FALL 2020 Taking Stock With Teens® 20 Years Of Researching U.S. Teens GenZ Insights Piper Sandler 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 78 - 80 of this report or at the following site: http://www.pipersandler.com/researchdisclosures. 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 2 | Taking Stock With Teens Survey - Fall 2020 Results Piper Sandler Investment Research Table of Contents 01 02 03 04 Executive Teen Behavior & Teen Brand Demographics & Summary Habits Preferences Appendices • Demographics • Gen Z Insights • Historic No. 1 Ranks • Survey Demographics • 20 Years of Teen • Top Social Media • Apparel & Footwear • Spending Breakdown Research • Spending Trends • Top Fashion Trends & Channel Trends • Key Takeaways • Channel Preferences • Up- & Downtrending • Top Brand Time Series • Views on the Economy • Secondhand & Rental • Accessories • Top Athletic Brands • COVID-19 Insights • Fashion Casualization • Beauty • Social Media History • Stock Highlights • Content Consumption • Websites • Content Consumption History • Smartphone Trends • Amazon Prime • Meet Our Senior • Video Games • Restaurants Analyst Team • Snacks • Plant Based Meat Piper Sandler Investment Research Taking Stock With Teens Survey - Fall 2020 Results | 3 40th Semi-Annual Proprietary GenZ Research Project TEENS 9,800 SURVEYED 15.8 AVERAGE AGE 51% 48% U.S. 1% 48 STATES MALE FEMALE NON-BINARY $67,500 24% AVERAGE HOUSEHOLD INCOME 42% 24% 10% TEENS CURRENTLY PART-TIME EMPLOYED 33% SOUTH WEST MIDWEST NORTHEAST Survey is executed in partnership with DECA The source for all charts/tables within this report is Piper Sandler. Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices 4 | Taking Stock With Teens Survey - Fall 2020 Results Piper Sandler Investment Research Commemorating 20 Years Of Teen Research 2001 – 2020 – Fallin’ – Alicia Keys WAP – Cardi B Week 4 September George W. Bush Donald Trump COVID-19, September 11, 2001 Current Affairs George Floyd, Breonna Taylor Generation Gen Y Gen Z Survey Size N=300; 10 States Taking Stock N=9,800; 48 States with Teens Top Brands Gap, Abercrombie & Nike, American Eagle, Fitch, Express adidas Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices Piper Sandler Investment Research Taking Stock With Teens Survey - Fall 2020 Results | 5 Key Takeaways – Demographics & Spending • This Fall marks 20 consecutive years of conducting primary research on the U.S. teen on a semi-annual basis • Our 40th semi-annual survey was conducted between August 19 & September 22 • Regional responses impacted by school start dates: 42% in the South (vs. 44% Spring); NE at 10% (same as Spring) • As a result of COVID-19, 76% of teens went back to school either in a hybrid format or fully virtual • 8% of teens or an immediate member in their household have had COVID-19 (vs. national average of 6%) • 48% of teens believe the economy is getting worse vs. 47% in Spring & 32% last Fall • Teen “self-reported” spending at an all-time survey low of $2,150, down 5% sequentially & 9% Y/Y • Areas of wallet share contraction included: Food (but still No. 1 priority) & Concerts/Events • Areas of wallet share expansion included: Video Games, Movies & Furniture/Room Accessories • Cosmetics spending for females down 20% Y/Y; skincare for females down only 3%; skincare for males up 12% • In the next six months, teen intent to dine-in & fly on a plane is higher & to visit a retail store is lower • Secondhand represents 8% of shopping time allocation, taking share from off-price, specialty & dept. stores Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices 6 | Taking Stock With Teens Survey - Fall 2020 Results Piper Sandler Investment Research Key Takeaways – Brand & Preference Rankings • Chick-Fil-A is No. 1 restaurant; Chipotle posted steady brand gains while Dunkin’ moved up to No. 4 • 18% of teens consume plant-based meat with Impossible Foods as the No. 1 choice • Video games are 10% of total teen wallet share—new survey high; 63% expect to purchase a NextGen console • Teens spend 34% of their daily video consumption on Netflix (gained share) followed by YouTube • 54% of teens cite Amazon as their No. 1 favorite e-com site; SHEIN took No. 2 spot for first time (ahead of Nike) • Ulta gained 400 bps of share as No. 1 beauty destination with 42% share; Target gained share; Amazon stays top-five • Handbag spending at $87, a new low in survey; Louis Vuitton unseats Michael Kors for No. 1 spot; Coach gained share • 86% of teens own an iPhone and 89% expect an iPhone to be their next phone; both new all-time highs • Snapchat is the favorite social media platform (again) but Instagram fell from No. 2 to No. 3 as TikTok moved up to No. 2 • Significant movement in top social & political issues led by Racial Equality, Environment & Black Lives Matter • Teens’ favorite celebrity is Kevin Hart and most followed influencer is David Dobrik Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices Piper Sandler Investment Research Taking Stock With Teens Survey - Fall 2020 Results | 7 Teen Perspective Of The Broader Economy 60% 52% 48% 50% 40% 30% 28% 20% 10% 0% Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 Getting Better Getting Worse • 48% believe the economy is getting worse—this compares to 47% in Spring and 32% from Fall 2019 • 76% of teens have returned to school in either a hybrid or a fully-virtual format this Fall • 33% of teens have a part-time job—this is down from 37% in Spring 2020 and 35% in Fall 2019 • 23% of teens indicated that COVID-19 has impacted their ability to find work Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices 8 | Taking Stock With Teens Survey - Fall 2020 Results Piper Sandler Investment Research COVID-19 Insights Employment Impact Lockdown Unlocked Did COVID-19 impact Since COVID… your part-time job or • 84% Visited a retailer ability to work? • 72% Dined-in a restaurant • 11% Flew on a plane NO: 77% In the Next 6 Months… • 81% Plan to visit a retailer YES: 23% • 77% Plan to dine-in • 33% Expect to fly on a plane 47% Returned to School Virtually 24% 64% Returned to School In-Class Would take a Vaccine when available 29% Returned in a Hybrid Format COVID-19 Vaccine Back to School Executive Summary Teen Behavior & Habits Teen Brand Preferences Demographics & Appendices Piper Sandler Investment Research Taking Stock With Teens Survey - Fall 2020 Results | 9 Stock Highlights: Global Lifestyle Brands Erinn Murphy, Managing Director | Sr. Research Analyst NKE (+) HAS HELD ITS NO. 1 POSITION FOR 10 CONSECUTIVE YEARS; GAINS FURTHER SHARE Nike has been the No. 1 apparel brand in our survey for 10 years and further strengthened its lead at 27% share—up 400 bps vs. LY. As a preferred footwear brand, Nike represents 52% of teen preference gaining a substantial 1,000 bps share. Nike ranks as the top trend for teens with popular responses including AirForce 1s & Jordans. It is the No. 1 preferred athletic apparel & footwear brand among upper-income teens at 60% and 74% share, respectively. LULU (+) BRAND HITS NEW SURVEY PEAK AS NO. 6 PREFERRED APPAREL BRAND lululemon is the No. 6 preferred apparel brand in our survey—moving up from No. 7 in Fall 2019. Among all females, it ranked No. 4 vs. No. 6 last year. Among upper-income females, it ranks No. 2 (behind AE) reaching 10% share. It ranked No. 8 among upper-income males vs. No. 9 last year. Leggings/lululemon are the No. 1 trend for females in school and lululemon is the No. 2 athletic apparel brand behind Nike—gaining 300 bps share Y/Y. ELF (+) REGISTERS ALL TIME HIGH IN SURVEY e.l.f. is the No. 2 preferred makeup brand for all teens—up from No. 4 last year and marks its highest ranking to-date in our survey. We believe this has been fueled by the significant success the brand has had on TikTok. While not in the top-ten, it ranks No. 17 as a preferred skincare brand (vs. 16 last year); we note skincare is only 9% of tracked channel sales but 25% of dot com sales (as of Q1). We are pleased to see its core channels (ULTA, TGT, WMT & AMZN) all in the top-five preferred beauty shopping destinations. ULTA (+/=) NO. 1 PREFERRED BEAUTY DESTINATION STRENGTHENS LEAD VS. SEPHORA ULTA continues to be in the best position to gain market share as we progress through the pandemic. It is the No. 1 beauty destination among teens at 42% share—up 400 bps from last year. Relative to No. 2 Sephora, it strengthened its lead, now 22 percentage points ahead vs. 15 percentage points last year. It took lead over Sephora among upper-income teens as well for the first time in our survey history. 86% of teens still prefer stores for beauty.