Taking Stock With Teens

HIGHLIGHTS FROM OUR 39TH SURVEY

A Collaborative Gen Z Insights Project

®

Piper Sandler does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of thisreport. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation underRegulation Analyst Certification, found at the end of this report or at the following site: http://www.pipersandler.com/researchdisclosures.

August 2020

Erinn MurphySR. RESEARCH ANALYST

Disclosures for the universe of Erinn Murphy1. I or a household member has a financial interest in the securities of the following companies: none

2. I or a household member is an officer, director, or advisory board member of the following companies: none

3. I have received compensation within the past 12 months from the following companies: none

4. Piper Sandler beneficially owns 1% or more of a class of the following companies: none

5. Piper Sandler has had a client relationship or has received compensation for investment banking services from the following companies within the past 12 months: none

6. Piper Sandler expects to receive or intends to seek compensation for investment banking services from the following companies in the next 3 months: none

7. Piper Sandler was a managing underwriter of a public offering of, or a dealer manager of a tender offer for, the securities of the following companies within the past 12 months: none

8. Piper Sandler has had a client relationship and has received compensation for non-investment banking securities related products or services in the past 12 months for the following companies: none

9. Piper Sandler has had a client relationship and has received compensation for non-securities services in the past 12 months for the following companies: none

10. Piper Sandler is a registered market maker for the following companies: CPRI, CROX, EL, ELF, FL, FNKO, GIII, KTB, LULU, NKE, PVH, SFIX, SHOO, TPR, UAA, ULTA, WWW

11. Piper Sandler will buy and sell securities on a principal basis for the following companies: ADS GR, RL, VFC

Risks to achievement of investment objectives include, but are not limited to, the following:• Reliance on key top management• Changing consumer preferences• Changes in input costs and raw materials• Markdown risks• Product flow and inventory disruptions• Competition• Lack of pricing power• Deleveraging of fixed expenses• Foreign exchange rate risk• General macroeconomic uncertainty

Investment Risks

What Do We Know About GenZ?

• 67M GenZers born between 1997 – 2012 in the U.S., according to Pew Research

• 9% of U.S. population is 19-25 years old, according to the U.S. Census Bureau

• Digitally-native; highly influential; care on social issues

• Piper Sandler has been doing research on the “teenager” in the U.S. since 2001

39th Semi‐Annual Taking Stock With Teens Survey

• The average teen in our survey was just four years old at onset of GFC

• The average teen in our survey was just three years old when the first iPhone launched

39th Semi-Annual Proprietary GenZ Research Project

Survey is executed in partnership with DECAThe source for all charts/tables within this report is Piper Sandler

MALE FEMALE BINARY

1%

49%

50%

10%

27%

19%

SOUTH WEST MIDWEST NORTHEAST

44%$65,600Average Household Income

41U.S. States

5,200Teens Surveyed 16.2

Average Age

Key Takeaways

Source: Chipotle. Chik-fil-a, Starbucks, Nike, lululemon, TikTok, Instagram, Apple, Microsoft, Sony, Nintendo, Mixhael Kors, LVMH, Sephora, ULTA, Amazon

25%Food Owned

of Teen Wallet Generation

8%of Teen Spend

85%Own iPhones

Teen Spending Down 13% Y/Y & Down 4% Vs. Fall

• Teens self-reported spending ~$2,300 per year in our survey, implying total teen spending for the of ~$63B in 2020, assuming 27.7M teens ages 13-19.

• 47% of teens believe the economy is getting worse vs. 28% just one year ago; we saw a higher level of mentions around the “stock market” and the “economy” as top concerns as well.

$3,023

$2,234

$2,371

$2,270

$2,000

$2,200

$2,400

$2,600

$2,800

$3,000

$3,200

Sprin

g 20

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14

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g 20

15

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2018

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eena

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pend

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TroughSpend

GenZ Insights: They Actually Care About The World

Most Important Political & Social Issues

• In Spring 2020, Coronavirus appeared in the No. 2 spot. We conducted our survey from February 17 to March 27. • Environment, nonetheless took the No.1 spot at 16% share—similar to Fall 2019. The No. 11 and No. 12 responses

this year were the Economy & LGBTQ+ Rights, respectively. • In response to the question: “Is vaping a trend in school?” 79% of teens said “Yes” (vs. 82% last Fall); 53% said

vaping is more popular than last year and 20% said it was less popular.

A closer look at what they care about...“Practicing Zero Waste”

“Global Warming is an important issue to me. I want the planet to be safe for the future.”

“Fashion’s impact on the Environment”

“The lack of available care for those suffering from the Coronavirus”

“Gun laws not being changed”

“The Pink Tax”

“Restaurants are closing, I lost my job due to it”

FALL 2019 SPRING 20201 Environment 16% 1 Environment 16%2 Immigration 12% 2 Coronavirus 11%3 Gun Control 11% 3 Abortion 8%4 Abortion 8% 4 Gun Control 7%5 Racial Equality 7% 5 Racial Equality 6%6 Equality/Women's Rights 6% 6 Immigration 6%7 Donald Trump 4% 7 Equality/Women's Rights 5%8 Bullying 3% 8 2020 Election 4%9 2020 Election 2% 9 Health Care 3%

10 LGBTQ+ Rights 2% 10 Donald Trump 2%

Top Environmental Concerns

GenZ Gets Specific On Their Environmental Concerns

91%Of Teens List A Specific Concern

49%Have Changed Their Behavior As A Result

(vs. 46% in Fall 2019)

Teen Behavioral Changes

1. Global Warming 2. Pollution/Waste3. Coronavirus4. Water/Ocean Health5. Natural Disasters

6. Deforestation7. Plastic8. Wildlife9. Air Health 10. Resource Mgmt.

1. Recycling More & Reducing Waste/Litter

2. Using Less Plastic, Converting To Metal Straws

3. Carpooling & Driving Less

GenZ Insights...The Who’s Who?

Favorite Celebrities1. David Dobrik2. LeBron James3. Kylie Jenner4. Donald Trump5. Charli D’Amelio6. Dwayne “The Rock” Johnson7. Emma Chamberlain8. Kevin Hart9. Gary Vaynerchuk10. PewDiePie

Favorite Social Media Personalities

Who They Like & Who They Follow

1. Kevin Hart 2. LeBron James3. Dwanye “The Rock” Johnson4. Billie Eilish5. Ariana Grande6. Post Malone7. Adam Sandler(tie) Taylor Swift9. Zendaya10. Donald Trump

• We asked teens for their favorite celebrity as well as their favorite influencer/personality to follow on social media.• Billie Eilish made her debut in the top-10 as the No. 4, Post Malone moved into the ranking at No. 6 and Taylor Swift

tied for No. 7 (along with Adam Sandler, who has been in our top-10 before).• Similar to last time, the favorite social media personalities were YouTube & Instagram stars and athletes.

Instagram & Snap Still Rule; TikTok Makes Strong Debut

Highest Social Media Engagement Favorite Social Media Platform

Social Media Preferences

• Picture-based apps outperform on usage, while core Facebook rebounds slightly.• Instagram continues to lead the pack in usage, while Snapchat continued as the favorite.• When asked, the average teen in our survey spends ~12 hours per week on social media.• For the first time in our survey, TikTok was a listed option as a preferred social network after strong results as a write

in within “Other.” About 62% of Teens use TikTok once a month, while 13% cited it as a favorite, after 4% of teens wrote in TikTok as a favorite in Fall 19.

1 Snapchat 36%2 Instagram 31%3 TikTok 13%4 Twitter 4%5 Facebook 4%6 Discord 2%7 Pinterest 1%8 Reddit 1%9 Other 1%

10 LinkedIn 0%

1 Instagram 85%2 Snapchat 82%3 TikTok 62%4 Twitter 41%5 Facebook 34%6 Pinterest 27%7 Discord 14%8 Reddit 12%9 LinkedIn 4%

10 Other 4%

NFLX & YouTube Top Platforms; Disney+ & Apple+ Debut

Teen Daily Video Consumption

• On average, teens spend 33% of their daily video consumption on Netflix, down from 35% in Fall 2019.• However, Netflix was the top platform, retaking the lead from YouTube at 31% (down from 37% in Fall).• Disney+ and AppleTV+ were first-time Teen Survey options and garnered 7% and 2%, respectively.• Hulu increased slightly to 8% from 7% for the fall while Amazon Prime was flat at 3%.

1 Netflix 33%2 YouTube 31%3 Cable TV 11%4 Hulu 8%5 Disney+ 7%6 Amazon 3%7 Apple TV+ 2%8 Facebook Watch tab 1%9 Other streaming 5%

Time Spent Shopping Continues To Shift Online

• Over the last four years, time spent shopping in these two channels is relatively unchanged in aggregate.• The composition has changed – online has picked up the >100 bps of share per year lost by traditional channels.• Teens indicate they spend 23% of their time in specialty vs. 22% of their time online; Major Chains, Off-Price,

Discount and Outlet channels each represent between 12-14% of time allocation. • However, 90% of female teens preferred shopping for beauty in-store vs. online—consistent with historic trend.

10%

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40%

45%

Spring2020

Fall2019

Spring2019

Fall2018

Spring2018

Fall2017

Spring2017

Fall2016

Spring2016

Fall2015

Spring2015

Fall2014

Spring2014

Fall2013

% T

ime

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hopp

ing

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nnel

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I Tee

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Department Store/Speciality Online Only eTailers

Favorite Websites For Shopping

• Amazon’s dominance continues as 53% of teens say this is their favorite website to shop on—up from 50% in Spring.• ~88% of upper-income female teens and ~91% of upper-income male teens shop online as of Spring’ 20; both at or

near all-time survey peaks; 94% of teen online shoppers use Amazon.• Other websites on the rise include SHEIN & lululemon (both tied for No. 4), Princess Polly and Brand Melville.

~80% Of 2019 Softlines Dollar Growth In North America

Upper-Income Teens

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Amazon 47% 1 Amazon 50% 1 Amazon 52% 1 Amazon 53%2 Nike 5% 2 Nike 5% 2 Nike 4% 2 Nike 5%3 American Eagle 3% 3 Urban Outfitters 4% 3 American Eagle 3% 3 Urban Outfitters 2%4 Urban Outfitters 3% 4 American Eagle 3% 4 Urban Outfitters 2% 4 Shein 2%5 PacSun 2% 5 Fashion Nova 2% 5 ebay 2% lululemon 2%6 eBay 2% 6 lululemon 2% PacSun 2% 6 PacSun 2%

Fashion Nova 2% PacSun 2% 7 lululemon 2% 7 American Eagle 2%8 Forever 21 2% 8 ebay 1% 8 Fashion Nova 2% 8 Princess Polly 2%9 lululemon 2% Forever 21 1% 9 Zumiez 1% ebay 2%

10 Adidas 1% 10 Brandy Melville 1% 10 Adidas 1% 10 Brandy Melville 1%Hollister 1%

What’s In Your Wallet? Food, Video Games & ClothingUpper-Income Teens

1 Food 25%

2 Clothing 16%

3 Video Games 14%

1 Clothing 26%

2 Food 25%

3 Personal Care 10%

Males’ Wallet Share Females’ Wallet Share

• Food remains the largest category for male spending and a close No. 2 for females; wallet share moved up 200 bps.• Video game share moved up to 14% for males; overall dollar spending was down—consistent with overall survey.• Clothing remains the top-choice within the wallet for females but share moderated slightly.• Personal care remained the No. 3 wallet choice for females at 10%; spending on makeup dropped to a 10-year low.

Athletic Apparel Trending Upward

• 37% of preferred apparel brands are “athletic,” flat from 37% last Fall and 36% in Spring 2019.• Preppy brands such as Sperry, Ralph Lauren and Vineyard Vines continue to cede share to athletic brands.

Aggregate Athletic Mindshare As Favorite Apparel Brand - Upper-Income Teens

28%

32%

26%

35%

41%

33%35% 34%

36% 37% 37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Average = 24%

Athletic Footwear Still Gaining Share Among FemalesFavorite Footwear Brand Mindshare - Upper-Income Female Teens

• 78% of females prefer an athletic brand of footwear (above), up 600 bps Y/Y and reaching a new survey high.• 87% of males prefer an athletic brand of footwear, above 84% last year and in line with 87% in Fall 2019.

0%

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70%

80%

90%Nike Converse Vans Adidas Puma Under Armour

Teen Brand Preferences

Image Source: Nike

Gap Abercrombie & Fitch Hollister Action Sports Brands Nike

3.5 years 3.5 years 2.5 years 9.5 years

Spring2001

Fall 2001 –

Fall 2004

Spring 2005–

Spring 2008

Fall 2008–

Fall 2010Spring 2011 - Spring 2020

Favorite Apparel BrandsAll Teens – See Appendix for more detail broken down by upper vs. average-income teens or male vs. female

Image Source: lululemon.com

• Apparel spending was ~$523/year—down 14% Y/Y; females outspend males by ~$40.• Nike share continued to gain share, capturing 25% of all teen apparel preferences.• adidas still No. 3 brand with share flat Y/Y at 5%, albeit 100 bps below Fall 2019.• lululemon moves to No. 6 vs. No. 8 in Spring 2019; new survey high.• Vans moves to No.10 in Spring 2020 vs. No. 11 LY although it moderates vs. Fall.• American Eagle, Hollister and PacSun relatively stable as F21 moves down further.• Ralph Lauren remains out of the top ten (No. 12) & Victoria’s Secret falls to No. 14.• Champion moved from No. 10 in Fall to No. 11 this year (although above No. 17 rank LY).

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Nike 22% 1 Nike 22% 1 Nike 23% 1 Nike 25%2 American Eagle 9% 2 American Eagle 9% 2 American Eagle 10% 2 American Eagle 10%3 Adidas 6% 3 Adidas 5% 3 Adidas 6% 3 Adidas 5%4 Forever 21 5% 4 Forever 21 5% 4 Hollister 4% 4 Hollister 4%5 PacSun 4% 5 Hollister 3% 5 PacSun 4% 5 PacSun 3%6 Hollister 4% 6 PacSun 3% 6 Forever 21 3% 6 lululemon 3%7 H&M 3% 7 Urban Outfitters 3% 7 lululemon 3% 7 Forever 21 3%8 Ralph Lauren 2% 8 lululemon 3% 8 Vans 3% 8 Urban Outfitters 3%9 Vans 2% 9 Victoria's Secret 2% 9 H&M 2% 9 H&M 2%

10 Urban Outfitters 2% 10 H&M 2% 10 Champion 2% 10 Vans 2%

Favorite Footwear BrandsAll Teens – See Appendix for more detail broken down by upper vs. average-income teens or male vs. female

Image Source: Nike.com

• Footwear spending was $284/year—down 5% Y/Y led by a mid-teens decline in female spend in the category.• Male spending on footwear was resilient & actually up 4% Y/Y; males now outspend females on footwear by ~$100.• Nike remains at No. 1 and moves to 47% share (up 600 bps Y/Y); Vans steady at the No. 2 position and 20% share.• Seasonality plays a big role in footwear—Dr. Martens move to No. 8 and Crocs rotates out of the top-10 list.• Crocs, however, took the No. 12 spot—the highest Spring-time reading ever vs. No. 19 just one year ago.• Under Armour moves out of the top-10 moving to No. 14 vs. No. 9 in Fall and No. 12 last Spring.• Sperry remains out of the top-10 preferences moving to No. 15 vs. No. 11 last year.

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Nike 41% 1 Nike 41% 1 Nike 42% 1 Nike 47%2 Vans 19% 2 Vans 20% 2 Vans 20% 2 Vans 20%3 Adidas 14% 3 Adidas 13% 3 Adidas 13% 3 Adidas 11%4 Converse 5% 4 Converse 5% 4 Converse 4% 4 Converse 4%5 Foot Locker 3% 5 Foot Locker 3% 5 Foot Locker 3% 5 Foot Locker 3%6 Birkenstock 2% 6 New Balance 1% 6 Birkenstock 2% 6 New Balance 1%7 Steve Madden 1% 7 Steve Madden 1% 7 Crocs 1% 7 Birkenstock 1%8 New Balance 1% 8 Birkenstock 1% New Balance 1% 8 Dr. Martens 1%9 Journeys 1% 9 DSW 1% 9 Under Armour 1% Steve Madden 1%

Sperry 1% 10 Journeys 1% 10 Steve Madden 1% 10 Finish Line 1%

Top Fashion Trends Right NowUpper-Income Teens

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Nike / Jordans 14% 1 Nike / Jordans 14% 1 Nike / Jordans 13% 1 Nike / Jordans 12%2 Athletic Wear 10% 2 Athletic Wear 11% 2 Athletic Wear 11% 2 Hoodies 10%3 Vans 7% 3 Vans 6% 3 Vans 7% 3 Athletic Wear 9%4 Supreme 6% 4 Jogger Pants 5% 4 Champion 5% 4 Flannels 7%5 Adidas 5% 5 Supreme 5% 5 Adidas 4% 5 Jogger Pants 5%6 Jogger Pants 4% 6 Adidas 5% 6 Hoodies 3% 6 Champion 5%7 Khakis / Chinos 3% 7 Hoodies 4% 7 Shorts 3% 7 Vans 5%8 Hoodies 3% 8 Khakis / Chinos 3% 8 Sweat Shirts 3% 8 Leggings / lululemon 4%9 Champion 3% 9 Leggings / lululemon 3% 9 Chains 3% 9 Baggy / Saggy Pants 3%

10 Leggings / lululemon 2% 10 Flannels 3% 10 Short Shorts 2% 10 Jeans 3%

Athletic (In Top 10) 46% Athletic (In Top 10) 47% Athletic (In Top 10) 47% Athletic (In Top 10) 48%Preppy (In Top 10) 3% Preppy (In Top 10) 3% Preppy (In Top 10) 2% Preppy (In Top 10) 0%

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Leggings / lululemon 21% 1 Leggings / lululemon 28% 1 Leggings / lululemon 17% 1 Leggings / lululemon 25%2 Jeans 7% 2 Vans 8% 2 Scrunchies 10% 2 Nike / Jordans 9%3 Vans 6% 3 Crop Tops 5% 3 Nike / Jordans 6% 3 Crop Tops 8%4 Birkenstock 5% 4 Jeans 5% 4 Baggy / Saggy Pants 6% 4 Jeans 7%5 Crop Tops 5% 5 Nike / Jordans 4% 5 Jeans 5% 5 Ripped Jeans 4%6 Ripped Jeans 4% 6 Ripped Jeans 3% 6 Vans 5% 6 Scrunchies 3%7 Tube Tops 3% 7 Hair 2% 7 Crop Tops 4% 7 Vans 3%8 Victoria's Secret 3% 8 Scrunchies 2% 8 VSCO 4% 8 Brandy Melville 3%9 Scrunchies 2% 9 Victoria's Secret 2% 9 Birkenstock 3% 9 VSCO 2%10 Fashion Nova 2% 10 Athletic Wear 2% 10 Ripped Jeans 3% 10 Hoodies 2%

Athletic (In Top 10) 27% Athletic (In Top 10) 42% Athletic (In Top 10) 28% Athletic (In Top 10) 39%

Beauty Wallet Contracts Well-Below Survey Average

• The beauty wallet (cosmetics, skincare & fragrance) stood at $258/year in Spring 2020 down 19% Y/Y but only down 2% from Fall; the multi-survey average is $302/year for the overall beauty category

• Cosmetics as a component of this wallet saw the steepest declines down 26% Y/Y—the lowest since Fall 2010

$229

$368

$318

$263 $258

$0

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otal

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d (A

ll Fe

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ens) Average: $302

Cosmetics Spending At 20-Survey Low, Down 26% Y/Y

• Female spending on cosmetics was dramatically lower to $103/year, a 26% contraction from $139/year vs. last year• Spending levels are now 17% below the multi-survey average of $124/year (peak: Spring 2017 at $173)• For skincare, spending of $101 was down 15% Y/Y from $119/year (peak: Spring 2018 at $140)• For fragrance, spending of $54 was down 10% Y/Y

$140

$101

$173

$103

$54

$0

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$140

$160

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Spring2007

Spring2008

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Skin Care Cosmetics Fragrance

Ann

ual "

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Beauty: Favorite Shopping Destinations

• 90% of teens prefer to shop for beauty in-store vs. online; this is consistent with last year.• Ulta strengthens its position as the No. 1 preferred beauty destination at 39% share vs. 33% last year (+600 bps Y/Y).• Sephora stays at No. 2 but moves to 24% share vs. 31% last year (-700 bps Y/Y).• Target overtakes Walmart capturing the No. 3 spot with a corresponding 200 bps share gain vs. Spring 2019.• Amazon rounds out the No. 5 spot & Glossier moves up from No. 10 to No. 7; Morphe moves down to No. 10.• We saw minor share shifts between Walgreens, CVS and Macy’s.

All Female Teens

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Sephora 34% 1 Ulta 33% 1 Ulta 38% 1 Ulta 39%2 Ulta 34% 2 Sephora 31% 2 Sephora 26% 2 Sephora 24%3 Walmart 9% 3 Walmart 8% 3 Walmart 8% 3 Target 8%4 Target 8% 4 Target 6% 4 Target 7% 4 Walmart 8%5 CVS 2% 5 Amazon 4% 5 Amazon 5% 5 Amazon 4%6 MAC 1% 6 Walgreens 1% 6 CVS 2% 6 Walgreens 2%7 Walgreens 1% 7 CVS 1% 7 MAC 1% 7 Glossier 1%8 Macy's 1% 8 Morphe 1% 8 Morphe 1% 8 CVS 1%9 Sally Beauty 1% 9 MAC 1% 9 Glossier 1% 9 Macy's 1%

10 Bath & Body Works 1% 10 Glossier 1% Walgreens 1% 10 Morphe 1%

Beauty: Favorite Skincare Brands

• Skincare spending for all female teens was $101/year—down 15% Y/Y and down 4% vs. multi-survey avg. of $106.• Neutrogena retained the No. 1 spot as mass brands continue to dominate the top-10 list.• Mario Badescu remains in its No. 2 spot with its peak-survey share of 10% (up 300 bps Y/Y).• Clinique share moved down by 200 bps Y/Y, rounding out the top-five.• Curology (customized, digitally-native, subscription skincare) made its debut top-10 appearance at No. 8.• CeraVe moved up within the top-10 and Olay, Aveeno & Biore remained in the top-10 Y/Y.• The biggest mover among upper-income females was Glossier—which ranked No. 6 in Spring 2020 vs. No. 9 LY.

All Female Teens

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Neutrogena 21% 1 Neutrogena 18% 1 Neutrogena 18% 1 Neutrogena 16%2 Clean & Clear 8% 2 Mario Badescu 7% 2 Mario Badescu 8% 2 Mario Badescu 10%3 Cetaphil 5% 3 Clean & Clear 6% 3 Clean & Clear 8% 3 Cetaphil 7%4 Mario Badescu 5% 4 Clinique 6% 4 Cetaphil 6% 4 Clean & Clear 6%5 Clinique 5% 5 Cetaphil 6% 5 Clinique 5% 5 Clinique 4%6 Proactiv 5% 6 Proactiv 5% 6 Proactiv 4% 6 Proactiv 3%7 Aveeno 2% 7 Biore 2% 7 Aveeno 2% 7 CeraVe 3%8 Biore 2% 8 CeraVe 2% Biore 2% 8 Curology 2%9 St. Ives 2% Olay 2% 9 Burt's Bees 2% 9 Olay 2%

10 Mary-Kay 2% 10 Aveeno 2% 10 CeraVe 2% 10 Aveeno 2%Biore 2%

Beauty: Favorite Cosmetics Brands

• Female spending on cosmetics was dramatically down year-over-year—to $103/year, a 26% contraction.• Spending levels are now 17% below the multi-survey average of $124/year (peak spend $173 in Spring 2017).• Tarte (Kose-owned) remained the top-ranked cosmetics brand (5th consecutive survey) at 11% share.• Makeup artistry brands MAC (now No. 7) & Anastasia Beverly Hills (No. 11) both decelerated in rank & share.• Three brands tied for No. 4 this year (e.l.f., Fenty Beauty & Morphe); e.l.f up from No. 6 and Fenty from No. 8 last

year.• Morphe while still a top brand saw 200 bps of share erosion Y/Y.• Too Faced slipped slightly as Maybelline moved into No. 2 spot; CoverGirl moved back to top-10 list (vs. 11 in Spring).

All Female Teens

FALL 2018 SPRING 2019 FALL 2019 SPRING 20201 Tarte 13% 1 Tarte 11% 1 Tarte 13% 1 Tarte 11%2 Too Faced 9% 2 Too Faced 8% 2 Too Faced 9% 2 Maybelline 9%3 MAC 7% 3 MAC 7% 3 Maybelline 7% 3 Too Faced 7%4 Maybelline 7% 4 Morphe 7% 4 e.l.f. 6% 4 e.l.f. 5%5 Anastasia Beverly Hills 6% 5 Maybelline 6% 5 Morphe 6% Fenty Beauty 5%6 Sephora 5% 6 e.l.f. 5% 6 MAC 6% Morphe 5%7 CoverGirl 5% 7 Anastasia Beverly Hills 5% 7 Fenty Beauty 5% 7 MAC 5%8 e.l.f. 5% 8 Fenty Beauty 5% 8 Sephora 5% 8 CoverGirl 4%9 Fenty Beauty 4% Sephora 5% 9 Anastasia Beverly Hills 4% 9 L'Oreal 4%

10 Morphe 4% 10 CoverGirl 5% 10 L'Oreal 4% 10 Sephora 4%Urban Decay 4%

Beauty: Shopping Channel Trends Favor Specialty

• 71% of UI teens prefer specialty formats for beauty shopping – unchanged from Spring 2019.• Aggregate legacy channel (CVS, Macy’s, Target, Walmart, etc.) mindshare was relatively stable at 15%.• Digital pure-plays, led by Amazon and followed by Glossier, captured 5% share—similar to last year.• When asked if they or their household purchase beauty/personal care on AMZN, 23% say “yes” vs. 21% last Spring.

Favorite Beauty Shopping Destinations – Upper-Income Female Teens

5% 5%

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71%71%

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Fall2013

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Aggr

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)Digital Mass, Dept & Drug Stores Specialty

Channel Reversal:Specialty stores outpace legacy

formats Amazon:Begins to register

within top-10

Clean Beauty Buzz Resonating With Teens

Look At Ingredients In Their Beauty/ Personal Care Products(vs. 47% in Fall 2019)53%

75%

30%

Willing To Spend More For “Clean” Or Natural Beauty(unchanged vs. Fall 2019)

Average Pricing Premium For “Clean” Or Natural(vs. 29% in Fall 2019)

All Female Teens

Beauty Industry Is Hot For Influencers

• ~78% of females use online influencers as a source of discovery for beauty brands & trends—flattish with past trends.• Beauty Retails & Brands going communicating direct with consumers is improving as well.• In looking at “favorite influencers,” Kylie Jenner is No. 3 among all teens and the only beauty influencer in the top-10.• We saw Shane Dawson in No. 12 and Jeffree Star at No. 13 whereas James Charles did not make the top-25.• Kim Kardashian was the No. 22 “favorite influencer” this Spring.

78%

67%

39%

14%

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90%

Online Influencers Friends Beauty Retailers/BrandsDirectly

MagazineEditors/Advertisements

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Fall-17 Spring-18 Fall-18 Spring-19 Fall-19 Spring-20

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Analyst Certification – Erinn Murphy, Senior Research Analyst: The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Sandler research analysts receive compensation that is based, in part, on the firm's overall revenues, which include investment banking revenues.

Ratings and Other DefinitionsStock Ratings: At times analysts may specify a different investment horizon or may include additional investment time horizons for specific stocks. Stock performance is measured relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at www.pipersandler.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no active analyst opinion or analyst coverage, but the opinion or coverage is expected to resume. Research reports and ratings should not be relied upon as individual investment advice. As always, an investor’s decision to buy or sell a security must depend on individual circumstances, including existing holdings, time horizons and risk tolerance. Piper Sandler sales and trading personnel may provide written or oral commentary, trade ideas, or other information about a particular stock to clients or internal trading desks reflecting different opinions than those expressed by the research analyst. Piper Sandler will buy and sell securities of the subject company on a principal basis, regardless of whether it is a registered market maker in those securities. In addition, Piper Sandler offers technical research products that are based on different methodologies, may contradict the opinions contained in fundamental research reports, and could impact the price of the subject security. Recommendations based on technical analysis are intended for the professional trader, while fundamental opinions are typically suited for the longer-term institutional investor.Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst. Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

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Important Research Disclosures

Other Important Information

The material regarding the subject company is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This report is solely for informational purposes and is not intended to be used as the primary basis of investment decisions. Piper Sandler has not assessed the suitability of the subject company for any person. Because of individual client requirements, it is not, and it should not be construed as, advice designed to meet the particular investment needs of any investor. This report is not an offer or the solicitation of an offer to sell or buy any security. Unless otherwise noted, the price of a security mentioned in this report is the most recently available market closing price. Piper Sandler does not maintain a predetermined schedule for publication of research and will not necessarily update this report. Piper Sandler policy generally prohibits research analysts from sending draft research reports to subject companies; however, it should be presumed that the fundamental equity analyst(s) who authored this report has had discussions with the subject company to ensure factual accuracy prior to publication, and has had assistance from the company in conducting diligence, including visits to company sites and meetings with company management and other representatives.

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Important Research Disclosures