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Presentation by
Edward Kennedy, President & CEO
The North West Company
Manitoba Investment Forum; November 10, 1999
“WHY INVEST IN NORTH WEST?”
1. Who We Are
2. Our Investor Values
4. Yield
3. Growth
“Our vision is to be the mostsuccessful small market
retailer in North America.”
Stores - Canada (142) $470 million
Stores - Alaska (26) $150 million
Catalogue - Canada $ 25 million
E-Commerce -----
REVENUE BY CHANNEL
“WHY INVEST IN NORTH WEST?”
1. Who We Are
2. Our Investor Values
4. Yield
3. Growth
!
VALUES we strive to be known for...
customer
community
employee
INVESTOR
“To our investors, we want tobe known for delivering total
returns that achieve topquartile performance
measured against otherpublicly-traded companies in
North America.”
“WHY INVEST IN NORTH WEST?”
1. Who We Are
2. Our Investor Values
4. Yield
3. Growth
!
!
GROWTH
" Grow with the North
Source: Statistics Canada Census 1996
49%34%
Population Under 25Years of Age
NWC Markets
CanadianAverage
Northern CanadaGrowth Rate
CanadianGrowth Rate
2.3%1.1%
ECONOMIC DRIVERSECONOMIC DRIVERS
Populationgrowth,Political action,Land claims
Increased spending onhousing &infrastructure
Increased employment, spending in all non-food categories
NATURAL RESOURCES MARKET
New capacity Jobs, overtime,increasedemployment andspendingin all non-foodcategoriesABORIGINAL MARKET
Resource pricecycle
GROWTH
" Grow with the North
# Increase market share
MARKET SHARE BY CUSTOMER TYPE
“Convenience, creditand impulse-driven atlow price points”
% ofTotalMarket
NWC50%
Outshopping50%
LocalCompetition
30%
Outshopping40%
LocalCompetition
25%
LocalCompetition
20%
NWC30%
60% 25% 15%
“Quality andselection-drivenat medium pricepoints”
“Trend-drivenyouth customers”
Outshopping25%
NWC30%
MARKET SHARE GROWTH STRATEGIES
$ More store space for food and convenience-driven needs
$ More catalogue space for selection-drivenneeds
$ Lower price points$ Better execution in foods$ Invest in complementary services
GROWTH
" Grow with the North
# Increase market share
% Achieve potential in Alaska
& Streamline support costs
ALASKA STRATEGIES
& Focus on food and everyday needs
& Invest in high potential locations
& Build expertise and “brand”
ACHIEVE POTENTIAL IN ALASKA
$0.6
$3.6
$6.3
$2.2
$3.3
$2.2
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
1995 1996 1997 1998 19986Mos.
19996Mos.
EBITDA $
ACHIEVE POTENTIAL IN ALASKA
0.5
4.73.01.9
11.310.712.1
10.1
02468101214
1995 1996 1997 1998
Alaska Canada
EBITDA %%
GROWTH PERFORMANCE 1995 - 1999*
$0.68
$1.18$1.40
$1.82
$0.70$0.92
$0.00
$0.50
$1.00
$1.50
$2.00
1995 1996 1997 1998 19986Mos.
19996Mos.
Earnings Per Unit BeforeUnusual Items
* Earnings per share for 1995 - 1997
“WHY INVEST IN NORTH WEST?”
1. Who We Are
2. Our Investor Value
4. Yield
3. Growth
!
!
!
100% - 15 M units100% - 15 M units
NWF STRUCTURENWF STRUCTURE
UNITHOLDERS
100% - sub debt $175 M100% common 15 M shares
NWF
NWC
$11.67 sub debt @ 12.5%1 common share
EACH UNIT
NWF
NWC
Income distributable per unit:1999 - 1.44
$37.9$33.3
$44.1 $42.2$45.1
$22.0
0.00
10.00
20.00
30.00
40.00
50.00
PRE-TAX CASH FLOW
1994 1995 19961997
1998
$ in millions
1999
6 Mos.
DEBT : EQUITY
177 175 172 172
178
$ Millions
169160 147 160
164
140
1.3
1.1
1.3
1.1
1.2
1.1
0
50
100
150
200
250
1994 1995 1996 1997 1998 SA 99
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
Debt Equity debt : equity
“WHY INVEST IN NORTH WEST?”
1. Strong, focussed retailer withdeliverable plans
2. Earnings growth potential of10% +
3. Yield potential of 10% +
+
+
= Total returns of 20% +
!
!
!
!
QUESTIONS?
For additional information on the Fund orthe Company, please call 204-934-1501 ortoll-free 1-800-563-0002; fax 204-934-1317;e-mail [email protected]….or visit ourweb site www.northwest.ca.
MERCHANDISING INDICES:MERCHANDISING INDICES:
FOOD STORES 57.8%
NWF.UN 18.5%
SPECIALITY STORES 14.0%
TSE 2.1%
MERCHANDISING 0.3%
DEPARTMENT STORES -21.1%
WHOLESALE DIST. -31.1%
HOSPITALITY -54.7%
OTHER COMPARABLES:
Canadian Tire 41.10 1.0 19.2Sears Canada 26.00 0.9 18.3Wal-Mart 95.38 0.4 49.7
Empire 25.30 1.1 5.5Loblaws 40.50 0.5 38.2Safeway 51.50 -- 32.9
NWF.UN 14.35 8.3 7.9*
* Does not include a $0.74 charge related to Canadian re-structuring
ClosedApr.5 /99 Yield % P/E
& Leverage local market knowledge curve
% Accelerate Alaska Performance Trend
& Increase “mid-sized” new store growth rate
& Move on opportunities created by localmarket consolidations
& Exit “can’t be fixed” locations
& Expand in-store offer for food, everyday needsand financial services
# Increase Canadian Market Share
& Expand catalogue offer for apparel, AF&E
& Shift to more “extreme value” price points
& Build people capability in foods
& Achieve 5% comp. sales growth by 2000
" Achieve Canadian productivitygains
“V2K+” GROWTH STRATEGIES
# Increase Canadian market share
% Accelerate Alaska performancetrend
