This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Luxury Market Update2012 Outlook

June 10, 2009

20092007200620052004

EMBARGOEDFor more information and approved use, contact:

Christopher FoxMedia RelationsBain & CompanyPh: 646-290-6103Email: christopher.fox@bain.com

2This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

0

40

80

120

160

€200B

1995

76

1996

84

1997

93

1998

98

1999

111

2000

130

2001

134

2002

134

2003

128

2004

134

2005

146

2006

159

2007

170

2008E

170

Worldwide Luxury Goods Market trend (1995-2008 E)

CAGR 95-0014%

CAGR 00-040,8%

11% 10% 5% 14% 17% 3% 0% -5%

+6,5%

CAGR:6,5%

5% 9%

In 2008 the luxury goods market was flat

+0%

CAGR 04-08 E6%

9%

3This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

In 2009 we expect the market to shrink by 10%

Bain Forecast April 2009

0

50

100

150

€200B

2008

170

2009FK

154

-10%

Source: Bain analysis

Main Assumptions

• First semester average market trend as the worst actual one: -15%-20%

• Slower decrease in the second half of the year: -5% - 0%

By semester

By channel

• Retail Like-for-Likedecreasing as the current trend (-5%, -10%)

• Compensation effect to the decrease of already committed new openings and full potential of 2008 numerous new openings

• Wholesale crisis as for actual order campaign (-20%) with aggressive mark-down campaigns (-30% on 50% of products)

ESTIMATES

At constant exchange rates – assuming no

change in the forex for 2009

4This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

We developed long-term forecasts for luxury market following a twofold approach

Top-downapproach

Bottom-upapproach

• Regression based on correlation of Luxury market and real GDP between 1995-2008

• Market forecast based on GDP projections by geographical area

• Market estimates based on benchmarking of competitors’current trading and sell-in/sell-out projections for the next seasons

*wholesale calculated through average mark-ups

• Bain Luxury Study

• Analyst reports

• Worldwide trade associations

• International Monetary Fund (World Economic Database)

• Bloomberg research

• Interviews to-players’ top management

-industry experts-luxury retailers

• Analyst reports

Methodology Sources

Luxury goods marketForecasts

5This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

We found strong historical correlation between Luxury market and key macroeconomic facts

0

100

200

300

Real GDP

WW Luxuymarket

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Indexed (1995)

Luxury market and GDP development (current exchange rate)

0.0

0.2

0.4

0.6

0.8

1.0

Rea

lG

DP

0.96

Tourist

arr

ival

s

0.96

Housi

ng

price

s

0.90

Wealth

(liq

uid

ass

ets

)

0.72

Dis

p.

inco

me

0.72

Sto

ckprice

0.20

Consu

mer

confidence

0.01

Pearson correlation (-1 to +1);Example Europe Luxury market

1.3 0.9 0.32.01.8 0.70.2Growthmultiple

Correlation of Luxury market with macro-indicators (EU

example)

Luxury market outperformed economic development

Luxury market development closely related macro-indicators

Luxury market can be forecasted using GDP projections

6This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Order taking will be negative until FW10

Order taking 2009 Order taking 2010

Also order taking forecasts can be a proxy of market trend for next 12-24 months

7This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Luxury market will not recover before 2012

• Dramatic decline of -10% in 2009

• 2007 market value recovered by 2012

• GDP trend:-strong contraction in 2009-flat in 2010-recovery beginning 2011

• Luxury reaction with a multiple of 1.8 on a global basis to GDP trend

• 2009 and 2010: GDP forecast adjusted based on current trading and order taking

0

50

100

150

€200B

207

170

2008

170

2009

154

2010

156

2011

162

2012

174

Bain Forecast(Constant exchange rates)

Main Assumptions

-10%

+1%

+4%

+7,5%0%

8This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

The current crisis is changing consumer trends

Reduce & Reuse

Polarize

Valuefor

Money

Under-statement

• Delay high-ticket and classic/basic purchases

• Booming season-end sales and discount channels

• Willing to spend only for items and brands who pass the worth-it-test

• Aspirational consumers trading down

• Austerity is fashionable even for wealthiest consumers

• Extravagant spending considered irresponsible or disrespectful

• Luxury shame, impacting negatively logo and showy products

• Consumers “shop their closets”, reusing purchases from past years

• Shoppers are trying to update their wardrobes inexpensively

• ... refreshing their looks with few key items and accessories

• Down-trading on fashion items, investing in evergreen items

• Accelerating Cheap & Chic

• Fast Fashion players winning the game

9This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Women are trading down on fashion items

ABSOLUTE

ASPIRATIONAL

ACCESSIBLE

CLASSIC / CONTEMPORARY

FASHION

Main trends in Female Luxury Consumption

-

-- =

---

Drastic decrease in ostentation

Value proof brands and long lasting products revamp

“Cheapest and chic” “Fashion for money”

Main consumption shifts

Impact on market trend

10This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

ABSOLUTE

ASPIRATIONAL

ACCESSIBLE

FORMAL CASUAL/FASHION

Main trends in Male Luxury Consumption

--

--- -

=

Niche loyal fashion freak

Delaying purchase

Trading down “Casual for money”

Men are delaying classic and formal purchases

Main consumption shifts

Impact on market trend

11This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Some trends will fade away slowly, but others are here to stay

Trends that stay relevant

Accel-erated, lasting trends

Accelerated & upcoming trends that will fade out

„Reduce, reuse, recycle“

„Inconspiciousconsumption“

„Redefine true luxury“

Consumer conscience

Technology dependence

Sensory/ indulgence

Feminisation Brand fatigue Tribalism

Individu-alism

Consumer experience

“Real value” for money

Spend polarization

Luxury shame

Consumption caps

„Polarization“

2007 2008 2009 2010 …

Core trends Emerging trends

“I don’t think it’s only the financial problem...it’s also that there was kind of indigestion. Fashion became just too much…”

Dries Van Noten

“I believe the cautious approach of customers everywhere towards spending on luxury goods is something that will stay…”Patrizio di Marco, President and Ceo,

Gucci

“Nice to have has vanished. But for compelling pieces, there’s no price resistance…”

Michael Burke, CEO, Fendi“Some prices are just too expensive for what you are getting. Hermès is doing very well. Why? I can still use my mother’s handbags…”

Diane Von Fustemberg

“I think there was too much of everything…the whole industry had to take a laxative”

Diane Von Fustenberg

12This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

Despite the crisis, long-term prospects for the luxury market remain strong

• Despite current negative trends, market fundamentals remain strong in the long-run

• Growth of personal wealth and HNWI forecasted to recover from the second half of 2010

• Global GDP forecasted to grow in 2010

• “New luxury segments” are emerging: working women, men, new generations, emerging markets

• Continuing growth of aspirational consumerbase (especially in Asian and emerging markets)

• New opportunities may come from changing values and consumption habits

Growing customer base