An In-depth Look at Footwear Retail YTD The U.S. Footwear Industry Market Drivers 12 months ending Jun ‘15

Prepared for FDRA members

September 2015

Copyright 2015. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD. The NPD Group, Inc. | Proprietary and Confidential Introduction The NPD Group provides market information and advisory services to help our clients make better business decisions. We help companies develop and offer the right products and get them in the right places at the right prices for the right people in order to grow their businesses.

For more information, visit npd.com and npdgroupblog.com. Follow us on Twitter: @npdgroup.

The NPD Group, Inc. | Proprietary and Confidential 2 Highlights

The total footwear market is estimated at $64B for the 12 months ending (ME) Jun’15 and grew +5% YOY. Footwear has benefited from consumers’ increased spending on health and wellness categories, driving the comfort and athletic markets.

■ Women’s footwear represents the largest wearer segment, and generated an absolute dollar gain around +$1.3B. Men’s footwear also contributed over +$1B in incremental sales. ■ Millennials drove industry dollar growth, particularly ages 25-34. This segment increased +37%. But still keep watch on 65+ consumers which increased +14%, generating over +$500MM in growth volume. ■ Online footwear sales totaled $15 billion, up +13% in dollar sales. 23% of total footwear dollar sales are generated online. ■ Performance footwear contributed the largest dollar volume growth of about +$2B. Outdoor footwear also increased at a similar pace (+10%), generating almost +$500MM in incremental sales as consumers gravitate towards styles that facilitate an active lifestyle (or make them feel/look like they have one). ■ The South Region contributed dollar growth volume of about +$1.5B. The region increased +7%. Most of the growth came from South Atlantic region, which drove almost half of the South’s growth.

For more information, visit npd.com and npdgroupblog.com. Follow us on Twitter: @npdgroup.

The NPD Group, Inc. | Proprietary and Confidential 3 Footwear Market Sales Drivers 12ME Jun’15

The total footwear market is estimated at $64B for 12ME Jun’15, up +5% YOY. Total ■ Women’s and men’s footwear both Women’s generated over +$1MM in incremental sales vs. LY. However, Men’s children’s footwear increased at the fastest rate of +8%. Children’s

$75 $50 $25 $0 0% 5% 10% Dollar VolumeMillions ($ Billions) Dollar Sales % Change

Dollar Distribution Total Footwear by Method of Purchase 100% Total

■ Online footwear sales 74% Store continued to drive total market growth with an 23% Website increase of +13%, or about +$1.7B in growth dollars. 3% Other Online sales contributed over half the growth in total $75 $50 $25 $0 -4% 0% 4% 8% 12% footwear. Dollar Volume ($ Billions) Dollar Sales % Change

Source: The NPD Group/Consumer Tracking Service

The NPD Group, Inc. | Proprietary and Confidential 4 Footwear Market Sales Drivers 12ME Jun’15

Total Footwear by Category Casual ■ Performance footwear is the Performance second largest category, and Dress/Evening contributed the largest dollar volume growth of about +$2B. Sport Leisure Although a much smaller Outdoor category, outdoor footwear also Work/Safety increased at a similar pace generating almost +$500MM in $30 $20 $10 $0 0% 5% 10% 15% incremental sales. Dollar Volume ($ Billions) Dollar Sales % Change

Total Footwear by Type ■ Sneakers continued to increase Sneaker (up +6%), driving almost 40% of footwear’s overall growth. Both Shoe boots and sandals increased +8% Boot vs LY, together contributing nearly +$2B to total footwear sales. Sandal

$30 $20 $10 $0 0% 5% 10% Dollar Volume ($ Billions) Dollar Sales % Change

Source: The NPD Group/Consumer Tracking Service

The NPD Group, Inc. | Proprietary and Confidential 5 Footwear Market Sales Drivers 12ME Jun’15

Total Footwear by Age of Wearer Under 13 13-17 ■ Growth in the footwear market 18-24 is being driven primarily by the 25-34 older Millennial segment (ages 35-44 25-34), generating over +$1B in 45-54 growth volume. 65+ consumers 55-64 are also a notable driver, with a 65+ dollar increase of +14%. 20% 10% 0% -10% 0% 10% 20% Dollar Share % Dollar Sales % Change

Total Footwear by Income Under $25K ■ Spending among $75-$100K $25K-$50K households increased +15% $50K-$75K generating the most $75K-$100K incremental dollar sales of all $100K-$150K the segments (+$1B). $150K-$200K ■ $200K+ consumers’ $200K+ footwear spend continued to 30% 20% 10% 0% -40% -20% 0% 20% 40% rise and outpace the rest, Dollar Share % Dollar Sales % Change with an increase of +36%. Source: The NPD Group/Consumer Tracking Service

The NPD Group, Inc. | Proprietary and Confidential 6 Footwear Market Sales Drivers 12ME Jun’15

Total Footwear by Ethnicity White ■ Growth in the footwear market Hispanic came from White consumers, who generated over +$1.6B in Black growth dollars. Hispanic Asian consumers’ dollar sales growth outpaced the rest of the market, Other increasing +9%. This increase contributed about +$1.2B in $40 $20 $0 -5% 0% 5% 10% 15% incremental sales. Dollar Volume ($ Billions) Dollar Sales % Change

Total Footwear by Region New England 100% ■ The South Region Middle Atlantic East North Central generated the largest Central dollar growth volume of West North Central South Atlantic about +$1.5B. The region South East South Central increased +7%. All sub- West South Central regions grew, but the Mountain West greatest incremental sales Pacific came from the South $20 $10 $0 -10% 0% 10% 20% Atlantic (+$700MM). Dollar VolumeMillions ($ Billions) Dollar Sales % Change

Source: The NPD Group/Consumer Tracking Service

The NPD Group, Inc. | Proprietary and Confidential 7 Thank You

Industries Countries Automotive Beauty Consumer Electronics Entertainment Fashion Food / Foodservice Home Luxury India Mobile Office Supplies Sports and Leisure Trends Technology Toys Video Games Poland Keep up with what’s new at The NPD Group. Subscribe to our newsletter and other communications by visiting npd.com and clicking “Subscribe.”

The NPD Group, Inc. | Proprietary and Confidential 8