Q1 Global Apparel & Accessories Report v27€¦ · inancing solutions to our global base of...

William Blair’s investment banking group combines signi�icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and �inancing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth �inancing, �inancial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010-2014, the investment banking group completed more than 330 merger-and-acquisition transactions worth $73 billion in value, involving parties in 36 countries and �ive continents, was an underwriter on more than 20% of all U.S. initial public offerings, and raised nearly $100 billion in public and private �inancing.

About William Blair Investment Banking

Global Apparel and Lifestyle Accessories In this Issue: – Sector Trends – Insights – M&A Activity – Comparables Trading

Global Consumer & Retail Investment Banking

Elizabeth A. PickensManaging DirectorHead of Global Apparel and Lifestyle [email protected] +44 207 868 4479+1 212 237 2700

Sector Update September 2014

William Blair

Global Apparel and Lifestyle Accessories Report A Word on Lifestyle

A Word on Lifestyle

In this first Issue of William Blair’s dedicated coverage of the Global Apparel and Lifestyle Accessories Sector, we provide an overview of market activity and valuation data across the worldwide sector leaders. We have classified the public comparable companies into seven major groups: Global Leaders, Modern Lifestyle, Performance Apparel, Traditional Apparel and Accessories, Youth/Teen, and eCommerce. In addition to the established sector leaders, we will also focus on the cohort of rapidly emerging next-generation global brands, who are going public earlier and getting funded in the private markets today. Our consumption choices, particularly in apparel and accessories, have long communicated our personal affiliations and aspirations. Today, the consumption experience extends beyond the moment of purchase, often selling an experience, or communicating a value set. This has broadened the remit for brands, invoking themes of greater social responsibility, seen by the growing prevalence of B Corps, and community, including content-driven websites and entertainment-driven retail venues. These changing consumer values have given rise to new sector leaders, including emergent brands Bonobos and Harrys of London, lifestyle visionaries like Hunter Original, new marketplaces such as Gilt Groupe, and Vide Dressing, and radical new models such as Warby Parker. In turn, M&A activity is driven by buyers keeping pace with these shortening cycles of innovation. Examples of such activity includes the acquisition of Trunk Club by Nordstrom, and announced acquisition of Mytheresa.com by Neiman Marcus. Lifestyle-driven consumption is an increasingly prevalent concept, making it a rare moment in time for valuations in this exciting space. We look forward to exploring the sector with you. Sincerely, Beth Pickens

William Blair

Global Apparel and Lifestyle Accessories Report Table of Contents

Table of Contents Consumer & Retail Investment Banking Contacts .................................................................................................................................................................... 3 Consumer & Retail Research Coverage.......................................................................................................................................................................................... 4 Selected William Blair Transactions ............................................................................................................................................................................................... 5 2014 Global Investor Conferences ................................................................................................................................................................................................... 6 Sector View: Comparable Companies ............................................................................................................................................................................................. 7 LTM Global Apparel and Lifestyle Accessories Sector Performance ................................................................................................................................. 8 Comparable Company Analysis ........................................................................................................................................................................................................ 9 News Review ........................................................................................................................................................................................................................................... 12 IPO Backlog .............................................................................................................................................................................................................................................. 13 Equity Research Team ........................................................................................................................................................................................................................ 14 Notes .......................................................................................................................................................................................................................................................... 15 Disclosures ............................................................................................................................................................................................................................................... 16

William Blair

Global Apparel and Lifestyle Accessories Report Consumer & Retail Investment Banking Contacts 3

Consumer & Retail Investment Banking Contacts

Consumer & Retail Investment Banking

Elizabeth Pickens, Managing Director, joined William Blair in 2000. Ms. Pickens specializes in advisinginternational branded consumer and retail growth companies across global apparel and lifestyle brands. She is also an angel investor in early-stage consumer companies, including Bonobos.com and InteriorDefine.com. Ms. Pickens holds an MBA from the University of Chicago Graduate School of Business and a BS in finance from the University of Illinois at Urbana-Champaign. She also completed studies at the Université de Paris IV-Sorbonne. [email protected] +44 20 7868 4479

Adam Filkin, Managing Director, joined William Blair in 2007 within the Consumer and Retail Investment Banking Group. Mr. Filkin has extensive transaction experience across numerous consumer verticals, including consumer products, personal care and food. He joined William Blair from Bank of America Securities. Before joining Bank of America, Mr. Filkin was a manager at A.T. Kearney, focusing on consumer and retail companies. Mr. Filkin holds an MBA with a concentration in finance from the University of Chicago Graduate School of Business, and holds a BSE. in chemical engineering from the University of Michigan. [email protected] +1 312 364 8077

Michael Siska, Managing Director, joined the firm in 2002. Before joining William Blair, Mr. Siska worked in private equity for Allstate Private Equity in Chicago and 3i Group in London. He spent five years in the products and business services industry group at Andersen Corporate Finance LLC. He focuses on specialty retail, food retail, restaurants, and consumer services. Mr. Siska earned an MBA from the University of Chicago and a BS, with honors, from the University of Illinois at Urbana-Champaign. [email protected] +1 312 364 5393

Laura Provenzale, Managing Director, joined Blair in 2014 within the Consumer and Retail Investment Banking Group. Prior to joining William Blair, Ms. Provenzale built the restaurant investment banking practice and executed transactions across the consumer sector at Raymond James. Before Raymond James, she led the consumer and retail effort at WR Hambrecht, and prior to WR Hambrecht led the software M&A and the consumer products investment banking practice at Banc of America Securities. Ms. Provenzale earned her MBA from Fordham University and graduated with honors from Lehigh University with a BS in accounting. [email protected] +1 415 248 5919

William Blair

Global Apparel and Lifestyle Accessories Report 4 Consumer & Retail Research Coverage

Consumer & Retail Research Coverage

Amy Noblin

Sharon Zackfia

Mark Miller

Daniel Hofkin

Jon Andersen

William Blair

Global Apparel and Lifestyle Accessories Report Selected William Blair Transactions 5

Selected William Blair Transactions

$230,000,000

Initial Public OfferingNovember 2013

$246,047,100$240,033,072 $388,743,210Initial Public & Follow-on OfferingsMarch 2013November 2012April 2012

$90,000,000

§363 sale toAuthentic Brands Group

December 2012

$94,112,106$74,750,000

Initial Public & Follow-on OfferingFebruary 2011October 2010

$376,740,000

Initial Public OfferingAugust 2007

Not Disclosed

has been acquired byProventus

July 2007

Not Disclosedhas completed a leveraged recapitalization with

Berkshire Partners

June 2007

William Blair

Global Apparel and Lifestyle Accessories Report 6 2014 Global Investor Conferences

2014 Global Investor Conferences

34th Annual Growth Stock Conference 10-12 June 2014, Chicago • William Blair's Growth Stock Conference is an exclusive gathering of the late-stage growth stock community, including senior executives of fast-growing private companies, corporate development teams from large- and midcap industry leaders, and private equity investors • Featuring high-ranking senior management, a forum that encourages the exchange of ideas, and extensive one-on-one meetings, our conferences have become premier events for growth stock investors • Superior access to industry leaders • More than 350 professionals from across the corporate landscape • Our highly respected lineup of growth stock conferences provides investors a private audience with C-level executives in an environment that is conducive to dialogue and interaction 16th Annual Private Equity Conference 17-18 September 2014, Chicago This Year’s Event Highlights

• 55 participating companies • More than 600 registered institutional private equity investors • Roundtable discussions focused on the following industry sectors and topics:

– Business services, commercial services, cross-border investing, debt capital markets, equity capital markets, healthcare, industrials, retail and restaurants, special situations and restructuring, and technology • Roughly 682 requested one-on-one meetings between private equity investors and company management

William Blair

Global Apparel and Lifestyle Accessories Report Sector View: Comparable Companies 7

Sector View: Comparable Companies

Global

Modern Lifestyle

Performance

Traditional

Traditional Luxury

Youth

eCommerce

William Blair

Global Apparel and Lifestyle Accessories Report 8 LTM Global Apparel and Lifestyle Accessories Sector Performance

LTM Global Apparel and Lifestyle Accessories Sector Performance

LTM — Indexed Stock Price Performance

Source: CapitalIQ, public filings and William Blair analysis. Global Apparel and Lifestyle Accessories Sector Valuation Overview

Sector

Enterprise Value / Revenue Enterprise Value / EBITDA P/E Ratio ’14E-’15E Revenue Growth

2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E eCommerce 2.18x 2.16x 1.67x 12.2x 18.2x 17.0x 34.3x 27.8x 25.6% 32.6% 5.3% 2.7xGlobal 2.42x 2.25x 2.04x 13.1x 12.2x 10.9x 22.6x 19.8x 9.6% 54.3% 18.2% 4.0xModern Lifestyle 2.79x 3.20x 2.72x 13.2x 12.3x 11.6x 22.2x 18.6x 18.7% 52.9% 23.4% 1.9xPerformance 1.27x 1.45x 1.28x 12.8x 12.8x 11.2x 25.0x 20.6x 11.3% 43.3% 8.3% 8.7xTraditional 1.95x 1.87x 1.75x 10.8x 10.1x 9.1x 17.3x 15.1x 7.2% 52.3% 21.7% 1.3xTraditional Luxury 3.04x 2.87x 2.64x 12.7x 11.6x 10.4x 20.3x 17.9x 8.4% 62.3% 24.0% 2.1xYouth 1.07x 1.01x 1.04x 7.1x 7.3x 6.7x 17.6x 14.8x 6.2% 43.8% 11.4% 1.4x

60.0%80.0%

100.0%120.0%140.0%160.0%

S&P 500 (17.7%) EURO STOXX TMI (7.6%) Youth (-34.2%)Traditional Luxury (-9.7%) Traditional (17.5%) Performance (6.8%)Modern Lifestyle (16.1%) Global (7.5%) eCommerce (20.9%)

William Blair

Global Apparel and Lifestyle Accessories Report Comparable Company Analysis 9

Comparable Company Analysis

eCommerce

Company

Share Price (Local Currency) 8/15/2014

% of 52 Week High

Market Value ($MM)

Enterprise Value ($MM)

Enterprise Value / Revenue Enterprise Value / EBITDA PE Ratio

‘14E-‘15E Revenue Growth

2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E YOOX S.p.A. 24.2 51% 1,429 1,410 2.17x 1.94x 1.59x 27.0x 18.8x 14.7x NMF NMF 21.9% 37.1% 8.0% 1.8x Amazon.com Inc. 333.2 82% 153,955 149,088 1.82x 1.64x 1.36x NMF 24.5x 17.8x NMF NMF 20.3% 28.3% 4.9% 67.0x Blue Nile Inc. 26.3 53% 338 222 0.49x 0.49x 0.43x 9.9x 9.9x 8.9x 32.0x 26.4x 16.1% 18.6% 5.0% 1.9x Zulily, Inc. 36.7 50% 4,583 4,273 4.51x 3.51x 2.40x NMF NMF NMF NMF NMF 46.3% 27.2% 2.5% 3.4x ASOS plc 39.6 33% 3,284 3,165 2.13x 1.79x 1.45x NMF 26.6x 19.4x NMF 35.9x 23.3% 51.8% 6.7% 1.9x

Median 2.13x 1.79x 1.45x 18.5x 21.6x 16.3x 32.0x 31.1x 21.9% 28.3% 5.0% 1.9x

Average 2.23x 1.87x 1.45x 18.5x 19.9x 15.2x 32.0x 31.1x 25.6% 32.6% 5.4% 15.2x Global

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E H & M Hennes & Mauritz AB (publ) 42.8 98% 70,876 68,056 3.37x 3.17x 2.86x 16.3x 15.4x 13.7x 24.5x 21.7x 11.2% 59.0% 20.6% 2.1x The Gap, Inc. 42.1 95% 18,572 18,421 1.14x 1.10x 1.05x 7.1x 6.8x 6.3x 14.2x 12.6x 4.6% 46.3% 15.9% 1.2x Ralph Lauren Corporation 163.2 90% 14,351 13,556 1.81x 1.74x 1.61x 9.8x 9.8x 9.0x 19.5x 16.7x 7.8% 57.9% 18.4% 1.3x Industria de Diseno Textil SA 28.7 88% 89,530 84,636 3.76x 3.52x 3.17x 16.5x 14.9x 13.3x 26.1x 22.8x 10.9% 59.2% 22.8% 2.3x Fast Retailing Co. Ltd. 322.4 73% 32,858 30,026 2.29x 2.15x 1.90x 17.1x 16.9x 15.2x NA 32.1x 13.3% 49.9% 13.4% NA


Average 2.47x 2.34x 2.12x 13.4x 12.7x 11.5x 21.1x 21.2x 9.6% 54.5% 18.2% 1.7x Modern Lifestyle

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E Moncler S.p.A. 16.2 73% 4,047 4,330 NMF 4.69x 4.11x 16.2x 14.5x 12.5x 26.1x 21.4x 14.1% 71.6% 32.4% 1.5x Coach, Inc. 36.3 63% 10,233 9,435 1.86x 2.11x 2.16x 5.0x 8.5x 9.1x 17.7x 18.0x (2.5%) 73.0% 37.0% 2.8x Under Armour, Inc. 68.8 97% 7,574 7,379 3.16x 3.16x 1.98x 20.6x 20.6x 14.2x NMF NMF 59.6% 48.7% 15.4% 3.0x Harley-Davidson, Inc. 62.4 84% 13,570 18,235 2.91x 3.25x 3.03x 12.1x 12.2x 10.9x 16.5x 14.3x 7.4% 39.4% 24.0% 1.2x Kate Spade & Company 31.6 74% 4,005 4,237 2.99x 3.91x 3.16x NMF NMF 20.1x NA NA 23.5% 57.1% 4.3% NA Tumi Holdings, Inc. 23.2 94% 1,577 1,548 3.31x 3.31x 2.52x 14.8x 14.8x 11.5x 26.0x 22.3x 31.2% 57.5% 22.4% 1.7x Michael Kors Holdings Limited 78.4 78% 16,178 15,349 NMF 3.74x 3.02x 15.1x 11.6x 9.7x 20.2x 16.7x 23.8% 61.0% 34.0% 0.9x Vince Holding Corp 32.9 87% 1,210 1,338 4.44x 3.95x 3.37x 23.9x 17.8x 15.0x 35.8x 27.7x 17.3% 47.1% 18.6% 1.4x Lululemon Athletica Inc. 38.8 50% 5,659 4,960 3.12x 2.79x 2.46x 10.3x 12.0x 10.6x 23.5x 19.4x 13.4% 54.7% 30.2% 1.4x G-III Apparel Group, Ltd. 77.2 92% 1,702 1,765 0.97x 0.85x 0.78x 12.1x 10.1x 8.5x 18.6x 15.7x 9.8% 34.4% 8.1% 1.0x Apple Inc. 97.5 98% 583,817 576,931 3.24x 3.12x 2.89x 9.8x 9.4x 8.9x 14.9x 13.6x 7.9% 38.4% 33.2% 1.2x


Average 2.89x 3.17x 2.68x 14.0x 13.1x 11.9x 22.1x 18.8x 18.7% 53.0% 23.6% 1.6x

William Blair

Global Apparel and Lifestyle Accessories Report 10 Comparable Company Analysis

Performance

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E Fenix Outdoor AB 47.4 80% 829 529 2.91x 2.68x 2.51x 17.4x 13.9x 12.4x 20.1x 17.4x NA 54.8% 16.7% NA Nike, Inc. 77.3 96% 71,707 67,504 2.67x 2.31x 2.12x 17.1x 15.6x 14.0x 25.1x 21.3x 8.8% 43.6% 15.6% 1.8x Quiksilver Inc. 3.0 33% 520 1,353 0.77x 0.80x 0.77x 13.9x 13.2x 8.9x NMF NMF 3.3% 49.4% 5.6% (0.7x) PUMA SE 252.5 79% 3,773 3,418 0.89x 0.88x 0.84x NMF 12.5x 10.1x 35.0x 23.4x 4.4% 46.4% 2.5% (9.9x) Columbia Sportswear Company 75.2 84% 2,667 2,145 1.27x 1.27x 0.97x 11.3x 11.3x 8.6x 21.5x 18.4x 31.0% 44.2% 11.3% 1.7x Black Diamond, Inc. 8.0 53% 259 293 1.44x 1.44x 1.21x NMF NMF 28.7x NMF NMF 19.5% 38.9% 4.4% (3.6x) Lafuma SA 26.2 98% 186 169 0.69x NA NA 6.4x NA NA NMF NA NA 35.0% 10.8% NA Adidas AG 79.9 64% 16,719 17,156 0.89x 0.88x 0.83x 10.2x 9.7x 8.4x 19.3x 15.3x 5.8% 48.8% 8.7% 2.1x ASICS Corp. 22.1 94% 4,189 4,403 1.09x 1.33x 1.16x 9.9x 13.1x 11.4x 24.1x 22.4x 15.2% 44.2% 11.0% 4.7x Mizuno Corporation 6.1 95% 763 925 0.51x 0.50x 0.49x 11.3x 10.8x 10.0x 21.4x 19.1x 2.4% 39.6% 4.6% 1.42x


Average 1.43x 1.45x 1.28x 13.3x 12.8x 11.2x 24.5x 20.2x 11.3% 44.5% 9.2% 12.5x Traditional

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2013E 2014E 2014E 2015E ANN INC. 35.8 82% 1,678 1,551 0.62x 0.61x 0.58x 5.7x 5.6x 5.2x 17.7x 14.2x 4.7% 53.3% 10.9% 1.5x L Brands, Inc. 62.8 93% 18,319 22,400 2.06x 1.99x 1.88x 10.3x 10.1x 9.2x 19.7x 17.4x 5.4% 46.6% 20.1% 1.7x V.F. Corporation 61.9 97% 28,015 28,688 2.51x 2.51x 2.14x 14.7x 14.7x 12.2x 20.0x 17.7x 17.1% 48.1% 17.1% 1.5x Oxford Industries Inc. 61.7 74% 1,015 1,149 1.22x 1.15x 1.07x 9.4x 8.8x 7.8x 20.3x 16.8x 7.5% 55.6% 13.0% 1.1x Express Inc. 14.2 57% 1,193 1,217 0.56x 0.57x 0.55x 5.0x 5.7x 5.1x 17.8x 14.2x 3.1% 41.4% 11.2% 1.1x PVH Corp. 112.7 81% 9,278 12,871 1.56x 1.52x 1.43x 11.1x 10.3x 9.2x 17.1x 12.8x 6.3% 52.2% 14.0% 1.4x Hanesbrands Inc. 98.4 92% 9,800 11,445 2.34x 2.24x 2.03x 14.9x 13.8x 12.4x 20.3x 16.1x 10.3% 35.8% 15.7% 1.3x Perry Ellis International Inc. 18.7 88% 293 483 0.53x 0.52x 0.51x 14.6x 10.0x 9.1x 21.3x 15.0x 3.0% 33.3% 3.7% 3.6x Cherokee Inc. 18.4 97% 155 184 NMF NMF NMF 11.7x 11.1x 10.1x 16.2x 15.5x 6.0% 100.0% 51.3% 1.2x Iconix Brand Group, Inc. 41.2 92% 1,978 3,386 NMF NMF NMF 12.3x 11.6x 10.8x 14.7x 15.1x 6.3% 100.0% 61.5% 1.2x Gildan Activewear Inc. 57.6 93% 7,038 7,126 3.07x 2.88x 2.61x 15.7x 14.2x 11.6x 18.7x 15.6x 10.7% 27.7% 19.6% 1.3x Next Plc 114.2 86% 17,520 18,295 2.93x 2.72x 2.58x 13.0x 11.7x 11.0x 16.9x 15.8x 5.5% 33.2% 22.6% 1.8x



William Blair

Global Apparel and Lifestyle Accessories Report Comparable Company Analysis 11

Traditional Luxury

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E Compagnie Financiere Richemont SA 96.1 91% 54,086 47,319 3.34x 3.20x 2.93x 12.6x 11.6x 10.5x 18.4x 16.6x 9.4% 63.4% 26.4% 1.6x Tiffany & Co. 97.0 94% 12,750 13,400 3.32x 3.05x 2.84x 13.3x 12.1x 10.8x 22.6x 19.7x 7.5% 58.1% 25.0% 1.6x Kering SA 208.2 86% 26,385 31,943 2.44x 2.36x 2.19x 11.7x 11.5x 10.2x 17.0x 13.9x 7.6% 62.5% 20.9% 1.6x LVMH Moet Hennessy Louis Vuitton SA 171.9 86% 86,211 96,370 2.43x 2.34x 2.17x 10.4x 9.7x 8.8x 18.3x 16.2x 7.9% 65.4% 23.5% 2.0x Hugo Boss AG 139.9 92% 9,656 9,918 2.99x 2.84x 2.62x 13.7x 12.1x 10.8x 19.5x 17.1x 8.3% 66.2% 21.9% 1.6x Burberry Group plc 24.4 87% 10,712 10,019 2.58x 2.46x 2.26x 10.6x 10.3x 9.8x 19.8x 18.4x 9.1% 71.2% 24.4% 2.4x Prada S.p.A 7.0 65% 17,811 17,327 3.62x 3.49x 3.17x 11.8x 11.2x 10.1x 21.2x 18.9x 10.2% 73.9% 30.8% 2.2x Tod's SpA 106.7 55% 3,265 3,117 2.40x 2.37x 2.22x 11.2x 10.5x 9.5x 19.7x 17.4x 6.9% 36.0% 21.4% 3.8x Salvatore Ferragamo SpA 26.7 67% 4,492 4,577 2.68x 2.54x 2.34x 13.0x 11.9x 10.5x 21.5x 18.7x 8.5% 63.3% 20.6% 1.5x


Average 2.87x 2.74x 2.53x 12.0x 11.2x 10.1x 19.8x 17.4x 8.4% 62.2% 23.9% 2.0x Youth

Company


% of 52 Week High

Market Value ($MM)




2014E Gross Margin

2014E EBITDA Margin

2014E P/E/G LTM 2014E 2015E LTM 2014E 2015E 2014E 2015E American Apparel, Inc. 0.9 49% 154 388 0.61x 0.61x 0.58x NMF 9.4x 6.6x NMF NMF 4.0% 50.6% 0.5% NA American Eagle Outfitters, Inc. 10.8 64% 2,098 1,770 0.54x 0.55x 0.54x 5.6x 5.8x 4.9x 20.1x 14.8x 1.7% 33.8% 9.6% 1.9x Guess? Inc. 25.5 73% 2,172 1,725 0.68x 0.68x 0.66x 5.5x 6.3x 5.4x 17.2x 14.1x 2.4% 37.5% 12.4% 2.9x Abercrombie & Fitch Co. 41.4 84% 3,103 2,248 0.55x 0.56x 0.55x 4.5x 4.5x 4.1x 17.9x 14.9x 1.4% 62.6% 12.2% 1.0x The Buckle, Inc. 45.8 84% 2,215 2,023 1.79x 1.75x 1.69x 7.0x 6.9x 6.6x 13.4x 13.0x 3.2% 50.1% 25.6% 2.1x Bebe Stores, Inc. 2.9 41% 226 99 0.22x 0.23x 0.21x NMF NMF 5.8x NMF NMF 8.1% 32.0% (5.9%) (0.2x) Vera Bradley, Inc. 19.1 64% 781 768 1.42x 1.48x 1.33x 6.3x 9.0x 7.5x 18.4x 15.2x 11.1% 56.6% 22.3% 1.3x Francesca's Holdings Corporation 12.8 52% 541 534 1.57x 1.38x 1.21x 6.1x 6.2x 5.4x 11.9x 10.1x 13.9% 51.7% 25.9% 0.7x Body Central Corp. 0.4 5% 7 3 0.01x 0.01x NA NMF NMF NA NMF NA NA 33.8% (19.1%) NA Urban Outfitters Inc. 36.3 82% 5,408 4,884 1.58x 1.46x 1.33x 8.5x 8.5x 7.5x 18.9x 16.0x 10.1% 37.6% 18.6% 1.2x



William Blair

Global Apparel and Lifestyle Accessories Report 12 News Review

News Review

9/15/2014 The Neiman Marcus Group has agreed to buy Mytheresa.com, the Munich-based luxury fashion e-tailer, from founders and minority investor Acton Capital Partners. 8/20/2014 TOMS Shoes Inc. has announced the signing of a definitive agreement to partner with Bain Capital, to accelerate the growth of the company and its giving programs around the world. TOMS Founder and Chief Shoe Giver Blake Mycoskie will continue as visionary of the company and remain 50% owner of TOMS. 8/10/2014 A stake in Achica, the UK-based "flash" sales website, has been acquired by Lansdowne Partners, The Sunday Telegraph reported. The report said Companies House filings revealed the fund manager's acquisition of an equity stake; it did not specify how much Lansdowne paid or the size of its holding. 7/31/2014 Catterton Partners announced it has agreed to acquire Hong Kong-based designer jeweler John Hardy Limited in a management buyout transaction from 3i Group for an estimated minimum of USD 100m. 7/30/2014 Kering and Ulysse Nardin have signed an agreement for Kering to acquire 100% of the capital of Ulysse Nardin. The deal value was not disclosed. The brand will join Kering's Luxury - Watches and Jewellery' division, headed by Albert Bensoussan, and the management team will remain in place. The deal should be finalised during the second half of 2014. 5/20/2014 The Mondadori Group is accelerating the development of the "Grazia International Network", which entered the e-commerce fashion market through the acquisition of London-Boutiques.com. The London-based marketplace offers readers and users the possibility of selecting a wide range of clothing and accessories of some of the British capital's best boutiques. 5/1/2014 Farfetch, the global ecommerce site for independent boutiques, has raised USD 66 million in a Series D round of investment led by London-based private equity firm Vitruvian Partners. Farfetch has sales of USD 275 million and year-on-year growth of 100%. 4/13/2014 Sycamore Partners announced that Kurt Geiger, a leading European luxury branded shoe retailer, has completed a management-led buyout and is now operating as an independent company. Sycamore Partners supported Kurt Geiger's management team in its acquisition of the business, which previously was a division of the Jones Group Inc. 4/9/2014 PVH Corp. announced that it has become a minority shareholder in the parent company of the Karl Lagerfeld brand. 4/9/2014 L Capital Management and L Capital Asia, two private equity companies sponsored by the Louis Vuitton Moet Hennessy Group (LVMH), have acquired a 30% stake of Vicini S.p.A., owner of the Giuseppe Zanotti Design brand. On a strategic standpoint, this new partnership comes from the willingness of Giuseppe Zanotti, Vicini’s Chairman and Chief Designer, to create the ideal conditions to foster the company’s future growth in the increasingly competitive global markets. 4/8/2014 Bree, the German handbag maker, has been acquired by a group of investors, Sueddeutsche Zeitung reported. The German-language daily cited the company as saying that Philipp Bree, a son of the company founder, sold his 50% stake, while his brother Axel Bree also sold a small stake. The report said majority ownership of Bree now lies in the hands of investors led by two retail experts: Peter Wolf and Klaus Schmidt. Bree's annual turnover is about EUR 50m, according to the article. 3/29/2014 Better Capital, has invested an additional GBP 7.5m in its Jaeger fashion retail business. 3/28/2014 IC Company has entered into an agreement to sell its Mid Market division comprising of the four brands InWear, Matinique, Part Two and Soaked in Luxury as well as the store concept COMPANYS to DK Company, according to a company press release. In the future IC Company will focus on the Premium segment in which the Company has realized strong growth and solid earnings for the past few years. 3/24/2014 Steven Madden Ltd. and footwear designer Brian Atwood have acquired Atwood's brand for an undisclosed sum, Women's Wear Daily reported. 3/17/2014 Labelux, an Austrian fashion company, has reportedly sounded out investment banks regarding a potential flotation of a minority shareholding in its Jimmy Choo shoes business. Early estimates indicate that Jimmy Choo could have a flotation value of about GBP 1bn (EUR 1.19bn), the item said, noting that Labelux paid GBP 525m for the company in 2011. 3/11/2014 Betty Blue Spa, a private Italian fashion company that owns the Elisabetta Franchi and Betty Blue brands, aims to list a 30% to 40% share on the Milan Bourse between 2017 and 2018, Giacinto D’Onofrio, a partner at Betty Blue’s sponsor Trilantic Capital Partners said. 3/7/2014 Etro, the Italian fashion house, has denied that it is up for sale, MF Fashion reported. The report cited a press release denying sale rumours. 3/3/2014 Iconix Brand Group, Inc. , today announced that it has acquired the remaining 50% of Iconix Latin America from its joint venture partner, New Brands Group, S.A., for USD 42m. 3/2/2014 Oakley Capital has acquired a majority interest in North Technology Group, the "North Sails" sailing brand.

William Blair

Global Apparel and Lifestyle Accessories Report IPO Backlog 13

IPO Backlog

2014YTD IPOs by Primary Sector Current IPO Backlog by Primary Sector

Europe

U.S.

Asia

39%

5%6%6%40%

4% ConsumerBusiness ServicesFinancialHealthcareIndustrialTechnology

20%2%

38%4%35%


21%5%

18%11%

27%


12% 4%13%

11%53%


33%5%1%7%37%


7% 7%4%8%66%


William Blair

Global Apparel and Lifestyle Accessories Report 14 Equity Research Team

Equity Research Team

Amy Noblin +1 415 248 2874 Apparel and Accessories Abercrombie & Fitch Co. (ANF) Coach, Inc. (COH) DSW Inc. (DSW) Francesca’s Holdings Corporation (FRAN)

Michael Kors Holdings Limited (KORS)Nordstrom, Inc. (JWN) Tiffany & Co. (TIF) Tumi Holdings, Inc. (TUMI) Vera Bradley, Inc. (VRA) Vince Holding Corp. (VNCE)

Sharon Zackfia, CFA Group Head–Consumer +1 312 364 5386 Apparel and Accessories, Leisure, Restaurants BJ’s Restaurants, Inc. (BJRI) Bloomin’ Brands, Inc. (BLMN) CarMax, Inc. (KMX) Carnival Corporation (CCL) The Cheesecake Factory Incorporated (CAKE) Chipotle Mexican Grill, Inc. (CMG) Dunkin’ Brands Group, Inc. (DNKN)

Harley-Davidson, Inc. (HOG)Life Time Fitness, Inc. (LTM) lululemon athletica inc. (LULU) Panera Bread Company (PNRA) Potbelly Corporation (PBPB) Royal Caribbean Cruises Ltd. (RCL) Sonic Corp. (SONC)

Starbucks Corporation (SBUX)Tilly’s, Inc. (TLYS) Tumi Holdings, Inc. (TUMI) Under Armour, Inc. (UA) Urban Outfitters, Inc. (URBN) Zumiez Inc. (ZUMZ)

Mark Miller, CFA +1 312 364 8498 Broad Assortment and Hardlines, E-commerce, Health and Beauty Amazon.com, Inc. (AMZN) Blue Nile, Inc. (NILE) Cabela’s Incorporated (CAB) Costco Wholesale Corporation (COST) CVS Caremark Corporation (CVS) Dick’s Sporting Goods, Inc. (DKS) Fairway Group Holdings Corp. (FWM)

The Fresh Market, Inc. (TFM)GNC Holdings Inc. (GNC) Mattress Firm Holding Corp. (MFRM) MercadoLibre, Inc. (MELI) Natural Grocers by Vitamin Cottage, Inc. (NGVC)Target Corporation (TGT) Tractor Supply Company (TSCO)

Vitamin Shoppe, Inc. (VSI) Walgreen Co. (WAG) Wal-Mart Stores, Inc. (WMT) Whole Foods Market, Inc. (WFM) zulily, inc. (ZU)

Daniel Hofkin +1 312 364 8965 Hardlines, Specialty Retail Bed Bath & Beyond Inc. (BBBY) Luxottica Group S.p.A. (LUX) O’Reilly Automotive, Inc. (ORLY) PetSmart, Inc. (PETM)

Regis Corporation (RGS)Restoration Hardware Holdings, Inc. (RH) Ross Stores, Inc. (ROST) Steiner Leisure Limited (STNR) The TJX Companies, Inc. (TJX)Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Williams-Sonoma, Inc. (WSM)

Jon Andersen, CFA +1 312 364 8697 Consumer Products Annie’s, Inc. (BNNY) AptarGroup, Inc. (ATR) Boulder Brands, Inc. (BDBD) Church & Dwight Co., Inc. (CHD) Colgate-Palmolive Company (CL) Fox Factory Holding Corporation (FOXF) J&J Snack Foods Corp. (JJSF)

The J.M. Smucker Company (SJM)Jarden Corporation (JAH) Kellogg Company (K) Keurig Green Mountain (GMCR) Mead Johnson Nutrition Company (MJN) Perrigo Company (PRGO) Prestige Brands Holdings, Inc. (PBH)

The Procter & Gamble Company (PG)The Scotts Miracle-Gro Company (SMG) SodaStream International Ltd. (SODA) Tempur-Pedic International Inc. (TPX) TreeHouse Foods, Inc. (THS)

William Blair

Global Apparel and Lifestyle Accessories Report Notes 15

Notes

William Blair

“William Blair” is a trade name for William Blair & Company, L.L.C., William Blair Investment Management, LLC and William Blair International, Ltd. William Blair & Company, L.L.C. and William Blair Investment Management, LLC are each a Delaware company and regulated by the Securities and Exchange Commission. William Blair & Company, L.L.C. is also regulated by The Financial Industry Regulatory Authority and other principal exchanges. William Blair International, Ltd is authorized and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom. William Blair only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated in the United States and are not offered to persons or institutions outside the United States. This material has been approved for distribution in the United Kingdom by William Blair International, Ltd. Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on at any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com August 18, 2014 Global Apparel and Lifestyle Accessories Report 16 Disclosures

Disclosures

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