014 Opportunity • Pokemon – distribution within 2 ft statement of collectible section at front end of store from Sept ‘14 to March ‘15 ($5M) • John Deere Core – Q4 tab placement of 70 pc value set ($250k) • John Deere Gear Force – new launch within precool aisle ($2-3M) • Dot com – align and execute to at least a 10% share and 30% growth vs. 2013 for store listings Challenge • Battroborg – year two with Warrior/TMNT product mix projected at $3.2M shipments vs. generation one shipments of $5.8M with a 70% sell-thru (gap of $700k vs. budget and $2.3M vs. LY) 2. Replenishment – timing of corporate holiday seasonal policies for toys 3. Chuggington – lack of store distribution in Fall ‘14 / reduction of space in train aisle
Walmart US - MIT- 2014 • Opportunity • Disney licensed infant products – partner with Disney BV team to secure multiple features and tab for cups, potties, booster seats ($4M) • 2. Execute incremental business opportunities with Lamaze toys, JJ Cole travel program, Walmart Baby Registry, TFY rebrand re-launch ($2M). • 3. Price increase to improve overall profit margin (in particular tubs). • Challenge • 1. Walmart corporate replenishment strategies and team turnover (year 2 of new GRS system). • 2. Decline in sales performance of Bumbo floor seat and topline sales of existing gear business (total of $2M). • 3. Impact of price increases on product placement and performance.
Walmart US -- Margin Enhancement • Price increases on both sides of business. • 2. New placement of higher margin items. • Reduce the number of low margin item features in MIT. • More focused rollback strategy and import shipment option in toys. Price Increase Goal: Stretch Goal • 1. New product placement and performance (i.e. Pokemon in front end of store). • 2. Store count expansion of Travel and JJ Cole test programs. • 3. TFY Brand relaunch impact.
Walmart Canada Sales History/Forecast Current 2014 YTD Trade Margin: 41.5% (Toy 39.8% and MIT 41.7%) F2013 R/A %: 11.2% (Toy 5.7% and MIT 12.5%)
Walmart Canada -Toy & Hobby - 2014 Opportunity • Pokemon – distribution within boys aisle (60% of total in 2013) • John Deere – align to US success and Sept TV advertising campaign (39% of total in 2013) • Market share growth with Target Canada poor launch execution Challenge • Battroborg – lack of placement even with US success and buyer help 2. Chuggington – lack of distribution in Fall ‘14 / TV show coverage on Treehouse
Walmart Canada - MIT- 2014 • Opportunity • Toddler feeding – expand Take & Toss to all stores and add TFY insulated cups (current overall business is 80% non licensed) • 2. Licensed feeding – expand Disney offerings with additional characters in insulated cups and add open stock bowls / plates per US success • Travel – develop product program based on Canada channel strategy and US Fleurville distribution • Import shipments in US $’s – competitive vendors are shifting full programs to overcome currency risk and high costs of distribution / tariffs • Challenge • 1. Mature retailer market – no retail is providing significant growth with poor Target launch; vendors are being aggressive with Walmart • 2. Continue expansion of Tommy Tippee and private label in most categories • 3. Infant feeding – breast pump business down 17% YTD (represents 44% of total business)
Walmart Canada -- Margin Enhancement • Price increases on both sides of business. • 2. New placement of feeding / travel to offset gear (18% of business in ‘13 at 26% TM). • Import shipment programs in US $’s especially in MIT. Price Increase Goal: Stretch Goal • 1. Infant – expansion of feeding / travel to offset gear. • 2. Toy – Battroborg arena placement / JD and Pokemon featires
TARGET STORES Sales History/Forecast Current 2014 YTD Trade Margin: April 2013 34.7% / April 2014 42.2% / Budget 38.2% F2013 R/A %: 5.77%
TARGET-Toy & Hobby - 2014 Opportunity • Rollout of Chuggington items to entire chain • Pokémon success through Excell could lead to additional items placed during fall season. We’re averaging $65k-$70k per week with 3 sku’s • Battroborg and Chuggington featured in Target Holiday Toy Catalog • 55% of Chuggington play sets and 70% of Battroborg already on order import • Partnering with Anchor Bay on an in-store Chuggington promotion and increase circular exposure Challenge • Sales are only across 3 lines. If one of these don’t perform, it will pull down the number. Any softness early on could cause Target to cancel import orders • Target has de-valued in-stocks during holiday season with a focus on profitability and inventory reduction. With Chuggington being a new line, they will be less likely to extend themselves • Continued erosion of market share due to decreased store traffic will have a negative effect on the entire department
TARGET-- MIT- 2014 Opportunity • Baby 360 rollout to 180 stores offers opportunity to see increased sales in these locations. • Continue to grow the Disney toddler feeding in excess of Playtex levels from last year. • Continued focus on in-stocks despite Target’s decreased focus. Currently, our in-stocks are 96% vs. 90% LY Challenge • Decreased stores traffic continues to affect overall Target sales • Change in market dynamics in the breast feeding business has negatively effected Target and TOMY sales (ACA) • News buyers in the department (4 of 5 have less than 1 year within the dept) • Loss of JJ Cole business ($2.3M) and Gear ($800K) need to be made up in other categories
TARGET-- Margin Enhancement • Reduced policy accrual 2% for TFY MIT and 1% T&H (Target) & 2% T&H (.com) • Reduced spending on Target Baby catalog from $250,000 - $150,000 • Analyzing all TPC’s to ensure they drive a positive ROI • Continue to fight all post-audit claims. YTD, I’ve refused $500k+ in claims Price Increase Goal: Stretch Goal • Chuggington exceeds plan and we see increased domestic orders • We received increased MIT distribution for Spring set and these items ship in fiscal 2014 • Expansion of JD POG through segmentation strategy • Overall store traffic increases at Target
Toys R Us / Babies R Us Sales History/Forecast Current 2014 YTD Trade Margin: 59% Toy and 49% MIT F2013 R/A %: 8.6% (Toy 7.1% and MIT 10.3%)
Toys R Us -Toy & Hobby - 2014 Opportunity • TMNT Battroborg (FTM, Big Book, Top Toy, Feature space) • John Deere (8’ Planogram, 12 additional SKU’s, Peterbilt) • Sonic (10 additional SKN’s, 4’ planogram, FTM Launch) • Pokemon (In-store demo, Big Book, 4’ planogram, POP, Signage) • Big Book support for Chuggington Challenge • Toys R Us loss of market share to Wal*Mart, Target and Amazon • New Markdown Policy (dropping slow selling items early in season) • Private label has replaced some of our key categories • Higher cost for Catalogue “white” space
Babies R Us -- MIT- 2014 Opportunity • Reusable Feeding (2 additional SKU’s) (spring sidekick) • Gumdrop (11 additional SKU’s) (Featured in Big Baby Book) • American Red Cross (back on the shelves in July) • Boon – Race Track Display (not confirmed yet) • Mommy Hook – 2 additional SKU’s (exclusive print) Challenge • Gumdrop sales trend • Private label has replaced some of our key categories (Tubs, disposable feeding, Health and grooming) • BRU loss of market share to Amazon and Target. • Increased costs for endcaps and racetrack locations
Toys R Us -- Margin Enhancement • John Deere price increase of 5% (June 1st) – new fall items upcharged • TRU.COM price increase Ride-ons 6% and Lamaze 5% • Collect ship saved $492,000 in 2013 (projected savings of $741,000 in 14) • BRU - $20,000 CA for advertising funding rejected Price Increase Goal: Stretch Goal • Pokemon Pallet Event (Potential $300,000) • American Red Cross (6 new items shipping in June – increase store count) • Boon RaceTrack Display (potential $800,000 of new business) • Inside Out import shipping (Potential $250,000) • Battroborg Green Friday (Potential $930,000)
Amazon Sales History/Forecast Current 2014 YTD Trade Margin: 60.48% F2013 R/A %: 11.5%
Amazon - Toy & Hobby - 2014 • Opportunity • Pokémon – develop brand presence • Sonic – new brand, gain exposure • Chuggington – increased placement in retail to drive additional exposure • Battroborg/John Deere – leverage success and use what worked. Continue increased forecasting and demand • Enhanced assets • Challenge • Keep R&A to a minimum but increase marketing efforts • Fighting for space/exposure • Inventory Planning and assortments – TOMY Toys, Pokémon
Amazon - MIT- 2014 • Opportunity • Increased velocity – we have demand and glance views, need to improve shut off items and in-stocks to increase velocity. • JJ Cole Store – potential opportunity but also challenged for placement and managing running • JJ Cole – whole brand under utilized, especially diaper bags. • Boon – Continue to leverage brand and increase exposure with search and relevance • Carefully execute The First Years brand experience early 2015 – continue to leverage succesful sales this year with Take and Toss, Tubs, etc. • Challenge • Pricing wars and controlling MAP on key brands for JJ Cole and Boon • Ensuring exposure of top brands with placement on main page.
Amazon - Margin Enhancement • Price increases both sides of business • Reduction in prep charges – savings around $100 to $200K per year. • Frustration Free Packaging and Import Items • More marketing for less R&A - packages • Price Increase Goal: Stretch Goal • Make up for lost dollars in Gear Budget – ($2.2M vs. forecast of $1.2) • Marketing Plans with licensors – Sega, Pokémon, Nick, Disney – leverage resources • Full marketing spend with buyers – tiered spend • Focus on Boon/JJ Cole – under developed
John Deere Sales History/Forecast Current 2014 YTD Trade Margin: 56% F2013 R/A %: 3.33%
John Deere -Toy & Hobby - 2014 Opportunity • Continue momentum on the popularity of Day of Play events at dealerships. • Parts EXPO in Phoenix will drive additional new 3rd quarter sales • Partners with Retail Showroom Development team developing retail displays and POS material • Promoting and marketing fall TV ads • Continue growth in Central and South America Challenge • Deere’s dealer program structure and new dealer communication regulations • Corporate personnel changes • Replacing Peg Perego dollars with wagons and Gear Force • Dealer consolidation
John Deere-- MIT- 2014 Opportunity • Cross promote within dealers new Buyers Guide • Floor display • Product with purchase (John Deere infant/toddler apparel) Challenge • Licensor • MOQ • New Product offering
John Deere-- Margin Enhancement • Removed volume discount for year-around purchases • Loss of Peg Perego program • Year-around Central and South America program with higher discount minimums Price Increase Goal: Stretch Goal • Plush • New product produced and shipped in fourth quarter • Additional placement of MIT items in dealerships
Tractor Supply Current 2014 YTD Trade Margin: 56.57% Plan - 53.70% F2013 R/A %: 5.70% F2012 – 7.08%
Tractor Supply - Toy & Hobby - 2014 Opportunity • John Deere Plush - Spring • Power Panels - Spring • Clip Strips - Spring • Gear Force – Spring Challenge • Value/Pricing • Direct Import – New Ray • Expand Every Day Business
Tractor Supply -- MIT- 2014 Opportunity • JD Sippy Cups for Spring Tool Table Promotion • Roll Fall Power Panel into Spring • Other Licensed Feeding for Spring (Clip Strip, Power Panel) Challenge • No New extensions to the JD Infant Line • Training them that other Infant Licenses will sell on impulse (Disney)
Tractor Supply -- Margin Enhancement • Reduced Markdown by $250K on CNP reset • Price Increases went into effect in January • 3. Implement price increase with the Every Day reset in January ‘15 Price Increase Goal: Stretch Goal • Gear Force for Spring • Expanding Every Set • John Deere Plush • JD Sippy Cups for Spring Tool Table Promotion
Kohl’s Sales History/Forecast Current 2014 YTD Trade Margin: 56.33% F2013 R/A %: 11.82%
Kohl’s - Toy & Hobby - 2014 • Opportunity • Listed 10 John Deere items for fall 2014 (500 doors) vs. 5 items in 500 doors 2013. • Lamaze – continue to refresh Lamaze with changing out new characters/products. Revisit Freddie the Firefly Book that was passed on. • Challenge • Lamaze is not included in the Baby Sale anymore – challenge to keep growing sales. • Price increases may hurt retails/sales but hoping price point on Lamaze will remain in line and retail won’t increase.
Kohl’s - MIT- 2014 • Opportunity • New Jake and Doc licenses to pick up sales • Maximize .com sales to increase volume and gain more placement on Boon and JJ Cole • New Feeding Items for 2015 with Mickey and Minnie Pacifiers to feature next to Bibs (along with Gumdrop) and Flip Top Straw Cup, Take and Toss Multi Character • Challenge • Reduced space in baby department for feeding items – continually fighting space reductions • Baby sale performance lower than expected – watch September sales • Price increases may hurt retails/sales
Kohl’s - Margin Enhancement • Toy increases – repeat items increased by 5% • Baby increases - average 3.5% ($0.25 on Lamaze and $0.17 on 4pc feeding sets) • Watch R&A spending in Baby sale participation • Price Increase Goal: Stretch Goal • Continue to hold space in feeding and gain placement of new skus for January 2015 with addition of Straw Cup or Take and Toss • Maximize First Years new branding online to help sales since most items in store are Disney branded. • Maximize John Deere Sell through of new items/placement
TJX Companies Sales History/Forecast Current 2014 YTD Trade Margin: 31% (Indexing 129% to ALL H Sales) F2013 R/A %: 0.0% LY TM MIT 15.7% $1,551K / T&H 7.4% $1,732K
TJX Companies -Toy & Hobby - 2014 Opportunity • HighTM Offers on Closeouts for High Profile Brands (Chuggington, John Deere, Pokémon) • Prudent Selection of “Front Line” Brands and Products • Working to Identify Product earlier in the Lifecycle to take advantage of higher current retails Challenge • Supply of Higher Margin MIT and T+ H Inventory to Sell • Competitive Inventory Flooding • Cautionary Position with regard to Brand Awareness
TJX -- MIT- 2014 Opportunity • Front Line Development / Discontinued-Manufactured Closeouts • Bundle Me Business could easily double with HIGH TM • Identify Drops at Majors Earlier to keep Retails higher on initial negotiations Challenge • Inventory Availability • Team Resources to Develop Product/Programs • Competitive Inventory Flooding Market
TJX Companies -- Margin Enhancement • Offset Low TM Product Sales with Pressure to purchase Highest TM product ranges • Prospect Front Line Sales with Highest Margin Categories • Where possible artificially inflate retails/wholesales on blind products • Apply the “Quick and the Dead” methodology in all Opportunity Sales Price Increase Goal: Stretch Goal • Front Line Sales in Key Brands while vigilantly monitoring Brand effects • Seek Out Global Products (not carried in US) for Distribution at TJX • Work toward TJX Complete Ownership in Brand/Product Inventory
Specialty Sales Channel Sales History/Forecast Current 2014 YTD Trade Margin: 57.69% F2013 R/A %: 4%
Specialty Channel -Toy & Hobby - 2014 • Opportunity • TOMY Toys/Games • Pokemon • John Deere • All of these are gaining new door placement this year and incremental space. 2013 reported strong sell through. • Calendar Club US and Canada 275 locations • Toy Collection 40 members • Learning Express 100+ members • Rossy 81 locations • Lammle’s 24 locations, starting w 10 store test-all JD 4 – 8ft • Just to name a few • Challenge • New product delays – TOMY Toys/Games missing 6+M of sales on Best sellers. • Competition with on line retails – John Deere • Credit Limits – Maxed at 1 or 2 brands and don’t allow for replenishment when needed.
Account Name -- MIT- 2014 Opportunity • JJ Cole – Retail Partnership Program • JJ Cole – Bags added to DS Program • Boon – Bath Program for Toy Stores • TFY – Licensed Cups and Bath/Potty placement expansion w/ Specialty Apparel and variety stores. Challenge • Competitive Online Retails • Space limitations • Credit limits