Navy Exchange Service Command Caring Committed Connected Navy

Navy Exchange Service Command Caring, Committed, Connected

Navy Exchange Dual Mission • Providing Sailors and Navy Community Quality Goods and Services at a Savings • Supporting Navy Quality of Life Programs “The creation of supplemental source of funding for the military MWR Program is to be considered a secondary mission when establishing pricing” - Do. D Instruction 1330. 9 A Critical Non-pay Benefit for the Navy Family 2

Our Navy Exchange… Caring, Committed, Connected S $2. 7 B ales Active Duty, Retirees, Reservists, Guard, Family Members $43 M to MWR 23% 14, 000 Associates Worldwide 27% Navy Family Members Savings 2, 257, 738 Total Navy Eligible Shoppers 104 42 160 Navy 37 MSC 104

2011 Store Performance - Total ‘ 11 Sales ’ 11 GM% Growth Segment Sales % of Sales ‘ 10 GM% GM $ Variance Main $1, 295. 5 M 63. 8% 23. 02% 23. 40% +3. 2 M Small $351. 2 M 17. 3% 3. 2% 26. 05% 25. 93% +3. 2 M Specialty $353. 5 M 17. 4% 4. 9% 26. 96% 26. 95% +4. 5 M Total $2, 030. 0 M 100. 0% +3. 2% 23. 96% 24. 20% +10. 9 M

2011 Store Performance Consumables: Candy, Food, Tobacco, Beverage, Spirits Segment Sales % of Sales ‘ 11 Sales Growth FY 11 GM% FY 10 GM% GM$ Variance Main $181. 8 M 34. 8% +0. 9% 23. 71% 24. 21% -500 K Small $232. 2 M 44. 4% +4. 4% 27. 43% 27. 34% +3 M Specialty $100. 4 M 19. 2% +8. 2% 26. 39% 26. 17% +2. 2 M Total $523. 1 M 100% 4. 0% 25. 53% 25. 65% $4. 5 M

CANDY & NUTS DEPARTMENT SUMMARY May 2 -4, 2011 Caring, Committed, Connected

CANDY & NUTS DEPARTMENT SUMMARY Opportunities: Power Wing Shippers (Power Panels) One-time Buys Seasonal Candy- 4 Main Seasons- Huge Business trending at about 20% of total Innovation in Nuts/Trail Mix for One-time Buys Main Store Customer- Seasonal, Larger Pack Sizes Mini-Marts- Convenience, single packs- instant consumables

GROCERY, SNACKS, & PERISHABLES DEPARTMENT SUMMARY DRY GROCERY, SNACK, AND PERISHABLES FY 2011 Total SNACKS DRY GROCERIES 50% 47% OTHER GENERAL GROCERY 0% SEASONAL FOODS Total FROZEN CHILLED PRODUCE 3% 61% 48% 37% 4% FRCUT FISH/POULTRY 1% FRCUT BEEF FRCUT PORK OTHER PERISHABLE Total PREPARED 1% 0% 9% 34% 0. 1% 100% Total 5% Sales $ LY 76, 298, 913 70, 499, 461 22, 983, 793 20, 546, 127 21, 574, 334 20, 360, 673 % Sales $ Sales Units % Sales vs LY Sales Units LY Units vs LY 8. 23% 35, 212, 487 33, 977, 623 3. 63% 11. 86% 10, 997, 749 10, 588, 752 3. 86% 5. 96% 11, 668, 374 11, 204, 711 4. 14% 201, 905 219, 109 (7. 85%) 113, 602 90, 901 24. 97% 1, 483, 381 46, 243, 413 12, 365, 979 9, 628, 422 1, 072, 217 1, 160, 178 42, 286, 087 12, 013, 774 9, 181, 741 913, 350 27. 86% 9. 36% 2. 93% 4. 86% 17. 39% 282, 758 23, 062, 483 4, 656, 245 4, 443, 423 765, 702 204, 723 22, 089, 087 4, 660, 680 4, 446, 855 647, 271 38. 12% 4. 41% (0. 10%) (0. 08%) 18. 30% 207, 640 97, 926 112. 04% 28, 576 15, 991 78. 70% 137, 808 55, 903 2, 431, 003 25, 814, 734 84, 238 4, 156, 529 77, 510 36, 619 2, 169, 143 24, 425, 195 64, 868 3, 723, 311 77. 79% 52. 66% 12. 07% 5. 69% 29. 86% 11. 64% 16, 323 5, 033 1, 047, 378 10, 927, 551 35, 129 1, 187, 324 7, 601 2, 849 1, 003, 938 10, 750, 905 34, 280 1, 103, 351 114. 75% 76. 66% 4. 33% 1. 64% 2. 48% 7. 61% 4, 156, 529 3, 723, 311 11. 64% 1, 187, 324 1, 103, 351 7. 61%

GROCERY, SNACKS, & PERISHABLES DEPARTMENT SUMMARY Total Top Locations and Segmentation Sales $ LY 76, 298, 913 70, 499, 461 7, 070, 633 6, 091, 440 4, 744, 721 4, 437, 989 % Sales $ vs LY 8. 23% 16. 07% 6. 91% Total NEX FACILITY BAH ORLANDO MCCOY ST GROCERY 9% 6% PEARL HARBOR MALL GUAM HOSP MM/GAS (6) GREAT LKS STUDENT ST PEARL HOLOMOKU MM PEARL HALSEY MM SAN DIEGO MURPHY MM PENSACOLA FLEET ST SINGAPORE MAIN ST NEX ROTA GATEWAY MAL MAIN HOUSING FLEET MAIN 3% 2% 2% 2% 1% 1% 1% 2, 177, 427 1, 447, 870 1, 310, 801 1, 212, 399 1, 202, 025 1, 145, 917 1, 132, 589 1, 116, 711 1, 067, 622 2, 027, 116 1, 179, 308 1, 500, 584 1, 139, 267 1, 218, 743 1, 137, 751 1, 067, 647 975, 116 987, 907 7. 42% 22. 77% (12. 65%) 6. 42% (1. 37%) 0. 72% 6. 08% 14. 52% 8. 07% SAN DIEGO QMART CLSD S DIEGO QUICK MART YOKO MAIN STORE NORF AIR STATION MM GUAM NCTS MAIN (20) FLEET MAIN MINI MART HOUSING 1% 1. 8% 1% 1, 048, 210 1, 381, 907 986, 317 969, 698 900, 618 1, 550, 016 0 1, 024, 436 699, 331 693, 463 (32. 37%) NA (3. 72%) 38. 66% 29. 87% Mini Mart and Fleet: • Impulse and immediate consumables focused Grocery and Housing: • Focus on both grocery and convenience with depth of core grocery items Seek : • Innovation • Convenience packaging • One time buy opportunities • Power Wings / Panels • Shippers

MWR and NEX Partners Delivering Qualify of Life CNO Senior Navy Leadership Balances Programs Joint MWR/NEX Bo. D • Strategic Direction • Financial Goals and Objectives • Profit Distribution 70% MWR Share 25% To Installations NEX Net Profit 100% NEX Profits Support Sailor Programs • Joint Base Events 30% NEXCOM Share • Name Brand Food • Telecommunications/ Internet • Internal Audit Support • Wounded Warrior Support Construction/Renovations Information Systems Equipment 10 Connection More Than Dividend Distribution

Unique NEX Strategy Overlaps into Four Major Retailing Segments Discount Mass Retailer Wal*Mart, Target, Kohl’s, TJ Maxx, Clubs Department Stores and Specialty Macy’s, Penney’s, GAP, Coach, Limited Focused Discounter Home Depot, Best Buy, Sports Authority C-Stores 7 -11, WAWA, Sheetz, am pm 11 11

Navy Exchange Customer New to the Navy, Married and single, male and single active enlisted, they have duty enlisted, no disposable income children, they spend mainly primarily 18 -44, on themselves. not price Brand name sensitive; brand oriented and style generally not price conscious. Live sensitive. off base or in on -base housing. Active Duty married and single with children, primarily 25 -44. Limited disposable income, working to make ends meet with family needs. Retired from the military, almost all 45 -64. Receiving multiple retirement incomes. Half do not have children living at home. Seek quality and value and are above average spenders. Retired, 65+. Receiving military retirement and social security. Loyal to shopping at the Exchange. Many have significant disposable income and prefer high quality 12 and brand names.

NEXs Operate Differently from Commissaries • Commissaries are subsidized with taxpayer dollars that pay salaries and operating costs • NEXs operate like civilian retailers … profits must pay salaries, insurance, retirement benefits, the cost of renovating and building new stores and purchase inventory 13

Exchanges & Commissaries Commissary • Appropriated fund program • Operating costs supported by taxpayers • Prices based on cost plus 5% surcharge • Limited non-food assortment Navy Exchange • • Non-appropriated fund program (NAFI) Self-supporting except overseas transportation costs Prices included markup to cover operating expenses and provide MWR dividend Broad assortment 14

Social Connection Facebook Twitter You. Tube Video 15 Digital Flyer 15

Social Media 124, 145 Likes 580, 000 Flyer Sign-Ups 310, 000 Email Sign-Ups 27, 000 Text Message Sign. Ups Demographics: 56% Female 44% Male 26% Ages 18 -24 27% Ages 25 -34 20. 3% Ages 35 -44 46 Countries 46 Languages

Vendor Community-Points of Interest NEX Offers: • • • A unique channel of trade to try different ideas and offers A trading partner that is not going out of business An A-1 Credit Rating An outstanding repeat clientele A customer base that develops lifetime brand loyalties during their time in service. 17

Bottom Line Is……… If ANYONE deserves the NEWEST PRODUCTS, the BEST DEALS, the BEST SERVICE, and SPECIAL CONSIDERATIONS… It is the men and women that serve our country! YOU play an important role in delivering this to our customers!!! 18