EXCERPTS OF RECENT MEDIA COVERAGE RETAIL AND CONSUMER PRODUCTS PRACTICE

A SAMPLING OF BDO THOUGHT LEADERSHIP IN THE MEDIA FOR Q4 2013

"In general, Americans u REUTERS are learning to live without some things," ANALYSIS: U.S. RETAILERS said Ted Vaughan, a BRACE FOR MARGIN partner at consulting HIT FROM HOLIDAY firm BDO, whose DISCOUNTS survey of 100 retail chief marketing officers By Lisa Baertlein and Phil Wahba predicted that sales in established stores during the holiday season would rise 2.5 Shoppers like stay-at-home mom Susan percent for 2013. Sterling are American retailers' worst nightmare this holiday season… "At certain points in history you have BDO has been a valued a resetting of expectations," said business advisor to retail and She is not the only one cutting back. Vaughan. "This one is proving to be very According to a new Reuters-Ipsos poll, most significant.”… consumer product companies Americans plan to spend less than they did for more than 100 years. The during the 2012 holiday shopping season. BDO's Vaughan expects shoppers to delay And by all indications, most are demanding purchases even with the discounting, Retail & Consumer Products rock-bottom prices. waiting as long as they can for deeper price Practice of BDO works with cuts. About half of shoppers haven't started Retailers from Macy's to Wal-Mart Stores shopping, 27 percent completed less than a wide variety of retail and to Best Buy are responding with massive a quarter of their purchases and 5 percent consumer oriented clients, discounts even at the risk of profit margin have finished shopping, according to the declines. When the smoke clears on poll. ranging from multinational the unprecedented price-cutting blitz, Fortune 500 corporations consumers should emerge as the clear winners… to more entrepreneurial u LOS ANGELES TIMES businesses, providing a To be sure, the emphasis on discounting is nothing new. Since the recession, Americans KMART, SEARS TO STAY myriad of accounting, tax and have searched for ways to save money. OPEN ALL NIGHT ON other financial services. They're disconnecting home phones, opting for free entertainment and driving cars THANKSGIVING longer before replacing them. Beyond that, By Tiffany Hsu the Internet has made it easier to find deals. Kmart is going on a holiday all-nighter, opening for bargain hunters at 6 a.m. Thanksgiving morning and keeping the lights on for 41 straight hours. MEDIA COVERAGE OF THE BDO RETAIL & CONSUMER PRODUCTS PRACTICE 2

Sister company Sears also is gearing up "We're seeing retailers for an overnight shopping marathon, enter the holiday u MEDIAPOST welcoming patrons at 8 p.m. on Turkey Day season with realistic, MARKETING DAILY and running special deals until 1 p.m. the rather than optimistic, next day. expectations," said SURVEY: RETAILERS BACK Doug Hart, partner in AWAY FROM MOBILE The effort will be the longest test of BDO's retail division. By Sarah Mahoney endurance in both retailers' history… A new survey of retail CMOs shows that A poll from the National Foundation for stores are backing away from mobile Credit Counseling found Monday that 53% u WOMEN’S WEAR technology, even as m-commerce sales of shoppers plan to spend less on holiday DAILY climb. Only 38% say it figures in their gift-giving this year than they did last year. marketing strategy this holiday, according A third said they'll spend nothing; only 3% STUDY: STORES TO to the BDO Compass Survey of CMOs, intend to spend more. SPREAD OUT HOLIDAY down from 50%. And while 72% say they are spending the same amount on A separate survey Monday from financial PROMOTIONS marketing as they did last year, the mix is consulting firm BDO concluded retailers By Arnold Karr changing. Some 88% are saying social is expect a 2.5% increase in holiday sales at now a part of their seasonal plan, and will stores open at least a year. That's far more Retail marketing experts are looking to account for 14% of the pessimistic than last year's predictions, spread out their holiday promotions even marketing budget, up which ultimately proved too upbeat. as the unforgiving fourth-quarter calendar compresses the season, according to an from 10% last year. Natalie Kotlyar, a The survey also showed big changes in what annual study by business services firm BDO partner in BDO’s retailers expect shoppers to buy. USA, LLP... retail and consumer products practice, tells The BDO report said 69% of retailers in The study, dubbed the 2013 BDO Retail Marketing Daily what’s the survey believe electronics will be the Compass Survey of CMOs, also revealed driving the trends. bestselling product segment -- up from less that stores expect a 3.1 percent increase than a quarter in 2009. Just 3% of those in sales this year, identical to Q: Mobile has been such a strong and surveyed said toys would be the hottest their expectations last year, while their growing trend. Why back away and be category, down from 39% four years ago. median expectation for sales was a 3.7 percent increase, down from last wishy-washy now? Nearly two-thirds of retailers anticipate year’s projection of 4.3 percent growth. The A: I think retailers are indecisive. There inventory levels on par with last year's, percentage of stores expecting an increase are an overwhelming number of mobile suggesting they expect similar demand on Black Friday rose, to 38 percent from possibilities, and to a certain extent, the from consumers. 30 percent a year ago, but the percentage economy is uncertain. So it makes sense to expecting an increase on Cyber Monday fell, me that they are thinking they will sit on to 25 percent from 34 percent. the sidelines for now, and wait to see what works for others. Ted Vaughan, partner with BDO’s retail and consumer products practice, noted Q: Do you think stores are uncertain about that the shortness of the holiday selling m-commerce, big picture? season — with just 25 days between Black Friday and versus 32 in 2012 — A: No, m-commerce is growing, and I think is likely to increase the power of “Super a year from now more consumers will be Saturday” on Dec. 21. “Stores will have using their phones to make purchases. But, these large initial sales opportunities but for now, they use them to do research, for it’s clear they’re trying not to skew too social sites—but not to pull the trigger on much of the demand at the beginning of actual purchasing. So retailers are stuck the season,” he said. “As inventory builds on that question: Is mobile creating brand up and competitors do what they can to recognition? Or is it creating demand and attract customers, they’ll push to make sure building sales? there isn’t too much inventory left over on their shelves.” It’s also worth noting that among retailers who are using mobile, they are spending Super Saturday is considered the second- more. Last year, mobile comprised about busiest day of the holiday season, behind 6% of retailers’ overall marketing budget; only Black Friday. this year, it’s 15%... MEDIA COVERAGE OF THE BDO RETAIL & CONSUMER PRODUCTS PRACTICE 3

Q: Do many stores know what works, or Black Friday -- the day after Thanksgiving are they all still experimenting? and the traditional start to the holiday CONTACT: shopping season… A: The metrics are the most difficult aspect. DAVID BERLINER, New York It is very difficult to figure out when and "Long Island has had 212-885-8347 / [email protected] how this customer is coming to you. pretty good success this And social can be great advertising. But, PAUL BROCATO, Chicago year," said Al Ferrara, ultimately, the sale is what’s important, so 312-616-4639 / [email protected] national director of you want the consumer to buy as quickly as retail for BDO USA, AL FERRARA, New York possible. If there are too many clicks, you a Chicago-based 212-885-8000 / [email protected] will lose them. consulting firm. "Its RANDY FRISCHER, New York economy is in decent 212-885-8445 / [email protected] shape, you might see a major positive u uptick" in holiday sales. DOUGLAS HART, San Francisco NEWSDAY 415-397-7900 / [email protected]

TRADITION PROPELS SOME NATALIE KOTLYAR, New York BLACK FRIDAY SHOPPERS u WOMEN’S WEAR 212-885-8035 / [email protected] By Maura McDermott and Keiko Morris DAILY ISSY KOTTON, Los Angeles 310-557-0300 / [email protected] Black Friday got off to a busy -- if less WEAK SHOWING FOR frenzied -- start in malls across Long Island. ALAN SELLITTI, New York NOVEMBER SALES 212-885-8599 / [email protected] Some shoppers said the discounts weren't By Vicki Young and Arnold Karr TED VAUGHAN, Dallas steep enough to bring them out in the 214-969-7007 / [email protected] wee hours. Others said they had already Stores reporting November sales Thursday done much of their bargain-hunting on generally fell short of modest expectations, Thanksgiving Day… and December might not be much better. That’s where we saw a lot of people going Merchants have been eager to win a larger Although a few retailers had a strong out Thanksgiving night when the stores share of shoppers' limited wallets, and November finish following Thanksgiving, supposedly had the best deals.” According many began offering holiday deals weeks some observers believe that consumers to Kotlyar, the promotional sales so far are ago. A slower-than-expected back-to- will be closely watching the promotions raising concerns over margin erosion. school season, price-conscious consumers cadence at retail throughout the month and six fewer shopping days between to determine the best time to jump in and “Stores such as Kohl’s that will be operating Thanksgiving and Christmas have put buy… on extended hours are spreading the same pressure on retailers. sales they would otherwise be getting over Natalie Kotlyar, partner at professional a longer [store-opening] period, which will Many retailers decided to launch what they services firm BDO USA and a retail raise their costs and eat into their margins,” said were their biggest sales events of the and consumer product industry group she said. year Thursday -- on Thanksgiving evening leader, said, “I think people have a budget or even earlier in the day -- instead of at of how much they want to spend and they midnight or in the early morning hours of are waiting for the lowest bottom price.

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