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YLiving.com Discussion q3 Hindsight & q4 priorities 2013. Session Objectives. Review of 2013 YTD Performance – Financial and Operational Align on Q4 Forecast and Key Priorities. 2013 YTD Recap (through 9/30/13). Financial
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YLiving.com Discussion q3 Hindsight & q4 priorities 2013
Session Objectives • Review of 2013 YTD Performance – Financial and Operational • Align on Q4 Forecast and Key Priorities
2013 YTD Recap (through 9/30/13) • Financial • Year-to-date YCS Bookings $8.2M vs. plan $9.9M (-20%) & +31% comp to LY • Q3 Results were tough; -$1.5M to plan (-37%); -620k (-19%) to revised forecast; • to forecast $200k Knoll miss, $60k bath, $360k balance • Q4 forecast resubmitted to reflect an additional $800k of risk ($400k bath; $400k YV); bringing total Q4 miss to plan to $1.15M (-27%) • Total YCS demand forecasted to miss annual plan by -20% and deliver a 27% comp. • GAAP Revenues forecasted to miss annual plan by -18% and deliver a 31% comp. • Gross Margin is 31.3% YTD vs. 32.5% target, forecasted at 31.9% on annual basis. • Improved a bit in q3 with August Margin rate @ 32.2% (highest of the year) • Should continue to improve as we take advantage of inventory @ a discount, adjust shipping methods/fees to control COGS worst offenders, implement brand shipping policies, allow upgraded WG) • Freight revenue is becoming material: projected at $200k TY vs. $40k LY • New Brand additions are driving significant growth: • Revenue attributed to NEW vendors that were not in our matrix in 2012 represent appx. 15% of September revenue and 8% YTD. Key additions from Spacify include: Catellan Italia, Steelcase & Rossetto. • Significant Brands exceeding plan: Modloft, Bludot, Tom Dixon, Modernica, Loll, Modern Fan, Fiam • HMM & Knoll are around +15% comp—outperforming flat plans (but with volatility) • Significant Brands missing plan: Calligaris, Domitalia, Emeco, Vitra, Gus • Kartell had a promotional shift in July, so is now -7% to LY, but should recoup that in October; will still miss plan for the year.
2013 YTD Recap (through q3) • Marketing • Total Traffic soft to plan: forecast at 32% growth for the year (1.8M uniques); YV experiencing high variability in traffic comp’s with significant weakness since May. • Organic traffic is in freefall: q3 -31.1% comp; • PPC/SEM ROAS is underperforming; We are spending to plan for less than planned results • Direct P-rev showed growth in q3 +38% to LY • We have executed promotions well to mixed results: • Gus Sale in January –flat performance to LY • Knoll Sale in Feb/March was successful +110% comp; YET September dropped 50% • HMM Sale was flat even though we did everything possible to drive results; next big one 11/25-12/12 • We have executed more editorial oriented home page & email messages than LY. • Sales • Sales team in flux: Allison went to a competitor; Amy is selling a ton, but with training opportunities, Craig is new. Opportunities to implement more formal processes with lead follow up should be addressed. • Drupal cart impacts quoting system in that orders aren’t pushed into YCS w/o payment; follow up on quotes is made more difficult; impact was felt during Knoll sale for the first time. • Site Experience • We have made slight site improvements as we work toward shared templates but there is much to be done. • Launched new home page with Bath • We had major hiccups with cart on first/last day of Knoll sale where prices were not syncing in cart quickly enough and there was clear business impact. • SOLR search launched
2013 YTD Recap (through q3) • Operational • The core product/merchandising team is adjusting well to the realignment. Early indications are good that the level of engagement is improved and the team is working together more closely with a shared definition of success. • We have pivoted to execute the Holiday site experience which includes October BIG brand promotions as well as a gifting experience. • Queue work is centered on refreshes and accessories for holiday; We launched 1566 products in q3 which was just short of plan 1600 & an improvement vs. 2232 in the entire first half. • We fully refreshed Knoll, Kartell, GUS & Vitra in the quarter. 4/5 Tier 1’s now refreshed. • Site reviews are driving best practice conversations & training the team • We have increased our investment in inventory in order to compete and improve gross margins; this has stressed the team/systems as our tools/reporting/processes are laborious and involve many pass-offs • But, Alex is catching up and making a dent on inventory management; On YV we have reviewed most BOX based vendors; updated assortments. • Pro-actively for holiday, we have reviewed (hope to get to all by eom October) all box-based YV vendors to ensure assortments are current and stocked where appropriate. • Swatch follow up process is very much needing retooling; feedback from Sales that customers aren’t getting their swatches in a timely manner from vendors; no clear reporting or visibility with current process.
2013 Q4 Forecast and Key Focus Areas • Annual forecasted GAAP of -18% to plan is the RISK. While we’re projecting growth of 31%, it is not plan of 60%. There is more opportunity to captureand groundwork to lay for 2014 growth. • YV needs to focus on execution to deliver as close as possible to planby: • Continuing to launch new brands that will deliver meaningful SALES and build out furniture categories that are strategically relevant. • Refreshing all brands to ensure assortment is current-now moving through tier 2 • Hitting the targets of product additions (1500 per quarter average) • Execute Holiday promotions flawlessly with full support –Herman Miller, Kartell, Vitra, Gus • Delivering a compelling Gift experience on 11/4 • Align approach for ensuring Holiday orders are a great customer experience; review site assortment to reduce discontinued items; out-of-stocks; order promptly when needed from vendor; • Competing for conversion with inventory availability where possible. • To drive future growth, it is critical that YV take advantage of the full Ybrand platform, sharing a site/cart with Ylighting and deliver improvements to our site experience • Building the foundation for this tabbed site/shared cart experience is the goal of q4 • YV template improvements to be consistent w/ YL • Global Navigation/footer launch • Improvements to cart; 1.5 release
Q4 Priorities • Category/Assortment Strategy • Continue to recruit brands to fill out major furniture categories; Recruit kids brands; Great gifts • Execute Compelling Holiday Gfit Guide including Gift Wrap, Gift Message, Gift Card and “order by messaging” • Execute BIG SALE events (Kartell, HMM, Vitra, GUS) holistically & try to capitalize • Product Data Management • Fully refresh —Calligaris, Modernica, Modloft, Copeland • Launch new products from existing brands concurrent with availability (as prioritized via mm) • Target : Add 1200 products • Improve Site experience • Standardize YV templates with YL new standard to prepare for future • Launch new YV homepage with Global navigation/footer/lightbox/TOPNAV/homepage templates (11/4) • Continuously improve search results with improved data • RTI on 70% of applicable business by end of year • Deliver Cart 1.5 • Marketing & Sales • SEO improvements; focus on important categories/brands • Continue to refine PPC /retargeting—targeting 95% vs. Plan • Support marketing initiatives: Initiate engagement with relevant Editorial content and more planful approach to 2014 • Support planning for integrated brand campaign in q1 2014 • Support customer retention OFI--Grow Email database--Opt-in swatch email addresses, light-box homepage signup • Sales lead process for HMM Sale in November –swatch follow up process • Improve Operations/Logistics • Continuous improvement on customer experience; WG upgrades, reduction of damages and improvement in margin • Tighten up gift order delivery; build process to ensure orders aren’t sitting, waiting to be passed to vendor; • Box –Thanksgiving coverage? • People • Fully onboard merchandise manager & recruit 1 additional ; Onboard Inventory planner & Content Lead & Establish criteria for success • Define role for Sales ops, Recruit & onboard • Team transformation to high-performing! Focus on team dynamic between YV merch/product content/CS/Sales –align expectations, process and goals.