Mervyns Introduction & Background  Founded in 1949  Over 200 stores in 13 states  20,000 associates

 3 regions, 23 districts  Acquired from Target in Aug ’04 by Cerberus International  Logo: “Big Brands, Small Prices” Mervyns Introduction & Background

Mervyns Upland Background  One of 12 stores in District #215  30 years old with several tenured associates

Mervyns Upland Core Vision  To become a well presented neighborhood department store that gives great service and offers value with “Big Brands, Small Prices”.

Upland Performance Strategy Goals for 2006  Sales – attain $20M = +9% over 2005  Credit – attain 9,116 applications = +18% over 2005  Team Empowerment – Training and development of associates through 12 month training topics.

Statistics  Average pay per associate $7.00/hr  All associates non-benefited  GE Credit pays Mervyns $10.60 per approved credit account $11,000,000 paid last year (2005) $3,070,300 paid YTD (2006)  Average number of accounts opened by a Credit Roamer daily: 12

Opportunities  Achieve a 9% increase over 2005 sales  Achieve an 18% increase over 2005’s credit results

Solutions  Add one dedicated FTE as a Credit Roamer at 40 hrs / wk  Additional training for Credit Roamer  Rotate Credit Roamer throughout the store

 For every dollar invested in a Credit Roamer, $11.63 is realized as profit Output201,920 Input 17, profit Revenue Analysis

Breakeven Analysis  Fixed cost: $301 Wages and Training  Revenue: $76.60 $66 spent by customer $10.60 paid to Mervyns by GE  Variable Cost: $1 Mervyns pays to the employee who opens the credit account

Breakeven Analysis  FC = Fixed Cost  R = Revenue  VC = Variable Cost  BE=FC R-VC  Q BEP = – 1 = BE = 3.98

 3.98 accounts to break even  12 accounts is 48% of store’s daily credit goal  34 accounts a day 12,036 accounts a year  $3,224,000 annual sales, exceeding goal of $1,622,000 for Breakeven

 Problem: To achieve 9,116 approved credit applications  Solution: Add 1 F/T dedicated Credit Roamer  Results: $3,224,000 = Sales Revenue generated $1,622,000 = 2006 goal achievement Conclusion