2020 Research Correspondent

Conference
Softlines Retail & Global Brands
June 26, 2020
Equity Research | Global

Michael Binetti
MDR
212 325 7812
[email protected]

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE
AND THE STATUS O F NON-US ANALYSTS. US Disclosure: Credit Suisse 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 decision.
Analyst Biography: Michael Binetti

 Managing Director and Senior Analyst, specializing in Softlines Retail &

Global Brands
 14 years of sell-side research experience
– Institutional Investor’s All-American Research Team rankings:
 Department Stores & Specialty Softlines Category: 3rd in 2016 and
2017, runner-up in 2015 and 2018
 Apparel, Footwear & Textiles Category: 3rd in 2014, Runner-up in
2011 and 2013
– Ranked a top stock picker in the FT StarMine Analyst Awards in 2011,
2012, 2013, and 2014
 MBA in Finance and Economics from the Stern School of Business at
New York University and BS in Business from Indiana University

June 26, 2020 2

Softlines Retail & Global Brands Coverage Summary
Curr. Mkt. Ent. EV/EBITDA P/E EV/Sales
CS CS % to Price Cap. Val. 3-Yr. 5-Yr. 3-Yr. 5-Yr. 3-Yr. 5-Yr.
Company Rating PT PT Jun 23 ($B) ($B) NTM Avg. Avg. NTM Avg. Avg. NTM Avg. Avg.
Global Brands
23 3
Nike O $92 (9%) $101 $156.9 $164.5 27.8x 20.1x 18.4x 37.0x 27.4x 25.9x 3.8x 3.0x 2.9x
Estee Lauder O $187 (3%) $193 $69.4 $68.3 21.2x 17.9x 16.4x 36.3x 29.5x 27.7x 4.5x 3.8x 3.4x
V.F. Corporation O $70 10% $64 $24.9 $27.0 24.7x 15.8x 14.3x 45.4x 22.9x 21.0x 2.9x 2.5x 2.4x
Ralph Lauren O $90 20% $75 $5.4 $6.4 8.6x 7.8x 7.6x 23.1x 16.0x 16.0x 0.9x 1.2x 1.2x
Under Armour N $9 (7%) $10 $4.3 $5.6 29.5x 20.3x 22.2x nm 66.1x 62.2x 1.0x 1.5x 2.1x
PVH O $55 14% $48 $3.4 $7.7 12.7x 8.4x 8.7x 100.8x 13.7x 13.7x 0.7x 1.1x 1.1x
Hanesbrands N $10 (13%) $11 $4.0 $8.0 9.7x 8.8x 9.9x 11.8x 9.6x 11.1x 1.2x 1.4x 1.6x
Adidas* U € 188 (22%) € 242 $53.5 $57.8 18.0x 13.8x 13.7x 39.7x 24.4x 24.5x 2.2x 1.8x 1.6x
Puma - - - $70 $11.8 $12.3 18.4x 13.7x 13.8x 54.2x 31.4x 36.1x 1.9x 1.4x 1.2x
Columbia - - - $80 $5.3 $5.3 13.2x 11.6x 11.0x 27.6x 21.6x 21.2x 1.8x 1.7x 1.6x
Gildan Activewear - - - $21 $3.1 $7.0 15.1x 11.3x 11.5x 22.7x 16.0x 16.2x 2.0x 2.4x 2.4x
Global Brands Avg. 18.1x 13.6x 13.4x 39.9x 25.3x 25.0x 2.1x 2.0x 2.0x

GLOBAL LUXURY
Ferrari O $198 13% $175 $30.6 $33.7 31.2x 23.3x 19.4x 45.7x 33.6x 30.1x 10.6x 7.7x 6.2x
Tiffany & Co. N $135 11% $122 $14.8 $16.4 21.7x 12.8x 11.5x 39.6x 23.3x 21.7x 3.8x 2.9x 2.7x
Canada Goose O C$ 43 28% C$ 34 $2.7 $2.5 16.1x 24.9x 24.8x 43.8x 41.4x 41.9x 3.9x 6.3x 6.2x
LVMH* O € 360 (8%) € 390 $221.3 $244.7 15.6x 12.2x 11.1x 31.4x 23.0x 21.5x 4.1x 3.2x 2.8x
Hermes* N € 660 (12%) € 748 $88.0 $85.1 28.2x 21.8x 20.3x 53.4x 39.9x 36.9x 10.7x 8.3x 7.6x
Richemont* U CHF 49 (21%) CHF 62 $37.3 $32.3 12.9x 11.8x 11.6x 37.4x 22.1x 21.5x 2.3x 2.6x 2.7x
Burberry* O £17 8% £16 $7.9 $7.4 8.2x 11.4x 10.6x 26.2x 22.3x 20.7x 2.3x 2.5x 2.3x
Moncler - - - € 36 $10.0 $10.1 13.5x 14.2x 12.9x 32.2x 25.2x 23.0x 5.3x 5.0x 4.4x
Prada - - - HKD 28 $9.1 $12.3 11.0x 11.4x 10.9x 70.0x 30.3x 27.4x 3.3x 2.5x 2.5x
Salvatore Ferragamo* U €8 (36%) € 13 $2.5 $3.1 8.8x 12.6x 11.9x nm 32.4x 27.3x 1.8x 2.2x 2.3x
Brunello Cucinelli* U € 22 (21%) € 28 $2.1 $2.7 16.9x 19.1x 17.7x 90.5x 41.0x 37.0x 4.1x 3.4x 3.1x
Global Luxury Avg. 16.7x 16.0x 14.8x 47.0x 30.4x 28.1x 4.7x 4.2x 3.9x

Source: Credit Suisse estimates, Factset June 26, 2020 3

* Company covered by Credit Suisse Europe Analysts Simon Irwin and Guillaume Gauville
Softlines Retail & Global Brands Coverage Summary
Curr. Mkt. Ent. EV/EBITDA P/E EV/Sales
CS CS % to Price Cap. Val. 3-Yr. 5-Yr. 3-Yr. 5-Yr. 3-Yr. 5-Yr.
Company Rating PT PT Jun 23 ($B) ($B) NTM Avg. Avg. NTM Avg. Avg. NTM Avg. Avg.
SPECIALTY RETAIL
Lululemon O $315 3% $307 $40.0 $40.1 36.4x 19.4x 17.4x 61.4x 34.2x 31.2x 8.9x 4.8x 4.2x
Ulta O $265 28% $207 $11.6 $13.3 13.2x 12.3x 13.5x 28.7x 22.5x 26.7x 1.6x 2.1x 2.3x
Tapestry N $15 7% $14 $3.9 $9.6 5.1x 7.7x 8.2x 9.0x 13.6x 15.0x 0.8x 1.6x 1.8x
Gap Inc. U $9 (22%) $12 $4.3 $11.2 40.8x 5.8x 5.5x nm 11.2x 11.3x 0.3x 0.5x 0.6x
Capri Holdings N $13 (18%) $16 $2.4 $6.4 6.1x 6.8x 6.4x 6.6x 9.8x 9.9x 0.8x 1.4x 1.4x
L Brands N $13 (12%) $15 $4.1 $12.2 7.4x 6.5x 7.8x 27.9x 11.8x 14.7x 0.8x 1.0x 1.4x
Foot Locker O $30 0% $30 $3.1 $5.7 5.1x 4.8x 5.6x 17.0x 9.6x 11.2x 0.3x 0.5x 0.7x
The RealReal O $14 (5%) $15 $1.3 $1.1 nm nm nm nm nm nm 3.4x 2.9x 2.9x
REVOLVE, Inc. O $17 6% $16 $1.1 $1.1 24.6x 18.8x 18.8x 44.1x 31.8x 31.8x 1.7x 1.8x 1.8x
Urban Outfitters - - - $17 $1.7 $2.6 13.1x 5.7x 5.7x nm 13.4x 13.7x 0.3x 0.6x 0.7x
American Eagle - - - $12 $2.0 $3.4 6.6x 4.9x 4.8x 54.3x 13.4x 13.3x 0.4x 0.6x 0.6x
Chico's - - - $1 $0.2 $0.9 nm 4.0x 4.6x nm 190.4x nm 0.3x 0.3x 0.4x
J.Jill - - - $1 $0.0 $0.5 nm 4.1x 4.3x nm 10.3x 10.7x nm 0.6x 0.6x
Specialty Retail Avg. 15.9x 8.4x 8.5x 31.1x 31.0x 17.2x 1.6x 1.4x 1.5x

OFF-PRICE
TJX Companies O $65 22% $53 $63.6 $75.9 22.5x 12.0x 11.4x 41.4x 20.0x 20.1x 1.8x 1.5x 1.5x
Ross Stores O $105 15% $91 $32.5 $35.8 22.4x 13.1x 12.2x 40.1x 21.5x 21.0x 2.3x 2.1x 1.9x
Burlington Stores O $250 21% $207 $13.6 $17.0 33.5x 13.7x 12.3x 92.3x 26.1x 24.3x 2.1x 1.6x 1.4x
Off-Price Avg. 26.1x 12.9x 12.0x 57.9x 22.5x 21.8x 2.1x 1.7x 1.6x

DEPARTMENT STORES
Kohl's N $18 (19%) $22 $3.5 $9.1 9.0x 5.2x 5.0x nm 11.5x 11.3x 0.4x 0.6x 0.6x
Macy's U $6 (16%) $7 $2.2 $6.3 71.4x 8.7x 7.5x nm 7.9x 9.0x 0.4x 0.4x 0.5x
Nordstrom N $18 5% $17 $2.7 $7.5 10.7x 5.7x 6.2x nm 13.2x 14.4x 0.4x 0.6x 0.6x
Dillard's - - - $26 $0.6 $1.2 35.3x 9.8x 7.7x nm 14.9x 13.2x 0.2x 0.3x 0.4x
Department Stores Avg. 31.6x 7.3x 6.6x 11.9x 12.0x 0.3x 0.5x 0.5x

Source: Credit Suisse estimates, Factset June 26, 2020 4

Our Outlook for US Retail Sector as Stores Reopen
Our Framework for Softlines Retail Companies Trends Through 2021

June 26, 2020 5

Long-Term Changes to the Softlines Retail Landscape

 Accelerated shift of consumer SSS Comparison: Off-Price vs Moderate Department Stores

spending online 15%
Early Recession:
Extreme budgetting,
 Accelerated closures of 10% all discretionary sales
underperforming US retail decline
stores 5%

 Increasing consumer focus on 0%

value
(5%)
– In the last recession, off-price Slow Recovery:
Consumer trade down
gained 900bp of market share (10%)
continues, Offprice
from department stores as +900bp mkt share!
consumers sought value… (15%)

– …which is a trend we expect to

repeat in 2020/2021 as the US Off-price SSS Moderate D-Stores SSS
economy enters a recession
Source: Company data, Credit Suisse estimates. Note: “Off-price” includes TJX and ROST,
“Moderate D-Stores” includes Macy’s, Kohl’s and JCPenney

June 26, 2020 6

 Permanent Changes to Softlines Retail P&Ls

 Higher COVID-19 related costs even after stores reopen (PPE, cleaning)

 Potentially permanent reduction in rent expenses

 Highest interest expense

Rent as a Percent of Revenues Estimated Pro-Forma Interest Expense as % of CY20 EBIT

14% 100%
12% 90%
80%
10% 70%
8% 60%
50%
6%
40%
4% 30%
20%
2%
10%
0% 0%

Rent % of Sales (CY19)

Pro Forma CY20 Int Exp % of EBIT
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

June 26, 2020 7

Business Models that will Emerge Competitively
Stronger Post-COVID
Relative Category Online Pure-
Strong Value
Winners Plays / Emerging
Proposition for
(Athletic, Beauty, “Retail 2.0”
Consumers
Outdoor) Business Models

June 26, 2020 8

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IM PORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit
Suisse 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 decision.

Companies Mentioned (Price as of 22-Jun-2020) Credit Suisse's distribution of stock ratings (and banking clients) is:
Burlington Stores, Inc. (BURL.N, $204.81)
Canada Goose Holdings, Inc. (GOOS.TO, C$33.02) Global Ratings Distribution
Capri Holdings (CPRI.N, $15.78)
Ferrari N.V. (RACE.N, $171.45) Rating Versus universe (%) Of which banking clients (%)
Foot Locker, Inc. (FL.N, $29.52)
HanesBrands (HBI.N, $11.23) Outperform/Buy* 49% (32% banking clients)
Kohl's Corporation (KSS.N, $21.94) Neutral/Hold* 37% (28% banking clients)
L Brands, Inc. (LB.N, $14.65) Underperform/Sell* 12% (21% banking clients)
Macy's Inc. (M.N, $7.08) Restricted 1%
Nike Inc. (NKE.N, $99.51) *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond
Nordstrom, Inc. (JWN.N, $17.21) to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.)
PVH Corp. (PVH.N, $47.5) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
REVOLVE Group, Inc (RVLV.N, $15.98)
Ralph Lauren Corporation (RL.N, $73.34) Important Global Disclosures
Ross Stores, Inc (ROST.OQ, $90.68)
Tapestry, Inc. (TPR.N, $13.71) Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products
The Estee Lauder Companies Inc. (EL.N, $192.26) may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made
The Gap, Inc. (GPS.N, $11.54)
The TJX Companies, Inc. (TJX.N, $52.82)
available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the
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Under Armour, Inc. (UAA.N, $9.51)
VF Corporation (VFC.N, $62.6) Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market
lululemon athletica inc. (LULU.OQ, $304.69) that may have a material impact on the research views or opinions stated herein.
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As of December 10, 2012 Analysts’ stock rating are defined as follows: revenues, a portion of which are generated by Credit Suisse's investment banking activities
Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. See the Companies Mentioned section for full company names
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- S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and
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puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between
GOOS.TO, PVH.N, ROST.OQ, TIF.N, TPR.N, VFC.N) within the next 3 months.
15% and 7.5%, which was in operation from 7 July 2011.
Credit Suisse currently has, or had within the past 12 months, the following issuer(s) as client(s), and the services provided were non-investment-
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at this time. GOOS.TO, CPRI.N, RACE.N, FL.N, HBI.N, KSS.N, LB.N, M.N, NKE.N, JWN.N, PVH.N, RVLV.N, RL.N, ROST.OQ, TPR.N, EL.N, GPS.N, TJX.N,
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June 26, 2020 9

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