Consumer Taking Stock with Teens Survey - Fall 2017 Results

INDUSTRY NOTE October 11, 2017

Consumer Taking Stock With Teens Survey - Fall 2017 Results

CONCLUSION Erinn E. Murphy What surprised us most in our Fall 2017 Teen Survey was the stark decline of Nike. In Sr Research Analyst, Piper Jaffray & Co. contrast, adidas achieved new highs. Overall, larger brands are ceding share for small 612 303-8356, [email protected] brands. Emerging on the scene was notable strength in streetwear (Vans, Supreme). Nicole Miller Regan Accessories spending is the most muted we've seen. Food/restaurant spend dipped from Sr Research Analyst, Piper Jaffray & Co. peak but remain a focal point of teen spending. Starbucks remains the only concept with 612 303-6637, [email protected] DD% share. The shift online strengthened with 49% of teens citing Amazon as their favorite Michael J. Olson Sr Research Analyst, Piper Jaffray & Co. website. In video games, the mix shift to full game downloads is playing out at a more 612 303-6419, [email protected] rapid pace than many expect. Next phone purchase intent peaked again for Apple (82%). Sam Kemp Snapchat bolstered its social media lead and Instagram engagement continues to impress. Sr. Research Analyst, Piper Jaffray & Co. Unsurprisingly, on-demand music & SVOD services continue roll up legacy providers as 612 303-6179, [email protected] preference for linear TV fell 300 bps Y/Y. Stan Meyers Sr. Research Analyst, Piper Jaffray & Co. Actionable Movers In Teen Results: 212 284-5037, [email protected]

• (+) Biggest Brand Gainers: adidas, Amazon, Apple, American Eagle, Birkenstock Related Companies: Share Price: (private), Gucci, Starbucks, Supreme (private), Tommy Hilfiger. AAPL 155.90 ADS GR 194.77 AMC 13.85 • (-) Largest Brand Losers: Facebook, Fossil, Michael Kors, Nike, Pandora, Ralph AMZN 987.20 Lauren, Steve Madden, Tory Burch (private), UGG (DECK), Under Armour. ATVI 61.45 CMG 310.88 Key Themes In The Data: CNK 36.00 1. While overall teen spending was down 4%, fashion as a percent of the budget was COH 40.00 steady Y/Y at 38% of the wallet. Restaurants remain a focal point, albeit at perhaps DECK 71.62 peak levels as spending on food remained the single largest category at 22% of the EA 117.82 upper teen wallet (vs. a high of 24% in Spring 2017). EBAY 38.84 2. Athletic apparel trends are moderating as Nike's share losses are not fully offset by FB 171.59 rise of adidas. Within footwear, we are still seeing a strong athletic appetite by females FOSL 8.48 IMAX 21.75 (athletic now represents 73% of female footwear preferences vs. 67% last year). JCP 3.54 Newer trends include denim, Streetwear/culture & 1990s/retro. JWN 43.38 3. Teens estimate they spend 17% of their time online when shopping - up from 15% KORS 47.56 last year. Traditional channels (dept. stores plus specialty) now represent 38% of time LB 42.95 spent vs. 42% last year. LGF/A 30.57 4. Amazon is 49% of teens' favorite website - up 600 bps from Spring. MCD 160.58 5. Teens who anticipate downloading most of their purchased video games reached 50%, NFLX 195.08 a significant jump from 45% in Spring. NKE 51.53 6. Facebook saw a 600 bps decline in engagement, driven by younger, newly sampled P 7.85 cohorts not adopting Facebook at rates of prior cohorts. This is offset by increasing PVH 126.04 strength in use and engagement in Instagram. RGC 16.00 RL 87.22 SBUX 55.42 Demographic Breakdown & Spending Results: In our 34th semi-annual Taking Stock SHOO 42.50 With Teens Fall survey we spoke with 6,100 teens across 44 states in the U.S. with an SNAP 14.34 average age of 15.9 years. We split our data into upper-income HH ($101k/year) and TTWO 102.67 average-income HH ($55k/year). The gender split this Fall was 46% female/54% males - UAA 16.84 similar to the last four surveys. Geographically, we received the most responses from the VFC 64.51 South (45%) and Midwest (32%) with the balance from the West & Northeast. Spending ZNGA 3.71 overall for teens contracted 4% Y/Y. Looking at wallet allocation, food spend moderated from 24% to 22% share of wallet. "Car" and necessities spend ticked higher. INDUSTRY RISKS Reliance on top mgmt, consumer preference changes, consumer spending, FX, competition. 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. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst certification, found on pages 65 - 66 of this report or at the following site: http://www.piperjaffray.com/researchdisclosures. Page 1 of 66 Taking Stock With Teens A Collaborative “GEN Z” Insights Project Fall 2017

Page 2 of 66 Investment Risks

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

Page 3 of 66 34th Semi-Annual Proprietary Teen Research Project

National survey of teens measuring: • Spending Patterns UPPER-INCOME GROUP • Channel Preferences • Product Trends & Cycles 1,500 teens $101,000 Household income Electronic surveys Represents top 20% of U.S. household units 6,100 Responses

AVERAGE-INCOME GROUP 15.9 Average Age 4,600 teens $55,000 Household income Electronic surveys Aligns more closely with U.S. median 35% Part-Time Employed

Survey is executed in partnership with DECA The source for all charts/tables within this report is Piper Jaffray.

Taking Stock With Teens

Page 4 of 66 Executive Summary

• Spending Is Down Overall By 4% Y/Y For Teens; 38% Of Budgets Spent On Fashion

• Monitoring A Cresting In “Food” Spend & Uptick In “Car” / Necessity Spend

• Athletic Trend Evolving Led By NIKE Declines; adidas Reaches Yet Another High

• Culture-Oriented/Streetwear Fashion Trends Surging: Vans, Supreme

• Amazon Captures Nearly 50% Of GenZ’s Vote For Favorite Website

• Accessorizing Less? 75% Of Females Do Not Plan To Buy A Handbag Next

• Intent To Buy iPhone Reaches High; Over 80% of GenZ Will Choose iPhone Next

• Video Game Download Momentum – 50% Will Download More Vs. 45% In Spring

• Snapchat & Instagram Engagement Ticks Up; Facebook Engagement Declines

• On-Demand Music & SVOD Services Continue Share Gain From Legacy Providers

Taking Stock With Teens

Page 5 of 66 Global Fashion & Lifestyle Brands Clothing, Shoes, Accessories & Connected Devices 38% of Teen Spending

Page 6 of 66 Teen Spending Declined >4% Y/Y Fall vs. -2% Y/Y Spring

$2,450/Yr what teens estimate they spend each year GenZ contributes $830B (7% U.S. retail sales)*

Male’s Wallet Share Female’s Wallet Share

1 Food 22% 1 Clothing 24%

2 Clothing 17% 2 Food 22%

Personal Care/ 3 Video Games 11% 3 Accessories 16%

*Source: Fung Global Retail & Technology Taking Stock With Teens

Page 7 of 66 Athletic Trend Evolving Led By Nike; adidas Ticks Up Upper-Income Favorite Apparel Brand (All Teens)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 21% 1 Nike 29% 1 Nike 31% 1 Nike 23% 2 American Eagle 8% 2 American Eagle 9% 2 American Eagle 10% 2 American Eagle 11% 3 Forever 21 7% 3 Forever 21 5% 3 Forever 21 5% 3 Adidas 4% 4 Ralph Lauren 6% 4 Ralph Lauren 4% 4 lululemon 3% 4 Forever 21 4% 5 Hollister 4% 5 Urban Outfitters 3% 5 H&M 3% 5 Hollister 4% 6 PacSun 3% 6 H&M 3% Adidas 3% 6 PacSun 3% 7 Urban Outfitters 3% 7 PacSun 2% 7 Hollister 2% 7 lululemon 3% Victoria's Secret 3% 8 Adidas 2% 8 Urban Outfitters 2% 8 H&M 3% 9 H&M 3% 9 Vineyard Vines 2% Vans 2% 9 Urban Outfitters 3% 10 Adidas 2% 10 Victoria's Secret 2% 10 PacSun 2% 10 Supreme 3% Ralph Lauren 2%

• Nike, while still No. 1, moves from 29% share as preferred apparel brand to 23%

• Adidas doubles its mindshare from 2% to 4% as it moves from No. 8 to No. 3

• American Eagle captures another double-digit % mindshare

• Supreme, makes its foray into top-10 preferred apparel brands (male led)

Taking Stock With Teens

Page 8 of 66 Athletic Trend Evolving Led By Nike; adidas Ticks Up Upper-Income Favorite Footwear Brand (All Teens)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 48% 1 Nike 51% 1 Nike 52% 1 Nike 46% 2 Vans 10% 2 Vans 9% 2 Vans 9% 2 Vans 12% 3 Converse 7% 3 Converse 7% 3 Adidas 8% 3 Adidas 11% 4 Adidas 4% 4 Adidas 6% 4 Converse 6% 4 Converse 7% 5 Sperry 3% 5 Steve Madden 2% 5 Steve Madden 3% 5 Birkenstock 2% 6 DSW 3% 6 Sperry 2% 6 Sperry 2% 6 DSW 2% 7 Steve Madden 3% 7 DSW 2% 7 DSW 2% 7 Foot Locker 2% 8 Foot Locker 2% 8 Birkenstock 2% 8 Foot Locker 1% 8 Sperry Top-Sider 2% 9 UGG 1% 9 Foot Locker 1% 9 Birkenstock 1% 9 New Balance 1% 10 TOMS 1% 10 Nordstrom 1% 10 Payless ShoeSource 1% 10 Steve Madden 1% UGG 1%

• Nike, while still No. 1, moves from 51% share as preferred footwear brand to 46%

• Adidas almost doubles mindshare from 6% to 11% as it moves from No. 4 to No. 3

• Vans strengthens its No. 2 spot hitting 12%; Birkenstock rounds out top 5

• Steve Madden & UGG move down considerably (now tied for No. 20)

Taking Stock With Teens

Page 9 of 66 Athletic Apparel Moderates As Brand Leadership Rotates Upper-Income Favorite Apparel Brand (All Teens)

• 33% of preferred apparel brands are “athletic,” down from 41% in Spring and 35% in Fall • Nike’s 800 bps of share erosion accounted for the entire loss vs. Spring; adidas continued to gain

Taking Stock With Teens

Page 10 of 66 Athletic Footwear Inches Higher For Females Upper-Income Favorite Footwear Brand (Females)

• 73% of females prefer an athletic brand of footwear, up from 67% last year (below) • 86% of males prefer an athletic brand of footwear, even with the last two surveys

Taking Stock With Teens

Page 11 of 66 The Big Three Athletic Brands (Y/Y Comparison)

Nike (No. 1 brand) seeing more share loss from males vs. females • Preferred clothing: UI males from 44% to 36% share Y/Y; AI males from 40% to 36% • Preferred footwear: UI males from 66% to 59% share Y/Y; AI males from 65% to 57% • Preferred clothing: UI females steady at 7% Y/Y; AI females from 12% to 11% • Preferred footwear: UI females steady at 30% Y/Y; AI females steady at 38% Y/Y • Nike/Jordan declined as “top-fashion trend for males” from 19% to 12% • As a performance athletic brand, Nike lost share among both genders & both categories

Adidas gaining share across both genders but more notably among males • Preferred clothing: UI and AI males saw the same move from 3% to 6% share Y/Y • Preferred footwear: UI males from 6% to 14% share Y/Y; AI males from 6% to 13% • Preferred clothing: Not in the top-ten for females of either income demographic • Preferred footwear: UI females from 5% to 7% Y/Y; AI females from 4% to 7% • Adidas is No. 1 “new” brand that males are wearing & No. 3 for females • As performance athletic brand, adidas gained share among both genders & categories

Under Armour being boxed out by resurgent adidas & retro-category growth • Preferred apparel brand (UI males), UAA fell out of top-ten, from No. 8 to No. 11 Y/Y • Preferred apparel brand (AI males), UAA fell from No. 6 to No. 9 Y/Y (2% share) • Among upper-income females, UAA only received one vote as preferred apparel brand • Under Armour still cited as the No. 1 “old” brand that males are no longer wearing

Taking Stock With Teens

Page 12 of 66 Brands That Made Significant Upwards Moves In Top 20

Supreme

BIRKENSTOCK GUCCI

Taking Stock With Teens

Page 13 of 66 Brands That Made Significant Upwards Moves In Top 20

• Supreme ranked in the Top 10 as preferred apparel brand (1st time) Supreme • No. 7 up & coming brand from males; No. 10 preferred website • Street brand with minority investment from The Carlyle Group

• First time in top-10 preferred handbag rankings • CK was No. 8 among upper-income females; No. 10 for avg-income • GIII is PVH’s licensee for handbags; ~$130-$150M category

BIRKENSTOCK • First time as top-five preferred footwear brand with upper-income

• Jumped to No. 15 preferred apparel brand (No. 10 for males) GUCCI • Moved up in top-five handbags among avg-income (3% to 7% Y/Y) • Moved from No. 8 to No. 6 as preferred handbag (upper-income)

• Tommy Hilfiger (~43% of PVH sales) saw strength among males • First time in top 20 as preferred apparel brand for males

Taking Stock With Teens

Page 14 of 66 Vans Pick Up As Teens Shift Focus From Athletic To Street Upper-Income Favorite Footwear Brand (All Teens)

• Vans hits the highest level in our survey history at 12% (achieved once previously in Fall 2013) • Women’s was driving the most significant piece of this increase (14% vs. 7% last year) • First time its hit top-ten apparel brands with average-income teens (led by males) • Listed as a top-ten fashion trend for males & females and an up & coming brand for both

Share gains led by women’s

Taking Stock With Teens

Page 15 of 66 The Biggest Losers

Taking Stock With Teens

Page 16 of 66 The Biggest Losers

• RL fell out of top-10 preferred brands (No. 11 UI teens) • RL moved from No. 4 to No. 8 (avg-income teens)

• UGG now No. 16 preferred brand (upper-income females) vs. No. 9 last year • First time out of top-ten in over 10 years of surveys

• Fossil moved from No. 3 at 8% to No. 4 brand at 5% • Michael Kors (No. 1 licensed brand) from 15% in Spring to 12% this Fall, reaffirming this brand’s downtrend in watches (rightsizing of brand underway)

• Nike lost between 600-800 bps Y/Y of share across apparel & footwear for all teens regardless of how data was sliced

Taking Stock With Teens

Page 17 of 66 Brands Over Boxes…Seeing A Deeper Focus On Brands A Deeper Look At Top-20 Preferred Apparel Choices (Upper-Income Teens)

Rank Fall 2014 Share Rank Fall 2015 Share Rank Fall 2016 Share Rank Fall 2017 Share 1 Nike 18% 1 Nike 27% 1 Nike 29% 1 Nike 23% 2 American Eagle 8% 2 Forever 21 7% 2 American Eagle 9% 2 American Eagle 11% 3 Forever 21 7% 3 American Eagle 6% 3 Forever 21 5% 3 Adidas 4% 4 Ralph Lauren 6% 4 Ralph Lauren 5% 4 Ralph Lauren 4% 4 Forever 21 4% 5 Hollister 4% 5 Urban Outfitters 3% 5 Urban Outfitters 3% 5 Hollister 4% 6 PacSun 3% 6 PacSun 2% 6 H&M 3% 6 PacSun 3% 7 Victoria's Secret 2% 7 Free People 2% 7 PacSun 2% 7 lululemon 3% 8 Aeropostale 2% 8 H&M 2% 8 Adidas 2% 8 H&M 3% 9 Charlotte Russe 2% 9 Vineyard Vines 2% 9 Vineyard Vines 2% 9 Urban Outfitters 3% Rue21 2% 10 Nordstrom 2% 10 Victoria's Secret 2% 10 Supreme 2% 11 H&M 2% 11 Hollister 2% 11 Hollister 2% 11 Ralph Lauren 2% 12 Kohl's 2% 12 Abercrombie & Fitch 2% 12 lululemon 2% Vans 2% 13 Abercrombie & Fitch 1% 13 Victoria's Secret 2% 13 Vans 1% 13 Victoria's Secret 2% 14 Hot Topic 1% 14 Kohl's 1% 14 Nordstrom 1% 14 Vineyard Vines 2% 15 Urban Outfitters 1% 15 lululemon 1% 15 Tilly's 1% 15 Gucci 1% 16 T.J. Maxx 1% 16 Target 1% Under Armour 1% 16 Target 1% 17 The Buckle 1% 17 T.J. Maxx 1% Brandy Melville 1% 17 Kohl's 1% 18 JCPenney 1% 18 Adidas 1% 18 Free People 1% 18 Under Armour 1% 19 Levi's 1% 19 Brandy Melville 1% 19 Abercrombie & Fitch 1% 19 Old Navy 1% 20 Vans 1% 20 J.Crew 1% 20 Old Navy 1% T.J. Maxx 1%

Taking Stock With Teens

Page 18 of 66 Channel Preferences Still Favor Online Time Spent By Channel; Upper-Income Teen

Taking Stock With Teens

Page 19 of 66 Amazon Captures Almost 50% Of Teen Vote Favorite Website To Purchase From, Upper-Income Teens

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Amazon 41% 1 Amazon 40% 1 Amazon 43% 1 Amazon 49% 2 Nike 5% 2 Nike 8% 2 Nike 5% 2 Nike 6% 3 Forever 21 5% 3 American Eagle 4% 3 American Eagle 5% 3 American Eagle 5% 4 eBay 3% 4 eBay 3% 4 Forever 21 3% 4 ebay 3% 5 American Eagle 3% 5 Forever 21 2% 5 eBay 2% 5 Forever 21 3% Victoria's Secret 3% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 7 Urban Outfitters 3% 7 Nordstrom 1% 7 Victoria's Secret 2% 7 Fashion Nova 2% 8 Eastbay 2% 8 Victoria's Secret 1% 8 lululemon 1% 8 lululemon 2% 9 Dick's Sporting Goods 1% 9 Hollister 1% PacSun 1% 9 PacSun 2% 10 PacSun 1% PacSun 1% 10 Zumiez 1% 10 Supreme 1%

>100% Of Softlines Dollar Growth In North America

Taking Stock With Teens

Page 20 of 66 Fashion Moving Towards Street, Denim & Festival Wear Top Fashion Trends Right Now, Upper-Income Males

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike/Jordans 20% 1 Nike/Jordans 19% 1 Nike / Jordans 18% 1 Nike / Jordans 12% 2 Jogger Pants 12% 2 Jogger Pants 8% 2 Jogger Pants 8% 2 Supreme 8% 3 Ralph Lauren 6% 3 Vineyard Vines 7% 3 Athletic Wear 6% 3 Jogger Pants 5% 4 Preppy 6% 4 Athletic Wear 6% 4 Khakis / Chinos 5% Ripped Jeans 5% 5 Athletic Wear 5% 5 Khakis/Chinos 6% 5 Adidas 4% 5 Khakis / Chinos 5% 6 Hair / Man Buns 5% 6 Preppy 6% 6 Leggings / lululemon 4% 6 Adidas 4% Khakis/Chinos 5% 7 Ralph Lauren 4% 7 Ripped Jeans 3% 7 Vineyard Vines 4% 8 Vineyard Vines 4% 8 Tall Socks 4% 8 Preppy 3% 8 Preppy 3% 9 Boat Shoes 3% 9 Boat Shoes 3% 9 Jeans 3% 9 Jeans 3% 10 Tall Socks 2% 10 Adidas 2% 10 Timberland 2% Vans 3% Athletic Wear 3%

Top Fashion Trends Right Now, Upper-Income Female

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Leggings/lululemon 23% 1 Leggings/lululemon 25% 1 Leggings / lululemon 25% 1 Ripped Jeans 12% 2 Victoria's Secret 7% 2 Birkenstock 6% 2 Chokers 11% 2 Off the Shoulder Tops 11% 3 Converse 6% 3 Victoria's Secret 5% 3 Converse 5% 3 Birkenstock 10% 4 Nike / Jordans 6% 4 Converse 4% 4 Victoria's Secret 4% 4 Jeans 9% 5 Boots 3% 5 Ripped Jeans 4% 5 Adidas 4% 5 Leggings / lululemon 8% 6 Crop Tops 3% 6 Jeans 3% 6 Ripped Jeans 4% 6 Converse 4% 7 Athletic Wear 2% 7 Adidas 3% 7 Jeans 3% 7 Crop Tops 3% 8 Jeans 2% 8 Bralettes 3% 8 Boots 3% 8 Chokers 2% 9 Michael Kors 2% 9 Nike / Jordans 3% 9 Nike / Jordans 2% American Eagle 2% 10 Adidas 2% 10 Chokers 3% 10 UGG 2% Vans 2%

Taking Stock With Teens

Page 21 of 66 Accessories Spending Intentions Waning All Female Teens

of females do NOT plan to purchase a handbag in next six months—this is a higher level from 63% in Spring and the 75% 59% multi-year average

is what all female teens estimate they spend each year on handbags/accessories—this is down double-digits $100 sequentially & Y/Y and is survey trough

Handbags are the second lowest dollar spend category for females behind fragrance. Even skin care & cosmetics carry a greater share of wallet

Taking Stock With Teens

Page 22 of 66 Handbag Brand Preferences Upper-Income Females

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Michael Kors 38% 1 Michael Kors 34% 1 Michael Kors 33% 1 Michael Kors 31% 2 Kate Spade 16% 2 Kate Spade 19% 2 Kate Spade 19% 2 Kate Spade 16% 3 Coach 12% 3 Coach 10% 3 Coach 9% 3 Coach 14% 4 Louis Vuitton 4% 4 Louis Vuitton 5% 4 Longchamp 5% 4 Louis Vuitton 6% 5 Gucci 4% 5 Longchamp 3% 5 Louis Vuitton 5% 5 Vera Bradley 6% 6 Chanel 3% Vera Bradley 3% 6 Gucci 4% 6 Gucci 5% 7 Tory Burch 3% 7 Chanel 2% 7 Tory Burch 3% 7 Longchamp 3% 8 Longchamp 2% 8 Gucci 2% 8 Vera Bradley 2% 8 Calvin Klein 2% 9 Vera Bradley 2% 9 Tory Burch 2% 9 Target 2% 9 Chanel 2% 10 Fossil 2% 10 Fossil 1% 10 Chanel 2% 10 Target 1% Tory Burch 1%

Average-Income Females

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Michael Kors 49% 1 Michael Kors 44% 1 Michael Kors 40% 1 Michael Kors 35% 2 Coach 12% 2 Coach 13% 2 Coach 14% 2 Coach 13% 3 Kate Spade 8% 3 Kate Spade 10% 3 Kate Spade 12% 3 Kate Spade 12% 4 Vera Bradley 4% 4 Vera Bradley 5% 4 Vera Bradley 4% 4 Gucci 7% 5 Louis Vuitton 3% 5 Gucci 3% 5 Louis Vuitton 3% 5 Vera Bradley 5% 6 Fossil 2% 6 Louis Vuitton 3% 6 Gucci 3% 6 Louis Vuitton 4% 7 Gucci 2% 7 Chanel 2% 7 Target 2% 7 Chanel 2% 8 Chanel 2% 8 Fossil 1% 8 Tory Burch 2% 8 Guess 2% 9 Tory Burch 1% Target 1% 9 Chanel 2% 9 Longchamp 1% 10 Steve Madden 1% 10 Betsey Johnson 1% 10 Guess 1% 10 Calvin Klein 1% Guess 1%

Taking Stock With Teens

Page 23 of 66 Watch Brands Upper-Income Teens

of teens do NOT plan to purchase a watch in next six months—this is higher than the Spring level and multi-year 72% average, both 71%.

of females intend to purchase a smartwatch in the next six months, above the Spring level and multi-year 16% average, both 10%.

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Rolex 29% 1 Rolex 37% 1 Rolex 37% 1 Rolex 44% 2 Michael Kors 22% 2 Michael Kors 17% 2 Michael Kors 15% 2 Michael Kors 12% 3 Fossil 8% 3 Apple 5% 3 Fossil 8% 3 Apple 7% 4 Casio 6% Casio 5% 4 Apple 6% 4 Fossil 5% 5 Apple 5% 5 Fossil 5% 5 Casio 4% 5 Nixon 4% 6 Nixon 3% 6 Nixon 3% 6 Nixon 2% 6 Casio 3% 7 Nike 3% 7 Nike 2% 7 Gucci 2% 7 Fitbit 2% 8 Invicta 1% 8 Timex 2% 8 Nike 2% 8 Garmin 1% 9 Kate Spade 1% 9 Fitbit 1% 9 Citizen 2% Timex 1% 10 Citizen 1% 10 Gucci 1% 10 Garmin 1% 10 Nike 1% Gucci 1% Kate Spade 1% MVMT 1%

Taking Stock With Teens

Page 24 of 66 Restaurants Food 22% of Teen Spending

Page 25 of 66 Restaurant Spending Trends

FOOD VS. CLOTHING SPEND AMONG UPPER INCOME TEENS

• Restaurants have steadily grown in importance within the broader teen wallet. • During the most recent survey, restaurants represented 22% of overall spending for upper income teens. This result was within the context of the longer-term trend of food spend outpacing clothing spend but was down sequentially vs. Spring 2017’s all-time high level of 24%. • Restaurant spending continues to outpace spending on clothing.

Taking Stock With Teens

Page 26 of 66 Restaurant Spending Trends

PREFERENCE FOR LIMITED SERVICE BRANDS

100%

90%

36% 36% 37% 80% 40% 41% 38% 39% 38% 40% 43% 48% 46% 46% 52% 50% 57% 56% 70% 59%

60% Full-Service

50% Limited-Service

40%

64% 64% 63% 30% 60% 59% 62% 61% 62% 60% 57% 52% 54% 54% 48% 50% 43% 44% 20% 41%

10%

0% Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Teens are showing a continued preference for limited service restaurants relative to full service brands. • This is the continuation of a longer-term trend we have observed going back to Spring 2009, at least, when teen brand preferences were primarily focused around full service brands. We believe this fueled by Fast Casual preference coupled with affordability considerations.

Taking Stock With Teens

Page 27 of 66 Restaurant Spending Trends PREFERRED BRANDS (UPPER INCOME) 1 2 3 4 5 Fall Starbucks Chick-fil-A Chipotle McDonald's Dunkin Donuts 2017 Spring Chick-fil-A Starbucks Chipotle Buffalo Wild Wings Panera Fall Starbucks Chipotle Chick-fil-A Taco Bell McDonald's 2016 Spring Starbucks Chipotle Chick-fil-A Panera McDonald's Fall Starbucks Chipotle Chick-fil-A McDonald's Panera 2015 Spring Chipotle Starbucks Chick-fil-A Panera Olive Garden Fall Starbucks Chipotle Chick-fil-A McDonald's Dunkin Donuts 2014 Spring Starbucks Chipotle Chick-fil-A McDonald's Panera Fall Starbucks Chipotle McDonald's Chick-fil-A Panera 2013 Spring Starbucks Chipotle Panera Chick-fil-A McDonald's Fall Starbucks Chipotle McDonald's Olive Garden Chick-fil-A 2012 Spring Starbucks Chipotle McDonald's Olive Garden Chick-fil-A Fall Starbucks Chipotle McDonald's Olive Garden Dunkin Donuts 2011 Spring Starbucks Chipotle McDonald's Olive Garden Chick-fil-A Fall Chipotle Starbucks McDonald's Olive Garden Chili's 2010 Spring Starbucks Chipotle Olive Garden T.G.I. Friday's Chili's

2017 Fall Starbucks Chick-fil-A Chipotle McDonald's Dunkin Donuts Estimated Average Check By $5.38 ~$6.00 $10.66 $6.04 $4.78 Preferred Brand PREFERRED BRANDS (AVERAGE INCOME) 1 2 3 4 5 Fall Starbucks Chick-fil-A McDonald's Olive Garden Buffalo Wild Wings 2017 Spring Starbucks Chick-fil-A McDonald's Chipotle Buffalo Wild Wings Fall Starbucks Chick-fil-A McDonald's Olive Garden Chipotle 2016 Spring Starbucks McDonald's Chick-fil-A Olive Garden Buffalo Wild Wings Fall Starbucks McDonald's Chipotle Chick-fil-A Olive Garden 2015 Spring Starbucks McDonald's Chipotle Chick-fil-A Olive Garden Fall Starbucks McDonald's Chipotle Chick-fil-A Taco Bell 2014 Spring Starbucks McDonald's Chipotle Olive Garden Taco Bell Fall Starbucks McDonald's Olive Garden Taco Bell Chipotle 2013 Spring Starbucks McDonald's Olive Garden Taco Bell Buffalo Wild Wings Fall Starbucks McDonald's Olive Garden Red Lobster Taco Bell 2012 Spring Starbucks McDonald's Olive Garden Taco Bell Red Lobster Fall Starbucks McDonald's Olive Garden Taco Bell Applebee's 2011 Spring Starbucks McDonald's Olive Garden Taco Bell Applebee's Fall McDonalds Starbucks Olive Garden Taco Bell Apple Bee's 2010 Spring Starbucks Olive Garden McDonald's Applebee's Chili's

2017 Fall Starbucks Chick-fil-A McDonald's Olive Garden Buffalo Wild Wings Estimated Average Check By $5.38 ~$6.00 $6.04 $17.50 $18.14 Preferred Brand Taking Stock With Teens

Page 28 of 66 Media & Devices Music, Video Games, Mobile & Entertainment 26% of Teen Spending

Page 29 of 66 Snap & IG Winning vs. FB & Twitter • Snapchat and Instagram remain top platforms, while FB and Twitter are seeing engagement declines as the youngest teens don’t adopt these platforms. • Instagram and Snapchat have extremely high user overlap, but Instagram is a better channel for branding, has better ad units, and stronger advertiser engagement. Which social platform do you use at least once per month? Spring 2015 Fall 2015 Spring 2016 Fall 2016 Spring 2017 Fall 2017 Snapchat 68% 74% 75% 80% 81% 82% Instagram 73% 76% 74% 79% 79% 81% Twitter 57% 58% 58% 56% 56% 50% Facebook 47% 56% 60% 52% 51% 45% Pinterest 25% 25% 27% 25% 25% 23% Google+ 14% 24% 23% 22% 19% 16%

What is your favorite social platform? Spring 2015 Fall 2015 Spring 2016 Fall 2016 Spring 2017 Fall 2017 Snapchat 11% 17% 24% 35% 39% 47% Instagram 29% 29% 23% 24% 23% 24% Twitter 21% 18% 16% 13% 11% 7% Facebook 12% 13% 15% 13% 11% 9% Pinterest 2% 1% 1% 1% 1% 1% Google+ 1% 1% 1% 1% 0% 0% Strong, Early Adoption of Snapchat & Instagram Facebook Twitter Snapchat Instagram 90% 80% 70% 60% 50% 40% 30%

% Platformusing % 20% 10% 0% 14 15 16 17 18 Taking Stock With Teens Age

Page 30 of 66 FB: Losing Engagement; Cohorts Stable • Facebook showed a step down in aggregate teens indicating they use the platform. • Decline appears to be driven by younger teens entering our sample at a lower rate of initial adoption. • Our longitudinal data suggests this isn’t an issue of churn. • While declining engagement is an investor concern, it is unlikely to be a meaningful headwind for several years as teens are a HSD % of MAUs.

Declining Engagement at Facebook Longitudinal Data Suggests Cohorts Not Deteriorating Spring-16 Fall-16 Spring-17 Fall-17 14 & 15 Year Olds as of Spring 2015, Followed Through to Graduation 80% 70% 70% 60% 60% 50% 50% 14 Year Olds 40% 40% 15 Year Olds

30% 30% % Platformusing % 20% 20%

10% 10% 0% 14 15 16 17 18 Total 0% Spring-15 Fall-15 Spring-16 Fall-16 Spring-17 Fall-17 Age

Taking Stock With Teens

Page 31 of 66 IG: Strength Continues, Best Brand Channel • Instagram showed a step-up in engagement and is neck-and-neck with Snapchat. • We asked teens the best channel to reach them: Instagram is the clear winner. • We believe this reflects Instagram’s use case, which is much more brand-friendly. • Instagram has largely the same user base as Snapchat, but a better ad unit and advertiser engagement.

Instagram Momentum Continues Instagram is the Best Channel to Reach Teens Spring-16 Fall-16 Spring-17 Fall-17 % indicating channel as a best way to communicate new products/promotions 90% 70% 80% 60% 70% 50% 60% 40% 50% 30% 40% 20%

30% 10% % Platformusing % 20% 0% 10% 0% 14 15 16 17 18 Total Age

Taking Stock With Teens

Page 32 of 66 Snapchat: Maintains Engagement • Snapchat remains the No. 1 platform among teens (~100bps ahead of Instagram). • Efforts at Instagram and Facebook to move more into ephemeral photo/video messaging and video has not impacted engagement. • Snap pitches itself as having unique access to a hard-to-reach demographic, but our survey suggests its user base is nearly identical to Instagram.

Snapchat Remains Dominant Snapchat & Instagram Share Vast Majority of Users Spring-16 Fall-16 Spring-17 Fall-17 Unique Users Cross-Platform Users 90% 100% 80% 90% 70% 80% 60% 70% 50% 60% 40% 50% 40% 30% % Platformusing % 30% 20% 20% 10% 10% 0% 14 15 16 17 18 Total 0% Snapchat Instagram Age

Taking Stock With Teens

Page 33 of 66 Amazon Mindshare Gains Continue • Amazon mindshare gains continue, driven by female and male respondents. • eBay mindshare ticked up 90bps, a positive data point worth monitoring. • Concentration of mindshare remains high, with 76% of preferred website responses (unaided) among the top 10 platforms. • Walmart has 0.18% of mindshare, Target has 0.44%; limited threat.

PREFERRED WEBSITES (UPPER-INCOME) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Amazon 41% 1 Amazon 40% 1 Amazon 43% 1 Amazon 49% 2 Nike 5% 2 Nike 8% 2 Nike 5% 2 Nike 6% 3 Forever 21 5% 3 American Eagle 4% 3 American Eagle 5% 3 American Eagle 5% 4 eBay 3% 4 eBay 3% 4 Forever 21 3% 4 ebay 3% 5 American Eagle 3% 5 Forever 21 2% 5 eBay 2% 5 Forever 21 3% Victoria's Secret 3% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 7 Urban Outfitters 3% 7 Nordstrom 1% 7 Victoria's Secret 2% 7 Fashion Nova 2% 8 Eastbay 2% 8 Victoria's Secret 1% 8 lululemon 1% 8 lululemon 2% 9 Dick's Sporting Goods 1% 9 Hollister 1% PacSun 1% 9 PacSun 2% 10 PacSun 1% PacSun 1% 10 Zumiez 1% 10 Supreme 1%

Females PREFERRED WEBSITES BY GENDER (UPPER-INCOME) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Amazon 29% 1 Amazon 27% 1 Amazon 30% 1 Amazon 35% 2 Forever 21 11% 2 American Eagle 8% 2 American Eagle 11% 2 American Eagle 11% 3 Victoria's Secret 6% 3 Forever 21 6% 3 Forever 21 7% 3 Forever 21 7% 4 American Eagle 5% 4 Urban Outfitters 5% 4 Urban Outfitters 5% 4 Fashion Nova 5% 5 Urban Outfitters 5% 5 Victoria's Secret 3% 5 Victoria's Secret 5% 5 lululemon 4% 6 Nike 2% 6 Nordstrom 3% 6 Lululemon 3% 6 Urban Outfitters 4% Sephora 2% 7 Brandy Melville 3% 7 Fashion Nova 2% 7 Nordstrom 2% 8 Hollister 2% 8 Hollister 2% 8 Hollister 2% 8 Hollister 2% lululemon 2% 9 Etsy 2% Nordstrom 2% Nike 2% 10 PacSun 2% 10 Free People 2% 10 Tobi 2% PacSun 2%

Males Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Amazon 50% 1 Amazon 48% 1 Amazon 51% 1 Amazon 59% 2 Nike 7% 2 Nike 12% 2 Nike 8% 2 Nike 9% 3 eBay 5% 3 eBay 5% 3 eBay 3% 3 ebay 5% 4 Eastbay 3% 4 Vineyard Vines 1% 4 PacSun 2% 4 Supreme 2% 5 Dick's Sporting Goods 2% 5 Zumiez 1% Zumiez 2% 5 PacSun 2% 6 Foot Locker 2% 6 Eastbay 1% 6 adidas 1% 6 adidas 2% 7 Zumiez 2% 7 adidas 1% Foot Locker 1% 7 Eastbay 1% 8 Supreme 1% PacSun 1% 8 Eastbay 1% Zumiez 1% 9 Ralph Lauren 1% 9 Foot Locker 1% H&M 1% 9 Dick's Sporting Goods 1% Taking Stock With Teens 10 Three Sites Tied 1% 10 Ralph Lauren 1% 10 Aliexpress 1% H&M 1%

Page 34 of 66 Profile of Prime Growth

• Prime Adoption is at 66% vs. 60% in Spring 2017. Adoption increased in each income bracket except top income earners (may be a statistical fluke). • Our survey suggests high-60M to low-70M households have Prime memberships in the U.S.; while a staggering number, our non-teen surveys and Amazon filings suggest similar levels. • 46% of new Prime members are coming from the top 2 quintiles of household income.

90% Fall 2014 80M Prime Members by Income Quintile Amazon Prime Penetration by Household Income 80% Spring 2015 70M $112K+ Fall 2015 $68K-$112K 70% 60M Spring 2016 $41K-$68K 60% Fall 2016 50M $21K-$41K 50% $0K-$21K Spring 2017 40M 40% Fall 2017 30M 30% 20M 20% 10M 10% M 0% Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall $21K-$41K $41K-$68K $68K-$112K $112K+ 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017

Taking Stock With Teens

Page 35 of 66 Teen iPhone Ownership Up Nicely

iPhone Ownership 90% 80% 70% 60% 50% Own an iPhone 40% 30% Expect Next Phone To Be 20% iPhone 10% 0%

iPhone ownership of 78% is highest we’ve seen with upside remaining as 82% of teens say next phone will be an iPhone.

Apple Watch Intention 18% 16% 14% 12% 10% 8% Own A Smartwatch 6% Plan to buy Apple Watch 4% 2% 0%

Apple Watch interest is up significantly with 17% planning to buy an Apple Watch in the next 6 months vs. 13% in Spring 2017.

Taking Stock With Teens

Page 36 of 66 Console Video Game Takeaways DO YOU ALREADY OWN OR EXPECT YOUR HOUSEHOLD TO BUY THE PS4 OR XBOX ONE IN THE NEXT TWO YEARS? Sales of Current Gen Consoles Outpacing Prior Cycle* Anticipate purchase Already own one

PS4 and Xbox One Launched Nov. 2013

26% 39% 37% 52% 54% 62% 58%

65%

52% 49% 41% 33% 34% 26% 22% 17% 17%

Spring 2013 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 Spring 2017 Fall 2017

79% of respondents anticipate buying a current gen console or already own one, compared to 75% in Spring-2017. New console ownership is up to 62% vs. 58% in spring.

Percentage of teens who anticipate downloading >50% of games onto console is now 50%, up from 45% in spring and 37% in Fall-15, when we first asked the question.

Taking Stock With Teens

Page 37 of 66 Console Video Game Takeaways

HOW MUCH ARE TEENS SPENDING ANNUALLY ON VIDEO GAMES? • Expected spend by male teens on video games (as % of total budget) is 11% for Fall 2017, while total expected spend (male & female) is down 8% to $183.

• Only food (22%) and clothing (17%) exceed male teen spending on video games (11%).

• Average video game spend by teens over the past 15 years is $159.

$183 - Expected Video Game Spend in 2017 $250 14% 11% - Budget Spent On Video Games in 2017

12% $200

10%

$150 8%

6% $100

$50 2%

$0 0%

Fall 2015 Fall Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2016 Fall 2017 Fall

Spring 2011 Spring 2012 Spring 2013 Spring 2014 Spring 2015 Spring 2016 Spring 2017 Spring Video Game Spend (Male+Female) Video Game Spend Allocation (Male)

Taking Stock With Teens

Page 38 of 66 Teen Mobile Game Trends

DO YOU PLAY GAMES ON YOUR MOBILE PHONE OR TABLET?

72% play games on smartphone or tablet, compared with 73% in the spring.

% of % of % of % of % of % of Students % of Students % of Students % of Students Students Students Spring Students Spring Students Spring Students Fall 2013 Spring 2014 Fall 2014 2015 Fall 2015 2016 Fall 2016 2017 Fall 2017

Yes 81% 85% 80% 81% 79% 81% 77% 73% 72%

No 19% 15% 20% 19% 21% 19% 23% 27% 28%

WHEN PLAYING GAMES ON YOUR MOBILE DEVICE, DO YOU BUY VIRTUAL GOODS LIKE ENERGY, COINS OR EXTRA LEVELS?

28% of teens who play mobile games spend money in game (flat from spring), still an all-time high for our survey.

No 82% 82% 78% 79% 76% 74% 76% 72% 72%

Taking Stock With Teens

Page 39 of 66 Video and Music Trends

TEEN VIDEO CONSUMPTION

Digital platforms continue to take share: YouTube consumption saw a nice uptick to 29% from 26% in our Spring survey. Netflix took a small dip to 37% from 38%, while linear TV continued its decline to 22% from 25% a year ago.

TEEN MUSIC CONSUMPTION

On-demand music services like Spotify, YouTube, and Apple Music (30%, 20%, and 17%) continue to gain market share among teens, as more traditional platforms and Pandora continue to lose share. Taking Stock With Teens

Page 40 of 66 Cinema Trends

Theatres remain the preferred way for teens to see a film. 58% of teens saw in-theatre as their preferred method to watch a movie, up from 55% in our Spring survey.

Premium features like large format screens (IMAX 13%) and recliners (26%) are resonating with teens as these upgrades enhance the experience beyond what is possible in-home.

We found teens had limited interest in a $30/30 day PVOD window, with 82% indicating they would not rent.

Taking Stock With Teens

Page 41 of 66 Stock Highlights: Global Fashion and Lifestyle Brands Analyst: Erinn Murphy ADS-GR (+): UPWARD MARCH CONTINUES; SHARE GAINS FAR FROM OVER, IN OUR VIEW Mounting evidence brand momentum is not being driven by legacy Originals (Superstar & Stan Smith). Sequential improvement or stability from Spring 2017 in every income group/category, with material improvement in most. Particularly strong among males with 400-600 bps mindshare sequential improvement in footwear. VFC (+/=): ROBUST VANS MOMENTUM (20% OF SALES) & GENERAL STABILITY FOR THE NORTH FACE (20% OF SALES) Vans is finding traction in apparel, while footwear mindshare is increasing rapidly among females – doubled Y/Y to 14% among the upper- income group. Upward Patagonia momentum & downward trends for The North Face of late appear to have plateaued.

NKE (-): MINDSHARE MODERATION ONGOING & WE EXPECT FUNDAMENTAL DETERIORATION TO OUTPACE Teens continue to show a strong affinity for wearing athletic brands in our survey, with aggregate footwear mindshare higher from Spring 2017 and aggregate apparel mindshare lower. Nike is by far the largest donator, with brands like adidas, Puma, New Balance, and Vans all net beneficiaries.

UAA (-): ADIDAS’ RESURGENCE APPEARS TO BE CROWDING OUT UNDER ARMOUR; LOWERING ESTIMATES Despite significant SKU expansion and reported category growth, male footwear mindshare has remained ~1% across both income groups in our past five surveys. Apparel rank has consistently declined among average-income males over the last four surveys.

SHOO (=/-): REMAIN POSITIVE LONG TERM, BUT KEY VICTIM OF ATHLETIC & BIRKENSTOCK STRENGTH SAW DECLINES Mindshare fell 300 bps from Spring 2017 and hit an all-time low among upper-income females. We note Birkenstock improved by the same magnitude sequentially, while aggregate share for Nike, adidas, Vans, and Converse improved from Spring 2017.

DECK (-): UGG (84% OF SALES) HIT NEW RECORD LOW IN SURVEY AS BRAND TRANSITIONS FROM TOP-OF-MIND STATUS While we believe the brand has become more staple like (& thus less top of mind for teens), it reached a record low and did not register in the top ten among either female income group. HANDBAGS (=): REMAIN NEUTRAL ON COH & KORS; CATEGORY SPENDING INTENTIONS CONTINUE TO DECLINE

Taking Stock With Teens

Page 42 of 66 Stock Highlights: Restaurants Analyst: Nicole Miller Regan

SBUX (+): MOST PREFERRED BRAND AMONG TEENS Starbucks notably maintained its position as the most preferred brand overall (11% preference for upper & 12% preference for average income teens vs. 12% & 12%, respectively, during Spring 2017) and within the coffee category where it remains the overwhelmingly favorite brand with 68%+ share. However, these trends are more muted relative to historical peak levels of 18% preference for upper income teens (in both Fall 2013 & Spring 2007 cycles), 16% share (Spring 2008), and 15% share (Fall 2014, Spring 2009, & Fall 2007)... reflecting what has been an approximate 100 bps loss for each of the past few survey cycles sequentially. We remain confident in our long-term thesis based around proven global brand equity and an accelerating asset-light growth model – both of which generate strong cash flow in support of continued reinvestment into the business and an ongoing commitment to capital allocation.

CMG (=/+): SURVEY SUGGESTS EVIDENCE OF MODEST BRAND IMPROVEMENT Exiting this season's survey Chipotle remained the third most preferred public brand among upper income teens (8% mindshare was flat sequentially vs. Spring 2017) and moved down to the fifth most preferred brand among average income teens. Among average income teens Chipotle's rank (to #4 from #3) and mindshare (to 4% from 5%) slipped a position vs. Spring 2017. At the cuisine level, the company remained the overwhelmingly most-preferred upper income teen brand within the Hispanic cuisine category at 53% mindshare, but ceded its top spot among average income teens to Taco Bell. We reiterate our bullish outlook on Chipotle shares grounded by when (not if) improvement occurs, the company has the ability to leverage strong unit-level economics, a healthy long-term unit growth pipeline, and its human capital investments.

MCD (+): SURVEY RESULTS HIGHLIGHT ONGOING COMPETITIVE INTRUSION AMONG AVERAGE INCOME TEENS McDonald’s showed steady mind share levels among upper (Number 4 brand) and average income teens (Number 3 brand) in the latest survey cycle. Similar to prior survey cycles, we continue to observe strong competition from non-burger names (such as Chick-fil-A). From a cuisine perspective, McDonald’s remains the most preferred hamburger brand across both sets of teens and continues to regain mind share percentage. That said, we believe culture change, culinary/marketing vision and technology initiatives leave McDonald's solidly positioned as the company leverages its core global brand through EOTF efforts.

Taking Stock With Teens

Page 43 of 66 Stock Highlights: Internet Analyst: Sam Kemp

FB (+): FACEBOOK ENGAGEMENT DECLINES, BUT INSTAGRAM REMAINS A KEY CATALYST Teens showed declining engagement with Facebook, with the percent of teens indicating they have used Facebook in the past month declining from 51% in the Spring to 45% in our Fall 2017 survey; teens naming it as a top 3 social network remained consistent at 33%. This was counterbalanced by rising engagement with Instagram, with the percent of teens indicating they used Instagram in the past month increasing from 79% to 81%, while the percent indicating Instagram as a top 3 platform increased from 75% to 81%. While the declining engagement among teens at Facebook is a negative, in context with the broader core Facebook story we note it should have little impact for several years. We are not observing any cohort degradation – that is, for example, current 18 year olds who adopted Facebook when they were 13 are not abandoning Facebook; rather, teens just entering our sample are showing signs of lower initial adoption of Facebook. Therefore, the fundamental risk is not that older users abandon the platform, but that future growth from teens is lessening. We estimate teens account for a HSD percent of Facebook users, making this a limited headwind to revenue growth for core Facebook for several years. We are encouraged by Instagram’s consistent strong showing and rising engagement, reflecting a strong defensive positive vs. Snapchat’s presence as teens’ favorite platform (though by a shrinking margin). All else equal, we would rather see teens engaged with Instagram as the long term branding potential within Instagram appears to be stronger than core Facebook; 58% of those surveyed indicated they believe Instagram is a good channel for brands/retailers to reach them, 2.5x higher than Facebook at 22%. We are remaining Overweight on FB given our outlook for a tripling of revenue between 2016 and 2021, driven primarily by Instagram, core Facebook, and early revenue from the messaging platforms (WhatsApp and Messenger).

SNAP (=): SNAPCHAT MAINTAINS ENGAGEMENT, BUT REMAIN CAUTIOUS ON A LACK OF MOAT Snapchat remains the king of teens’ social lives, with 82% indicating use in the past month (vs. 81% in Spring 2017) and 82% naming it as a top three social platform (vs. 79%). Teens are clearly engaged with Snapchat’s unique approach to social (narrow network, direct messaging), and we believe this provides near-term support to Snapchat daily active user (DAU) growth in Q3’17. We are remaining Neutral on SNAP as Snapchat’s user base has 92% crossover with Instagram’s user base, making it susceptible to Instagram’s expansion of its use case to encompass messaging and stories (two uses we see expanding in our recent survey work) and creating headwinds to monetization as advertisers have less reason to spend behind Snapchat vs. Instagram.

Taking Stock With Teens

Page 44 of 66 Stock Highlights: Consumer Technology & eCommerce Analyst: Mike Olson AMZN (+): SURVEY SHOWS INCREASED MINDSHARE & INCREASING PRIME ADOPTION Amazon gained 900bps of teen mindshare y/y at 49% (most preferred shopping website). Prime adoption continues to be strong; survey implies high-60M to low-70M U.S. households have Prime.

EBAY (=/+): SLIGHT IMPROVEMENT IN EBAY MINDSHARE AMONG TEENS eBay mindshare rebounded modestly to 3.3% from 2.4% from our Spring-17 survey, which is a trend to watch as the company works to surmount the challenges in shifting brand perception for an entrenched online offering, such as this. We remain Neutral as EBAY’s current valuation (12x ’18E EBITDA) fairly represents the company’s growth opportunity, in our view.

AAPL (+): TEENS CONTINUE TO INCREASE IPHONE OWNERSHIP Apple continued to grow smartphone share among teens with 78% of teens owning an iPhone vs 76% in Spring-17. This is further bolstered by 82% of respondents expecting their next phone to be an iPhone, up slightly from 81% in the spring. We view the survey as a positive data point on iPhone 8 and X demand and increasing interest in the Apple Watch. Netflix (+): Leading the Pack in Video Consumption Teens spend 37% of their time watching video on Netflix, the next closest is YouTube at 29% and pay TV at 22%.

ATVI(+), EA(+), TTWO(+): TEEN VIDEO GAME BUDGET ALLOCATION DOWN SLIGHTLY, INCREASING ACCEPTANCE OF FULL GAME DOWNLOADS We saw a slight downtick in % of teen budgets allocated to video games, but not a material change. We also note that the proportion of respondents who digitally download >50% of titles on consoles has increased to 50% from 45% in Spring-17. ZNGA (=/+): SURVEY POINTS TO DECLINES IN MOBILE GAME INTEREST, BUT INCREASED WILLINGNESS TO SPEND Mobile gaming interest declined for the third consecutive survey. However, willingness to spend in-game remained at an all- time high. Declining DAUs and improving ARPU has been a trend evident with several of the major mobile developers recently.

Taking Stock With Teens

Page 45 of 66 Stock Highlights: Media and Entertainment Analyst: Stan Meyers

LGF (+): LIONSGATE WELL-POSITIONED AMID CONTINUED VIDEO CONSUMPTION FRAGMENTATION • Viewership among teens continues to fragment creating more demand for content across traditional and emerging platforms. • Netflix (37%) and YouTube (28%) continue to dominate teens’ video consumption as Cable TV continues to lose share (22%). • These trends bode well for Lionsgate, which produces high quality long-form content across all platforms.

P (-): TEENS CONTINUE TO PIVOT AWAY FROM PANDORA AND INTO ON-DEMAND MUSIC SERVICES • Pandora continues to lose teen mindshare as the go-to music platform, as they shift to on-demand platforms such as Spotify and Apple Music. Just 35% of teens surveyed are listening to music on Pandora, down from 49% in 2H16. • Teens spent just 8% of their time listening to Pandora, down from 14% in the spring. Other on-demand services like Spotify and apple music are commanding 30% and 17% respectively. • We believe Pandora’s market share decline among teens is largely priced into the shares, as the focus shifts to monetization of its current 75M listener base.

AMC, CNK, RGC, IMAX (+): TEENS STILL PREFER GOING TO THE MOVIES OVER STAYING HOME . Our survey results continue to indicate that, among teens, theatres remain the preferred way to see a film. 58% of teens now prefer in-theatre when watching a movie, up from 55% in 1H17 survey. . 2H17 survey shows teen VOD demand dropping to 7% from 9% in 1H17, as subscription streaming rises in popularity. . Teens are unlikely to rent a film for $30 through the potential new PVOD window. 82% of respondents indicated no interest.

Taking Stock With Teens

Page 46 of 66 Questions & Answers

SPEAKER COVERAGE Erinn Murphy Global Fashion & Lifestyle Brands Nicole Miller Regan Restaurants Sam Kemp Internet Michael Olson Consumer Technology & eCommerce Stan Meyers Media & Entertainment

Taking Stock With Teens

Page 47 of 66 Appendix

Page 48 of 66 Project Framework & Key Demographics

Spring Fall 2014 Spring Fall 2015 Spring Fall 2016 Spring Fall 2017 ALL TEENS 2014 2015 2016 2017 Teens Surveyed 7,500 7,200 6,200 9,400 6,500 10,000 5,500 6,100 Gender - Female 47% 47% 49% 44% 44% 45% 45% 46% Gender - Male 53% 53% 51% 56% 56% 55% 55% 54% Average Age 16.4 16.0 16.3 16.0 16.5 16.0 16.4 15.9 Percentage Of Teens Part-Time Employed 33% 35% 35% 36% 39% 34% 39% 35% Average Household Income $63,000 $73,000 $67,000 $68,000 $62,500 $68,800 $66,100 $66,100

Spring Fall 2014 Spring Fall 2015 Spring Fall 2016 Spring Fall 2017 UPPER-INCOME TEEN SURVEY 2014 2015 2016 2017 Teens Surveyed - Upper Income 1,300 2,200 1,400 2,700 1,300 2,800 1,400 1,500 Gender - Female 43% 46% 46% 41% 46% 41% 42% 43% Gender - Male 57% 54% 54% 59% 54% 59% 58% 57% Average Age 16.2 16.1 16.2 15.9 16.5 15.8 16.4 15.9 Percentage Of Teens Part-Time Employed 33% 36% 36% 33% 40% 31% 39% 38%

Spring Fall 2014 Spring Fall 2015 Spring Fall 2016 Spring Fall 2017 AVERAGE-INCOME TEEN SURVEY 2014 2015 2016 2017 Teens Surveyed - Average Income 6,200 5,000 4,800 6,700 5,200 7,200 4,100 4,600 Gender - Female 48% 48% 49% 45% 44% 46% 46% 47% Gender - Male 52% 52% 51% 55% 56% 54% 54% 53% Average Age 16.4 16.0 16.4 16.1 16.4 16.0 16.4 15.9 Percentage Of Teens Part-Time Employed 33% 35% 34% 37% 39% 36% 39% 35% Average Household Income $55,000 $56,000 $56,000 $52,000 $53,000 $53,000 $55,000 $55,000

Taking Stock With Teens

Page 49 of 66 What Is In A Teen’s Wallet Today? All Upper-Income Teens

Basic Needs Basic Needs Electronics, Cars, 17% & Other Social Budget 21% 36% Female

Selfie Budget Selfie Budget Clothing, Accessories, 47% Personal Care, & 38% Shoes

Basic Needs Social Budget Social 24% Budget Food, Video Games, 44% Music, Movies, Events, Male 41% & Books

Selfie Budget 31%

Taking Stock With Teens

Page 50 of 66 Spending by Category by Income Demographic

SPENDING BY CATEGORY (UPPER-INCOME, ALL TEENS)

Spending by Category - All Teens Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 Spring 2017 Fall 2017 Video Games / Systems 7% 7% 8% 7% 7% 7% 8% 7% Music / Movies (DVD/CD) 6% 6% 6% 6% 5% 5% 5% 5% Electronics / Gadgets 8% 8% 8% 8% 8% 8% 7% 8% Clothing 21% 21% 20% 20% 20% 21% 19% 20% Accessories / Personal Care / Cosmetics 9% 10% 10% 9% 10% 9% 9% 9% Shoes 9% 8% 7% 9% 8% 8% 8% 8% Food 21% 20% 23% 22% 22% 23% 24% 22% Concerts / Movies / Sporting Events 6% 6% 6% 6% 5% 6% 6% 5% Car 9% 9% 8% 7% 9% 6% 9% 9% Books / Magazines 2% 2% 2% 2% 2% 1% 1% 1% Furniture / Room Accessories 1% 2% 1% 1% 1% 2% 2% 2% Other 3% 3% 4% 3% 3% 4% 4% 4% Total Fashion (Clothing, Access & Footwear) 38% 39% 36% 38% 38% 38% 36% 38%

SPENDING BY CATEGORY (AVERAGE-INCOME, ALL TEENS)

Spending by Category - All Teens Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 Spring 2017 Fall 2017 Video games / systems 7% 7% 7% 7% 8% 8% 8% 8% Music / movies (DVD/CD) 7% 6% 6% 6% 6% 5% 5% 5% Electronics / gadgets 8% 8% 8% 8% 8% 8% 7% 7% Clothing 21% 20% 20% 20% 18% 20% 19% 20% Accessories/personal care/cosmetics 11% 10% 11% 10% 11% 11% 10% 10% Shoes 10% 9% 9% 10% 9% 10% 9% 10% Food 18% 17% 21% 19% 20% 21% 22% 20% Concerts/Movies/Sporting events 5% 5% 5% 5% 5% 5% 4% 5% Car 9% 9% 8% 9% 9% 8% 9% 8% Books/magazines 2% 2% 2% 2% 2% 2% 2% 1% Furniture / room accessories 2% 2% 2% 2% 2% 2% 2% 2% Other 3% 3% 3% 4% 4% 4% 4% 4% Total Fashion (Clothing, Access & Footwear) 41% 40% 40% 39% 38% 40% 39% 40%

Taking Stock With Teens

Page 51 of 66 Top Fashion Trends Right Now

TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, MALES)

TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, FEMALES)

Taking Stock With Teens

Page 52 of 66 Uptrending Brands

BRANDS STARTING TO WEAR (UPPER-INCOME, MALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 11% 1 Nike 13% 1 Adidas 10% 1 Adidas 12% 2 Ralph Lauren 10% 2 Ralph Lauren 10% 2 Nike 9% 2 Nike 9% 3 Adidas 7% 3 Adidas 8% 3 Ralph Lauren 6% 3 Ralph Lauren 5% 4 American Eagle 4% 4 American Eagle 5% 4 American Eagle 5% 4 American Eagle 5% 5 Vineyard Vines 3% 5 Vineyard Vines 5% 5 Under Armour 4% 5 Under Armour 5% 6 Under Armour 3% 6 Under Armour 5% 6 Patagonia 3% 6 Vineyard Vines 4% 7 Vans 3% 7 Vans 3% 7 Vans 3% 7 Vans 4% 8 Hollister 2% 8 H&M 2% 8 lululemon 2% Supreme 3% 9 New Balance 2% 9 lululemon 2% 9 Gucci 2% 9 Patagonia 3% 10 Four Brands Tied 2% 10 Hollister 2% 10 Vineyard Vines 2% 10 lululemon 2%

BRANDS STARTING TO WEAR (UPPER-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 American Eagle 7% 1 American Eagle 9% 1 American Eagle 7% 1 American Eagle 9% 2 Nike 6% 2 Urban Outfitters 5% 2 Urban Outfitters 6% 2 Forever 21 6% 3 Forever 21 5% 3 Free People 5% 3 Nike 6% 3 Adidas 5% 4 H&M 4% Nike 5% 4 Forever 21 5% 4 PacSun 5% 5 Victoria's Secret 4% 5 lululemon 4% 5 Adidas 4% 5 Nike 4% 6 Express 4% 6 Victoria's Secret 4% lululemon 4% 6 lululemon 4% 7 Adidas 3% 7 Adidas 4% 7 Victoria's Secret 4% 7 Free People 4% Free People 3% 8 PacSun 4% 8 H&M 4% 8 Vans 4% Hollister 3% 9 Forever 21 4% 9 PacSun 3% 9 Urban Outfitters 3% lululemon 3% 10 Brandy Melville 3% 10 Free People 3% 10 Three Brands Tied 3%

Taking Stock With Teens

Page 53 of 66 Downtrending Brands

BRANDS NO LONGER WORN (UPPER-INCOME, MALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Gap 13% 1 Adidas 10% 1 Under Armour 11% 1 Under Armour 10% 2 Adidas 9% 2 Gap 10% 2 Gap 10% 2 Gap 9% 3 Abercrombie & Fitch 7% 3 Under Armour 7% 3 Adidas 9% 3 Adidas 9% 4 Nike 7% 4 Nike 6% 4 Nike 7% 4 Reebok 7% 5 Under Armour 6% 5 Reebok 6% 5 Reebok 6% 5 Nike 7% 6 Hollister 5% 6 Skechers 5% 6 Aeropostale 6% 6 Skechers 5% 7 Reebok 5% 7 Puma 5% 7 Puma 4% 7 Puma 5% 8 Aeropostale 4% 8 Abercrombie & Fitch 4% 8 American Eagle 4% 8 Old Navy 4% 9 American Eagle 4% 9 Hollister 4% 9 Hollister 4% 9 Hollister 4% 10 Skechers 3% 10 Aeropostale 3% 10 Skechers 3% 10 American Eagle 3% Champion 3%

BRANDS NO LONGER WORN (UPPER-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Aeropostale 26% 1 Justice 29% 1 Aeropostale 26% 1 Justice 27% 2 Justice 20% 2 Aeropostale 17% 2 Justice 21% 2 Aeropostale 20% 3 Abercrombie & Fitch 12% 3 Abercrombie & Fitch 12% 3 Hollister 10% 3 Hollister 8% 4 Hollister 9% 4 Hollister 9% 4 Abercrombie & Fitch 9% 4 Abercrombie & Fitch 6% 5 Gap 5% 5 Gap 4% 5 American Eagle 3% 5 Gap 4% 6 Old Navy 3% 6 Forever 21 3% 6 Forever 21 3% 6 American Eagle 2% 7 Forever 21 2% 7 American Eagle 1% 7 Old Navy 2% 7 Forever 21 2% 8 American Eagle 2% Old Navy 1% 8 Gap 2% 8 Old Navy 2% 9 Nike 2% 9 H&M 1% 9 Adidas 2% 9 Roxy 2% 10 Target 1% Ralph Lauren 1% 10 Nike 1% 10 Nike 2% Victoria's Secret 1%

Taking Stock With Teens

Page 54 of 66 Top Clothing Brands Among Upper-Income PREFERRED CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 21% 1 Nike 29% 1 Nike 31% 1 Nike 23% 2 American Eagle 8% 2 American Eagle 9% 2 American Eagle 10% 2 American Eagle 11% 3 Forever 21 7% 3 Forever 21 5% 3 Forever 21 5% 3 Adidas 4% 4 Ralph Lauren 6% 4 Ralph Lauren 4% 4 lululemon 3% 4 Forever 21 4% 5 Hollister 4% 5 Urban Outfitters 3% 5 H&M 3% 5 Hollister 4% 6 PacSun 3% 6 H&M 3% Adidas 3% 6 PacSun 3% 7 Urban Outfitters 3% 7 PacSun 2% 7 Hollister 2% 7 lululemon 3% Victoria's Secret 3% 8 Adidas 2% 8 Urban Outfitters 2% 8 H&M 3% 9 H&M 3% 9 Vineyard Vines 2% Vans 2% 9 Urban Outfitters 3% 10 Adidas 2% 10 Victoria's Secret 2% 10 PacSun 2% 10 Supreme 3% Ralph Lauren 2% PREFERRED CLOTHING BRANDS (UPPER-INCOME, MALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 33% 1 Nike 44% 1 Nike 47% 1 Nike 36% 2 Ralph Lauren 10% 2 Ralph Lauren 6% 2 Adidas 4% 2 Adidas 6% 3 American Eagle 5% 3 American Eagle 4% 3 American Eagle 4% 3 American Eagle 5% 4 Adidas 3% 4 Adidas 3% 4 Ralph Lauren 4% 4 Supreme 4% 5 PacSun 3% 5 Vineyard Vines 3% 5 Vans 3% 5 Ralph Lauren 4% 6 Hollister 2% 6 H&M 3% 6 Under Armour 3% 6 Vans 4% 7 Abercrombie & Fitch 2% 7 Vans 2% 7 H&M 2% 7 Vineyard Vines 3% 8 Vans 2% 8 Under Armour 2% Supreme 2% Hollister 3% 9 Supreme 2% 9 PacSun 1% 9 Hollister 2% 9 H&M 2% 10 Vineyard Vines 2% Hollister 1% 10 Vineyard Vines 2% 10 Gucci 2%

PREFERRED CLOTHING BRANDS (UPPER-INCOME, FEMALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Forever 21 14% 1 American Eagle 17% 1 American Eagle 18% 1 American Eagle 20% 2 American Eagle 11% 2 Forever 21 11% 2 Forever 21 11% 2 Forever 21 9% 3 Nike 7% 3 Nike 7% 3 Nike 8% 3 Nike 7% 4 Victoria's Secret 6% 4 Urban Outfitters 7% 4 lululemon 6% 4 Urban Outfitters 5% 5 Urban Outfitters 5% 5 Victoria's Secret 5% 5 Urban Outfitters 5% 5 PacSun 5% 6 Hollister 5% 6 H&M 3% 6 Victoria's Secret 5% 6 Hollister 5% 7 PacSun 4% 7 PacSun 3% 7 H&M 4% 7 lululemon 5% 8 H&M 4% 8 lululemon 3% 8 Hollister 4% 8 Victoria's Secret 4% 9 Nordstrom 3% 9 Brandy Melville 3% PacSun 4% 9 H&M 3% 10 Charlotte Russe 2% 10 Free People 3% 10 Free People 2% 10 Target 2% Nordstrom 3% Taking Stock With Teens

Page 55 of 66 Top Clothing Brands Among Average-Income PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 23% 1 Nike 27% 1 Nike 27% 1 Nike 24% 2 American Eagle 9% 2 American Eagle 8% 2 American Eagle 10% 2 American Eagle 10% 3 Forever 21 5% 3 Forever 21 6% 3 Forever 21 5% 3 Forever 21 6% 4 Ralph Lauren 5% 4 Ralph Lauren 5% 4 Ralph Lauren 4% 4 Adidas 4% 5 Victoria's Secret 4% 5 Hollister 3% 5 Victoria's Secret 4% 5 Victoria's Secret 4% 6 Hollister 4% 6 Victoria's Secret 3% 6 Hollister 3% 6 H&M 4% 7 H&M 2% 7 H&M 3% 7 H&M 3% 7 Hollister 3% 8 Under Armour 2% 8 Adidas 2% 8 Adidas 3% 8 Ralph Lauren 3% 9 PacSun 2% 9 rue21 2% 9 PacSun 3% 9 PacSun 2% 10 Aeropostale 2% 10 PacSun 2% 10 rue21 2% 10 Vans 2%

PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, MALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 34% 1 Nike 40% 1 Nike 40% 1 Nike 36% 2 Ralph Lauren 8% 2 Ralph Lauren 7% 2 Ralph Lauren 6% 2 Adidas 6% 3 American Eagle 7% 3 American Eagle 5% 3 American Eagle 5% 3 American Eagle 6% 4 Under Armour 3% 4 Adidas 3% 4 Adidas 5% 4 Ralph Lauren 5% 5 Hollister 3% 5 Hollister 3% 5 Hollister 3% 5 H&M 3% 6 PacSun 2% 6 Under Armour 3% 6 H&M 3% 6 Supreme 3% 7 H&M 2% 7 H&M 2% 7 PacSun 2% 7 Hollister 3% 8 Adidas 2% 8 Vans 2% Under Armour 2% 8 Gucci 3% 9 Aeropostale 2% 9 PacSun 2% 9 Vans 2% 9 Under Armour 2% 10 Vans 2% 10 Levi's 2% 10 Supreme 2% 10 Vans 2%

PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Forever 21 11% 1 American Eagle 12% 1 American Eagle 15% 1 American Eagle 15% 2 American Eagle 11% 2 Forever 21 12% 2 Forever 21 11% 2 Forever 21 12% 3 Nike 10% 3 Nike 12% 3 Nike 11% 3 Nike 11% 4 Victoria's Secret 10% 4 Victoria's Secret 7% 4 Victoria's Secret 8% 4 Victoria's Secret 8% 5 Hollister 4% 5 rue21 4% 5 Hollister 4% 5 H&M 4% 6 rue21 3% 6 Hollister 4% 6 rue21 4% 6 Hollister 4% 7 H&M 2% 7 H&M 3% 7 H&M 3% 7 rue21 3% 8 Hot Topic 2% 8 PacSun 3% 8 PacSun 3% 8 PacSun 3% 9 Charlotte Russe 2% 9 Hot Topic 2% 9 lululemon 3% 9 Urban Outfitters 3% 10 Aeropostale 2% Ralph Lauren 2% 10 Hot Topic 2% 10 Hot Topic 2%

Taking Stock With Teens

Page 56 of 66 Top Footwear Brands Among Upper-Income PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 48% 1 Nike 51% 1 Nike 52% 1 Nike 46% 2 Vans 10% 2 Vans 9% 2 Vans 9% 2 Vans 12% 3 Converse 7% 3 Converse 7% 3 Adidas 8% 3 Adidas 11% 4 Adidas 4% 4 Adidas 6% 4 Converse 6% 4 Converse 7% 5 Sperry 3% 5 Steve Madden 2% 5 Steve Madden 3% 5 Birkenstock 2% 6 DSW 3% 6 Sperry 2% 6 Sperry 2% 6 DSW 2% 7 Steve Madden 3% 7 DSW 2% 7 DSW 2% 7 Foot Locker 2% 8 Foot Locker 2% 8 Birkenstock 2% 8 Foot Locker 1% 8 Sperry Top-Sider 2% 9 UGG 1% 9 Foot Locker 1% 9 Birkenstock 1% 9 New Balance 1% 10 TOMS 1% 10 Nordstrom 1% 10 Payless ShoeSource 1% 10 Steve Madden 1% UGG 1% PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, MALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 63% 1 Nike 66% 1 Nike 67% 1 Nike 59% 2 Vans 10% 2 Vans 11% 2 Vans 9% 2 Adidas 14% 3 Adidas 6% 3 Adidas 6% 3 Adidas 8% 3 Vans 10% 4 Sperry 4% 4 Sperry 3% 4 Sperry 3% 4 Sperry Top-Sider 2% 5 Converse 2% 5 Foot Locker 2% 5 Foot Locker 1% 5 New Balance 2% 6 Foot Locker 2% 6 Converse 2% 6 Converse 1% 6 Foot Locker 2% 7 Asics 1% 7 Under Armour 1% New Balance 1% 7 Converse 2% 8 Champs Sports 1% 8 ASICS 1% 8 Under Armour 1% 8 Finish Line 1% 9 Clarks 1% New Balance 1% 9 Skechers 1% 9 Under Armour 1% 10 Under Armour 0% 10 Finish Line 0% 10 Ralph Lauren 0% 10 Four Brands Tied 0% New Balance 0%

PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, FEMALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 32% 1 Nike 30% 1 Nike 33% 1 Nike 30% 2 Converse 14% 2 Converse 15% 2 Converse 14% 2 Converse 15% 3 Vans 9% 3 Vans 7% 3 Vans 9% 3 Vans 14% 4 DSW 7% 4 Steve Madden 5% 4 Adidas 7% 4 Adidas 7% 5 Steve Madden 5% 5 Adidas 5% 5 Steve Madden 6% 5 Birkenstock 5% 6 Adidas 3% 6 DSW 5% 6 DSW 5% 6 DSW 4% 7 UGG 3% 7 Birkenstock 4% 7 Birkenstock 2% 7 Steve Madden 3% 8 Sperry 2% 8 Nordstrom 2% 8 UGG 2% 8 Nordstrom 1% 9 TOMS 2% 9 UGG 2% 9 Payless ShoeSource 2% Foot Locker 1% 10 Foot Locker 2% 10 Michael Kors 1% 10 Nordstrom 2% 10 Payless ShoeSource 1% Payless ShoeSource 2% Sperry 1% Famous Footwear 1% Taking Stock With Teens

Page 57 of 66 Top Footwear Brands Among Average-Income PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 54% 1 Nike 53% 1 Nike 50% 1 Nike 48% 2 Vans 9% 2 Vans 9% 2 Vans 9% 2 Vans 10% 3 Converse 6% 3 Converse 7% 3 Adidas 8% 3 Adidas 10% 4 Adidas 4% 4 Adidas 5% 4 Converse 6% 4 Converse 7% 5 Sperry 2% 5 Foot Locker 3% 5 Foot Locker 2% 5 Foot Locker 2% 6 Foot Locker 2% 6 Sperry 2% 6 Sperry 2% 6 Birkenstock 2% 7 Steve Madden 1% 7 Birkenstock 2% 7 Steve Madden 1% 7 Sperry Top-Sider 2% 8 DSW 1% 8 Steve Madden 1% 8 Birkenstock 1% 8 Steve Madden 1% 9 Under Armour 1% 9 Payless ShoeSource 1% DSW 1% 9 Puma 1% 10 Journeys 1% 10 Under Armour 1% 10 Under Armour 1% DSW 1% Payless ShoeSource 1% UGG 1%

PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, MALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 65% 1 Nike 65% 1 Nike 61% 1 Nike 57% 2 Vans 9% 2 Vans 9% 2 Adidas 9% 2 Adidas 13% 3 Adidas 4% 3 Adidas 6% 3 Vans 8% 3 Vans 9% 4 Converse 2% 4 Foot Locker 3% 4 Sperry 3% 4 Sperry 3% 5 Sperry 2% 5 Sperry 2% 5 Foot Locker 2% 5 Foot Locker 2% 6 Foot Locker 2% 6 Converse 2% 6 Converse 2% 6 Converse 2% 7 Under Armour 1% 7 Under Armour 1% 7 Under Armour 1% 7 Gucci 1% 8 Ariat 1% 8 New Balance 1% 8 New Balance 1% Under Armour 1% 9 ASICS 1% 9 ASICS 1% 9 Ariat 1% 9 New Balance 1% 10 Ralph Lauren 1% 10 Ralph Lauren 1% Ralph Lauren 1% 10 Puma 1% Skechers 1% PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 41% 1 Nike 38% 1 Nike 37% 1 Nike 38% 2 Converse 11% 2 Converse 12% 2 Converse 12% 2 Vans 12% 3 Vans 8% 3 Vans 9% 3 Vans 11% 3 Converse 12% 4 Steve Madden 3% 4 Adidas 4% 4 Adidas 6% 4 Adidas 7% 5 Adidas 3% 5 Birkenstock 3% 5 Steve Madden 3% 5 Birkenstock 4% 6 DSW 2% 6 Foot Locker 2% 6 Birkenstock 2% 6 Steve Madden 3% 7 UGG 2% 7 Steve Madden 2% DSW 2% 7 Foot Locker 2% 8 Payless ShoeSource 2% 8 Sperry 2% Foot Locker 2% 8 DSW 2% 9 Birkenstock 2% 9 Payless ShoeSource 2% 9 Journeys 1% 9 Journeys 1% 10 Foot Locker 2% 10 DSW 1% 10 Sperry 1% 10 Puma 1% Taking Stock With Teens

Page 58 of 66 Top Athletic Clothing Brands Among Upper-Income

PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 71% 1 Nike 71% 1 Nike 69% 1 Nike 67% 2 Adidas 7% 2 lululemon 7% 2 Adidas 8% 2 Adidas 10% 3 Under Armour 5% 3 Adidas 7% 3 lululemon 7% 3 lululemon 7% 4 lululemon 5% 4 Under Armour 6% 4 Under Armour 7% 4 Under Armour 6% 5 The North Face 1% 5 Athleta 1% 5 Patagonia 1% 5 Patagonia 1% The North Face 1% The North Face 1%

PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, MALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 73% 1 Nike 76% 1 Nike 71% 1 Nike 70% 2 Adidas 8% 2 Under Armour 7% 2 Under Armour 10% 2 Adidas 11% 3 Under Armour 7% 3 Adidas 7% 3 Adidas 6% 3 Under Armour 9% 4 The North Face 2% 4 lululemon 1% 4 lululemon 2% 4 lululemon 1% 5 Bauer 1% 5 Columbia 1% 5 Bauer 1% 5 Patagonia 1% Patagonia 1%

PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 69% 1 Nike 65% 1 Nike 65% 1 Nike 63% 2 lululemon 9% 2 lululemon 15% 2 lululemon 14% 2 lululemon 15% 3 Adidas 5% 3 Adidas 7% 3 Adidas 9% 3 Adidas 9% 4 Under Armour 4% 4 Under Armour 4% 4 Under Armour 3% 4 Under Armour 3% 5 Athleta 2% 5 Athleta 1% 5 Fabletics 1% 5 Athleta 1% The North Face 1%

Taking Stock With Teens

Page 59 of 66 Top Athletic Clothing Brands Among Average-Income

PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 69% 1 Nike 72% 1 Nike 69% 1 Nike 69% 2 Under Armour 10% 2 Under Armour 9% 2 Adidas 9% 2 Adidas 11% 3 Adidas 5% 3 Adidas 7% 3 Under Armour 8% 3 Under Armour 8% 4 lululemon 2% 4 lululemon 2% 4 lululemon 3% 4 lululemon 3% 5 The North Face 1% 5 Victoria's Secret 1% 5 The North Face 1% 5 Victoria's Secret 1%

PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, MALES) Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 68% 1 Nike 71% 1 Nike 69% 1 Nike 68% 2 Under Armour 12% 2 Under Armour 11% 2 Under Armour 10% 2 Adidas 11% 3 Adidas 6% 3 Adidas 8% 3 Adidas 10% 3 Under Armour 10% 4 The North Face 1% 4 Columbia 1% 4 lululemon 1% 4 lululemon 1% 5 Columbia 0% The North Face 1% 5 The North Face 1% 5 The North Face 1%

PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 70% 1 Nike 73% 1 Nike 70% 1 Nike 70% 2 Under Armour 9% 2 Under Armour 7% 2 Adidas 8% 2 Adidas 10% 3 Adidas 4% 3 Adidas 6% 3 lululemon 6% 3 Under Armour 6% 4 lululemon 4% 4 lululemon 5% 4 Under Armour 6% 4 lululemon 5% 5 Victoria's Secret 1% 5 Victoria's Secret 1% 5 The North Face 1% 5 Victoria's Secret 2% Victoria's Secret 1%

Taking Stock With Teens

Page 60 of 66 Top Athletic Footwear Brands Among Upper-Income

PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 81% 1 Nike 83% 1 Nike 80% 1 Nike 77% 2 Adidas 6% 2 Adidas 7% 2 Adidas 8% 2 Adidas 13% 3 ASICS 2% 3 ASICS 2% 3 New Balance 2% 3 New Balance 2% 4 New Balance 1% New Balance 2% 4 ASICS 2% 4 ASICS 2% 5 Under Armour 1% 5 Under Armour 1% Under Armour 2% 5 Under Armour 2%

PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, MALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 78% 1 Nike 80% 1 Nike 78% 1 Nike 74% 2 Adidas 8% 2 Adidas 8% 2 Adidas 8% 2 Adidas 15% 3 New Balance 2% 3 New Balance 2% 3 Under Armour 2% 3 Under Armour 2% 4 Under Armour 2% 4 Under Armour 2% 4 New Balance 2% 4 New Balance 2% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1%

PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 85% 1 Nike 86% 1 Nike 82% 1 Nike 81% 2 Adidas 4% 2 Adidas 5% 2 Adidas 8% 2 Adidas 9% 3 ASICS 2% 3 ASICS 2% 3 ASICS 3% 3 ASICS 2% 4 Brooks 1% 4 New Balance 1% 4 New Balance 1% 4 New Balance 2% 5 Mizuno 1% 5 Brooks 1% 5 Brooks 1% 5 Under Armour 1% Saucony 1% Under Armour 1%

Taking Stock With Teens

Page 61 of 66 Top Athletic Footwear Brands Among Average-Income

PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 80% 1 Nike 82% 1 Nike 80% 1 Nike 77% 2 Adidas 5% 2 Adidas 6% 2 Adidas 8% 2 Adidas 11% 3 Under Armour 3% 3 Under Armour 2% 3 Under Armour 2% 3 Under Armour 2% 4 ASICS 1% 4 ASICS 1% 4 New Balance 2% 4 New Balance 1% 5 New Balance 1% 5 New Balance 1% 5 ASICS 1% 5 ASICS 1%

PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, MALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 77% 1 Nike 78% 1 Nike 77% 1 Nike 72% 2 Adidas 6% 2 Adidas 8% 2 Adidas 10% 2 Adidas 14% 3 Under Armour 3% 3 Under Armour 3% 3 Under Armour 3% 3 Under Armour 3% 4 New Balance 1% 4 New Balance 2% 4 New Balance 2% 4 New Balance 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1%

PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES)

Rank Spring 2016 % Rank Fall 2016 % Rank Spring 2017 % Rank Fall 2017 % 1 Nike 84% 1 Nike 86% 1 Nike 83% 1 Nike 82% 2 Adidas 4% 2 Adidas 5% 2 Adidas 7% 2 Adidas 8% 3 Under Armour 1% 3 ASICS 1% 3 Under Armour 1% 3 ASICS 1% 4 ASICS 1% 4 Under Armour 1% 4 ASICS 1% 4 Under Armour 1% 5 Mizuno 1% 5 Brooks 1% 5 New Balance 1% 5 New Balance 1%

Taking Stock With Teens

Page 62 of 66 Meet Our Senior Analyst Team

Erinn Murphy Nicole Miller Regan Sam Kemp Managing Director Managing Director Vice President Sr. Research Analyst Sr. Research Analyst Sr. Research Analyst Global Fashion & Restaurants Internet Lifestyle Brands

Mike Olson Stan Meyers Managing Director Vice President Sr. Research Analyst Sr. Research Analyst Consumer Media & Technology & Entertainment eCommerce

Taking Stock With Teens

Page 63 of 66 Page 64 of 66 INDUSTRY NOTE October 11, 2017

IMPORTANT RESEARCH DISCLOSURES

Distribution of Ratings/IB Services Piper Jaffray

IB Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [OW] 380 57.66 104 27.37 HOLD [N] 259 39.30 26 10.04 SELL [UW] 20 3.03 1 5.00

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from which Piper Jaffray and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Jaffray ratings are not the equivalent of buy, hold or sell, but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight with sell. See Stock Rating definitions below.

Analyst Certification — Erinn E. Murphy, Sr Research Analyst — Nicole Miller Regan, Sr Research Analyst — Michael J. Olson, Sr Research Analyst — Sam Kemp, Sr. Research Analyst — Stan Meyers, Sr. Research Analyst 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.

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

Time of dissemination: 11 October 2017 03:19EDT.

Page 65 of 66 INDUSTRY NOTE October 11, 2017

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