NPD for FESI European Sport Market Estimate

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1

European Sport Market Size EstimateRelease 2011

In Euros / Sixth edition of a survey initiated in 2005

Based on consumer tracking (where available), statistical projections and our industry expertise

Figures are sell-out (retail VAT included), not wholesale

Copyright. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

Proprietary and Confidential

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Copyright The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

Results 2010


3

Global Sport Market Size Estimate, Year 2010, Billion Euros

Trend 10/09

226 Billion Euros

+4%


4

European Sport Market Size Estimate, Year 2010, Billion Euros

Trend 10/09

66 Billion Euros

+2%


5

Market sizes and Evolution rates by area in Scandinavia, Central & Eastern Europe and Western Europe

+1%

Western Europe

52.7

Central and Eastern Europe

8.7

Trends 10/09

Main Markets in Billion EurosYear 2010

+2% +7%

Scandinavia*4.8

* Norway, Sweden, Finland, Denmark


6

How Does the European Sport Market Look Segmented By Universe of Products?

2010 In Billion Euros and trend vs 2009

Footwear

+3%

14.5 Billion Euros

Equipment

+2%

16.9 Billion Euros

Apparel

+2%

23.9 Billion Euros

Bikes (and related accessories)

+1%

10.9 Billion Euros


7

In comparison with last year, we have revised upwards our estimate for Equipment in Europe

European Market Broken Out into 4 Segments % Value 2010

Split by universe of products in % value

Footwear; 22%

Apparel; 36%

Equipment ; 26%

Bikes; 16%


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Copyright 2008. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

5 year Trends 10/05


9

European Sport MarketTrends Over The Last Few Years & Forecast 2011

+0%+4%

Trend 06/05

+4%

Trend 07/06 Trend

08/07Trend 09/08

+4%

Trend 10/09

+3%+2%

+2%

Forecast11/10

+1%

-1%-1%


10

11,4

9,6

8,7

7,34,9

4,1

2,9

2,21,71,31,21,5

1,4

7,9

Germany

France

United Kingdom

Italy

Spain

Russia

Netherlands

Sweden

Belgium

Poland

Greece

Austria

Switzerland

All others

Europe: A Fragmented Market

Total Europe 66.2 Billion Euros

Top 12 Markets Year 2010

+2%

In Billion Euros In %

Trend 10/09

17%

15%

13%

11%7%

6%

4%

3%3%2%2%2%2%

12%


11

Russia bounced back in 2010 while France, UK Italy and Spain were only able to put an end to 2009 decline

+1%Germany

11.4

+0%France

9.6

+1%UK8.7

+1%Italy7.3

+0%Spain4.9

Main Markets in Billion Euros

Year 2010

Russia4.1 +7%


12

Other countries in Europe show moderate growth to the exception of Greece where consumption is slowing down due to the recession

Sweden2.2

Belgium1.7

Austria1.5

Switzerland1.4

Norway1.0

Czech Rep.0.8

Netherlands2.9 +0% +4%

Denmark0.9 +4%

+4% +2%

+1%

Poland1.3 +7%

+5%

+5%

Finland 0.7 +6%

Greece1.2 -2%

Main Markets in Billion Euros Year 2010

Ireland 0.8 +2%


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Other Analyses


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What is the Average Spend per Head by country In the European Sport market?

In Billion EurosYear 2010 World : 33

Central and Eastern Europe 27

Western Europe and Scandinavia 140

Poland 35

Russia 29

Czech Rep. 76

Europe 90

Germany 140

France 153

Italy 121

United Kingdom 141

Spain 106

Austria 176

Sweden 232

Belgium 160

Netherlands 175

Switzerland 185


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Methodology


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Definitions

We are trying to figure out global consumption for Sporting goods.

For footwear and apparel, the intention is to represent Sport and Sport inspired shoes and garments.

So the scope goes beyond sport use. It includes sport style as far as it can be detected either by NPD or by consumer perception.

We have slight differences in methodology depending upon countries, but we are trying to keep it comparable.


1717

Common Denominator across countries is Consumer Panel information

NPD Regional Product Mix

Brazil & Russia ongoing tracker in 2011


18

The NPD Group, in association with its partners, has an on-going tracking service that collects sports footwear and sports apparel data in 10 countries for the year 2010

These 10 countries account for 16% of the global population and 68% of global spending on sports footwear and sports apparel.

Other countries and equipment are estimated through statistical projections and NPD’s industry expertise.

Which Part Of The World Is Covered By On-going Tracking?

Population

16%

Projected

Tracked

Sport market

68%Projected

Tracked


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What is the online consumer panel?

– Individuals are recording online purchases of:

• Sports footwear

• Sports apparel

– Panelists are recruited to represent country demographics

– The data is then weighted to represent the total population of the country, and data is reported quarterly.

The Online Consumer Panel


20

Global Panel pool Size -Individuals

More than 1 Million of people worldwide have given their approval to be surveyed in our consumer panel


21

Global Panel Database Size

Database size for the year 2009 (sport footwear & apparel combined)

More than 1 million purchases worldwide recollected over the last 2 years, in the database, to be able to give a trend

Per year:

– 275,000 purchases in Canada and the U.S.

– 185,000 purchases in Europe covering Great Britain, France, Germany, Italy, Spain, Netherlands, and Sweden.

– 40,000 purchases in Japan


22

Definitions - What Is In? What Is Out? By Category

INCLUDES EXCLUDES

clogsoutdoor shoes, after ski boots, winter boots, hunting and fishing boots non branded thongs and flip flopssport sandals , ballerinas (partly,based on consumer perception) swim sandals (counted in equipment)

rain boots, gardening boots

Formal wear / city wear

Services Bicycles and ski maintenance, rental bicycles & ski services Services

Age

Sport Footwear/Trainers: Any sport, active, or sport-style footwear worn for leisure and sport

branded thongs and flip flops, recreational workboots (partly, based on consumer perception)

Everything as soon as it is being sold within sporting goods stores Inline skates and ski boots are reported in equipment Bikes are included wherever they are sold , all of them including those used as a way of transportationE-bikes are included.

Distribution

Perception

for footwear , apparel and bikes : whether it is sold or not in sport distribution does not matterFor Equipment:we cover only sales done inside the sport distribution notably travel luggage,cooler bags and insulated containers, camping gaz, dried food, maps, Guides, GPS hammocks&camps beds, Back to school backpacks, sunglasses, sun skin protection-

This is up to the consumers to decide if a brand/a garment is belonging (and therefore declared) or not (then not declared) to the sport universe

Ticketing for sport competitions

all covered

Apparel

Sports

Some categories for the part of the business done outside the sport distribution or in B to B channel (ex fitness equipment) :Travel luggage, Back to school backpacks, optics/sunglassessome camping&hiking gear (cooler bags and insulated containers, camping gaz, dried food, maps, Guides, GPS hammocks&camps beds)Fun sports and games ( Darts Boule petanque Frisbee, boomerangs, juggling articles, kite flying Billiard Bowling)

Whatever has an engine, guns air bottle for diving, boats

Borderline sports such as Motor sports, fishing hunting Diving Skydiving, Paragliding are estimated as our experience shows that consumers hardly declare them as sportsFor equipment we do not have a consumer tracking, only external sources; As a consequence, Data is subject to variations according to the sources considered

B to B sales excluded. for instance we exclude a sport retailer selling directly tennis balls to a tennis club or Fitness equipment manufacturers selling treadmills, stationary bikes or rowers to a gym club

Equipment Equipment

Distribution

Sports

Sport Clothing: Any sport , sport inspired clothing or active wear, worn for sport or leisure and any casual garment worn for sport.

Footwear Footwear

Apparel

All age groups are included infant sizes (partly, based on consumer perception)


23

Each Sport Generates

A Market for Sport Practice

A Market for garments and shoes inspired by the sport

Footwear / Apparel / Equipment Footwear / Apparel

Understanding for One Given Sport, How Revenue Breaks Down Between Sport Use and Sport-inspired.


24

METHODOLOGY

Used for Sport

Made for Sport & not used for sport

Made for Sport & used for Sport Cannot be read directly in the report


25

Understanding for One Given Sport, How Revenue Breaks Down Between Sport Use and Sport-inspired.

Used for the sport

– All shoes and garments worn primarily for sport use.

– Include made for

• A technical T-shirt made for running and used for jogging

– Can include also not made for

• A cotton T shirt is not made for running but may be used for jogging

Apparel used for the sport

Apparel made for the sport & not used for it

Footwear used for the sport

Footwear made for the sport & not used for it

Equipment

TOTAL

Made for the sport and not used for it• Inspired by the sport and mostly not

worn for sport use

• A technical T-shirt made for running, found in the running shelve, but finally worn in day to day life by the consumer.

• A football shirt worn by supporters at the stadium

Apparel used for the sport

Apparel made for the sport & not used for it

Footwear used for the sport

Footwear made for the sport & not used for it

Equipment

TOTAL


26

Definitions - What Is In? What Is Out? By Sport

excludes american football reported in other sports

Snowboard

Running

Snow Sportsexcluding snowboard

includes hiking trekking nordic walking, walking for exercice, mountaineering sport sandals, winter boots tents, pads,sleeping bags+ Backpacks/Rucksacks +mattresses (insulating&inflatable) + Poles/Sticks+ Drinking systems Hiking Backpacks only (other backpacks reported in multisport) + all other camping/hiking gear sold in sport distribution (GPS, maps...)excludes thongs, flip flops and swim sandals (reported in swimming)rock Climbing (reported in other outdoor sports), treadmills (reported in fitness)

Rugby

Footballcalled soccer in the USexcludes rugby ,American football and Australian Football

Alpine Skiing, Nordic skiing, ice skating Cross country skiingSki Boots/Binding/poles/Wear/Other Equipment/Ski helmets / Ski masks/ After ski /Moon boots+ included sales covering services (ski rental, ski repair) Excludes Ice Hockey (reported in other sports), snowboard winter boots (reported in hiking) Are not included here sunglasses –as they can be used for a variety of sports, they are counted in multi sports-

Hiking Walking

includesmulti-purpose belt, reflector, running gloves, water bottle, wrist pocket, reflective armband, MP3 Player armband, hydration belt, high visibility vest, hydration pack, Excludes treadmills which are counted in fitness, heart rate monitors & watches, deodorising balls, drawstring bag counted in multisport


27


Summer Board Sports

covers Surfing, Windsurfing, Kitesurfing, Kiteboarding, Bodyboarding, Skateboarding, Wakeboardingwetsuits, surfboards masts&sails, all boardshortsnote: wetsuits under equipment lineinclude an estimate for branded thongs and flip flopsFor apparel covers a selection of brands inspired by the surf/skateboard worldexclude swimwear from surfing brands and sun protection tops counted in swimwear

Cycling

Other Outdoor sports

includeshorse riding Climbing Sailing Kayaks and canoes, CanyoningMarine sports : Equipment for Scuba Diving/skin diving/Snorkeling Fishing hunting and hence related shoes&garments (rainwear waxed or coated,...) includes hunting and fishing bootsSkydiving, paragliding excludes guns & ammunition sold outside sport retailers, gardening boots,

All kinds of bicycles whatever usage (sport or way of transportation in day to day life)E-bikes (electrical bikes) Mountain bikes, BMX Road Bike/Wear/Helmet/Shoes/Other EquipmentBicycle computers, frames and parts,accessories,care products,clothing, gloves, panniers, HelmetsExcludesstationary bikes counted in fitness

Swimming

All swimwear functionnal swimwear &beach wear (SwimSuits, bathing suits, bathing trunks, bathing shorts, bikinis, swimwear from surf brands and sun protection tops) equipment:Swim Cap/Swim Goggles /Other Swim Equipment including swim sandals, Buoyancy aids, swimming trainers, buoyancy jacketswater polo balls & equipment, aqua gym, aqua fitness, excludesboardshorts counted in summer board sports and Equipment for Marine sports: Scuba Diving/skin diving/Snorkeling counted in other outdoor sports

Golf Club/Ball/Bag/Shoes/Globe/Wear/Other Equipment


28


Racket/Ball/Shoes/Wear/Tennis Bag/String/Other Tennis Equipmentexclude any other racket sports

Other sports

Rackets sports (Badminton, Table tennis, Squash, Paddle …)martial arts ( kendo Judo Karate Ju jitsu Sumo) Ice-Hockey, Inline skating Roller skating, Epées, sables, foil American Football, Cricket,Boxing, Wrestlingvolley ball, beach volley ball, handball and other ball games

Baseball softballGlobe/Wear/Bat/Spike/Ball/Bag/Other Equipment

Tennis

Fitness, Work-out, Training and Dancing

Includes all gym club activities + same sports when practiced outside the gym/at home.aerobic fitness training work out in gym wellness yoga taichi pilates Gymnastics, Rhythmic gymnastics, excludes school gym activities reported in multi sports For equipment, covers steppers home fitness & fitness equipment including treadmills, cycling &running trainers, statioanry bikes free weights exercice benches rowing machines elliptical machines exercice cycles and excludes exercice institutionnal (we cover only exercice-consumer)

Sport styled, Multi-sports and school gym

Cover all footwear "sport:fashion sneakers" and garments that cannot be related to one sport specifically by consumers either worn for sport use or notheadwear (caps), some tracksuits, cotton T-shirts, polos, bermudas, 3/4 pants, socks, triathlon clothing+ apparel footwear made for kids for school gym activities fall in this category as well Equipment include sales within sport distribution only for backpacks / Day-packs, luggage, sunglasses/optics, sun skin protection exclude hiking backpacks (counted in hiking)


29

We Use Gross Domestic Product in Purchasing Power Parity (and Other Inputs) to Estimate the Other Countries.


30

Methodology: How Do We Determine Market Size for Countries where no panel is existing?

We measure the sports market size in 10 high income countries.A/

We also know the gross domestic product (GDP) per capita for these 10 countries.B/

Also We do have the GDP per capita for every single country in the world.C/

For one given level of GDP per capita, we make the assumption that the following ratio is stable:D/Spendings on sports

GDP

A/ B/ C/ D/ Gives us an estimate of the spending per capita on sporting goods for every projected country.


31

Methodology: How Do We Determine Market Size for Countries where no panel is existing?

High income GDP per capita

> 35 000 USD

Luxembourg

Norway

United States

Ireland

Iceland

Denmark

Canada

Austria

Qatar

Belgium

Finland

Australia

Netherlands

United Arab Emirates

Singapore

Sweden

Belgium

Finland

Germany

United Kingdom

Sweden

France

Italy

Taiwan

Spain

Japan

New Zealand

Greece

Slovenia

Israel

Highlighed countries are those countries where NPD has an on going

tracking or has a partner with on going tracking. Segmentation Of Countries by Income determine

the 7 thresholds of ratios Spending on sport / GDP used to calculate sport market size on projected

countries.

High income GDP per capita

25 000- 35 000 USD

20 000- 25 000 USD

15 000- 20 000 USD

And 5 other Thresholds of GDP per capita are used:

10 000- 15 000 USD

5 000- 10 000 USD

0-5 000 USD


32

Assumptions for Countries with Intermediate and Low Income

Countries with intermediate and low income spend less per capita on sports than developed countries.

Spending on sport requires leisure time above money, and leisure time is a feature for rich country populations.

The question - how much less? - is being simulated by NPD with the help of external sources


33

How Does Spending on Sport Grow With Level of Income (GDP)?

Sp

ort

ing

Go

od

s C

on

sum

pti

on

Level of Income (GDP)

NO


34

How Does Spending on Sport Grow With Level of Income (GDP)?

Spendings on sports

GDP For low income countries, the ratio : is lower than for high income countries.

Sp

ort

ing

Go

od

s C

on

sum

pti

on

Level of Income (GDP)

Countries combining an already significant Sport market with a sporting good consumption growing faster than GDP: This is

where brand power is being built up for the future.

YES


35

What Makes Our Data Reliable?

Independancy from retailers and manufacturers in the data as the recollection of NPD data used for the survey is based on consumer input ; there are many advantages behind an independent external source; one advantage is that the research can be conducted on an on-going basis without being dependant on the industry for data recollection.

NPD is Measurement of the market through representative sample in each country available and statistical projection as opposed to other methodologies based on interviews of key brands and retailers from the industry.

Comparable data from a time perspective : NPD is sell out not sell-in.

We are tracking sales, not feelings or intentions to purchase.

Comparable data from a product scope perspective: NPD used harmonized definitions of products in its measurement which is never the case from interviews based methodology.

Complete data : NPD tracking allows to consolidate the branded market and the non branded market. NPD also allows to consolidate private labels and very small brands not only the majors.

Granularity: NPD is is the unique company recollecting sporting goods data at the maximum granularity available which is item level (one pair of shoes, one garment, one purchase) ; market size is obtained by aggregation as opposed to “guesstimates” built up from interviews conducted within the industry.


36

Understanding how NPD is building up their Knowledge of The Sport Industry.

Online consumer panel

Retail / Point of sales panel

Meeting on an ongoing basis with (and Learning from)

Manufacturers clients

Meeting on an ongoing basis with (and Learning from) Retailers participating to the POS panel

Experience of market research

Knowledge


37

Methodology: Other Assumptions

Footwear Apparel Equipment Bikes

We project the split observed in tracked countries on simulated countries, taking into account some factors that matter:

– Latitude: Less bikes, more indoor activities, more warm/expensive apparel in northern latitudes.

– Level of income: bicycles are a form of transportation in day-to-day life in countries where the population cannot afford a car or a motorbike.

– Landscape: Presence of seaside, of mountains.


38

Definitions are Slightly Different Between the Countries

Definition for the United States & Canada

We are tracking total apparel & footwear

Sport & sport inspired apparel (also called Active wear in the US) is obtained through a filter on the data not through consumer perception

Constructed definition based on type of apparel, where purchased, and intended use

The additional filters «where purchased» and «intended use» are activated only for some garments which are not obviously belonging to the sport universe (casual pants, turtle necks…)


39

Definition for Japan

We are not tracking total apparel & footwear. The survey is tracking Sport and Sport inspired shoes and garments –similar to Europe-

NPD does not have a panel representative of total JAPAN. We have a panel representative of TOKYO+ OSAKA which represent roughly 40% of the total japanese population.

We are also tracking some equipment categories in Japan



40

Definition in Europe big 5 countries We are not tracking total apparel & footwear. The

survey is tracking Sport and Sport inspired shoes and garments –similar to Japan-

In apparel, survey choices exclude some garments that are 99% not used for sport practice (eg: jeans, city wear).

It is consumer perception and type of garments suggested which finally defines the market size. What is important, is the respondent’s perception of the garment/shoes purchased: Does it relate to sports (then declared) or not (then not declared).

It does not matter if the product has been purchased in specialized sport distribution.

Therefore, the sports territory is not defined by manufacturers or retailers but by consumers.



41

Definition in Sweden & Netherlands

We are tracking total apparel

Sport & sport inspired apparel is obtained through a filter on the data not through consumer perception

– All purchases used for sport regardless of apparel type category

– All specific sport brand sales (closed list) regardless of usage and apparel type category

– All purchases coming from the sport retailers.



42

Why Do We Use Purchasing Power Parity for GDP?

A purchasing power parity change rate is intended to equalize the purchasing power of different currencies. These special exchange rates are often used to compare the standards of living of two or more countries. The adjustments are meant to give a better picture than comparing gross domestic products (GDP) using market exchange rates. Without a PPP exchange rate the GDP may not accurately measure differences in income and consumption.

Market exchange rates fluctuate widely, but many people believe that PPP exchange rates reflect the long run equilibrium value. The distortions caused by using market rates are accentuated because prices of non-traded goods and services are usually lower in poorer economies. For example, a U.S. dollar exchanged and spent in China will buy much more than a dollar spent in the United States.

The differences between PPP and market exchange rates can be significant. For example, GDP per capita in China is about USD 1,500, while on a PPP basis, it is about USD 6,200. At the other extreme, Japan’s nominal GDP per capita is around USD 37,600, but its PPP figure is only USD 31,400.


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Thanks for your attention

Copyright The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.