IMPERIALCAPITAL, LLC INVESTMENT BANKINGCONSUMER GROUPLIFESTYLE BRANDS: 2015 REVIEW
SECTION 1 3 17THE RECAP 31 49SECTION 2THE TRENDSSECTION 3THE INDUSTRYSECTION 4THE FIRMIMPERIAL CAPITALImperial Capital, LLC is a nationally recognized full-serviceinvestment bank with an integrated financial advisory andcapital markets platform. Consumer is the largest industrypractice at Imperial Capital and is led by an experiencedgroup of senior professionals. Imperial Capital has over 240employees and is headquartered in Los Angeles with offices inNew York, Boston, Chicago, Houston, Minneapolis, PalmBeach, San Francisco, and affiliated offices in London and TelAviv.01 |2015 FYE
CONTACTSFor more info about our Lifestyle Brands Practice and our particularemphasis within Apparel, Footwear & Accessories and Sporting Goods,please contact:BRIAN LITTLE, CFA AUSTIN COLLINSManaging Director Associate(310) 246-3627 (310) [email protected] [email protected] |IMPERIAL 02
THERECAP03 |2015 FYE
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2015 IN REVIEWWe’ve summarized the year gone by in three datapoints. Because a number isWith both the stock market and weatheroff to a temperamental start in 2016, it'seasy to lose perspective (buried underseveral feet of snow).Taking a look back at lessons learned in2015, let alone examining the underlyingthemes that will ultimately driveconsumer brands in the year to come, is atask that likely resides at the bottom ofyour New Year’s resolutions (right afterthat cleanse). That's what we're here for.We hope you enjoy the first installment ofthis publication, where we profess ourlove of Lifestyle Brands and highlightrelevant trends, performance, andthemes.Now if you'll excuse us, we're off to shovelthe metaphorical snow off of our own to-do lists.05 |2015 FYE
worth a thousand words… or something like that - The Active Apparel & Footwear1.1% sector increased by an average of 1.1%, outperforming the flat S&P and the only comp set positive for 2015$27 -Consumer deal volume of $27 billion led all middle market activity in 2014 and 2015, withbillion over 240 transactions in this past year alone$2 - Global M&A volume surpassed $2 trillion in 2015 (up 17% overtrillion 2014) with no signs of slowing in 2016Source: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 06
INSIGHTSTrends that will stand the test of time. Or will they?BRICKS VS. BROWSERS - Internet retail was up 88% in 2015, putting a figurative band- aid on traditional brick and mortar retailers, who continued to experience declining mall traffic, deflationary pricing in apparel, and greater competition from new channels including brands going DTC - Amazon, which led internet retailers with a y-o-y stock gain of 118%, noted that nearly 70% of its customers used a mobile device to make a purchase over the HolidayCURRENCY AFFAIRS - U.S. exports, for years bolstered by a weak dollar, have suffered as a result of the strengthening of the US dollar against most major currencies during 2015 - U.S. consumers, on the other hand, have benefited from the ability to travel and spend abroad with increased buying powerSTRAIGHT TO THE SOURCE - The success of fast fashion companies have forced brands, large and small, to rethink design schedule and sourcing to address an increasingly demanding consumer - Sustainability and ethical sourcing continue to be important to US consumers, and thus retailers, while brands struggle with the inability to pass through related cost increases07 |2015 FYE
ACTIVEWEAR SHOWED ENDURANCE - Stats for increased participation in the broader active/outdoor market (which accounts for nearly $650 billion of consumer spending annually) help to explain the continued surge in Activewear companies, which outperformed all other apparel in 2015 - Factor in the trend of performance apparel worn for leisure activities (e.g. grocery shopping) and it’s easy to see why investors remain bullish on the categoryWEATHER, OR NOT - Unseasonably warm and cold weather led to more promotional activity for many retailers. Outerwear particularly felt the heat as El Nino provided the warmest Winter on record for the Northeast - Elsewhere, snowfall was particularly strong in the west, a welcome sight for winter-focused action sports brands and snow angel aficionadosGRINCH MET HIS MATCH - Ubiquitous pre-holiday and ‘friends and family’ sales expanded selling season over more days resulting in smaller revenue spikes on Black Friday, Cyber Monday, Super Saturday and Boxing Day - Santa came to the rescue with retail sales growing 7.9% between Black Friday and Christmas Eve (against a forecasted 3.5%); women’s apparel led the way with double digit growthSource: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 08
SCORECARDWarren Buffet once said, “Rule No.1: Never lose money. Rule No.2: Never forgetTRADING STATS EV / LTM EV / LTM REVENUE EBITDA($ in thousands)$2,250$2,000 $1,750$1,500 Jan 2015 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Apparel & Fashion 5.0x 15.5x$120 1.5x 9.3x 0.4x 4.9x$100 $80$60 Jan 2015 Mar 2015 Jun 2015 Sep 2015 Dec 2015Active Apparel & Footwear$125 4.5x 17.2x$110 1.1x 11.1x 0.6x 5.5x$95$80 Jan 2015 Mar 2015 Jun 2015 Sep 2015 Dec 2015Trading statistics based off of company performance. Details can be found on pages 35-46.09 |2015 FYE
rule No.1.” But who’s counting? (We are) Accessories EV / LTM EV / LTM REVENUE EBITDA$105$95 6.2x 19.5x $85 9.3x $75 2.0x 0.5x 4.2x Jan 2015 Apr 2015 Jul 2015 Sep 2015 Dec 2015 Sporting Goods 4.1x 18.3x$120 1.2x 12.3x 0.4x 5.8x$105$90 $75 Jan 2015 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Retail 16.9x 2.9x$120 0.7x 5.9x$105 0.2x 3.5x $90 $75 Jan 2015 Apr 2015 Jul 2015 Sep 2015 Dec 2015Source: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 10
PULSE CHECKOur version of Hot or Not, minus the photos and mean-spirited natureTOP PERFORMERSApparel & Hanesbrands Inc. (HBI): +6.43% Fashion - “Hanesbrands profit boosted by recent acquisitions” MarketWatch, Oct. 15 - “Hanesbrands Tops Q3 Earnings &Revenues; Raises FY View” Zacks, Oct. 15Active Apparel & Skechers U.S.A., Inc. (SKX): +62.59% Footwear - “Skechers Set for Nice Run” Barron’s, Dec. 15 - “Skechers's Shares Rise as Profit, Sales Top Estimates” WSJ, Jul. 15Accessories ZAGG Inc (ZAGG): +58.55% - “Zagg Has A Bright Future Ahead (ZAGG)” Seeking Alpha, Feb. 15 - “ZAGG Enters Category Captain Partnership With Carphone Warehouse” Globe Newswire, Jul. 15Sporting Goods Amer Sports Corp. (AMEAS): +50.35% Retail - “Amer Sports expands in indoor cycling with Spinner line” Bicycle Retailer, Sep. 15 - “Louisville Slugger Is Sold to Amer Sports Oyj's Wilson Brand” Bloomberg, Mar. 15 Amazon.com, Inc. (AMZN): +117.78% - “Amazon Dominated Cyber Monday With 36% of All Online Sales” Fortune. Dec. 15. - “Why analysts are upping the numbers on Amazon” CNBC. Jul. 15.Performance for the 12 month period 1/1/15-12/31/15. Details can be found on pages 35-46. 11 |2015 FYE
LAGGARDSApparel & Vince Holding Corp (VNCE): -82.34% Fashion - “Boutique Retailer Vince’s Shares Plummet” WSJ, Sep. 15 - “Vince (VNCE) Stock Tanks Following Earnings Miss” TheStreet, Sep. 15Active Apparel & Deckers Outdoor Corp. (DECK): -47.40% Footwear - “Deckers Outdoor Corp. - Cautious Outlook” Seeking Alpha, Dec. Accessories 15Sporting Goods - “Deckers Outdoor Hits 52-Week Low: What’s Taking It Down?” Zacks, Dec. 15 Retail Fossil Group, Inc. (FOSL): -66.86% - “FOSL Stock: Is It Time to Bail on Fossil Group, Inc.” Profit Confidential. Aug. 15. - “Fossil Group Falls to 5-Year Lows After Lackluster Guidance” Motley Fool. Aug. 15. GoPro, Inc. (GPRO): -73.07% - “GoPro Inc: GPRO Stock May Never Recover From This” InvestorPlace, Oct. 15 - “GoPro (GPRO) Stock Falls in After-Hours Trading on Earnings Miss” TheStreet, Oct. 15 Pacific Sunwear (PSUN): -89.06% - “Brands that will disappear in 2016” USA Today. Nov. 15. - “Pacific Sunwear (PSUN) May Not be a Good Pick: Here's Why” Zacks. Sep. 15.Source: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 12
M&A OVERVIEW[insert self-serving quote here about record setting M&A markets and good time toTRANSACTION VOLUME count 450($ in billions) $45 402 314 290 279 269 288 272$30 244 244 246 240 300 238 206 150 219 182 155$15 $18 $24 $22 $37 $16 $19 $22 $28 $20 $27 $26 $32 $27 $22 $26 $23$0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Volume Deal CountCONSUMER TRANSACTIONS count 450($ in billions) 297$45 401 300 353 375 303 317$30$15 150 $28 $31 $35 $30 $39 $27$0 2011 2012 2015 0 2010 Volume 2013 2014 Deal CountNote: Middle-market defined as transactions between $25 and $300 million where pricing is disclosed. Deals in this report arefor announced transactions involving U.S. based companies.13 |2015 FYE
speak with a banker (see: Imperial Capital)]VOLUME BY SECTOR($ in billions) $45 $39$30 $27 $23 $25 $19 $19 $17 $20$15 $15 $14 $9 $9$0 Energy & Financials & Healthcare Industrials & Technology & Consumer Utilities Real Estate Materials Telecom 2014 2015CONSUMER MULTIPLES15.0x 12.1x 13.7x 11.4x 12.5x 13.4x 11.3x10.0x 2011 2012 2013 2014 20155.0x0.0x 2010Source: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 14
TRANSACTIONSLike we said – deals, deals, and more dealsQ1 Sweaty Simpson Louisville J. Jill Cycle Gear Betty Performance Slugger Acquired by Acquired by Acquired by Acquired by Acquired by TowerBrook J.W. Childs Catterton BRS WilsonMyFitnessPal Gilt Eyebobs McDavid Acquired by Acquired by Acquired by Acquired by Under General Norwest Shock Armour Atlantic DoctorQ3 Ben Manduka Shoe Hudson Jeans ShermanBackcountry Acquired by Sensation Acquired by .com Acquired by Valor Equity Acquired by Robert Acquired by Marquee Graham Brands Partners J.W. Childs TSG Santa Cruz P.J. Salvage Camelbak Belk Joe’s Jeans Bicycles Acquired by Acquired by Acquired by Acquired by Acquired by Delta Galil Vista Sycamore SequentialPon Holdings Outdoor Partners Brands15 |2015 FYE
Q2 Warby Parker Stuart Bravo Sports American Acquired by Weitzman Acquired by Recreation T. Rowe Price Acquired by One Acquired by Coach Industries Exxel Nine West Implus ANN Vanity Fair Corporation Acquired by Acquired by Acquired by Acquired by Authentic Ascena Perceva Brands Berkshire PartnersQ4 Nathan Sports Jarden Shoes for Crews Acquired by Acquired by Acquired by EZ GARD Newell CCMP Rubbermaid Flip Flop Shops J. Mclaughlin PRO-TEC Acquired by Acquired by Acquired by Cherokee Brentwood Bravo SportsSource: company filings, Thomson Reuters, S&P Capital IQ. |RECAP 16
THETRENDS17 |2015 FYE
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ATHLEISUREOptionality to break a sweat, and look good all the while$35 - size of the U.S. Activewear apparel market in 2014 (NPD Group) withbillion leaders including Nike, Adidas, Reebok, Puma, Under Armour, and Lululemon8% - increase in category sales year over year and it’s not a coincidence that denim jeans were down 8%93% - percent of consumers that wear Activewear for activities other than exercise. Over 65% are comfortable in Activewear outside of the houseConsumer Willingness to Pay More for Apparel with Following Features:80% 69% 71% 65% 69% 65% 69% 61% 68% 58% 64%60%40%20%0% Fit You Prefer Absorb Moisture Keeps You Dry Remains Odor Style Away from Skin Free 2009 2012Popularity of Athleisure continuesto soar as performance appareltranscends workouts19 |2015 FYE
“At Saks Fifth Avenue, we definitely believethat the trend toward athleisure iscontinuing to gain momentum. We see itmore as a lifestyle change”-Colleen Sherin, senior fashion directorWHERE DO YOU ATHLEISURE? 100% 85% 80%75% 65% 58%50% 2009 2012 42% 34%25% 20% 18% 16% 18% 13% 12% 10% 7%0% Shopping Out to Eat / School / Work Only for Around the Running Exercise House Errands Movie ClassSource: WWD, The Robin Report, Cotton Incorporated. |TRENDS 20
MILLENNIALSThey get to walk downhill to school, both ways. P.S. get off our lawn!1 in 4 - Americans are of the millennial generation. That’s 80 million millennials in the U.S. alone who are driving trends across the apparel industry$200 - annual buying power of U.S. millennials. This generation will have over $8 trillionbillion of annual net income by 202533% - of millennials that rely mostly on blogs for purchasing decisions. <3% of millennials look to traditional media for guidance1930 1940 1950 1960 1970 1980 1990 2000 2010 Greatest Generation (Until 1946) US Pop.: 141.4M Baby Boomers (Until 1964) US Pop.: 191.9M Generation X (Until 1984) US Pop.: 235.8M Millennials (Until 2004) US Pop.: 293.7MMillennials are a massivelyimpactful generation withconsumption driven byconnections to authentic brands21 |2015 FYE
VIEW OF U.S. MILLENNIALSBy MillennialsHardworking iPod rude music ambitious interestingfresh rock free pop hippies friendly apatheticopen-minded computers green consumersawesome party connected creative cool innovativecrazy good digital independent lazygreat spoiled social wild wise motivatedentitledtech-savvy internet hip punk smart confident alternative boring conservative lucky fun y2k young selfishdriven trendy intelligent liberal uniqueBy Non-Millennialsgreedy unmotivated educated Internet loving green carefree connected immature groovy intelligenthappy responsible grunge entitlementmoney independent young crazy driven ambitious smart hip lazy fun hardworking dumb entitled work wild gamers irresponsible social poortech-savvy awesome unemployed debt musichippies computer dependent good electronic naive energetic selfishcreative motivated rude spoileddisrespectful materialisticSource: U.S. Census Bureau, Harvard Center, Strauss & Howe, BCG Analysis. |TRENDS 22
FAST FASHIONFat margins, skinny deadlines, and a whole new set of logistics16% - average profit margins of fast fashion retailers vs. 7% for traditional retailers.17x Fresher inventories and lower carrying5 costs, drive higher profit marginsdays - the average number of annual visits per Zara customer vs. 5x at the Gap. It’s10 necessary due to a weekly introduction of 100+ new products by H&M and Zarawashes - time to ship from Turkey to the UK vs. 3 weeks from China. To meet the quicker schedule, fast fashion companies utilize close sourcing or expensive air shipping - the average number of washes fast fashion garments are expected to last versus 50+ washes for traditional apparelContinued momentum of fastfashion retailers indicative ofevolving consumer preferences;will continue to put pressure onthe sourcing (and margins) oftraditional retailers23 |2015 FYE
“What [fast fashion] has done is made the industry movefaster and work faster and have to produce more product.It's created a sort of year-round calendar for fashion asopposed to a biannual calendar for fashion.”-Ed Filipowski, President of KCDPRODUCT LIFECYCLETraditional Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21DesignProductionDistributionSales@ DiscountFast Fashion 4>21? Weeks 1 2 3 4DesignProductionDistributionSales@ DiscountSource: Retail Touch Points, industry reports, S&P Capital IQ. |TRENDS 24
OMNI-CHANNELNot quite as cool as omni-scient, but still way cooler than multi-channel71% - of consumers expect to be able to view brick & mortar store inventories online, while 50% expect the ability to buy online and pickup in-store1 in 3 - retailers have omni-channel capabilities.34% Consumers demand convenience when shopping and an omni-channel presence is now a brand differentiator - of consumers have used their mobile device to research products while in store and 45% are willing to purchase out of stock products if free shipping is offeredI expect the sales associate to have a mobile device that enables them to: Look up product information 50% Look up nearby inventory 44% Check store inventory 43% 40% Provide warranty or return policies 33%Reserve product for nearby store pick upConvenience is a key driver ofconsumer decision making; omni-channel capabilities are no longera ‘nice-to-have’25 |2015 FYE
WHAT IS OMNI-CHANNEL?SINGLE CHANNEL OMNI-CHANNELMULTI-CHANNELCROSS-CHANNEL FULFILLMENT 60% 0% 20% 40%Buy online, pick up in-store 11% 14% 9% 5% 17%Buy in-store, ship to customer 12% 6% 6% 18% 7%Real-time store inventory available… 17% 7% 8% 4% 10%Buy online, ship from store 18% 7% 10% 5% 5%Next-day delivery 4% 9% 11% 8% 6% 1st Priority 2nd Priority 3rd Priority 4th Priority 5th PrioritySource: S&P Capital IQ, Accenture, Forrester Consulting. |TRENDS 26
UNDERWEARNot your father’s underwear. Which, admittedly, would be wrong for many reasons$2.7 - the size of the U.S. men’s underwear market. The segment saw approximatelybillion 3% growth in 2014 with boxer briefs growing at the highest rate6% - the expected growth rate for men’sCAGR underwear for 2015-2020, driven by premium underwear with better fit and75% comfort35% - percentage of men that purchase their own underwear in 2014, versus historical average of 25 - the percentage of men that purchase underwear to specifically showoff the branded waistbandUnderwear has become theaccessory du jour; quality,innovation, and style continue todrive increased spending27 |2015 FYE
MOST POPULAR STYLE 41% 37% 22%Briefs Boxer Briefs Boxers $11BCATEGORY REVENUE $8B$4B2010 2015 2020Source: Garcon Model, Hanes Brands 2011 Investor Presentation, NPD. |TRENDS 28
SOURCINGProduct that makes you feel good inside and out (exception: your wallet)5,000 - the amount of water needed to manufacture a single cotton T-shirt andgallons a pair of jeans. Cotton alone is responsible for 2.6% of global water use1,074 - electricity needed to produce the estimated world supply of fabric. Thatbillion KWH amount could power >3.5 million households for a month50% - of consumers believe Made In the USA clothing is more eco-friendly than foreign sourcing. Also satisfies desire to support the domestic economyMarketing Terms Likely to Motivate Purchase 100% Cotton 74%Made in the USA 68% Natural 61%Environmentally-Friendly 53% Sustainable 51% 0% 20% 40% 60% 80%Increasing consumer awareness isimpacting decision making andbenefiting local, responsible brands29 |2015 FYE
“We can no longer see resources as infinite orignore externalities. We needed a new approach, away to see the reality behind our supply chains, tounderstand our environmental impact so that we canreduce it.” – KeringKERING ENVIRONMENTAL P&L tier 0: tier 1: tier 2: tier 3: tier 4: stores assembly manufacturing raw material raw material warehouses processing production officesair emissionsCHGSland usewaste waterconsumption waterpollutionSource: Eco Watch, Environmental Leader, S&P Capital IQ, Kering website., Cotton Consumer Perspective. |TRENDS 30
THEINDUSTRY31
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APPARELGLOBAL APPAREL MANUFACTURING North Asia Europe 35.8% 29.6% S. East Asia India & C. Asia N. America 15.1% 7.1% 5.0% S. America Africa & Middle East Oceania 5.0% 1.9% 0.5%GLOBAL RETAIL SALES($ in trillions)$30 $24 $25$25 $21 $23 $20$20$15$10$5$- 2014 2015 2016 2017 201333 |2015 FYE
U.S. INDUSTRY SEGMENTATION Accessories 16% Footwear 19% Apparel 65%U.S. WHOLESALE APPAREL SALES($ in billions)$180 $176 $169$160 $155$140 $144 $149$120 2011 2012 2013 2014 2015Source: U.S. Census Bureau, IBIS world, NPD. |INDUSTRY 34
APPAREL/FASHION($ in millions, except per share data) COMPANY NAME TICKER PRICE % OF 52 MARKET ENT. SYMBOL 12/31/15 WK HIGH VALUE VALUEBurberry Group plcCherokee Inc. BRBY $ 17.62 62% $ 7,743 $ 7,125Delta Galil Industries CHKE 17.25 58% 150 170G-III Apparel Group TASE:DELT 27.59 82% 702 770Hanesbrands Inc. GIII 44.26 60%Hugo Boss AG HBI 29.43 85% 2,015 2,133Iconix Brand Group BOSS 83.41 64% 11,531 14,026Kering SA ICON 6.83 18% 5,757 5,962Li & Fung Limited KER 171.54 80%Michael Kors Holdings 494 0.68 63% 331 1,816Perry Ellis International KORS 40.06 53% 21,658 27,385Prada S.p.A PERY 18.42 65% 5,722 6,890PVH Corp. 1913 46% 6,685Ralph Lauren PVH 3.11 57% 7,373Sequential Brands 73.65 60% 291 386Vince Holding Corp RL 111.48 43% 8,192 SQBG 17% 7,957 9,033 VNCE 7.91 6,035 9,127 4.58 9,442 807 478 244 168Source: company filings, S&P Capital IQ.35 |2015 FYE
ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 3,825 $ 854 1.9x 8.3x 10.5x 34 16 5.0x 8.3x 9.2x1,080 93 0.7x 14.6x 9.7x2,331 232 0.9x 10.1x 11.9x5,845 960 2.4x 11.0x 4.9x3,050 616 2.0x 8.8x 8.7x374 180 4.9x 9.5x 8.0x12,581 2,302 2.2x 15.5x 5.8x19,205 627 0.4x 9.5x4,594 1,359 1.5x 9.4x903 44 0.4x3,950 937 2.1x7,977 947 1.1x7,419 1,141 1.2x88 52 N/M315 42 0.8x MEAN 1.4x MEDIAN 1.3x |INDUSTRY 36
ACTIVE APPAREL &($ in millions, except per share data) COMPANY NAME TICKER PRICE % OF 52 MARKET ENT. SYMBOL 12/31/15 WK HIGH VALUE VALUEAdidas AGASICS Corp. DB:ADS $ 97.73 95% $ 19,566 $ 20,423Billabong International 63% 3,986 4,138Columbia Sportswear 7936 21.00 64% 353 457Crocs, Inc. 65% 3,429 3,092Deckers Outdoor Corp. ASX:BBG 1.78 64% 754 768Lululemon Athletica 49% 1,526 1,319NIKE, Inc. COLM 48.76 75% 7,270 6,866PUMA SE 92%Skechers U.S.A., Inc. CROX 10.24 92% 106,524 102,584Under Armour, Inc. 55% 3,230 2,858V.F. Corporation DECK 47.20 76% 4,720 4,345Wolverine World Wide 80% 17,397 17,938 LULU 52.47 47% 28,681 26,538 2,352 NKE 62.50 1,719 PUM 216.21 SKX 30.21 UA 80.61 VFC 62.25 WWW 16.71Source: company filings, S&P Capital IQ.37 |2015 FYE
FOOTWEAR ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 18,371 $ 1,510 1.1x 13.5x 11.4x3,716 363 1.1x 10.4x 10.0x798 44 0.6x N/M 5.5x2,326 310 1.3x 16.2x N/M1,091 4 0.7x 17.2x 10.8x1,837 241 0.7x N/M 13.6x1,959 423 3.5x 7.9x31,339 5,059 3.3x 12.3x 11.4x3,679 166 0.8x3,159 404 1.4x3,963 516 4.5x12,543 2,114 2.3x2,749 297 0.9x MEAN 1.1x MEDIAN 1.0x |INDUSTRY 38
ACCESSORIES($ in millions, except per share data) COMPANY NAME TICKER PRICE % OF 52 MARKET ENT. SYMBOL 12/31/15 WK HIGH VALUE VALUECoach, Inc.Essilor International COH $ 32.73 75% $ 9,083 $ 8,633Fossil Group, Inc.Kate Spade & Co. ENXTPA:EI 124.95 92% 26,519 29,232Luxottica Group SpAMovado Group, Inc. FOSL 36.56 33% 1,759 2,282Pandora A/SRichemont SA KATE 17.77 50% 2,269 2,451Safilo Group S.p.A.Skullcandy, Inc. LUX 65.60 89% 31,506 32,638Tiffany & Co.Vera Bradley, Inc. MOV 25.71 80% 592 453ZAGG Inc PNDORA 126.90 99% 14,750 15,000 SWX:CFR 72.01 79% 40,662 35,324 BIT:SFL 11.63 70% 729 840 SKUL 4.73 40% 135 121 TIF 76.29 71% 9,781 10,153 VRA 15.76 77% 599 537 ZAGG 10.94 86% 301 287Source: company filings, S&P Capital IQ.39 |2015 FYE
ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 4,238 $ 932 2.0x 9.3x 17.0x7,294 1,721 4.0x 4.2x 15.1x3,301 548 0.7x 16.3x 5.6x1,212 162 2.0x 16.5x 10.4x9,597 2,006 3.4x 9.5x 6.3x586 81 0.8x 10.0x 7.1x2,436 907 N/M 7.5x12,452 3,387 2.8x 8.6x 9.3x1,389 88 0.6x266 19 0.5x4,176 1,012 2.4x501 75 1.1x269 38 1.1x MEAN 1.5x MEDIAN 1.1x |INDUSTRY 40
SPORTING GOODS($ in millions, except per share data) COMPANY NAME TICKER PRICE % OF 52 MARKET ENT. SYMBOL 12/31/15 WK HIGH VALUE VALUEAccell Group NVAmer Sports Corp. ACCEL $ 22.88 100% $ 578 $ 756Black Diamond, Inc. 96% 3,437 3,937Callaway Golf Co. AMEAS 29.29 41% 129Dorel Industries Inc. 91% 145 812Escalade Inc. BDE 4.42 74% 847 1,295Fox Factory Holding 66% 730 209Gaiam, Inc. ELY 9.42 84% 187 666Giant Manufacturing 80% 611 138GoPro, Inc. TSX:DII.B 22.58 68% 153 2,543Johnson Outdoors 26% 2,491 2,003Mizuno Corporation ESCA 13.25 62% 2,477 156Performance Sports 86% 218 769Shimano Inc. FOXF 16.53 51% 606 909Vista Outdoor Inc. 92% 438 12,900 GAIA 6.24 90% 14,391 3,378 2,773 9921 6.64 GPRO 18.01 JOUT 21.89 8022 4.81 PSG 9.61 7309 155.24 VSTO 44.51Source: company filings, S&P Capital IQ.41 |2015 FYE
ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 1,071 $ 79 0.7x 9.6x 2,753 286 1.4x 13.8x 155 N/M 844 2 0.8x 18.3x 2,683 44 1.0x 8.0x 156 162 0.5x 11.6x 367 18 1.3x 11.9x 185 56 1.8x N/M 1,861 8 0.7x 14.0x 1,620 182 1.4x N/M 430 84 1.2x 5.8x 1,639 27 0.4x 12.1x 613 64 0.5x 16.0x 3,150 57 1.5x 15.4x 2,058 837 4.1x 11.6x 292 1.6x 12 .4x MEAN 1.1x 12.0x MEDIAN 1.1x |INDUSTRY 42
RETAIL($ in millions, except per share data)MASS & CLUB TICKER PRICE % OF 52 MARKET ENT. COMPANY NAME SYMBOL 12/31/15 WK HIGH VALUE VALUEAmazon.com, Inc. AMZN $ 675.89 97% $ 316,832 $ 314,571Best Buy Co., Inc. BBY 30.45 73% 10,436 8,728Costco Wholesale COST 161.50 95% 71,024 71,099Target Corp. TGT 72.61 85% 44,732Wal-Mart Stores Inc. WMT 61.30 67% 55,524 196,276 245,469($ in millions, except per share data)DEPARTMENT & OFF PRICE TICKER PRICE % OF 52 MARKET ENT. COMPANY NAME SYMBOL 12/31/15 WK HIGH VALUE VALUEBon-Ton Stores Inc. BONT $ 2.10 27% $ 44 $ 1,162Dillard's Inc. 3,264Hudson's Bay DDS 65.71 46% 2,413 5,515J. C. Penney 6,714Kohl's Corp. TSX:HBC 13.05 61% 2,376 13,675Macy's, Inc. 18,490Nordstrom Inc. JCP 6.66 66% 2,038 11,146Ross Stores Inc. 21,702Stage Stores Inc. KSS 47.63 60% 9,041 427Stein Mart Inc. 485The TJX Companies M 34.98 48% 10,997 46,977 JWN 49.81 60% 9,158 ROST 53.81 95% 21,793 SSI 9.11 39% 278 SMRT 6.73 40% 307 TJX 70.91 92% 47,476Source: company filings, S&P Capital IQ.43 |2015 FYE
ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 107,006 $ 7,879 2.9x N/M 3.9x40,114 2,217 0.2x 14.9x 7.5x116,553 4,765 0.6x 7.1x73,909 7,425 0.8x 6.2x 7.1x484,028 34,727 0.5x MEAN 0.5x MEDIAN 0.6x ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 2,803 $ 120 0.4x 9.7x 4.2x6,817 786 0.5x 12.1x 10.8x7,114 456 0.8x 5.3x 5.0x12,522 623 0.5x 6.2x 11.6x19,154 2,582 0.7x 3.5x 5.8x27,574 3,670 0.7x 11.0x14,287 1,792 0.8x 7.7x 6.2x11,722 1,875 1.9x1,627 121 0.3x1,353 83 0.4x30,287 4,271 1.6x MEAN 0.6x MEDIAN 0.6x |INDUSTRY 44
RETAIL($ in millions, except per share data)SPECIALTY RETAIL TICKER PRICE % OF 52 MARKET ENT. COMPANY NAME SYMBOL 12/31/15 WK HIGH VALUE VALUEAbercrombie & Fitch ANF $ 27.00 90% $ 1,815 $ 1,751American Eagle AEO 15.50Ascena Retail Group ASNA 9.85 84% 3,017 2,654Boot Barn Holdings, Inc. BOOT 12.29The Buckle, Inc. BKE 30.78 56% 1,908 3,391Chico's FAS Inc. CHS 10.67DSW Inc. DSW 23.86 36% 324 539Finish Line Inc. FINL 18.08Foot Locker, Inc. 65.09 55% 1,479 1,330The Gap, Inc. FL 24.70Genesco Inc. GPS 56.83 56% 1,486 1,442L Brands, Inc. GCO 95.82Pacific Sunwear LB 0.24 60% 2,067 1,976Urban Outfitters Inc. PSUN 22.75Zumiez, Inc. URBN 15.12 62% 811 756 ZUMZ 84% 8,934 8,187 56% 9,927 10,637 70% 1,255 1,446 95% 27,734 32,180 8% 17 138 48% 2,669 2,565 36% 403 354($ in millions, except per share data)SPORTING GOODS RETAIL TICKER PRICE % OF 52 MARKET ENT. COMPANY NAME SYMBOL 12/31/15 WK HIGH VALUE VALUEBig 5 Sporting Goods BGFV $ 9.99 65% $ 219 $ 283Cabela's Incorporated CAB 46.73Dick's Sporting Goods DKS 35.35 79% 3,239 7,496Hibbett Sports, Inc. HIBB 30.24Sportsman's Warehouse SPWH 12.90 59% 4,065 4,339 54% 689 647 87% 542 768Source: company filings, S&P Capital IQ.45 |2015 FYE
ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 3,525 $ 343 0.5x 5.1x 5.7x3,488 463 0.8x 7.2x 11.6x5,281 474 0.6x 4.9x 5.1x523 47 1.0x 6.2x 5.7x1,141 273 1.2x 7.8x 4.5x2,672 282 0.5x 5.8x 12.8x2,588 317 0.8x N/M 5.2x1,860 133 0.4x 3.8x7,316 1,056 1.1x 5.6x 5.4x16,120 2,373 0.7x2,983 250 0.5x11,828 2,517 2.7x800 (1) 0.2x3,443 496 0.7x820 93 0.4x MEAN 0.7x MEDIAN 0.7x ENTERPRISE VALUE /LTM LTM LTM LTMREV. EBITDA REVENUE EBITDA$ 1,004 $ 48 0.3x 5.9x 3,864 443 1.9x 16.9x 7,191 771 0.6x 5.6x 937 131 0.7x 4.9x 703 56 1.1x 13.6x MEAN 0.8x 7.5x 5.8x MEDIAN 0.7x |INDUSTRY 46
THEFIRM47 |2015 FYE
IMPERIALIMPERIAL - Full-service platform, with breadth ofCAPITAL product expertise to allow bankers to effectively offer range of transaction alternatives and advice - Product capabilities effectively married with deep vertical focus and expertise provided by seasoned industry bankers - 12 industry verticals covered, with Consumer being the largest - Unique leveraged finance platform and resources that can help in execution of M&A processesCONSUMER - Leading advisor to premium consumer companies with particular focus onGROUP dynamic, lifestyle brands - Led by an experienced group of senior professionals who have deep sector expertise and a proven ability of communicating brand value and growth prospects - Unique in its ability to tell platform opportunity stories for high-growth, earlier stage brands at exciting inflection points49 |2015 FYE
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