A Collaborative Consumer Insights Project Fall 2013...Fall 2008 Nike Vans Steve Madden Converse Adidas Spring 2008 Nike UGG Australia Steve Madden Adidas Puma Fall 2007 Nike Steve

Taking Stock With Teens

A Collaborative Consumer Insights Project

Fall 2013

Disclosures

Disclosures for universe of: Stephanie Wissink, Nicole Miller Regan, Sean Naughton, Neely Tamminga, Erinn Murphy, Gene Munster, Mike Olson, James Marsh

1. I or a household member have 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 Jaffray or its affiliates beneficially own 1% or more of any class of common equities of the following companies: Naughton: FL; Olson: GLUU

5. The following companies have been investment banking clients of Piper Jaffray during the past 12 months: Miller Regan: BAGL, DFRG, FRGI, IRG, NDLS, SBUX; Murphy: KORS; Wi i k TLYS N h NGVC T i COTY GMAN RH ULTA M AAPl WWW YUM M h DISCA ENT PWissink: TLYS; Naughton: NGVC; Tamminga: COTY, GMAN, RH, ULTA; Munster: AAPl, WWW, YUM; Marsh: DISCA, ENT, P

6. Piper Jaffray expects to have the following companies as investment banking clients within the next three months: Miller Regan: DFRG, NDLS; Murphy: KORS; Tamminga: COTY, RH; Munster: YUME; Marsh: P

7. Other material conflicts of interest for Piper Jaffray regarding companies in my universe for which I am aware include: Miller Regan: DFRG, FRGI, NDLS: underwriting; Murphy: KORS: underwriting; Wissink:: TLYS: underwriting; Naughton: BDE, NGVC: underwriting; Tamminga: COTY, RH: underwriting; Munster: YUME, YY: underwriting; Marsh: DISCA, P: underwritingunderwriting

8. Piper Jaffray received non-investment banking securities-related compensation from the following companies during the past 12 months: Miller Regan: AFCE; Murphy: CROX; Naughton: NGVC; Wissink: GCO, WTSL; Tamminga: HSNI; Munster: DRIV, RLOC, VCLK;

9. Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis: Miller Regan: AFCE, BAGL, BBRG, BJRI, BKW, CAKE, DFRG, DNKN, DRI, EAT, FRGI, IRG, MCD, NDLS, PEET, PNRA, RRGB, RUTH, SBUX, SONC; Murphy: COH, CROX, DECK, FOSL, GES, GIII, KORS, PVH, SHOO WWW ZQK; Wissink: AEO ANF ARO BODY GCO GPS HAS JAKK MAT PLCE PSUN RUE TLYS WTSLA ZUMZ; Naughton: BDE BGFV CLUB COST DKS FINL HAIN SHOO, WWW, ZQK; Wissink: AEO, ANF, ARO, BODY, GCO, GPS, HAS, JAKK, MAT, PLCE, PSUN, RUE, TLYS, WTSLA, ZUMZ; Naughton: BDE, BGFV, CLUB, COST, DKS, FINL, HAIN, HIBB, NGVC, SKUL, TFM, TGT, UA, UNFI, WFM; Tamminga: ANN, ASNA, CACH, CHS, CWTR, EXPR, GMAN, IPAR, JCP, JWN, KIRK, KSS, RH, ROST, ULTA, URBN, VRA, VVTV; Munster: AAPL, AMZN, ANGI, BIDU, DRIV, EBAY, FB, GOOG, GRPN, IACI, LNKD, LOGM, MCHX, MELI, MOBI, PRTS, RLOC, SINA, VCLK, WWWW, YELP, YHOO, YNDX, YY; Olson: ADBE, AKAM, ATVI, CTRP, DLB, DTSI, EA, EXPE, GLUU, GME, LLNW, NFLX, OPEN, OUTR, PCLN, RNWK, ROVI, TIVO, TRIP, TTWO, ZNGA; Marsh: CBS, CKEC, CMLS, DIS, DISCA, DWA, IMAX, IPG, LAMR, LGF, MDCA, MM, NCMI, P, RGC, RLD, SIRI, VIAB

10. Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sell the securities of these companies on a principal basis: Miller Regan: CMG; Murphy: RL, VFC; Naughton: BGS, CAB, FL, LTM, NKE, VSI; Wissink: CRI, LF, SUMR; Tamminga: CBK, COTY, EL, HSNI, LTD, NWY, WSM; Munster: YUME;

2

basis: Miller Regan: CMG; Murphy: RL, VFC; Naughton: BGS, CAB, FL, LTM, NKE, VSI; Wissink: CRI, LF, SUMR; Tamminga: CBK, COTY, EL, HSNI, LTD, NWY, WSM; Munster: YUME; Olson: AWAY; Marsh: CNK, ENT, SNI

Results Conference Call & Speaking Order

Conference Call Details

Tuesday, October 8 at 4:30pm ET

Speaking Order

Dial-in Instructions: 855 566-6553 Conference ID: 74218706

1) Steph Wissink• Survey Details• Spending Highlights

2) Erinn Murphy

5) Neely Tamminga • Online & Off-Price Retailing• Beauty & Personal Care

6) G M t2) Erinn Murphy• Brand Preferences• Fashion Insights

3) Sean Naughton (Adam Engebretson)

6) Gene Munster• Digital & Social Media – Apple and Facebook

7) Michael Olson (Andrew Connor & Ryan Wright)• Online Movie Rentals) g ( g )

• Athletic Brands and Headphones• Organic Foods

4) Nicole Miller Regan (Joshua Long)R t t

• Video Games

8) James Marsh• Media & Entertainment

3

• Restaurants

Investment Risks

Risks to achievement of investment objectives include, but are not limited to:

• Reliance on key top management• 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

4

Survey Details

National Survey Of Teens Measures:

Brand Preferences Spending Trends Shopping Characteristics

26th Semi-Annual Proprietary Teen Research Project

Two Unique Surveys:

Total 8,650 teen responses

Average Age 16.2 years

1) Upper-Income Teen Survey) pp y

• Classroom visit & electronic surveys of 2,400 teens

• HH Income of $105,000 represents top 25% of U.S. household units

2) Average-Income Teen Survey2) Average-Income Teen Survey

• Classroom visit & electronic surveys of 6,250 teens

• HH Income of $53,000 aligns more closely with U.S. median

5Source: Piper Jaffray & Co.

Teen Spending By Category

OtherBooks

2%Furniture

1%

Clothing21%

Music & Movies6%

Events6%

3%

Video Games7%

Food20%

Shoes

Electronics7%

Accessories/Personal Care

10%

Car9%

Shoes9%


Spending Behavior Highlights

• Fashion Spending Declined Low To Mid-Single Digits Relative To Prior Seasons

• Spending Expectations Moderate From Spring To Fall

• Footwear Category Gains Share in Wallet, Share Shift Coming From Accessoriesg y g

• Shopping Frequency For Fashion Continues To Moderate

• Internet & Off-Price Channels Preferred Over Traditional Mall Retail

• Households Digest Tax Changes As Parent Contribution Returns To 65% Range


Teens Spending Less On Fashion

$1,562$1 531

$1,600

$1,700

$1,285

$1,468

$1,244$1,267

$1,423

$1,353

$1,415

$1,348

$1,531

$1,285

$1,454

$1,300

$1,400

$1,500

$1,139

$1,052

$1,183

$1,062$1,018

$1,083

$932 $934 $933$969

$1,133$1,102$1,087

$1,041

$1,000

$1,100

$1,200

$93 $ $

$700

$800

$900


Spending Expectations Moderate From Spring To Fall

49%50%

60%Apparel

Shoes

35%

20%

30%

40%

Accessories

16%

0%

10%


Fashion Wallet Share Shift From Accessories To Footwear

26%26%

Shoes

20%

Accessories

14%10%

Fall 20

13ring

201

3Fall 20

12ring

201

2Fall 20

11ring

201

1Fall 20

10ring

201

0Fall 20

09ring

200

9Fall 20

08ring

200

8Fall 20

07ring

200

7Fall 20

06ring

200

6Fall 20

05ring

200

5Fall 20

04ring

200

4Fall 20

03

Fall 20

13ring

201

3Fall 20

12ring

201

2Fall 20

11ring

201

1Fall 20

10ring

201

0Fall 20

09ring

200

9Fall 20

08ring

200

8Fall 20

07ring

200

7Fall 20

06ring

200

6Fall 20

05ring

200

5Fall 20

04ring

200

4Fall 20

03

SpSpSpSpSpSpSpSpSpSp

FSprF

SprF

SprF

SprF

SprF

SprF

SprF

SprF

SprF

SprF


Shopping Frequency For Fashion Continues To Moderate

38 4038

34

36

38

40

28

26

28

30

32

20

22

24


Parent Contribution To Teen Spending Returns To Historical Levels

80%

65%

70%

75%

55%

60%

45%

50%

40%Spring 2011 Fall 2011 Spring 2012 Fall 2012 Spring 2013 Fall 2013

Average Income Upper Income


A Spotlight On Emerging Channels: Online Retailing

I 10%

Shopping Preferences By Channel

Specialty, 27%Mail Order, 6%

Internet, 10%

Outlet, 14%

Major Chain/Dept Store/Off-Price,

30%

Discount, 12%


Top 5 Clothing Brands – HistoryTOP CLOTHING BRAND PREFERENCES (UPPER-INCOME TEEN SURVEY)

No. 1 No. 2 No. 3 No. 4 No. 5F all 2013 Nike Action Sports Brands Forever 21 American Eagle Polo Ralph LaurenSpring 2013 Nike Action Sports Brands American Eagle Forever 21 Polo Ralph LaurenF all 2012 Nike Forever 21 Polo Ralph Lauren Action Sports Brands American EagleS i 2012 Nik F 21 A ti S t B d A i E l P l R l h LSpring 2012 Nike Forever 21 Action Sports Brands American Eagle Polo Ralph LaurenF all 2011 Nike Forever 21 Action Sports Brands American Eagle Polo Ralph LaurenSpring 2011 Nike Forever 21 American Eagle Action Sports Brands Polo Ralph LaurenF all 2010 Action Sports Brands Nike American Eagle Forever 21 HollisterSpring 2010 Action Sports Brands Forever 21 Nike Hollister American EagleF all 2009 Action Sports Brands Forever 21 Hollister Nike American EagleSpring 2009 Action Sports Brands Hollister Nike Forever 21 American EagleF all 2008 Action Sports Brands Hollister Forever 21 American Eagle A&FF all 2008 Action Sports Brands Hollister Forever 21 American Eagle A&FSpring 2008 Hollister Action Sports Brands American Eagle A&F Forever 21F all 2007 Hollister Action Sports Brands American Eagle A&F Forever 21Spring 2007 Hollister American Eagle Action Sports Brands A&F Forever 21F all 2006 Hollister Action Sports Brands A&F American Eagle Urban Outfitters

TOP CLOTHING BRAND PREFERENCES (AVERAGE-INCOME TEEN SURVEY)

No. 1 No. 2 No. 3 No. 4 No. 5F all 2013 Nike Forever 21 American Eagle Action Sports Brands HollisterSpring 2013 Nike American Eagle Forever 21 Action Sports Brands HollisterF all 2012 Nike Forever 21 American Eagle Action Sports Brands HollisterSpring 2012 Forever 21 Nike Action Sports Brands American Eagle HollisterF all 2011 Nike American Eagle Forever 21 Hollister Action Sports BrandsSpring 2011 American Eagle Nike Forever 21 Action Sports Brands HollisterSpring 2011 American Eagle Nike Forever 21 Action Sports Brands HollisterF all 2010 American Eagle Hollister Nike Action Sports Brands AeropostaleSpring 2010 American Eagle Nike Action Sports Brands Hollister Forever 21F all 2009 Action Sports Brands American Eagle Nike Hollister Forever 21Spring 2009 American Eagle Action Sports Brands Hollister Nike Forever 21F all 2008 American Eagle Action Sports Brands Hollister Nike AeropostaleSpring 2008 American Eagle Action Sports Brands Hollister Nike A&FF all 2007 American Eagle Hollister Action Sports Brands Nike A&F


Spring 2007 American Eagle Hollister Action Sports Brands A&F NikeF all 2006 American Eagle Action Sports Brands Hollister A&F Aeropostale

Top 5 Footwear Brands – HistoryTOP FOOTWEAR BRAND PREFERENCES (UPPER-INCOME TEEN SURVEY)

No. 1 No. 2 No. 3 No. 4 No. 5F all 2013 Nike Vans Steve M adden Converse Sperry Top-SiderSpring 2013 Nike Vans Steve M adden Sperry Top-Sider UGG AustraliaF all 2012 Nike Vans Sperry Top-Sider Steve M adden UGG AustraliaS i 2012 Nik V C St M dd DSWSpring 2012 Nike Vans Converse Steve M adden DSWF all 2011 Nike Vans Steve M adden DSW ConverseSpring 2011 Nike Vans UGG Australia Steve M adden DSWF all 2010 Nike Vans Steve M adden Converse DSW/UGG AustraliaSpring 2010 Nike Vans UGG Australia Converse Steve M addenF all 2009 Nike Vans Steve M adden UGG Australia ConverseSpring 2009 Nike UGG Australia Vans Puma Steve M addenF all 2008 Nike Vans Steve M adden Converse AdidasSpring 2008 Nike UGG Australia Steve M adden Adidas PumaF all 2007 Nike Steve M adden Adidas Puma VansSpring 2007 Nike Steve M adden Puma Adidas DSW

TOP FOOTWEAR BRAND PREFERENCES (AVERAGE-INCOME TEEN SURVEY)( )

No. 1 No. 2 No. 3 No. 4 No. 5F all 2013 Nike Vans Converse Sperry Top-Sider AdidasSpring 2013 Nike Vans Converse TOM S Sperry Top-SiderF all 2012 Nike Vans Sperry Top-Sider Converse AdidasSpring 2012 Nike Vans Converse TOM S Sperry Top-SiderF all 2011 Nike Vans Converse Sperry Top-Sider JourneysF all 2011 Nike Vans Converse Sperry Top Sider JourneysSpring 2011 Nike Vans Converse Sperry Top-Sider UGG AustraliaF all 2010 Nike Vans Converse Adidas JourneysSpring 2010 Nike Vans Converse Puma UGG AustraliaF all 2009 Nike Converse Vans Adidas PumaSpring 2009 Nike Vans Converse Adidas DC ShoesF all 2008 Nike Vans Adidas Converse PumaSpring 2008 Nike Vans Adidas Converse Puma


Spring 2008 Nike Vans Adidas Converse PumaF all 2007 Nike Adidas Puma Vans ConverseSpring 2007 Nike Adidas Puma Vans Converse

Top Handbag Brands – History

Upper-Income Teens

Rank Brand % Total Rank Brand % Total Rank Brand % TotalSpring 2013 Fall 2012Fall 2013

1 Coach 26% 1 Coach 30% 1 Coach 36%2 Michael Kors 21% 2 Michael Kors 18% 2 Michael Kors 9%3 Louis Vuitton 7% 3 Louis Vuitton 7% 3 Vera Bradley 7%4 Vera Bradley 6% 4 Vera Bradley 6% 4 Louis Vuitton 7%5 Marc Jacobs 3% 5 Longchamp 4% 5 Tory Burch 4%6 Kate Spade 3% 6 Juicy Couture 3% 6 Fossil 4%7 Longchamp 3% Tory Burch 3% 7 Juicy Couture 4%

Average Income Teens

8 Gucci 3% Kate Spade 3% 8 Longchamp 2%9 Tory Burch 2% 9 Chanel 3% 9 Kate Spade 2%10 Fossil 2% 10 Gucci 2% 10 Gucci 2%

Marc Jacobs 2%

Average-Income Teens

Rank Brand % Total Rank Brand % Total Rank Brand % Total1 Coach 33% 1 Coach 39% 1 Coach 43%2 Michael Kors 21% 2 Michael Kors 14% 2 Vera Bradley 6%3 Louis Vuitton 5% 3 Louis Vuitton 5% 3 Gucci 5%4 V B dl 5% 4 G i 5% 4 Mi h l K 5%

Fall 2012Spring 2013Fall 2013

4 Vera Bradley 5% 4 Gucci 5% 4 Michael Kors 5%5 Gucci 4% 5 Vera Bradley 4% 5 Louis Vuitton 5%6 Fossil 3% 6 Fossil 3% 6 Fossil 3%7 Chanel 2% 7 Juicy Couture 2% 7 Juicy Couture 3%8 Steve Madden 2% 8 Betsey Johnson 2% 8 Chanel 2%

Guess 2% 9 Chanel 2% 9 Guess 2%10 Juicy Couture 1% 10 Dooney & Bourke 2% 10 Betsey Johnson 1%


Teens Talk Fashion

Down-Trending Brands

She Says:

Fall 2013* Spring 2013 Fall 2012Rank Brand No Longer Worn % Total Rank Brand No Longer Worn % Total Rank Brand No Longer Worn % Total

1 Aeropostale 25% 1 Aeropostale 33% 1 Abercrombie & Fitch 35%2 Abercrombie & Fitch 22% 2 Hollister 17% 2 Hollister 15%3 Hollister 15% 3 Abercrombie & Fitch 10% 3 Aeropostale 12%4 Justice/Limited Too 8% 4 Justice/Limited Too 5% 4 Justice/Limited Too 6%

G % G % G %y

5 Gap 5% 5 Gap 4% 5 Gap 3%6 Forever 21 2% 6 American Eagle 2% 6 American Eagle 3%7 American Eagle 2% 7 Baby Phat 2% 7 Forever 21 1%8 Old Navy 2% 8 Old Navy 1% 8 Uggs 1%9 Roxy 2% 9 Forever 21 1% 9 Juicy Couture 1%10 Juicy Couture 1% 10 Six Brands Tied for 10th 1% 10 Three Brands Tied for 10th 1%

He Says:

Fall 2013* Spring 2013 Fall 2012Rank Brand No Longer Worn % Total Rank Brand No Longer Worn % Total Rank Brand No Longer Worn % Total

1 Gap 11% 1 Hollister 12% 1 Gap 11%2 Abercrombie & Fitch 9% 2 Aeropostale 8% 2 Abercrombie & Fitch 10%3 Hollister 8% 3 Gap 7% 3 Hollister 8%4 Aeropostale 7% 4 Adidas 6% 4 American Eagle 5%

y4 Aeropostale 7% 4 Adidas 6% 4 American Eagle 5%5 Adidas 6% 5 American Eagle 5% 5 Adidas 5%6 American Eagle 4% 6 Abercrombie & Fitch 4% 6 Nike/Jordans 3%7 Nike/Jordans 4% 7 Under Armour 3% Volcom 3%8 Under Armour 3% DC 3% 8 Aeropostale 3%9 Quiksilver 3% 9 Reebok 2% DC 3%10 DC 3% Southpole 2% Quiksilver 3%


* Reflects change in methodology accounting for upper-income teens in online survey only

Teens Talk Fashion

Up-Trending BrandsFall 2013* Spring 2013 Fall 2012

Rank Brand % Total Rank Brand % Total Rank Brand % Total1 Forever 21 6% 1 Forever 21 12% 1 Forever 21 12%2 American Eagle 5% 2 H&M 5% 2 Urban Outfitters 7%3 Urban Outfitters 5% 3 American Eagle 5% 3 American Eagle 6%4 Brandy Melville 5% Hollister 5% 4 Victoria's Secret/PINK 4%5 Nike/Jordans 4% 5 Victoria's Secret/PINK 4% 5 H&M 4%6 Victoria's Secret 3% 6 PacSun 4% 6 PacSun 3%

She Says:7 H&M 3% 7 lululemon 3% 7 Miss Me 3%8 J.Crew 3% 8 Urban Outfitters 2% 8 Free People 3%9 Charlotte Russe 3% 9 Charlotte Russe 2% 9 Abercrombie & Fitch 3%

PacSun 3% 10 Four Brands Tied for 10th 2% 10 Nike/Jordans 2%

F ll 2013* S i 2013 F ll 2012Fall 2013* Spring 2013 Fall 2012

RankNew Brand Starting To

Wear % Total RankNew Brand Starting To

Wear % Total RankNew Brand Starting To

Wear % Total1 Nike/Jordans 14% 1 Nike/Jordans 16% 1 Nike/Jordans 16%2 Polo Ralph Lauren 12% 2 Polo Ralph Lauren 9% 2 Polo Ralph Lauren 15%3 American Eagle 5% 3 Under Armour 4% 3 American Eagle 4%4 Adidas 3% 4 American Eagle 3% 4 Vans 4%

He Says:4 Adidas 3% 4 American Eagle 3% 4 Vans 4%5 Under Armour 3% Adidas 3% 5 Adidas 3%6 Vans 3% 6 Diamond Supply Co. 3% 6 Diamond Supply Co. 3%7 Vineyard Vines 3% 7 Hollister 2% 7 H&M 2%8 Diamond Supply Co. 2% Vans 2% 8 Sperry's 2%9 Levi's 2% 9 Express 2% 9 Abercrombie & Fitch 2%10 Express 2% H&M 2% 10 Hollister 1%


* Reflects change in methodology accounting for upper-income teens in online survey only

Fashion Trend Insights – Action Sports

Upper-Income Teens

47 Brands mentioned vs 29 in Spring

18%18%

20%

24-Survey Average = 10.3%

47 Brands mentioned vs. 29 in Spring

(-) PacSun losing mindshare

(+) Tilly’s & Vans gaining

10%11%

10%9% 9%

12%

9%

13%

11%12%

14%13%13%

10%9% 9%

10%

12%

10%

12%

14%

16%

18%

5%

7%8%

6%

9% 9% 9%8% 9% 9%

2%

4%

6%

8%

10%

0%

%


Fashion Trend Insights – Fast Fashion

Upper-Income Teens

(-) F21 remains No. 1 while losing mindshare

40%

22-Survey Average = 21%

(=) Charlotte Russe No. 2 maintaining share

(=) H&M No. 3 maintaining share

1 %20%

24% 25%

33%29%30%32%33%34%

28%25%

20%25%30%35%40%

8%11%13%

17%12%

9%

14%10%

14%16% 16%

0%5%

10%15%20%

0%


Fashion Trend Insights – Refined Classic

Upper-Income Teens

19-Survey Average = 14%

(=) Polo Ralph Lauren maintaining share

(+) Nordstrom moving up in rank

(+) A&F moving up in rank

21%18%

21%

16% 17% 17%14% 14%

15%

19%

14% 14%

20%

25%

(+) A&F moving up in rank

14% 13%

9% 10% 10%8%

11%14% 14% 14% 14%

5%

10%

15%

0%


Fashion Trend Insights – Fashion Athletic

Upper-Income Teens (+) Nike remains No. 1 gaining share

(-) Under Armour losing mindshare

(+) Lululemon holding share

23%22%

25%

(+) Lululemon holding share

12%

15%

18% 18% 18%20%

15%

20%

Average = 15%

6%5%

9% 9%

12%

5%

10%

0%

5%

Spring 2008

Fall 2008

Spring 2009

Fall 2009

Spring 2010

Fall 2010

Spring 2011

Fall 2011

Spring 2012

Fall 2012

Spring 2013

Fall 2013


2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013

Fashion Trend Insights – Legacy Vertically Integrated Teen Retailers

Upper-Income Teens

35.6%40%

26-Survey Average = 24.6%

(+) A&F moving up in rank; maintaining share

( ) AE i d i h & k

20%

25%

30%

35% (-) AE moving down in share & rank

(-) Aero moving down in share & rank

12.1%

5%

10%

15%

20%

0%

5%


Most Popular Fashion Trend In School Right Now

Fall 2013 Spring 2013Rank Popular Fashion Trend % Total Rank Popular Fashion Trend % Total

1 Nike / Jordans 12% 1 Nike / Jordans 11%1 Nike / Jordans 12% 1 Nike / Jordans 11%2 Yoga Pants / lululemon 8% 2 Yoga Pants / lululemon 10%3 High-Waisted Pants/Skirts 5% 3 Leggings 6%4 Shoes 4% 4 Boots 5%5 Boat Shoes 3% 5 Color Apparel 3%6 Jeans / Skinny Jeans 3% Polo Ralph Lauren 3%7 Hi h S k 2% 7 J / Ski J 3%7 High Socks 2% 7 Jeans / Skinny Jeans 3%8 Polo Ralph Lauren 2% 8 Diamond Supply Co. 2%9 Maxi Dresses/Skirts 2% 9 Boat Shoes 2%10 Athletic Wear 2% 10 Athletic Wear 2%

Spring 2012 Fall 2011Rank Popular Fashion Trend % Total Rank Popular Fashion Trend % Totalp p

1 Yoga Pants 8% 1 Nike / Jordans 7%2 Nike 6% 2 Feathers In Hair 6%

TOMS Shoes 6% 3 Yoga Pants / lululemon 5%4 Jeans / Skinny Jeans 5% 4 TOMS Shoes 5%5 Leggings / Jeggings 4% 5 Jeans / Skinny Jeans 5%6 Vans 4% 6 Boat Shoes 4%6 Vans 4% 6 Boat Shoes 4%7 Uggs 4% 7 Snapback Hats 4%8 Snapback Hats 4% 8 Vans 3%9 Boat Shoes 3% 9 High-Waisted Pants/Skirts 3%10 Scarves 2% 10 Uggs 2%


Athletic Apparel Brands – All Teens

PREFERRED ATHLETIC CLOTHING BRAND - UPPER-INCOME TEEN SURVEY - ALL TEENS

Rank Brand % Total Rank Brand % Total Rank Brand % TotalFall 2013 Fall 2012Spring 2013

1 Nike 70% 1 Nike 68% 1 Nike 70%2 Under Armour 9% 2 Under Armour 11% 2 Under Armour 10%3 Adidas 5% 3 Adidas 4% 3 Adidas 5%4 Lululemon 3% 4 Lululemon 3% 4 Lululemon 1%5 The North Face 1% 5 The North Face 1% 5 The North Face 1%

PREFERRED ATHLETIC CLOTHING BRAND - AVERAGE-INCOME TEEN SURVEY - ALL TEENS


Rank Brand % Total Rank Brand % Total Rank Brand % Total1 Nike 68% 1 Nike 64% 1 Nike 63%2 Under Armour 11% 2 Under Armour 14% 2 Under Armour 16%3 Adidas 5% 3 Adidas 5% 3 Adidas 5%4 Lululemon 1% 4 Jordan 1% 4 Jordan 1%5 J d 1% Th N h F 1% 5 Th N h F 1%

• Nike continues to maintain or gain share within athletic apparel• Under Armour mindshare slipping

5 Jordan 1% The North Face 1% 5 The North Face 1%


Athletic Apparel Brands – Females

PREFERRED ATHLETIC CLOTHING BRAND - UPPER-INCOME TEEN SURVEY - FEMALE


1 Nike 67% 1 Nike 67% 1 Nike 67%2 Under Armour 9% 2 Under Armour 12% 2 Under Armour 12%3 Lululemon 8% 3 Lululemon 7% 3 Adidas 5%4 Adidas 4% 4 Adidas 3% 4 Lululemon 3%5 The North Face 2% 5 The North Face 1% 5 The North Face 1%

PREFERRED ATHLETIC CLOTHING BRAND - AVERAGE-INCOME TEEN SURVEY - FEMALE


Rank Brand % Total Rank Brand % Total Rank Brand % Total1 Nike 66% 1 Nike 63% 1 Nike 64%2 Under Armour 12% 2 Under Armour 15% 2 Under Armour 15%3 Adidas 5% 3 Adidas 5% 3 Adidas 4%4 Lululemon 2% 4 Lululemon 1% 4 The North Face 1%

Th N h F 1% Th N h F 1% S ff 1%

• Lululemon moves from 7% to 8% mindshare with upper-income females; only 1ppt behind Under ArmourL l l i d h i i i f l ll

5 The North Face 1% The North Face 1% 5 Soffe 1%


• Lululemon mindshare increasing among average-income females as well

Headphones

3.0%HEADPHONE SHARE OF TEEN WISHLISTS

2.0%

2.5%

1.0%

1.5%

0.0%

0.5%

FA06 SP07 FA07 SP08 FA08 SP09 FA09 SP10 FA10 SP11 FA11 SP12 FA12 SP13 FA13

• The percentage of teens asking for headphones as holiday/birthday gifts declined• First year-over-year decline since Spring 2009• Percentage of teens planning to purchase headphones in next six months fell from 63% in

ll ll

27

Fall 2012 to 58% in Fall 2013

Source: Piper Jaffray & Co.

Headphones

45% 46% 46%

45%

50%

HEADPHONE BRAND PLANNING TO PURCHASE NEXT

25%

30%

35%

40%

21%

14%

8%

22%

11%9%

25%

10%9%10%

15%

20%

25%

6%

3% 3%

8%6%

4%2%

5%3% 2%

0%

5%

10%

Beats by Dr. Dre Apple Skullcandy Sony Bose JVC All others

Fall 2012 Spring 2013 Fall 2013

• When asked which brand of headphones teens plan to purchase next, Beats by Dr. Dre received 46% of responses, Apple received 25% and Skullcandy receive 10%

• Skullcandy’s share of future purchases declined 100bp sequentially and 400bp y/y

Fall 2012 Spring 2013 Fall 2013

28

Skullcandy s share of future purchases declined 100bp sequentially and 400bp y/y

Source: Piper Jaffray & Co.

Next Generation Eating Organic

Do you eat organic food? Delta of respondents eating more versus less organic food versus a year ago

40%42%45%

%

45%

33%

40% 39% 39%

25%

30%

35%

40% 39%36%

31%33%

35%

25%

30%

35%

40%

0%

5%

10%

15%

20%

0%

5%

10%

15%

20%

• Number of teens eating organic food was flat y/y; Important to understand the preferences of next generation grocery shoppers (food & beverage for off premises

0%Fall 2011 Spring 2012 Fall 2012 Spring 2013 Fall 2013

0%Fall 2011 Spring 2012 Fall 2012 Spring 2013 Fall 2013

p g g y pp ( g pconsumption is ~$750B category)

• Of those teens that are eating organic, we are seeing them spend more on the category sequentially and year-over-year


Restaurants: Consistently #2 Rank In Terms % of Spend• Survey Results Support “Year of the Restaurant: The Second Course”

• Early Stages of Restaurant Industry Recovery:

• Lack of Unit Growth Supply, Public Growth Stock Shortage, Growing Demand to Eat Out More

• Recipe For Success: Brand Equity+ Asset Light Growth + High-Margin Licensing Arrangements • Recipe For Success: Brand Equity+ Asset Light Growth + High-Margin Licensing Arrangements

• Limited Service Segment Benefitting Most:• During Last Ten Survey Periods:

• Gained Momentum and Increased Overall Preference to 60% Today from 43% in Spring 2009

D t “Bl i f th Li ”• Due to “Blurring of the Lines:”

• Operators Tailoring Convenience Alternatives, Menu Relevance, Service Initiatives and Value Propositions Results in Shrinking Same-Store Sales Gap Between Segments

• Starbucks (SBUX) Accelerating Mind Share:

U I 18% T t l 83% b C i i• Upper Income 18% Total, 83% by Cuisine

• Proprietary Analysis By Cuisine Type: The Cheesecake Factory (CAKE) Accelerating Mind Share• Maintained No. 1 Position

• Upper Income 14% Total, 200 bps > No. 2 and 400 bps > No. 3 Rank

• Within Hamburger Cuisine Type Red Robin (RRGB) Maintains Mind Share:• Only Casual-Dining Operators In Top Ten

• Upper Income 10%+ For 4 of Last 5 Survey Cycles

• Maintain Neutral Until Traffic Trends Are Sustainably Positive


y


Internet 10%

Shopping Preferences By Channel

Specialty, 27%Mail Order, 6%

Internet, 10%

Outlet, 14%

Major Chain/Dept Store/Off-Price,

30%

Discount, 12%



FEMALES – YES MALES – YES

Do You Shop Online?

78% 82%

D Y P f T Sh O li O I S ?

FEMALES – ONLINE

25%MALES – ONLINE

37%

Do You Prefer To Shop Online Or In Store?

25% 37%

FEMALES – IN STORE

75%MALES – IN STORE

63%75% 63%



Regarding The Clothing You Buy Online, Which Do You Buy More From?

Female Teens Male Teens

E Tail

Female Teens Male Teens

E-TailPure

Play 30%

E-TailPure

Play41%

StoreSite

70%

41%

StoreSite

59%



Oth 11%

Online Shopping By Category

Accessories, 13%

Personal Care, 6%

Other, 11%

Footwear, 22%

Apparel, 29%

Electronics, 20%



Gender Differences When Shopping Online

Personal Care

Accessories

Footwear

Apparel

Electronics

Other

Men Shop More Women Shop More



Favorite Websites

Female Teens Male TeensFemale Teens Male TeensRANK WEBSITE % TOTAL

1 Amazon 25%

2 Forever 21 9%

RANK WEBSITE % TOTAL

1 Amazon 35%

2 eBay 10%

3 Nordstrom 6%

Urban Outfitters 6%

5 American Eagle 5%

3 Nike 9%

4 Eastbay 4%

5 PacSun 2%

6 eBay 5%

7 Victoria's Secret 4%

8 Wanelo 3%

5 PacSun %

6 CCS 2%

Polo Ralph Lauren 2%

8 Karmaloop 1%

9 Etsy 3%

10 Brandy Melville 2%

TOBI 2%

8 Karmaloop 1%

Zumiez 1%

10 Three Sites Tied for 10th 1%


A Spotlight On Emerging Channels: Off-Price Retailing

FEMALES – YES MALES – YES

Do You Shop Off-Price Retailers?

71% 57%

I I P l T Sh Off P i R il ?

FEMALES – YES

52%MALES – YES

45%

Is It Popular To Shop Off-Price Retailers?

52% 45%

Do You Prefer To Shop Off-Price Retailers vs. Traditional Department Stores?

FEMALES – YES

42%MALES – YES

37%



Reasons Teens Prefer Off-Price Retailing

PRICE/VALUEQUALITY

PRICE/VALUESELECTION CONVENIENCESELECTION CONVENIENCE



Reasons Teens Prefer Traditional Department Stores

SELECTIONQUALITY THE “EXPERIENCE”

SELECTIONPRICEMORE POPULAR PRICE

CONVENIENCE


Beauty & Personal Care: Gen Y (Teen Girls) Snapshot

UPPER-INCOME Y/Y UPPER-INCOME SEQ

Total Beauty Spending Among Teens

-6% -8%

AVERAGE-INCOME Y/Y AVERAGE-INCOME SEQ

-9%Q

-12%

Top Skin Care Brand Top Cosmetics Brand Top Fragrance Brand

UPPER-INCOME

NeutrogenaUPPER-INCOME

MACFEMALE

Victoria’s Secretg

AVERAGE-INCOME

NeutrogenaAVERAGE-INCOME

Cover GirlMALE

Ralph Lauren


Beauty & Personal Care: Beauty Retailers & Their Loyalty Programs

Where Do You Most Often Shop For Beauty Products?

Upper Income Teens Average Income TeensRANK BEAUTY STORE % TOTAL

1 Sephora 17%

2 Target 16%

Upper-Income Teens Average-Income TeensRANK BEAUTY STORE % TOTAL

1 Walmart 26%

2 Target 13%g

3 CVS 10%

4 Walmart 10%

5 Ulta 9%

g

3 Sephora 7%

4 Ulta 7%

5 Walgreens 4%5 Ulta 9%

6 Walgreens 3%

7 MAC 3%

8 N d 3%

5 Walgreens 4%

6 CVS 3%

7 Mall 3%

8 B h & B d W k 3%8 Nordstrom 3%

9 Mall 2%

10 Macy's 2%

8 Bath & Body Works 3%

9 Macy's 2%

10 MAC 2%


Beauty & Personal Care: Beauty Retailers & Their Loyalty Programs

Top Loyalty Programs For BeautyLoyalty Program Participation

RANK BEAUTY STORE % TOTALTEENS WHO BELONG TO A BEAUTY/PERSONAL CARE LOYALTY PROGRAM

34%RANK BEAUTY STORE % TOTAL

1 Sephora 32%

2 Ulta 22%

3 MAC 5%34% 4 Bath & Body Works 3%

CVS 3%

6 Victoria's Secret 3%

7 Target 2%

8 Walgreen's 2%

9 Clinique 2%q

10 Macy's 1%


Social Media – Facebook

• Twitter exceeds Facebook as most favored for first time:

PJC Teen Survey - Social Networking Fall-12 Spring-13 Fall-13 Change

Most Important Social Network?

Facebook 42% 33% 23% -10pp

Twitter 27% 30% 26% -4pp

Instagram 12% 17% 23% 7pp

Google+ 6% 5% 3% -2pp

Tumblr 3% 4% 4% -

Pinterest 2% 2% 1% -1pp

Other 2% 4% 17% 13pp*

D 't U S i l N t k 7% 6% 2% 4

• Believe data was expected given trend toward Twitter as most favored

• Instagram now tied for second most popular with Facebook

Don't Use Social Networks 7% 6% 2% -4pp

g p p

• Expect Facebook to continue to be a part of teens’ lives with more influence from other networks


Digital Media – Apple

Apple’s mobile devices continue to gain popularity among teens

• iPhone Ownership Among Teens Exceed 50% For First TimeiPhone Ownership Among Teens Exceed 50% For First Time

• 55% of teens own an iPhone compared to 48% in the Spring and 40% last fall

• Believe 5S/C could continue to push ownership higher

• 65% of teens plan on making iPhone their next mobile device24% t A d id f 23% i S i 2013– 24% expect Android from 23% in Spring 2013

• Tablet Ownership Continues To Grow, iPad Holding Share

• 56% of teens surveyed owned a tablet from 51% Spring 2013– 68% iPad share flat vs Spring 2013

• 20% of teens plan on buying a tablet in the next 6 months (vs. 17% Spring 2013)– 64% plan to buy an iPad (52% full size/12% Mini)


Movie Rentals

Netflix & Redbox are “alternative video rental models” gaining share from traditional channels

• Netflix (NFLX) streaming and Outerwall’s (OUTR) Redbox kiosks are benefiting from the closing of movie ( ) g ( ) g grental retail stores (Blockbuster, etc)

• Retail Stores: 28% of teens currently rent movies at retail stores (32% in Fall-12), and just 3% expect to rent at retail stores in five years; share will shift online and to kiosksat retail stores in five years; share will shift online and to kiosks

• Netflix: DVD-by-Mail and Digital streaming address 54% of market today

• DVD-By-Mail: 5% of teens currently use DVD-by-Mail

• Downloads/Streaming: 49% currently download/stream movie rentals

• In 5 Years 59% of teens expect Netflix to be their primary source of movie rentals (55% in Fall-12)

• Outerwall/Redbox: Kiosks keep share from retail stores (Blockbuster) closing & declining DVD-by-mailOuterwall/Redbox: Kiosks keep share from retail stores (Blockbuster) closing & declining DVD by mail

• Kiosks: 18% currently use kiosks to rent movies (flat from 18% in our Fall-12 survey)

• In 5 years 17% of teens expect Redbox to be their primary source of movie rentals (no significant chg from the 18% using kiosks today)


Video Games

Teens represent over one-third of video game players – games represent 7% of teen spending

Teen interest in traditional console gaming has grown ahead of the new console launches• 35% of teens plan to spend more time playing video games next year vs. 26% in Spring-12; this was the

highest since Spring-08

Interest In Next Gen Consoles Is High• Of the 5,564 gamers surveyed (those that play games at least once per month), 86% indicated they are

aware next gen consoles (PS4 & Xbox One) are expected to launch later this year

• 49% of teen gamers expect to purchase one of the next gen consoles• 49% of teen gamers expect to purchase one of the next gen consoles

Used Market Remains Critical Component of Industry• 26% of gamers said they will trade in an old console and game library to purchase new consoles

• Following Microsoft’s now infamous policy reversal post-E3, we know that both new consoles will support used games – 64% of teen gamers said they purchase used games (the highest we’ve seen in multiple years) and 56% of those purchase them at GameStop (Walmart next closest at 12%)


Media & Entertainment

Teens’ broader radio listenership remains at elevated levels positive for both Pandora (P) and radio (CMLS, SIRI) :

• Both broadcast and streaming radio remain at elevated levels from our 1H12 survey as the listenership of mp3and CDs continues to shrink, boding well for radio broadcaster CMLS, digital radio streamer Pandora and satellite radio operator SIRI radio operator SIRI.

Teens like watching films in premium formats including IMAX Corp (IMAX):

• IMAX remains the most preferred way to watch a movie in theaters, interestingly with-in home video, streaming continues to gain share improving from 4% in 2012 to 11% in 2013 continues to gain share -- improving from 4% in 2012 to 11% in 2013.

Increasing interest in home video boding well for Lionsgate:

• Interest in home video entertainment increased from 25% in 1H12 survey to 42% in 2H13, boding well for teen centric studio like LGFcentric studio like LGF.


Appendix

• Stock Highlights: Teen Retail

• Stock Highlights: Global Fashion Brandsg g

• Stock Highlights: Active & Healthy Lifestyle

• Stock Highlights: Restaurants

• Stock Highlights: Multi-Brand & Specialty Retail

• Stock Highlights: Digital & Social Media

48

Stock Highlights: Teen Retail• GCO (+) Footwear A Pocket Of Relative Outperformance; Mens Accessories Contracts On Snap Back Maturation

• Footwear continues to gain share in the fashion wallet; shoes are a fashion accessory of choice; Vans & Converse among top cited brands

• Adjusting estimates on accel. maturation in the snap-back hat trend among males; 15%-20% of Lids asst; co. is managing inventory tightly

• ANF (-) Risk Profile Elevated Near-term; Maintaining Positive Bias On Improved Visibility Into Model Realignment• ANF (-) Risk Profile Elevated Near-term; Maintaining Positive Bias On Improved Visibility Into Model Realignment• Maintaining bias into 2014 in hopes that visibility surrounding cost rationalization and business model realignment efforts will improve

• Adjusting estimates on extended recovery timeline; high beta stock; domestic stabilization needed, global brand growth still exists

• AEO(-) Share Losses Continue; Intrigued By Engagement; Recalibrating EstimatesR k & i d h d l d b h l d f l hi h l l l i F ll 2011 ( f l d d i l )• Rank & mindshare decelerated among both males and females, reaching the lowest level since Fall 2011 (onset of colored denim cycle)

• Modest improvement in brand reengagement suggests risk reward is fairly balanced; trimming near-term estimates

• ARO (-) Negative Brand Equity Persists Despite Significant Merchandise Changes; Brand Skewing Younger• Aero remains brand cited as no longer worn by teens; aging up the brand curve results in Aero positioning toward a younger teen

• Recovery is prolonged; supply exceeds demand; significant store closures and cost reengineering appears necessary

• Lowering estimates in view of mindshare losses; hope trade supporting shares as fundamentals continue to weaken

• PSUN (-) Downgrade To Neutral; Action Sports Brands Gain, PacSun Cedes; Elevated Comp For Profit Is Key Risk• Action Sports moved higher in rank while PacSun ceded share in the category, particularly among female teens

• Pathway to profitability dependent on need to recapture share at accelerating comp sales rate; +MSD needed, current trend +LSD at best

• Lowering estimates; higher-margin direct sourced mix under pressure (denim); profitability deferred by additional 9-12 months

• TLYS (+) Growth Play Tied To Action Sports Lifestyle Evolution; Share Gainer In Survey; Upside To Estimates


• WTSL, BODY (-) Fast Fashion Cedes Share Among Females; Channel Shift & Frequency Challenge Positioning

Stock Highlights: Global Fashion & Lifestyle Brands

• KORS (+) Upgrading To Overweight; $90 PT (26x FY15 $3.45)• Share gainer across multiple lifestyle categories: No. 2 handbag (21% share); No. 2 watch (15%); No. 5 jewelry (5%)

• Intent to purchase handbag in next 6 months for MK consumer: 64% upper-income and 73% average-income say "Yes"

• European checks suggest strong market share gains; store expansion underway

• Raising estimates: F14 from $2.75 to $2.78; F15 from $3.32 to $3.45; PT $73 to $90; EPS power ~$6.00/share

• RL (-/=) Downgrading To Neutral; $170 PT (17x FY15 $10.02)• Fashion spending down MSD sequentially and Y/Y; RL is No. 5 for upper-income; No. 6 average-income

• Europe is improving for RL but expect Asian woes to continue

• Investment cycle into FY15; changes parameters for upside and valuation; trimming multiple

• No estimate revisions; PT from $200 to $170

• DECK (+) Raising PT To $72 (16x FY14 $4.50); Intact Multi-Year Recovery Thesis• UGG brand in survey in top-ten; No. 8 for upper-income; No. 9 for average-income females

• Mindshare slips in upper-income as brand evolves into winter wardrobe staple

• Est. teens ~25% of UGG sales; less dependent on teen as brand evolves

• UK checks (11% of sales) suggest pick-up in biz; cleaner distribution

• Stock near-term trades on potential for sales and margin outperformance; we believe this is possible starting in Q3

• VFC (+/=) Raising PT To $197 (16x FY14 $12.32); Strength Of Vans In Teen Survey• No. 2 brand Vans sees increases in mindshare: from 10% to 12% for all upper-income teens; from 7% to 9% for average-income

• TNF stays No. 5 (1% share) for preferred athletic clothing brands for upper-income; slips to No. 6 for average-income

• Raising estimates ; F13 from $10.90 to $10.98; F14 from $12.20 to $12.32; PT from $183 to $197


Stock Highlights: Global Fashion & Lifestyle Brands – Assuming Coverage• COH (-/=) Reducing PT To $53 (13x FY15 $4.10); Trimming Estimates As Mindshare Fades

• Assuming coverage of COH from Tamminga at Neutral

• Coach still No. 1 handbag but at a share loss; from 30% to 26% for upper-income

• Intent to purchase handbag in next 6 months for Coach consumer: only 38% upper-income and 52% average-income say "Yes"

f $ $ f $ $ d f $ $• Trimming estimates: Q1 (Sep) from $0.79 to $0.76; FY14 from $3.73 to $3.71 and FY15 from $4.20 to $4.10

• FOSL (+/=) Portfolio Share Remains Strong In Teen Survey; PT of $121 (17x FY14 $7.31)• Assuming coverage of FOSL from Tamminga at Neutral; positive bias

• Licensed brand Michael Kors ranks No. 2; Fossil ranks No. 4 as preferred watch brand

• Fossil watch portfolio share steady in Fall 2013 at 25.2% vs. 25.8% in Spring 2013

• EU recovery play (Europe is 28% of sales, Germany is largest market); Long-term Asian distribution growth


Stock Highlights: Active & Healthy Lifestyle• NKE (+) Remains favorite apparel brand, footwear brand, athletic apparel brand and athletic footwear brand

• For the third consecutive survey, Nike ranks as the No. 1 apparel and footwear brand among upper and average-income teens

• Increases mindshare as preferred apparel brand and sets new survey records

• Nike/Jordan the most popular fashion trend at school right now for second consecutive survey

A hl i l i d h i i d hi h Nik b ild l d U d A• Athletic apparel mindshare maintains or sets new record highs as Nike builds lead over Under Armour

• DKS (=/+) Remains favorite sporting goods store; beneficiary of Nike’s strength • Dick’s Sporting Goods remains the No. 1 sporting goods retailer among both upper-income and average-income teens

• Mindshare declined among upper-income teens, but mostly due to higher mix of responses from West region (smaller store base in West)

• Mindshare slips slightly to 28% among average-income teens; down modestly from 29% in Spring 2013 and 30% in Fall 2012

• Nike (17% of sales) remains preferred clothing and footwear brand across athletic and fashion categories among both income groups

• UA (=/-) Athletic brand mindshare slips to new lows among teens; Brand has broad consumer base to limit impact• Under Armour remains No. 2 most preferred athletic apparel brand among both income groups and genders

• Athletic apparel mindshare remains well behind Nike, spreads at highest point in survey history

• Lululemon share improved to 8% (highest in history of survey) with upper-income women; may pass UA in Spring 2014

• SKUL (-) Brand desirability slips again; Signs of teens losing interest in headphone category• Skullcandy falls to 15% from 16% in Spring 2013 and 18% in Fall 2012 when asked what type of headphones teens owny p g yp p

• Intent to purchase decelerates; 10% plan to buy Skullcandy headphones as next pair, down from 11% in Spring 2013 and 14% in Fall 2012

• Cycle appears post -peak; Share of teens asking for headphones as gifts declines sequentially and year-over-year; first y/y decline since 2009

• Beats by Dr. Dre and Apple continue to gain share in the category


Restaurants: Stock Highlights

• Top Pick: Starbucks SBUX (+)• Global Growth Portfolio

• Potential Upside:

– Lower Coffee Costs

– Conservative Comp Estimates

– Dividend Increase

– Kraft Resolution

• Price Target: $85 Based on 18x FY14E EV/EBITDA

A f 12 R il d 25 CPG– Average of 12x Retail and 25x CPG

• Top Pick: The Cheesecake Factory CAKE (+)• Global Growth Portfolio

– Store Growth Domestically

– Asset-Light Growth InternationallyAsset-Light Growth Internationally

– Long-Term CPG Business in Place

• Price Target: $50 Based on 10x FY14E EV/EBITDA

– Potential Upside From International Franchise Units: 1 Store = $0.02+ in EPS/unit or = $1 Mil. + in EBITDA

• Neutral Call Out: Red Robin RRGB (+/-)( / )• Maintaining Teen Survey Mind Share by Cuisine

• Potential Upside: November Analyst Day

• Price Target: $68 Based on 25x FY14E EPS

• Maintain Neutral Until Traffic Trends Are Sustainably Positive


Stock Highlights: Multi-Brand & Specialty Retail

• URBN (+) Focused On An Older Customer, But A Perennial Top Ten• Urban Outfitters remains on the radar of teens, with upper-income teens voting the brand No. 6 and upper-income

women (who have historically proven to be leading indicators to style, fashion, brands and trends) ranking UO at No. 3

• UO showing up in top three brands that upper-income women have recently started wearing

• UO ranking as No. 5 preferred website among upper-income teens and No. 3 among upper-income women

• JWN (+) Favored Retailer & Top E-Commerce Destination• Upper-income teens voting Nordstrom as No. 7 destination to shop for apparel; young women voting Nordstrom as

their No. 5 favorite retailer

• Nordstrom showing up in the top ten across multiple categories—apparel, jewelry, footwear, beauty and loyalty

• Nordstrom a top five destination among upper-income women when shopping online

• LTD (+) Strength In Fragrance & Apparel; Survey Points To Victoria’s Secret As A “Trending” BrandVictoria’s Secret and Bath & Body Works continue to increase mindshare among teens and are the dominant fragrances• Victoria s Secret and Bath & Body Works continue to increase mindshare among teens and are the dominant fragrances

• Victoria’s Secret, again, shows up in not just fragrances, but also as a preferred apparel brand—demonstrating its multi-category reach

• ULTA (+) Favored Beauty Destination & Loyalty Program For Beauty/Personal Care l l l f b l h l d d h• Upper-income teens voting Ulta as No. 2 loyalty program for beauty/personal care with solid 22% mindshare

• Ulta ranking as No. 5 top beauty destination among upper-income women and No. 4 among average-income women

• Ulta in the process of rolling out a much more understandable (points versus certificate) program


Stock Highlights: Digital, Social Media & eCommerce

• AAPL (+) Apple Remains Most Popular Technology Brand Among Teens• 55% iPhone ownership makes iPhone most important mobile platform for teens

• Path to 60%+ share remains intact

FB ( / ) F b k N S d T T itt A M t F d S i l N t k• FB (+/-) Facebook Now Second To Twitter As Most Favored Social Network• 23% of teens chose FB as most important social network, 26% Twitter

• Instagram tied with FB at 23%; continues to gain favor

• AMZN (+) Continues To Gain Traction Among Teens• 31% of teens chose AMZN as their favorite eCommerce destination, up from 23% in previous survey

• 33% of respondents live in a household with Prime membership, up from 29% in Spring 2013

• 32% of respondents say they prefer to shop online, up from 18% in Spring 2013

• EBAY (+) Popularity Among Teens Rebounded In Most Recent Survey• 8% of teens chose EBAY as their favorite eCommerce destination, up from 5% in previous survey

• 32% of respondents say they prefer to shop online, up from 18% in Spring 2013


Stock Highlights: Video Games & Online Content• GME (+) Pre-Owned Mindshare is Growing with No Sign of Incremental Competition

• Of gamers who trade in their games, 56% choose GameStop, consistent with the results observed during the Spring-13 survey.

• Walmart is the #2 market share leader with only 12% used game share among teens (a significant share gap).

• ATVI EA TTWO (+) Console Gaming Continues to Be an Important Activity Among Teens Today• ATVI, EA, TTWO (+) Console Gaming Continues to Be an Important Activity Among Teens Today• Spending by category data suggests male teens from upper income households spend 11% of their disposable wallet share toward video

games, a 100 bps expansion vs. our Fall 2012 survey results.

• 35% of teen gamers indicated they expect to play more video games next year vs. just 26% during the Fall-12 survey.

• OUTR (+) Redbox Share Among Teens Remains Stable• OUTR (+) Redbox Share Among Teens Remains Stable• 18% of teens indicated they currently use DVD rental kiosks as a primary source of movies, unchanged from Fall-12.

• Among movie services teens expect to use most over the next five years, Netflix and Redbox topped the list at 59% and 17%, respectively.

• NFLX (=) Strong Mindshare Despite Limited SelectionA t d ti f t il t i d i i l it 28% f t t t d d 3% t t t il t l t • As expected, renting from retail stores is decreasing in popularity; 28% of teens use stores today and 3% expect to use retail rental stores in five years.

• Netflix continues to have strong mindshare and, despite having a limited selection of newer release films for streaming, remains well positioned for growth in the movie rental category.


Analyst Biographies & Coverage Lists

Steph Wissink is a principal, senior research analyst and co-director of investment research. Wissink joined Piper Jaffray in May 2002 and has served in various capacities within Investment Research including as an associate analyst on the consumer team for eight years. As a senior

l Wi i k f / h i l il h i h di f hi b d d il k Wi i k

(Analysts listed in speaking order)

analyst, Wissink focuses on teen/youth specialty retail, authoring reports on youth spending, fashion brands, and retail markets. Wissink spearheads Piper Jaffray's bi-annual Taking Stock With Teens consumer insight project in which nearly 20,000 teens, young adults, and their parents are surveyed each year. Wissink combines her interest in youth marketing and generational psychology with her professional experience by serving on the National Advisory Board for DECA.

Associate: Maria Vizuete

Coverage Includes: ANF, ARO, AEO, BODY, CRI, GPS, GCO, HAS, JAKK, MAT, PLCE, PSUN, RUE, SUMR, TLYS, WTSL, ZUMZ

Erinn Murphy is a vice president and senior research analyst at Piper Jaffray covering global fashion & lifestyle brands. Murphy was raised in the Middle East and is passionate about international markets and has a strong affinity for languages with competencies in both French and Arabic. Murphy joined Piper Jaffray in January 2005 as an associate analyst in the retail sector. In December 2008, she expanded her international experience by joining ExxonMobil's gas & power marketing group as a natural gas negotiator and a senior supply/demand planner. Murphy re-joined Piper Jaffray in 2011 on the consumer team and now covers the global fashion and lifestyle brands. She holds a bachelor's degree in economics and French from Calvin College.g g

Associate: Eric Johnson

Coverage Includes: COH, CROX, DECK, FOSL, GIII, GES, KORS, PVH, ZQK, RL, SHOO, VFC, WWW

57

Analyst Biographies & Coverage Lists(Analysts listed in speaking order)

Sean Naughton is a vice president and senior research analyst covering the consumer sector, specifically companies contributing to active g p y g p y p gand healthy lifestyles. Prior to joining Piper Jaffray in 2007, Sean worked for Target in capital investment analysis responsible for new and existing store valuations. Sean holds the Chartered Financial Analyst designation.

Associates: Adam Engebretson, CFA & Jared Madlin

Coverage Includes: BGS, BGFV, BDE, CAB, COST, DKS, FINL, FL, FOXF, HAIN, HIBB, LTM, NGVC, NKE, SKUL, TGT, TFM, CLUB, UA, g , , , , , , , , , , , , , , , , , , ,UNFI, VSI, WFM

Nicole Miller Regan is a managing director and senior research analyst at Piper Jaffray, where she focuses on the restaurant sector. Prior to joining Piper Jaffray in 2006, Regan worked in equity research at ThinkEquity Partners in Minneapolis, and at Sterne, Agee & Leach in New Orleans. In 2006, she was ranked No. 1 Stock Picker, related to 2005 coverage of her universe, by StarMine.

Senior Associate: Josh Long, CFA

Coverage Includes: AFCE, BJRI, BBRG, EAT, BKW, CAKE, CMG, DRI, DFRG, DNKN, BAGL, GMCR, IRG, MCD, PNRA, RRGB, RUTH, SONC, g JSBUX

58


Neely Tamminga is a managing director and senior research analyst at Piper Jaffray focusing on specialty retailing: women's apparel & accessories, and personal products. Tamminga ranked as a top sell-side analyst in The Wall Street Journal Best on the Street analyst survey in 2006 and 2011 for her coverage in broadline and apparel retailers. In 2010, FT/Starmine ranked Tamminga No. 2 in Stock Picking for her

i S i l R il I FT/S i k d T i N I d E i f h 8 i P l


2009 coverage in Specialty Retail. In 2009, FT/Starmine ranked Tamminga No. 2 Industry Estimator for her 2008 coverage in Personal Products. Tamminga has also received recognition by Institutional Investor magazine for her coverage in the apparel & footwear, department stores, and hardlines retailing sectors. Prior to joining Piper Jaffray in 2002, Tamminga worked at A.G. Edwards & Sons, Inc. in St. Louis, where she covered specialty apparel retailing companies.

Associate: Kayla Berg

d d h l ff l d ff

Coverage Includes: ANN, ASNA, CACH, CHS, CBK, CWTR, COTY, EL, EXPR, GMAN, HSNI, IPAR, JCP, KIRK, KSS, LTD, NWY, JWN, RH, ROST, ULTA, URBN, VVTV, VRA, WSM

Gene Munster is a managing director and senior research analyst at Piper Jaffray, specializing in Internet. He joined Piper Jaffray in 1995. Munster's Internet focus includes the US, Europe, China & Latin America. In addition, Munster has covered the Digital Media space since 1995, including Apple. He has authored several key industry reports on technology and is quoted frequently in key financial and technical news journals.

Senior Associate: Doug ClintonA i t M tt L bAssociate: Matt Lebo

Coverage Includes: AMZN, ANGI, AAPL, BIDU, DRIV, EBAY, FB, GOOG, GRPN, IACI, LNKD, LOGM, MCHX, MELI, RLOC, SINA, MOBI, PRTS, VCLK, VIPS, WWWW, YHOO, YNDX, YELP, YY

59


Mike Olson is a managing director and senior research analyst at Piper Jaffray covering online media, online travel, and video games. Olson has been with Piper Jaffray covering companies in these industries since 2001 and has authored numerous industry reports, including "Internet Video: Field of Dreams or Nightmare on Elm Street," "The Next Leg of Online Travel," and "Pwned: How Casual Games Changed Th G i L d " Ol i d th N t k i k d i ti t i th Fi i l Ti / St Mi


The Gaming Landscape." Olson was recognized as the No. 2 stock picker and earnings estimator in the 2011 Financial Times / StarMineInternet & Catalog Retail category and was ranked in the 2010 Wall Street Journal "Best On The Street" for the Leisure Goods & Services category.

Associates: Andrew Connor & Ryan Wright

Coverage Includes: ATVI, ADBE, AKAM, AVID, CSTR, CTRP, DLB, DTSI, EA, EXPE, GME, GLUU, AWAY, KYAK, LLNW, NFLX, OPEN, OWW, Coverage Includes: ATVI, ADBE, AKAM, AVID, CSTR, CTRP, DLB, DTSI, EA, EXPE, GME, GLUU, AWAY, KYAK, LLNW, NFLX, OPEN, OWW, PCLN, RNWK, ROVI, TTWO, TIVO, TRIP, ZNGA

James Marsh is a managing director and senior research analyst at Piper Jaffray, following entertainment, radio and television broadcasting, outdoor advertising, and publishing companies. Previously, he co-founded Hanover Square Capital Management, LLC., a hedge fund focused

h d d h h d h d d l b d bl h d d d on the Consumer and Media sectors. Prior to that, Marsh covered the radio and television broadcasting, publishing and outdoor advertising sectors at Cowen & Co., Robertson Stephens and Prudential Securities. In 2004, Marsh ranked third in stock picking for the broadcasting & entertainment sector in The Wall Street Journal's "Best on the Street" analyst survey. James is a Chartered Financial Analyst, as well as a Certified Public Accountant.

Associate: Stan Meyers

Coverage Includes: BONA, CKEC, CBS, CHRM, CNK, CMLS, DISCA, DWA, ENT, IMAX, LAMR, LGF, MDCA, MM,NCMI, P, RLD, RGC, SNI, SIRI, IPG, VIAB, DIS

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Important Research Disclosures

Analyst Certification – Stephanie Wissink, Erinn Murphy, Nicole Miller Regan, Sean Naughton, Neely Tamminga, Gene Munster, Mike Olson, James Marsh, Senior Research Analysts

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., , y y p p

Piper Jaffray 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 this report. Investors should consider this report as only a single factor in making their investment decisions.

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

Ratings and Other Definitions

Stock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 months. 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.piperjaffray.com/researchdisclosures. Stock ratings and/or stock coverage may be y y y p p j y / g / g ysuspended 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 Jaffray 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. In addition, Piper Jaffray technical research products are based on different methodologies and may contradict the opinions contained in fundamental research reports.

O i h (OW) A i i d f l i h di f h f k d b h l 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

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