barbara canning brown, juvenile business review, june 14, 2009

CEMDirect Marketing Services


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JUVENILE BUSINESS REVIEW

KEY ISSUES FOR THE BUSINESS

Prepared byBarbara Canning Brown

Jun 14, 2009, rev 2



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1. Background:1.1 Steady declines in the Juvenile business

2. Challenges:2.1 Current mail volume will not support forecast sales2.2 Business planning direction at odds with trendlines2.3 Marketing performance scores are decling2.4 RFM segmentation test results will not offset business losses2.3 Harte-Hanks recommendations are inadequate

3. Next StepsAppendix• Juvenile trendline analysis•Juvenile RFM segmentation•Juvenile net customer loss analysis•Business intelligence forecasts

MEETING DISCUSSION



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JUVENILE BUSINESS ANALYSIS

Juvenile merchandise analysis results showed steady and significant declines of Juvenile product lines sales.

All segments show YOY declines to a total of -$36M in total sales.

GROUPS

SALES HH % Total HH

-$1,299 -3,489 55.77%

-$713 -634 10.13%

-$50 -188 3.01%

-$157 -147 2.35%

TOTAL -$2,219 -4,458 71.26%

-$2,106 -1,212 19.37%

-$2,018 -750 11.99%

-$1,085 -456 7.29%

-$1,757 -786 12.56%

TOTAL -$6,966 -3,204 51.21%

-$1,304 -617 9.86%

-$1,806 -476 7.61%

-$2,071 -458 7.32%

-$5,032 -712 11.38%

TOTAL -$10,213 -2,263 36.17%

-$177 -338 5.40%

-$1,002 -387 6.19%

-$2,104 -323 5.16%

-$18,312 -1,522 24.33%

TOTAL -$21,595 -2,570 41.08%

$1,365 126 -2.01%

$510 41 -0.66%

$129 -48 0.77%

$4 -36 0.58%

TOTAL $2,008 83 -1.33%

$1,922 251 -4.01%

$2,088 166 -2.65%

$1,294 113 -1.81%

$1,632 136 -2.17%

TOTAL $6,936 666 -10.65%

$229 14 -0.22%

$1,026 75 -1.20%

$2,041 19 -0.30%

$5,349 202 -3.23%

TOTAL $8,645 310 -4.96%

-$740 3 -0.05%

-$892 -30 0.48%

$922 80 -1.28%

$24,139 1,432 -22.89%

TOTAL $23,429 1,485 -23.74%

-$457 26 -0.42%

-$210 -23 0.37%

-$115 -7 0.11%

-$101 1 -0.02%

TOTAL -$883 -3 0.05%

-$497 17 -0.27%

-$912 -70 1.12%

-$735 -89 1.42%

-$1,335 37 -0.59%

TOTAL -$3,479 -105 1.68%

-$81 -5 0.08%

-$554 2 -0.03%

-$955 39 -0.62%

-$4,811 283 -4.52%

TOTAL -$6,401 319 -5.10%

-$316 144 -2.30%

$1,197 355 -5.67%

-$870 244 -3.90%

-$27,070 2,741 -43.81%

TOTAL -$27,059 3,484 -55.69%

TOTAL ACTIVES-$37,797 -6,256

JUVENILE

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JUVENILE MARKETING PERFORMANCE

Marketing developed alternative panel tests to offset losses and pushed to market aggressively based on the following:

LOYALTY CUSTOMIZATION TESTING-- OFFER AND CREATIVE

IN HOME EVENT FORMATSEGMENTATION

PANELSOFFER PANELS CREATIVE PANELS

23-Nov-09 Holiday Offer Postcard Postcard

NON-MEMBERS -- Sign up for Loyalty and get(1) $10 off 100; (2) $25 off $250. MEMBERS -- Double rewards, get $5 when you spend $75

(1) MEMBER unique creative version (2) NON MEMBERS unique creative version -- 'sign up!'

27-Oct-09 November Juvenile 24-page Slim Jim

23-Nov-09 December Juvenile 24-page Slim Jim

23-Nov-09 January Juvenile 16-page Digest

23-Nov-09 November/December Best Guest Mailer 4-panel postcard

NON MEMBERS -- Sign up for Loyalty and get 15% off one baby item. MEMBERS -- Double rewards, get $5 when you spend $75

(1) MEMBER unique creative version (2) NON MEMBERS unique creative version -- 'sign up!'

NON MEMBERS -- Sign up for Loyalty and get 15% off one baby item. MEMBERS -- Double rewards, get $5 when you spend $75

(1) MEMBER complete cover version (2) NON MEMBERS cover offer presentation of 'sign up!'

(1) Toy vs. Juvenile;

(2) loyalty member vs. non-

member; (3)

High/Medium/Low value



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JUVENILE CUSTOMER TRENDLINE

Despite the aggressive marketing push Juvenile customer trendlines continued to decline.

Of critical importance is the decline in the Best customer segments (10% of customers) which drive over 30% of sales.

Inconsistent funding of marketing acquisition exposes the business to ongoing weakness and risk.

R F M HH $ AUS HH $ AUS AUS HH $ AUS HH $ AUS

1 1 1 103,861 $10,461,505 $101 100,416 $10,132,310 $101 98,166 $10,091,925 $103 96,164 $10,060,827 $105 90,787 $9,819,897 $1081 1 2 21,347 $1,486,039 $70 19,670 $1,339,487 $68 18,643 $1,284,249 $69 17,664 $1,223,548 $69 16,870 $1,186,045 $701 1 3 7,029 $438,835 $62 7,082 $436,135 $62 7,060 $434,184 $61 7,176 $468,617 $65 6,682 $439,880 $661 1 4 8,611 $437,145 $51 8,174 $409,124 $50 8,034 $419,591 $52 7,816 $424,852 $54 7,484 $421,641 $56

TOTAL 140,848 $12,823,524 $91 135,342 $12,317,057 $91 131,903 $12,229,949 $93 128,820 $12,177,843 $95 121,823 $11,867,462 $97

1 2 1 56,812 $1,547,637 $27 56,315 $1,527,551 $27 57,691 $1,628,421 $28 57,783 $1,678,446 $29 53,829 $1,622,522 $301 2 2 51,352 $1,740,128 $34 47,771 $1,564,346 $33 46,115 $1,542,051 $33 44,553 $1,535,416 $34 41,976 $1,487,444 $351 2 3 28,748 $1,023,920 $36 28,586 $990,182 $35 29,800 $1,042,354 $35 30,147 $1,077,990 $36 27,705 $1,041,994 $381 2 4 52,591 $1,738,485 $33 50,595 $1,634,492 $32 49,281 $1,605,063 $33 48,512 $1,599,394 $33 45,730 $1,520,790 $33

TOTAL 189,503 $6,050,169 $32 183,267 $5,716,570 $31 182,887 $5,817,888 $32 180,995 $5,891,246 $33 169,240 $5,672,751 $34TOTAL BEST CUSTOMER 330,351 $18,873,693 $57 318,609 $18,033,628 $57 314,790 $18,047,838 $57 309,815 $18,069,089 $58 291,063 $17,540,213 $60

FEBOCTOBER JANUARYDECEMBERNOVEMBERSTRATEGIC GROUPS

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JUVENILE BUSINESS TRENDLINE

Overall the trend for the business is not good. Net contribution has begun to increase as unit sales fall and fixed overheads rations drop out of balance.

Comp sales have declined as follows;

•Q4 2008, -3.5%•Q1/2 2009, -7.2%

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JUVENILE RECOMMENDATIONS

1. Align acquisition expense to sales forecasts by bringing forecasting into the conversation,

2. Re balance overall marketing spend to focus the RFM segmentation on the top 1/3rd of the active customer file

3. Base all mailings on the value scoring RFM segmentation. Eliminate use of the demographic and Decile segmentations. They are hurting the business

4. Create an action team of marketing, finance and merchant to monitor the situation and report to the executive committee.

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DISCUSSION ANDNEXT STEPS