Taking Stock With Teens A Collaborative Consumer Insights Project Fall 2016
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2 | Taking Stock With Teens Investment Risks
Risks to achievement of investment objectives include, but are not limited to:
• 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
3 | Taking Stock With Teens Fashion & Beauty
Restaurants
Media & Devices
Questions & Answers
Appendix Depth of Piper Jaffray Consumer Insights Anchored in Primary Research
Taking Stock With Teens Restaurant Taking Stock Benchmark With Young Book Adults
Millennial CFO/CIO Moms Survey Survey
Healthy Women’s Lifestyles Survey Survey
Holiday Home Spending Improvement Survey Survey Athletic Brand & Wearables Survey
5 | Taking Stock With Teens 32nd Semi-Annual Proprietary Teen Research Project
National survey of teens measuring: UPPER-INCOME GROUP • Behaviors & Priorities • Capacity & Intentions • Brand Preferences 2,800 teens $109,000 Classroom visits Household income and electronic Represents top 20% of surveys U.S. household units 10,000 Responses
AVERAGE-INCOME GROUP
16.0 Average Age 7,200 teens $53,000 Classroom visits Household income and electronic Aligns more closely surveys with U.S. median 34% Part-Time Employed
Survey is executed in partnership with DECA.. The source for all charts/tables within this report is Piper Jaffray.
6 | Taking Stock With Teens Fall 2016 Action Ideas
STOCK CALLS: RATINGS CHANGES & ESTIMATE REVISIONS
INITIATING COVERAGE: adidas AG / ADS.GR / initiating Overweight / Sr. Research Analyst Erinn Murphy
RATINGS CHANGES: Estee Lauder Companies Inc. / EL / from Overweight to Neutral / Sr. Research Analyst Steph Wissink Under Armour, Inc. / UA / from Neutral to Overweight / Sr. Research Analyst Erinn Murphy Zumiez Inc. / ZUMZ / from Neutral to Overweight / Sr. Research Analyst Neely Tamminga
ESTIMATE REVISIONS: V.F. Corporation / VFC / reducing estimates and price target / Sr. Research Analyst Erinn Murphy
7 | Taking Stock With Teens Fall 2016 Survey Summary
HIGH-LEVEL VIEWPOINTS: • Summary takeaway: spending trends are encouraging among upper-income teens; a potential leading indicator for spending recovery • Total teen spending is down 2.6% y/y; spending on fashion, down 0.6% y/y • Upper-income: total spending up 2.5% y/y; spending on fashion, up 3.1% y/y • Average-income: total spending down 4.7% y/y; spending on fashion, down 2.1% y/y • Spending perceptions of “more” generally up among our upper-income female population—potential leading indicators for future growth • Upper-income females spending “more” increased 100 bps y/y in clothing and 100 bps y/y in shoes and dropped 100 bps y/y in accessories • Upper-income females spending significantly “more” on cosmetics and skincare up 900 bps and 600 bps y/y, respectively • Parent contribution in the fashion category for teens tracking above average levels seen since 2010 • Upper-income: parents contributing 51%+ for fashion at 71% vs. 68% average since 2010 • Could be attributed to fewer kids taking on part-time employment: 34% of teens surveyed have part-time employment—down 200 bps vs. LY
HIGH-LEVEL THEMES: • Denim trend strengthening • Beauty spending and prioritization at all-time highs • Video game spending tracking well ahead of multi-year average • Food is a source of entertainment • Social media engagement migrates to video- and photo-dominant platforms
8 | Taking Stock With Teens Fashion & Beauty Clothing, Shoes, Accessories & Beauty 38% of Teen Spending Upper-Income Inflects Positive Total teen spending is -2.6% y/y; spending on fashion, -0.6% y/y. UPPER-INCOME SPENDING $4,000 Upper-Income Total Spend Upper-Income Fashion Spend $1,800 $3,500 $1,600 Upper-income teens $3,000 $1,400 $1,200 leading potential $2,500 $1,000 $2,000 inflection in spending. $800 $1,500 $600 Total upper-income $1,000 $400 $500 $200 teen spending inflects Upper-Income Total Spend
$0 $0 Upper-Income Fashion Spend positive—up 2.5% y/y with fashion up 3.1%
Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 y/y. Spring 2005 Spring 2006 Spring 2007 Spring 2008 Spring 2009 Spring 2010 Spring 2011 Spring 2012 Spring 2013 Spring 2014 Spring 2015 Spring 2016
AVERAGE-INCOME SPENDING
$4,000 Average-Income Total Spend Average-Income Fashion Spend $1,800 $3,500 $1,600 $3,000 $1,400 $1,200 $2,500 $1,000 $2,000 $800 $1,500 $600 $1,000 $400 $500 $200
Average-Income Total Spend $0 $0 Average-Income Fashion Spend Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Fall Spring 2005 Spring 2006 Spring 2007 Spring 2008 Spring 2009 Spring 2010 Spring 2011 Spring 2012 Spring 2013 Spring 2014 Spring 2015 Spring 2016 Spring
10 | Taking Stock With Teens Denim Strengthening Driven by AEO Denim saw an uptick to 19.5% of overall mindshare among upper-income females—up 540 bps from spring and up 570 bps from last fall.
AEO is the primary driver of the denim uptick, up 710 bps from last fall.
Both “ripped jeans” and “jeans” showed Top Fashion Trends - Upper-Income Females up as top trends
Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % among upper-income 1 Leggings/lululemon 24% 1 Leggings/lululemon 23% 1 Leggings/lululemon 25% 2 Nike 5% 2 Victoria's Secret 7% 2 Birkenstock 6% females signaling to 3 Birkenstock 5% 3 Converse 6% 3 Victoria's Secret 5% us that there is a 4 Converse 4% 4 Nike 6% 4 Converse 4% 5 Victoria's Secret 4% 5 Boots 3% 5 Ripped Jeans 4% change in the casual 6 Crop Tops 3% 6 Crop Tops 3% 6 Jeans 3% 7 Short Shorts 2% 7 Athletic Wear 2% 7 Adidas 3% uniform. 8 Rompers 2% 8 Jeans 2% 8 Bralettes 3% Vineyard Vines 2% 9 Michael Kors 2% 9 Nike 3% 10 Dresses 2% 10 Adidas 2% 10 Chokers 3%
11 | Taking Stock With Teens 73% of Upper-Income Females 50% of upper-income Intend to Purchase Denim in Next 3 females have purchased denim in Months the past month and intend to purchase again in the next 3 months. In addition, 23% have not purchased denim in the past month, but intend to purchase in the next 3 months.
American Eagle Outfitters is the No. 1 destination from Top Denim Brands/Destinations – Upper-Income Females which upper-income Rank Fall 2016 % 1 American Eagle 36% females intend to 2 Hollister 13% 3 Abercrombie & Fitch 3% purchase denim. 4PacSun 3% 5 Nordstrom 3% Urban Outfitters 3% 7Old Navy 3% Hollister takes the No. 8H&M 2% 2 spot followed by 9Kohl's 2% 10 Forever 21 2% Abercrombie & Fitch. Levi's 2%
12 | Taking Stock With Teens AEO Mindshare Reaches New High American Eagle Among Upper-Income Females Outfitters holds the unique distinction of being the only brand consistently in the top Top Clothing Brands – Upper-Income Females 10 for 16 years. 30% AEO Comp AEO Change in Mindshare Y/Y 800 bps 25% 600 bps 20% AEO ticked back up to 400 bps 15% No. 1 among upper- 10% 200 bps income females as a 5% 0 bps preferred clothing AEO Comp AEO 0% -200 bps brand—the first time -5% since Spring 2007. -400 bps -10% Y/Y in Mindshare AEO Change Mindshare for the -15% -600 bps brand (17.4%) is up 700 bps from last fall Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015
Fall 2016E Fall among upper-income females.
13 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
AEO (+): Maintaining our survey’s status as the everlasting brand, American Eagle Outfitters once again makes the top ten in our unaided survey for preferred brands making the brand, to-date, the only brand in our survey’s 16-year history that consistently appears in the top ten as a preferred brand among teens. In the most recent fall survey, American Eagle set a new all-time high in being chosen the No. 1 preferred brand among upper-income females with 17% mindshare. Since the inception of our survey, American Eagle hasn’t achieved this level of mindshare or ranking in our fall surveys. Given their body positivity and inclusion messages while continuing to invest in its core competencies of fabric and style, American Eagle’s hard work and focus is clearly paying off in finding more customers than before. We remain confident that no matter the environment for spending this fall and holiday season—Election distractions included—AEO will continue demonstrating market share gains and delivering at or above their financial targets.
Top Clothing Brands (All) American Eagle Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Upper-Income 3rd (6%) 4th (9%) 2nd (6%) 4th (8%) 2nd (10%) 2nd (11%) 3rd (9%) 5th (5%) 4th (7%) 3rd (9%) 4th (8%) 2nd (9%) 3rd (8%) 3rd (6%) 2nd (8%) Average-Income 1st (13%) 1st (12%) 1st (14%) 1st (13%) 1st (10%) 1st (11%) 1st (10%) 4th (8%) 2nd (10%) 3rd (7%) 3rd (7%) 2nd (9%) American Eagle Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Upper-Income 4th (6%) 2nd (8%) 4th (6%) 4th (9%) 4th (8%) 3rd (10%) 4th (7%) 5th (8%) 3rd (10%) 4th (7%) 5th (8%) 3rd (7%) 2nd (8%) 3rd (6%) 2nd (9%) Average-Income 1st (13%) 1st (14%) 1st (16%) 1st (11%) 2nd (10%) 1st (12%) 2nd (10%) 3rd (9%) 3rd (8%) 2nd (8%) 2nd (8%) 2nd (8%)
Top Clothing Brands (Females) American Eagle Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Upper-Income 5th (5%) 3rd (8%) 4th (7%) 3rd (8%) 3rd (10%) 1st (13%) 3rd (8%) 4th (5%) 3rd (6%) 2nd (10%) 2nd (12%) 2nd (12%) 2nd (9%) 3rd (7%) 2nd (11%) Average-Income 1st (13%) 1st (11%) 1st (16%) 1st (13%) 1st (11%) 1st (11%) 2nd (10%) 2nd (9%) 2nd (11%) 2nd (8%) 2nd (8%) 2nd (11%) American Eagle Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Upper-Income 4th (6%) 4th (7%) 3rd (6%) 3rd (9%) 3rd (7%) 4th (8%) 4th (7%) 3rd (8%) 3rd (8%) 3rd (9%) 2nd (10%) 2nd (9%) 2nd (10%) 2nd (10%) 1st (17%) Average-Income 1st (13%) 1st (15%) 1st (17%) 2nd (12%) 2nd (10%) 1st (12%) 2nd (10%) 2nd (9%) 2nd (9%) 2nd (9%) 2nd (10%) 1st (12%)
Top Clothing Brands (Males) American Eagle Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Upper-Income 4th (6%) 3rd (9%) 3rd (5%) 5th (7%) 3rd (11%) 3rd (9%) 3rd (10%) 4th (5%) 3rd (10%) 4th (7%) 4th (5%) 3rd (7%) 3rd (7%) 3rd (4%) 3rd (5%) Average-Income 1st (12%) 1st (12%) 2nd (12%) 2nd (13%) 3rd (10%) 3rd (10%) 3rd (11%) 4th (7%) 2nd (10%) 3rd (6%) 3rd (6%) 3rd (7%) American Eagle Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Upper-Income 4th (6%) 2nd (10%) 5th (5%) 3rd (8%) 3rd (9%) 2nd (13%) 3rd (8%) 3rd (7%) 2nd (11%) 4th (6%) 4th (6%) 3rd (6%) 3rd (6%) 3rd (4%) 3rd (4%) Average-Income 1st (12%) 1st (12%) 1st (16%) 3rd (10%) 3rd (10%) 2nd (12%) 4th (9%) 4th (9%) 2nd (8%) 3rd (7%) 3rd (7%) 3rd (5%)
14 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
ANF (-): The brand turnarounds appear to have stalled a bit according to how teens are voting for each Hollister. No doubt, the core A&F brand is being positioned older than the teen demographic—so slippage could be interpreted as a good thing. That said, the Hollister brand moved down year-over-year slightly and more so sequentially among upper- income females—a group we tend to view as a leading indicator of brand relevance. In absolute with the movements we’re observing, we’d be neutral on the data and monitor for a few seasons before reacting to it. That said, the data doesn’t sit in absolute—we see it relative to other brand movements and American Eagle Outfitters is clearly dominating the mindshare game this fall season and possibly at the expense of Hollister. We like ANF the stock for reasons beyond a single fall season of teen survey data, therefore we maintain our Overweight rating. That said, for investors with a shorter time horizon, we recommend caution on ANF shares based on the apparent mindshare shift between American Eagle Outfitters and Hollister.
Top Clothing Brands (Upper-Income, All) Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 A&F 1st (13%) 1st (12%) 1st (13%) 2nd (10%) 4th (9%) 4th (8%) 4th (5%) 6th (4%) 7th (3%) 12th (2%) 10th (2%) 10th (2%) 10th (2%) 31st (1%) 11th (2%) Hollister NM 5th (5%) 4th (5%) 1st (12%) 1st (16%) 1st (13%) 1st (13%) 2nd (12%) 5th (7%) 7th (3%) 6th (5%) 5th (4%) 5th (3%) 7th (2%) 5th (3%) Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 A&F 1st (18%) 1st (15%) 1st (13%) 2nd (10%) 3rd (8%) 4th (8%) 5th (4%) 6th (4%) 10th (2%) 10th (2%) 9th (2%) 9th (2%) 23rd (1%) 12th (2%) 19th (1%) Hollister 22nd (1%) 5th (5%) 3rd (9%) 1st (13%) 1st (14%) 1st (14%) 2nd (10%) 3rd (8%) 5th (7%) 7th (4%) 7th (3%) 8th (2%) 7th (2%) 11th (2%) 11th (2%)
Top Clothing Brands (Upper-Income, Females) Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 A&F 2nd (10%) 2nd (12%) 1st (12%) 2nd (12%) 2nd (11%) 5th (8%) 5th (5%) 6th (4%) 11th (3%) 12th (2%) 9th (2%) 9th (3%) 11th (2%) 28th (1%) 12th (2%) Hollister NM 6th (7%) 3rd (8%) 1st (14%) 1st (18%) 1st (13%) 1st (14%) 1st (14%) 2nd (7%) 7th (3%) 3rd (6%) 3rd (6%) 6th (5%) 8th (3%) 6th (5%) Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 A&F 1st (19%) 1st (18%) 1st (14%) 2nd (12%) 2nd (10%) 3rd (8%) 7th (5%) 6th (4%) 9th (2%) 10th (2%) 7th (3%) 15th (2%) 23rd (1%) 14th (2%) 13th (1%) Hollister 25th (1%) 3rd (8%) 2nd (10%) 1st (16%) 1st (17%) 1st (15%) 2nd (10%) 2nd (8%) 4th (8%) 5th (5%) 5th (4%) 5th (4%) 9th (4%) 10th (3%)12th (2%)
Top Clothing Brands (Upper-Income, Males) Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 A&F 1st (16%) 2nd (12%) 1st (13%) 4th (8%) 4th (6%) 3rd (9%) 5th (6%) 5th (4%) 7th (3%) 9th (2%) 7th (2%) 9th (2%) 13th (1%) 20th (1%) 7th (2%) Hollister NM 10th (2%) 10th (3%) 3rd (9%) 2nd (14%) 2nd (13%) 2nd (13%) 3rd (10%) 4th (7%) 8th (2%) 5th (4%) 5th (3%) 4th (2%) 10th (2%) 6th (2%) Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 A&F 1st (16%) 3rd (9%) 2nd (10%) 3rd (8%) 4th (7%) 4th (7%) 5th (3%) 6th (3%) 8th (2%) 8th (2%) 7th (2%) 6th (2%) 19th (1%) 8th (2%) 19th (1%) Hollister 17th (1%) 11th (2%) 3rd (8%) 2nd (10%) 2nd (11%) 3rd (12%) 2nd (11%) 4th (8%) 4th (5%) 6th (2%) 5th (2%) 9th (1%) 9th (1%) 10th (1%) 9th (1%)
15 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
LB (=): A year ago, our data began to demonstrate a deceleration in upper-income females choosing “Victoria’s Secret” and “PINK” as their favorite clothing brand and we indicated then that it was a trend we were committed to monitoring. Victoria’s Secret (which includes votes for “PINK”) came in at No. 5 this fall vs. No. 7 a year ago and No. 4 six months ago. From a mindshare perspective, the combined votes for Victoria’s Secret and PINK came in at 4.6% this fall vs. 3.9% a year ago and 6.4% this spring. We recognize that for the most part, LB continues to deliver notable growth in their comparable- store sales trends. That said, we are honest to our process in being mindful of the mind share slippage we saw this spring and continuing to monitor trends.
Top Clothing Brands (Upper-Income, All) Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Victoria's Secret / PINK 24th (1%) 16th (1%) 19th (1%) 9th (2%) 6th (3%) 5th (4%) 7th (3%) Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Victoria's Secret / PINK 45th (<1%) 16th (1%) 11th (2%) 10th (2%) 10th (2%) 13th (2%) 10th (2%)
Top Clothing Brands (Upper-Income, Females) Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Victoria's Secret / PINK 15th (1%) 9th (2%) 9th (2%) 6th (4%) 3rd (6%) 2nd (7%) 4th (6%) Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Victoria's Secret / PINK 9th (2%) 8th (2%) 6th (4%) 6th (3%) 6th (4%) 7th (4%) 5th (5%)
Mindshare by Division (Upper-Income, Females)
PINK Victoria's Secret
2.2% 1.7% 2.6% 2.9% 2.4%
2.0% 2.4% 2.2% 1.3% 0.8% 1.0% 0.3% Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 16 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
JWN (=): Nordstrom has been bouncing around in the rankings of late but we are not alarmed. Among upper-income females, however, Nordstrom remained in the top ten coming in at No. 10. We’ve attributed some of the recent weakness to a commensurate drop in Free People as a preferred brand recognizing, as we do, that Nordstrom is one of the top and long-standing retailers of Free People. While we fully realize that shoppers from eight to eighty shop at Nordstrom, watching their relevance among the teen population is helpful to understanding both their relevance in the fashion landscape and their ability to convince her to shop in their store later in life even past when “mom” is around to pay the bill. Given the recent success of the pre-Fall Anniversary Sale event, we are not concerned about Nordstrom’s drop from No. 9 to No. 10 in six months. We look to their FQ3 report as providing additional leverage on expenses and investments— demonstrating their focus on growing earnings—likely to be well-received in the investment community.
Top Clothing Brands (Upper-Income, Females) Spr 2002 Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Nordstrom 14th (1%) 19th (1%) 12th (2%) 11th (2%) 5th (7%) 4th (9%) 4th (8%) 5th (5%) 9th (3%) 3rd (7%) 5th (5%) 4th (5%) 7th (4%) 6th (4%) 9th (3%) Free People 31st (<1%) 20th (1%) 28th (1%) 12th (2%) 14th (2%) 7th (4%) 19th (1%)
Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Nordstrom 19th (1%) 6th (4%) 6th (4%) 4th (7%) 5th (5%) 5th (4%) 7th (5%) 7th (4%) 3rd (9%) 2nd (10%) 3rd (7%) 4th (6%) 5th (5%) 6th (4%) 10th (3%) Free People 25th (1%) 6th (3%) 32nd (1%) 12th (2%) 8th (4%) 5th (6%) 10th (3%)
17 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
URBN (=): Urban Outfitters, while admittedly never likes to be associated as a teen retailer, is routinely viewed as an aspirational brand among the thousands of teens we survey each year. In our Fall 2016 survey, the core UO brand is demonstrating sequential improvement and year-over-year stability. Urban Outfitters came in at No. 5 versus No. 7 just six months ago among our upper-income teens. Female respondents in our survey voted the brand at No. 4—up from No. 5 six months ago and down just a notch from No. 3 a year ago. We noticed Free People, the brand, underperformed their past few fall surveys’ results but the brand is showing a sequential improvement coming in at No. 10 vs. No. 19 just six months ago.
Top Clothing Brands (Upper-Income, All) Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Urban Outfitters 34th (1%) 19th (1%) 7th (3%) 14th (2%) 10th (2%) 10th (2%) 8th (3%) 10th (2%) 9th (2%) 7th (3%) 7th (3%) 6th (3%) 6th (3%) 7th (3%) Free People 45th (<1%) 31st (<1%) 33rd (<1%) 20th (1%) 22nd (1%) 9th (2%) 32nd (1%) Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Urban Outfitters 30th (1%) 14th (2%) 8th (2%) 5th (4%) 9th (2%) 6th (4%) 7th (4%) 9th (3%) 8th (3%) 8th (3%) 5th (4%) 5th (4%) 5th (3%) 5th (3%) Free People 37th (<1%) 13th (1%) 42nd (<1%) 21st (1%) 12th (2%) 7th (2%) 18th (1%)
Top Clothing Brands (Upper-Income, Females) Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Urban Outfitters 19th (1%) 14th (2%) 7th (4%) 7th (3%) 8th (2%) 9th (3%) 6th (4%) 7th (4%) 5th (3%) 4th (6%) 4th (5%) 5th (5%) 5th (5%) 5th (5%) Free People 31st (<1%) 20th (1%) 28th (1%) 12th (2%) 14th (2%) 7th (4%) 19th (1%) Anthropologie NA NA NA 17th (1%) 22nd (1%) NA 38th (<1%) 40th (<1%) 26th (1%) 47th (<1%) 37th (<1%) 34th (<1%) 37th (<1%) 38th (<1%) Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Urban Outfitters 24th (1%) 11th (3%) 8th (3%) 4th (7%) 6th (3%) 5th (7%) 5th (7%) 6th (4%) 4th (6%) 4th (5%) 3rd (8%) 3rd (7%) 3rd (7%) 4th (7%) Free People 25th (1%) 6th (3%) 32nd (1%) 12th (2%) 8th (4%) 5th (6%) 10th (3%) Anthropologie NA NA NA 22nd (<1%) 32nd (<1%) 31st (<1%) 44th (<1%) 29th (1%) 35th (<1%) NA 32nd (<1%) 37th (<1%) 28th (1%) 49th (<1%)
Top Clothing Brands (Upper-Income, Males) Spr 2003 Spr 2004 Spr 2005 Spr 2006 Spr 2007 Spr 2008 Spr 2009 Spr 2010 Spr 2011 Spr 2012 Spr 2013 Spr 2014 Spr 2015 Spr 2016 Urban Outfitters NA 27th (1%) 24th (<1%) NA 25th (<1%) 22nd (1%) 10th (2%) 19th (<1%) 13th (1%) 14th (1%) 20th (1%) 21st (1%) 14th (1%) 18th (1%) Fall 2003 Fall 2004 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Urban Outfitters NA NA 18th (1%) 34th (<1%) 19th (1%) 19th (1%) 14th (1%) 19th (1%) 17th (1%) 20th (1%) 12th (1%) 15th (1%) 40th (<1%) 19th (1%)
18 | Taking Stock With Teens Stock Highlights: Multi-Brand Retail & Specialty Commerce Analyst: Neely Tamminga
ZUMZ (+): We are upgrading our investment rating on ZUMZ from Neutral to Overweight because proprietary survey data is pointing to strength for Zumiez and the brands it sells. Given the significant array of brands carried and sold by Zumiez, we created a Zumiez Brand Index to better gauge the mindshare in our data. Often these brands are limited in their distribution and nearly exclusive with Zumiez, so we believe a vote in one of the Zumiez-carried brands is a de facto vote for Zumiez. This fall, we note that among the upper-income teens in our survey, the Zumiez Brand Index carried 5.1% of the overall vote—up from 4.1% a year ago. When looking at the upper-income males, the Zumiez Brand Index accounted for 7.9% of the mindshare, up from 6.7% a year ago, and comparable to brands like Ralph Lauren and American Eagle in our top ten survey.
Zumiez Brand Index (Upper-Income, Male) ZUMZ Comp 8.0% 8%
6%
7.5% 4%
2% 7.0% 0%
-2% 6.5% -4%
-6% 6.0%
-8%
5.5% -10% Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016E
19 | Taking Stock With Teens Survey Highlights: Global Fashion & Lifestyle Brands Analyst: Erinn Murphy
ADS.GR – INITIATING OVERWEIGHT; €173PT (30X OUR FY17E EPS OF €5.76) • Initiating EPS estimates of €5.02 and €5.76 for FY16 and FY17 (EPS growth of 15%); Street €4.81/€5.57 • Teen Survey findings support adidas is gaining share—as an athletic & a fashion brand • No. 4 preferred footwear brand among all UI teens vs. No. 7 last year (6% mindshare vs. 2% LY) • No. 8 preferred apparel brand for UI teens vs. No. 18 last year • No. 2 preferred athletic footwear brand among all UI teens at 7% share vs. 4% share last year • Appeared on both top-ten trends for males & females for first time
UNDER ARMOUR – UPGRADING FROM NEUTRAL TO OVERWEIGHT; $44 PT (60X OUR FY17E EPS OF $0.73) • Raising PT from $40 to $44 (taking multiple up from 55x to 60x our FY17 EPS) • Teen Survey findings support on-going traction for UA within footwear • No. 7 preferred footwear brand for UI & AI males—highest in survey history • No. 8 preferred apparel brand for UI males—first time back in top-ten since Spring 2015 • UA traction with women’s evident in proprietary survey work on 9/12; UA as No. 2 athletic apparel brand for women • Guidance implies Q4’s weather pattern to be similar to LY; could prove conservative • Believe initial FY17 sales guidance could come in at 23%; upside to initial guide supported by Kohl’s & international
VF CORP – REDUCING ESTIMATES & PT TO $63; MAINTAINING OVERWEIGHT • Reducing Q3 EPS from $1.16 to $1.15; FY16 from $3.20 to $3.18; FY17 from $3.50 to $3.48 (Street: $3.57) • PT reducing from $67 to $63 on multiple reduction on FY17E EPS from 19x to 18x • Vans (18-19% of VFC sales) results mixed by gender: • No. 3 brand for females but mindshare slipped for both UI and AI females, down 270 bps and 170 bps • No. 2 brand for males; mindshare among UI males +190 bps (11% share); declined 70 bps for AI males
20 | Taking Stock With Teens Fashion Spending View Mixed Upper-income teens generally lead cycles; key spending Fashion Spending Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 Seq Chg Y/Y Chg takeaways: Apparel $733 $667 $685 $614 $701 14% 2% Shoes $279 $270 $277 $277 $291 5% 5% Accessories $103 $96 $95 $91 $98 7% 3% Total - All $1,115 $1,033 $1,057 $982 $1,090 11% 3% Females spending — Apparel $974 $854 $962 $754 $917 22% -5% Shoes $268 $260 $277 $270 $296 10% 7% 2% Y/Y with pressure Accessories $157 $144 $150 $125 $143 14% -5% Total - Female $1,399 $1,258 $1,389 $1,149 $1,357 18% -2% coming from apparel
Apparel $504 $483 $474 $480 $533 11% 12% and accessories— Shoes $290 $279 $277 $283 $286 1% 3% Accessories $56 $55 $57 $62 $66 6% 16% both -5%. Total - Male $850 $818 $808 $826 $885 7% 10%
Males spending +10% Y/Y with apparel up double-digits; footwear spend reaches new peak.
21 | Taking Stock With Teens Fashion Athletic Apparel Trend For combined genders, Remains Healthy 35% of upper-income teens favor an athletic brand within preferred 40% apparel. 35% 35% 32% 28% 30% 26% Athletic continues to 25% Average = 20% trend above the multi- 20% year average of 20%. 15% 10% 5% Gainers: Nike (+180 0% bps), Adidas (+100 bps), Under Armour (+20 bps).
Losers: Dicks Sporting Goods (- 30 bps).
We saw greater strength within athletic apparel from males (+400 bps Y/Y) vs. females (+100 bps Y/Y).
22 | Taking Stock With Teens “Denim” Brands Accelerate For Denim had an Females; Athletic Looks Still In increased presence in Fall 2016, representing 19.5%
25% mindshare for upper- Fashion Athletic Denim income females, an 20% increase from 13.8%
15% in Fall 2015.
10% Fashion Athletic was 5% also strong, now showing consecutive 0% fall increases since breaking out of this category in 2009.
23 | Taking Stock With Teens Athletic Footwear Marches Higher 86% of upper-income Among Males males select an athletic brand as their footwear preferences, up ~400 bps seq. & Y/Y.
100% 90% 80% Gainers: adidas +250 70% bps Y/Y; Vans +190 60% bps Y/Y; Under 50% 40% Armour +30 bps Y/Y; 30% Nike +20 bps Y/Y. 20% 10% Consolidated Mindshare 0% Losers: Converse decelerates 40 bps Y/Y. Nike Converse Vans Adidas Puma Under Armour
24 | Taking Stock With Teens Rotation From Fashion To Athletic 58% of upper-income Footwear Continues For Females females select an athletic brand as their footwear preferences, flat seq. but +700 bps Y/Y. 70%
60% Gainers: adidas +460 50% bps Y/Y; Converse 40% +300 bps Y/Y; Nike 30% +200 bps Y/Y; Puma 20% +20 bps. 10% Consolidated Mindshare Consolidated 0% Losers: Vans decelerates 300 bps Y/Y. Nike Converse Vans Adidas Puma Under Armour Steve Madden (not shown here) also decelerated 300 bps Y/Y; rotation points to athletic into Holiday.
25 | Taking Stock With Teens Top Teen Footwear Brands Nike remains favorite brand but adidas share gains are PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS) greater. Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 46% 1 Nike 50% 1 Nike 48% 1 Nike 51% 2 Vans 9% 2 Vans 9% 2 Vans 10% 2 Vans 9% 3 Converse 5% 3 Converse 7% 3 Converse 7% 3 Converse 7% Steve Madden 4 DSW 3% 4 Sperry 4% 4 Adidas 4% 4 Adidas 6% Steve Madden 3% 5 Steve Madden 3% 5 Sperry 3% 5 Steve Madden 2% decelerates in share 6 Sperry 3% 6 DSW 3% 6 DSW 3% 6 Sperry 2% 7 UGG 2% 7 Adidas 2% 7 Steve Madden 3% 7 DSW 2% from 3% to 2% (No. 5 8 Adidas 2% 8 Foot Locker 1% 8 Foot Locker 2% 8 Birkenstock 2% 9 Nordstrom 1% 9 Birkenstock 1% 9 UGG 1% 9 Foot Locker 1% 10 Payless ShoeSource 1% Nordstrom 1% 10 TOMS 1% 10 Nordstrom 1% UI teens); share loss more pronounced with females (-300 bps).
PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % Sperry moved down 1 Nike 46% 1 Nike 51% 1 Nike 54% 1 Nike 53% 2 Vans 11% 2 Vans 10% 2 Vans 9% 2 Vans 9% from No. 4 to No. 6 3 Converse 7% 3 Converse 6% 3 Converse 6% 3 Converse 7% 4 Sperry 3% 4 Sperry 3% 4 Adidas 4% 4 Adidas 5% among UI teens with 5 Adidas 2% 5 Adidas 2% 5 Sperry 2% 5 Foot Locker 3% 6 Steve Madden 2% 6 Foot Locker 2% 6 Foot Locker 2% 6 Sperry 2% 200 bps share 7 Foot Locker 2% 7 Steve Madden 1% 7 Steve Madden 1% 7 Birkenstock 2% 8 Payless ShoeSource 1% 8 Payless ShoeSource 1% 8 DSW 1% 8 Steve Madden 1% decline. 9 UGG 1% 9 DSW 1% 9 Under Armour 1% 9 Payless ShoeSource 1% 10 Three Brands Tied 1% 10 Birkenstock 1% 10 Journeys 1% 10 Under Armour 1% Payless ShoeSource 1% UGG 1%
26 | Taking Stock With Teens adidas Accelerates Into Holiday – adidas now Upper-Income Females represents over 5% of upper-income female teen footwear 6% preferences, up 470 bps Y/Y.
5% adidas tracking above its multi-year average 4% of 1.7%.
3% % Mindshare
2%
1%
0%
Adidas UI Women's Footwear Mindshare Adidas Multi-Year Average
27 | Taking Stock With Teens adidas Accelerates Into Holiday – adidas now Upper-Income Males represents 6% of upper-income male teen footwear preferences, up 300 14% bps Y/Y but flat sequentially. 12%
10% adidas tracking above its multi-year average
8% of 5.3%.
6% % Mindshare
4%
2%
0%
Adidas UI Footwear Mindshare Adidas Multi-Year Average
28 | Taking Stock With Teens Major Handbag Brands KORS No. 1 (34% share UI; 44% AI); KORS notably gained PREFERRED HANDBAG BRANDS (UPPER-INCOME, FEMALES) share among UI teens Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % (up 240 bps Y/Y). 1 Michael Kors 39% 1 Michael Kors 31% 1 Michael Kors 38% 1 Michael Kors 34% 2 Coach 14% 2 Kate Spade 15% 2 Kate Spade 16% 2 Kate Spade 19% 3 Kate Spade 10% 3 Coach 10% 3 Coach 12% 3 Coach 10% 4 Louis Vuitton 5% 4 Louis Vuitton 6% 4 Louis Vuitton 4% 4 Louis Vuitton 5% 5 Vera Bradley 5% 5 Vera Bradley 5% 5 Gucci 4% 5 Longchamp 3% KATE gains share 6 Tory Burch 4% 6 Tory Burch 4% 6 Chanel 3% Vera Bradley 3% 7 Chanel 2% 7 Gucci 3% 7 Tory Burch 3% 7 Chanel 2% across both surveys, 8 Target 2% 8 Longchamp 3% 8 Longchamp 2% 8 Gucci 2% 9 Longchamp 1% 9 Chanel 2% 9 Vera Bradley 2% 9 Tory Burch 2% up 470 bps among UI 10 Gucci 1% 10 Marc Jacobs 2% 10 Fossil 2% 10 Fossil 1% Marc Jacobs 1% teens and up 460 bps among AI teens.
COH slightly up PREFERRED HANDBAG BRANDS (AVERAGE-INCOME, FEMALES) among upper-income Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Michael Kors 39% 1 Michael Kors 44% 1 Michael Kors 49% 1 Michael Kors 44% teens, finishing at 2 Coach 17% 2 Coach 15% 2 Coach 12% 2 Coach 13% 3 Kate Spade 6% 3 Kate Spade 6% 3 Kate Spade 8% 3 Kate Spade 10% 10%, however AI 4 Louis Vuitton 4% 4 Vera Bradley 5% 4 Vera Bradley 4% 4 Vera Bradley 5% 5 Vera Bradley 3% 5 Louis Vuitton 3% 5 Louis Vuitton 3% 5 Gucci 3% teens declined 200 6 Gucci 2% 6 Gucci 2% 6 Fossil 2% 6 Louis Vuitton 3% 7 Chanel 2% 7 Chanel 2% 7 Gucci 2% 7 Chanel 2% Tory Burch 2% 8 Fossil 1% 8 Chanel 2% 8 Fossil 1% bps finishing at 13% 9 Fossil 2% 9 Steve Madden 1% 9 Tory Burch 1% Target 1% 10 Steve Madden 1% 10 Target 1% 10 Steve Madden 1% 10 Betsey Johnson 1% (vs. 15% last fall). We Guess 1% view upper-income as a leading indicator over average-income.
29 | Taking Stock With Teens Handbag Intent Lower Among Teens Intent to spend within the fashion accessory space had a notable HANDBAG SPENDING INTENTIONS decline of 480 bps All Customers: Intent To Spend On Handbag In Next Six Months Y/Y, correlating to Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 intent to spend within Yes 43% 43% 45% 39% 42% 36% No 57% 57% 55% 61% 58% 64% handbags, which declined 260 bps to 36% (vs. 39% last fall).
MAJOR BRANDS RANKINGS OVER TIME (UPPER-INCOME, FEMALES) The major accessible
80% luxury handbag
70% brands as a group
60% 6% 10% 16% reaccelerated from 10% 19% 50% 15% fall: KORS, KATE, 7% 26% 40% 9% 18% 21% TORY, COH, MARC at 30% 39% 30% 38% 31% 34% 66% overall handbag 20% 38% 36% vote up from 62% in 30% 26% 29% ConsolidatedMindshare 10% 18% 14% 10% 12% 10% fall, though down 0% sequentially from last spring at 69%.
Coach Michael Kors Kate Spade Tory Burch Marc Jacobs
30 | Taking Stock With Teens Watch Category Remains Out Of Favor Purchase intent Among Teens among upper-income teens has declined 150 bps Y/Y.
WATCH PURCHASE INTENT (UPPER-INCOME, ALL TEENS) Michael Kors was the Spring 2015 Fall 2015 Spring 2016 Fall 2016 Yes 28% 30% 34% 29% No. 2 watch— No 72% 70% 67% 71% declined 120 bps in share from Fall 2015. Fossil declined one rank to No. 5 brand from No. 4 one year PREFERRED WATCH BRANDS (UPPER-INCOME, ALL TEENS) ago. Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Rolex 31% 1 Rolex 34% 1 Rolex 29% 1 Rolex 37% 2 Michael Kors 24% 2 Michael Kors 19% 2 Michael Kors 22% 2 Michael Kors 17% 3 Casio 8% 3 Casio 7% 3 Fossil 8% 3 Apple 5% 4 Fossil 7% 4 Fossil 5% 4 Casio 6% Casio 5% 5 Nike 4% 5 Apple 5% 5 Apple 5% 5 Fossil 5% 6 Apple 3% 6 Nike 4% 6 Nixon 3% 6 Nixon 3% 7 Nixon 1% 7 Nixon 4% 7 Nike 3% 7 Nike 2% 8Swatch 1%8Gucci 2%8Invicta 1%8Timex 2% 9 Timex 1% 9 Timex 2% 9 Kate Spade 1% 9 Fitbit 1% 10 Gucci 1% 10 Swatch 1% 10 Citizen 1% 10 Gucci 1% Kate Spade 1% Gucci 1%
31 | Taking Stock With Teens Watch Preferences Migrating Towards Smartwatches Wearable Technology continued to infuse the watch category mindshare. Apple represented 5.4% of APPLE MINDSHARE OF WATCH CATEGORY (UPPER-INCOME, ALL TEENS) overall mindshare vs. 4.8% last fall. Rank 6% 5.3% 5.4% for Apple has increase 5% 4.8%
4% from No. 5 to No. 3
3% 2.7% Y/Y.
2% 1.2% 1% For the first time Fitbit 0% has entered the top 10 mindshare rank for Apple Share the category, further supporting the view of the fitness band and watch category converging.
32 | Taking Stock With Teens Fitbit Leads The Way With Wearables 21% of UI teens plan to purchase a fitness tracker in the next six MOST PREFERRED FITNESS BANDS (ALL TEENS) months up from 18% Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % of UI teens last Fall. 1 Fitbit 53% 1 Fitbit 72% 1 Fitbit 71% 2 Nike 24% 2 Nike 12% 2 Nike 13% 3 Apple 7% 3 Apple 6% 3 Apple 6% 4 Garmin 5% 4 Garmin 3% 4 Garmin 3% Fitness tracker’s 5 Jawbone 5% 5 Jawbone 3% 5 Jawbone 3% 6 Misfit 2% 6 Misfit 1% 6 Misfit 1% accelerates as UI 7 Adidas 1% 7 Under Armour 1% 7 Samsung 1% 8 Under Armour 1% 8 Samsung 0% 8 Adidas 0% ownership rises to 9 Samsung 1% 9 Microsoft 0% 9 Polar 0% 10 iFit 0% 10 iFit 0% Movband 0% 28% female and 22% TomTom 0% male vs. 14% and 12% Fall 2015. FITNESS BAND OWNERSHIP (UPPER‐INCOME, ALL TEENS)
30% 28.0% Fitbit No. 1 at 71% vs. Fitness Band Ownership (Male) 53% share last Fall. 25% Fitness Band Ownership (Female) 22.0% 22.1% In our Women’s Survey this 20% 18.0% September, Fitbit was
15% No. 1 with 73%. 13.1% 13.2% 13.6% 12.2%
10%
33 | Taking Stock With Teens Camcorder Category Unchanged Ownership of camcorders appears to be established in PERCENTAGE OF TEENS WHO OWN A CAMCORDER (ALL TEENS) the 28-29% range.
50% 44.7% 42.2% 38.8% 25% of teen families 40% 36.2% 31.0% owned a GoPro up 28.9% 29.3% 30% 28.3% from 20% last year.
20%
10%
0% Spring 2013 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016
PERCENTAGE OF TEENS WHOSE FAMILY OWNS A GOPRO (ALL TEENS)
30% 25.2%
21.1% 19.8% 20% 17.2% 17.9%
12.6% 9.3% 10%
0% Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016
34 | Taking Stock With Teens GoPro Demand Wanes In Unaided Wish list analysis “Wish List” shows a continued slide for GoPro as a “hot” gifting item.
% OF TEENS WHO LISTED GOPRO AS ONE OF THEIR TOP TWO HOLIDAY GIFTS 0.6% of teens cited
1.8% 1.6% $1,800 GoPro on their “wish
1.6% $1,600 lists” down from 1.0% 1.3% 1.4% GPRO Share GPRO Revenue $1,400 last fall, and 0.9% in 1.2% $1,200 1.0% Spring 2016. 1.0% 0.9% $1,000
0.8% $800 0.6% 0.6% 0.6% $600 0.4% The GoPro drone
Wishlist % Wishlist of Total 0.4% 0.3% $400
Trailing 12 Month Sales (Millions)Trailing made its initial debut 0.2% 0.2% $200 0.0% 0.0% 0.1% 0.0% 0.0% $0 as a wish list item, accounting for 4 entries in Fall 2016.
35 | Taking Stock With Teens Beauty Category Highlights
BEAUTY WALLET SHARE REACHES ANOTHER PEAK • Beauty category at 11.3% of female wallet, up 200bps Y/Y and 80bps since Spring 2016.
COSMETICS SPEND CONTINUES TO RISE; MAIN DRIVER OF SPENDING INCREASES • Cosmetics spending inflected higher, up 25% over the past 10 years and 20% Y/Y. • Average annual spend per person now at $188 for cosmetics; $395 across all personal care categories.
BRAND DECONCENTRATION SIGNALING INCREASED COMPETITION • Top 10 brands have ceded nearly 7ppts of share Y/Y and 8ppts since Spring 2016. • Number of brands mentioned is declining; mid-tier brands gaining share as social media evens ad playing field.
SPECIALTY ENVIRONMENTS PREFERRED • Shift from legacy (drug, mass & dept stores) to specialty (multi-brand specialty & online) environments continues. • Reversal in preference occurred in Spring 2015 and has accelerated over the last 18 months. • Sephora & Ulta are top preferred destinations across all income levels; represent 79% of loyalty participation.
ENTHUSIASTS DERIVE INSPIRATION FROM BRANDS & BLOGGERS; THEY INFLUENCE THEIR FRIENDS • Top quintile of spenders cite online influencers as their primary beauty source. • Average beauty spenders cite friends as the leading influence. • Teens overwhelmingly prefer to shop for color cosmetics in store (90%) vs. online (10%).
36 | Taking Stock With Teens Beauty Wallet Share and Cosmetics Beauty wallet share Spend Higher than Ever and cosmetics spend reached the highest BEAUTY WALLET SHARE, UPPER-INCOME FEMALES value in our survey’s
12.0% history. Wallet share 11.3% 11.0% 10.5% among upper-income
10.0% 9.8% 9.3% females reached 9.0% 11.3% while spending 8.0% in the beauty category 7.0% 6.4% increased 20% Y/Y 6.0%
5.0% and 13% since Spring
4.0% 2016. Cosmetics spending is up 25% Y/Y and AVERAGE ANNUAL SPEND, UPPER-INCOME FEMALES 10% since Spring.
$210 Skin Care Cosmetics Fragrance $188 Skincare spending is $190 $170 up 20% Y/Y and 24% $150 $141 since Spring. $130 $110 Fragrance spending is $90 $66 up 8% Y/Y and down $70 1% since Spring. $50 Fall-06 Fall-07 Fall-08 Fall-09 Fall-10 Fall-11 Fall-12 Fall-13 Fall-14 Fall-15 Fall-16 Spring-07 Spring-08 Spring-09 Spring-10 Spring-11 Spring-12 Spring-13 Spring-14 Spring-15 Spring-16
37 | Taking Stock With Teens Beauty is a Fashion Accessory; Beauty spend was Intent to Spend Strengthening more tightly correlated to the BEAUTY VS. FASHION SPENDING fashion cycle pre- Fashion Spending Y/Y Change Beauty Spending Y/Y Change recession; ties have Post Recession Correl = 0.6 30% weakened as beauty 20% spending has 10% remained robust while 0% fashion spending has -10% contracted. -20%
-30% Intent to spend Fall 2007 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013 Fall 2014 Fall 2015 Fall 2016 Fall
Spring 2008 Spring 2009 Spring 2010 Spring 2011 Spring 2012 Spring 2013 Spring 2014 Spring 2015 Spring 2016 remains very high; intent to spend INTENT TO SPEND MORE VS. LESS ON BEAUTY “more” exceeds “less” 25% by over 20ppts.
20% Average = 17%
15%
10%
5%
0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
38 | Taking Stock With Teens Cosmetics Spend Highly Related to Color cosmetics Social Media Engagement spending over the past several years has been highly related to AVERAGE ANNUAL SPEND VS. TIME ON SOCIAL MEDIA social media (UPPER-INCOME, FEMALES) engagement. As teens spend more time on Cosmetics Skin Care Fragrance Social Media >10 hrs/wk $210 70% social media, they
tend to spend more $190 60% Social
on cosmetics. on $170 50% hrs/wk $150 Skin care and 10 40% >
Spend fragrance, less visible $130 Media Spend 30% on digital mediums, Annual
$110 that are less correlated.
20% $90 Females
UI
of
10% $70 %
$50 0% Fall-13 Spring-14 Fall-14 Spring-15 Fall-15 Spring-16 Fall-16
39 | Taking Stock With Teens Brand Shakeups: MAC a Donor; Indie MAC is the biggest Brands Rise decliner on a Y/Y and sequential basis – declining 400-500bps PREFERRED COSMETICS BRANDS (UPPER-INCOME, FEMALES) for all females. Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 MAC 16% 1 MAC 17% 1 MAC 12% 2 Maybelline 12% 2 Maybelline 12% 2 Maybelline 9% 3 Urban Decay 10% 3 Urban Decay 11% 3 Urban Decay 9% 4 CoverGirl 9% 4 Sephora 7% 4 CoverGirl 8% The usual top-ranked 5 Bare Escentuals 6% 5 CoverGirl 7% 5 Too Faced 6% 6 Sephora 5% 6 Bare Escentuals 5% 6 Sephora 5% names were mostly 7 Benefit 5% 7 Benefit 4% 7 Clinique 4% 8 L'Oreal 3% 8 L'Oreal 4% 8 L'Oreal 4% donors of share while 9 Clinique 3% 9 Too Faced 3% 9 Benefit 4% 10 NARS 3% 10 Anastasia 3% 10 Tarte 4% artisanal brands – both prestige and mass – ranked higher this iteration. PREFERRED COSMETICS BRANDS (AVERAGE-INCOME, FEMALES) Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 MAC 19% 1 MAC 19% 1 MAC 15% 2 CoverGirl 12% 2 CoverGirl 11% 2 CoverGirl 9% 3 Maybelline 12% 3 Urban Decay 11% 3 Maybelline 9% Overall concentration 4 Urban Decay 9% 4 Maybelline 11% 4 Urban Decay 7% in top 10 declined – 5 Sephora 5% 5 Sephora 5% 5 Too Faced 5% 6 Bare Escentuals 5% 6 Bare Escentuals 4% 6 Name Withheld 5% social media is 7 L'Oreal 4% 7 Name Withheld 4% 7 Sephora 5% 8 Mary Kay 3% 8 Clinique 3% 8 NYX 4% evening the playing 9 Name Withheld 3% 9 L'Oreal 3% 9 Anastasia 4% 10 Clinique 3% 10 Too Faced 3% 10 Bare Escentuals 4% field for brand awareness.
40 | Taking Stock With Teens Mass Brands Remain On Top For Mass brands remain Skincare top-of-mind, but specialty retail destinations are PREFERRED SKINCARE BRANDS (UPPER-INCOME, FEMALES) gaining share. Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Neutrogena 32% 1 Neutrogena 31% 1 Neutrogena 31% 2 Clean & Clear 10% 2 Clean & Clear 8% 2 Clean & Clear 9% 3 Proactiv 6% 3 Clinique 7% 3 Clinique 7% 4 Clinique 5% 4 Proactiv 4% 4 Proactiv 7% Lack of innovation 5 Cetaphil 4% 5 Cetaphil 4% 5 Cetaphil 5% 6 Aveeno 3% 6 Aveeno 3% 6 Aveeno 3% continues to weigh on 7 Bare Escentuals 2% 7 Bare Escentuals 3% 7 Clearasil 2% Lush 2% 8 LUSH 2% 8 Biore 2% the prestige skincare 9 Clearasil 2% MAC 2% 9 LUSH 2% Mary-Kay 2% 10 Burt's Bees 2% 10 Mary Kay 2% industry. Sephora 2%
PREFERRED SKINCARE BRANDS (AVERAGE-INCOME, FEMALES)
Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Neutrogena 24% 1 Neutrogena 22% 1 Neutrogena 24% 2 Clean & Clear 12% 2 Clean & Clear 10% 2 Clean & Clear 10% 3 Proactiv 8% 3 Proactiv 9% 3 Proactiv 9% 4 Clinique 5% 4 Clinique 5% 4 Clinique 5% 5 Mary-Kay 4% 5 MAC 3% 5 Cetaphil 3% 6 Clearasil 3% 6 Aveeno 3% 6 Aveeno 3% CoverGirl 3% 7 Mary Kay 3% 7 Biore 3% 8 Cetaphil 3% 8 Cetaphil 2% 8 Clearasil 3% 9 Aveeno 2% Clearasil 2% 9 Mary Kay 2% MAC 2% 10 CoverGirl 2% 10 Dove 2%
41 | Taking Stock With Teens Channel Shift Persists, Specialty Specialty formats Gains continue to outpace legacy channels.
SHOPPING CHANNEL PREFERENCES (UPPER-INCOME, FEMALES)
Specialty Mass, Dept & Drug Stores 70% 65% 60% 54% 50%
40%
30% 32% 26% Channel 20% Reversal: Specialty stores 10% outpace legacy formats 0% Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016
42 | Taking Stock With Teens Stock Highlights: Beauty Category Analyst: Steph Wissink
ULTA (+): DISCOVERY FORMAT GROWTH PERSISTS; TEENS OVERWHELMINGLY PREFER TO PURCHASE COSMETICS IN-STORE Ulta ranked No. 2 among preferred beauty shopping destinations for upper-income females, growing share by 1% Y/Y and declining slightly since spring. Ulta achieved the top spot for average-income female shoppers, gaining +2% share vs. the Spring, and +6% Y/Y. Average-income teen girls favored Ulta at 29% of the vote vs. 20% among upper-income teen girls, implying a much wider reach vs. peers and recognizing the mass and prestige balance in the brand portfolio. Spend in specialty beauty formats (65%) continues to exceed all other channels combined according to our survey. 90% of beauty enthusiasts and average-income females prefer to buy color cosmetics in store vs. online. Upper-income females have an even greater preference (92%) to purchase products in-store.
EL (-): COSMETIC BRANDS DONATE SHARE, LED BY MAC MAC remains the No. 1 preferred brand cited by both upper- and average- income females but declined 400+bps Y/Y and 500bps sequentially since Spring. MAC had a more significant sequential drop for beauty enthusiasts (top quintile of beauty spenders). Clinique remains a top 5 brand for skincare, gaining 2% share Y/Y among upper-income, and maintaining share vs. spring. EL’s brands overall ceded 200bps of share Y/Y and sequentially since spring. As the artisanal makeup brand space becomes more competitive, the company’s legacy brands are less able to rely on traditional marketing and promotional tactics to gain share. The millennial-focused Estee Edit line, launched in March, did not appear within our survey.
COTY (-): BRAND RANKINGS DECLINE; COMPETITION IS INCREASING Coty’s largest color cosmetics brand, CoverGirl, ceded 300bps of share Y/Y for average-income and 200bps vs. spring. Competition from artisanal prestige and masstige brands is intensifying; share in legacy brands is declining.
43 | Taking Stock With Teens When It Comes to Teeth Straightening, Consistent across all Teens Want Convenience income ranges, teens want faster treatment times– more so for wealthier ASSUMING THAT CLEAR ALIGNERS WORK AS WELL AS TRADITIONAL teens. BRACKETS AND WIRES, WHICH ONE OF THE FOLLOWING WOULD MAKE YOU WANT TO USE THEM RATHER THAN BRACKETS AND WIRES (BRACES)? 50% Less pain the better. 45% Clear aligners rely on
40% constant gentle Ability to straighten teeth faster 35% pressure, whereas
30% Less pain braces apply brute force to move teeth 25% Convenience (can take out to eat and brush teeth) (rubber bands, 20% Cool designs (like emojis or different colors) tightening of wires, 15% Fewer visits to the orthodontist etc.). 10%
5% Higher the household 0% 0‐40k 40‐60k 60‐80k 80‐100k 100‐120k 120k+ income, the more value teens place on convenience.
44 | Taking Stock With Teens Wealthier Teens More Likely to Wear Overall market Clear Aligners to Straighten Teeth penetration remains low, with 63% of all teens saying that 1-2 out of 10 friends used OUT OF TEN PEOPLE THAT YOU KNOW THAT HAD THEIR TEETH cleared aligners. STRAIGHTENED, HOW MANY OF THEM USED CLEAR ALIGNERS?
70% Wealthier teens are 60% more likely to wear clear aligners – 37% 50% teens with a HHI of 1‐2 $100K+ had 3-6 40% 3‐4 friends use clear 5‐6 30% 7‐8 aligners. By 9‐10 comparison, 29% 20% teens with a HHI <$60k had 3-6 friends 10% use clear aligners.
0% 0‐40k 40‐60k 60‐80k 80‐100k 100‐120k 120k+
45 | Taking Stock With Teens Stock Highlights: Orthopedics, Dental, and Vision Care Analyst: Matt O’Brien
ALGN (+): ALIGN FOCUSED ON SHORTENING TREATMENT TIMES—A KEY FOCUS AMONG TEENS At Align’s recent analyst day in June, it mentioned for the first time an emphasis on speeding up treatment times. There are a number of ways treatment can be shortened: a) Accelerators – there are a number of mouth piece accelerators on the market today that vibrate the tooth/root, loosening them to allow braces or clear aligners to move teeth more easily. b) Another solution ALGN is tinkering with is reducing the wear time per tray. Historically, patients were required to wear each tray for 2 weeks. Now, some orthodontists have reduced the wear time by 1 week and have seen quality results.
1. With 26% of teens focused on pain reduction, this is an important metric for clear aligners in general since they are relatively painless. Clear aligners apply constant gentle pressure to move teeth, whereas braces apply brute force to move teeth (rubber bands, tightening wires, etc.).
2. On the negative side, ALGN has kicked around the idea of introducing aligners with “cool designs.” Based on the survey results, we do not think this will be a successful launch to further penetrate the teen market.
Potential Catalyst
1. ALGN presents data stating that 1 week wear times result in equivalent results compared to traditional braces AND 2 week wear times.
2. While acquiring a Accelerator technology would not be an immediate positive financially, it would indicate that the technology is legitimate and that a market exists. Meaning that patients would pay up for faster therapy times.
46 | Taking Stock With Teens Restaurants Food 23% of Teen Spending Restaurant Spending Trends Restaurants have steadily grown in importance within the broader teen wallet.
FOOD VS. CLOTHING SPEND
30.0% 15.0% During the most recent survey, 20.0% 10.0% restaurants
10.0% 5.0% Net FoodSpend represented 23% of overall spending for 0.0% 0.0% upper-income teens.
10.0% (5.0%)
20.0% (10.0%) In addition to
Clothing Food Spend | Spend increasing share of 30.0% (15.0%) the overall budget Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall
Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring restaurant spending 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Food Clothing Delta continues to outpace spending on clothing.
48 | Taking Stock With Teens Restaurant Spending Trends In addition to increasing both absolute and relative dollars at restaurants teens are showing an increasing PREFERENCE FOR LIMITED SERVICE BRANDS preference for limited 100% service restaurants 90% relative to full service 36% 80% 40% 41% 38% 39% 38% 40% 43% brands. 48% 46% 46% 52% 50% 57% 56% 70% 59%
60% Full Service This is the continuation
50% of a longer-term trend Limited Service we have observed going 40% back to Spring 2009, at 64% 30% 60% 59% 62% 61% 62% 60% 57% 52% 54% 54% least, when teen brand 48% 50% 43% 44% 20% 41% preferences were
10% primarily focused
0% around full service Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall 2009 2010 2011 2012 2013 2014 2015 2016 brands.
49 | Taking Stock With Teens Restaurant Spending Trends In the current “Pay For Performance” stage of
PREFERRED BRANDS (UPPER-INCOME) the cycle we view a 12345brand’s recipe for Fall Starbucks Chipotle Chick-fil-A Taco Bell McDonald's 2016 Spring Starbucks Chipotle Chick-fil-A Panera McDonald's success as equal parts Fall Starbucks Chipotle Chick-fil-A McDonald's Panera 2015 Spring Chipotle Starbucks Chick-fil-A Panera Olive Garden human capital, brand Fall Starbucks Chipotle Chick-fil-A McDonald's Dunkin Donuts 2014 Spring Starbucks Chipotle Chick-fil-A McDonald's Panera equity, prudent growth, Fall Starbucks Chipotle McDonald's Chick-fil-A Panera 2013 Spring Starbucks Chipotle Panera Chick-fil-A McDonald's and capitalizing on 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 strategic opportunities. 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
2016 Fall Starbucks Chipotle Chick-fil-A Taco Bell McDonald's Over time, this should Estimated Average Check By $5.12 $11.34 ~$6.00 $5.98 $5.82 Preferred Brand lend itself to self-funded
PREFERRED BRANDS (AVERAGE-INCOME) development,
12345consistency in Fall Starbucks Chick-fil-A McDonald's Olive Garden Chipotle 2016 Spring Starbucks McDonald's Chick-fil-A Olive Garden Buffalo Wild Wings earnings/cash flow, Fall Starbucks McDonald's Chipotle Chick-fil-A Olive Garden 2015 Spring Starbucks McDonald's Chipotle Chick-fil-A Olive Garden and/or excess capital to Fall Starbucks McDonald's Chipotle Chick-fil-A Taco Bell 2014 Spring Starbucks McDonald's Chipotle Olive Garden Taco Bell deploy back to Fall Starbucks McDonald's Olive Garden Taco Bell Chipotle 2013 Spring Starbucks McDonald's Olive Garden Taco Bell Buffalo Wild Wings shareholders via share Fall Starbucks McDonald's Olive Garden Red Lobster Taco Bell 2012 Spring Starbucks McDonald's Olive Garden Taco Bell Red Lobster repurchase and/or Fall Starbucks McDonald's Olive Garden Taco Bell Applebee's 2011 Spring Starbucks McDonald's Olive Garden Taco Bell Applebee's dividends. Fall McDonalds Starbucks Olive Garden Taco Bell Apple Bee's 2010 Spring Starbucks Olive Garden McDonald's Applebee's Chili's
2016 Fall Starbucks Chick-fil-A McDonald's Olive Garden Chipotle Estimated Average Check By $5.12 ~$6.00 $5.82 $17.00 $11.34 Preferred Brand
50 | Taking Stock With Teens Stock Highlights: Restaurants Analyst: Nicole Miller Regan
SBUX (+): REMAINS MOST PREFERRED BRAND AMONG ALL TEENS Brand equity matters. Starbucks maintains its position as the most preferred brand among both upper and average income teens across all geographies. 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 Chipotle remained the second most preferred brand among upper income teens and tied for top four among average income teens (vs. tied for number five in Spring 2016 survey). Although subtle we note the relative improvement and believe that the sequential move could suggest that trends are broadly mirroring the brand’s efforts to drive traffic and awareness. At the cuisine level, the company remained the overwhelmingly most preferred brand within the Hispanic cuisine category with the results being at relatively similar preference (or % mindshare) sequentially among both upper and average income teens but still below prior year periods. We reiterate our bull positioning grounded by when (not if) improvement occurs the company has ability to leverage strong ULES, a healthy long-term unit growth pipeline, and its human capital investments.
MCD (=/-): SURVEY SUGGESTS BRAND FACING COMPETITIVE INTRUSION AMONG AVERAGE INCOME TEENS Although McDonald’s showed steady mind share levels among upper income teens, survey results suggests continued competitive intrusion from Chick-fil-A (specifically among average income teens) could be impacting the brand’s relative mind share. McDonald’s brand results remain generally strong (in the top three range) while Chick-Fil-A has continued its steady march higher. McDonald’s overwhelming lead as the most preferred hamburger brand was maintained in the latest survey cycle. That said, we note that brand preference remains below peak levels seen in prior survey periods, but we believe operational, culinary, and technology initiatives position McDonald’s for continued improvement over the next several years.
51 | Taking Stock With Teens Media & Devices Music, Video Games, Mobile & Entertainment 26% of Teen Spending Amazon Mindshare Gains Continue Amazon essentially maintained mindshare PREFERRED WEBSITES (UPPER-INCOME) overall, which is in line Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % with our expectations. 1 Amazon 36% 1 Amazon 38% 1 Amazon 41% 1 Amazon 40% 2 Nike 8% 2 Nike 8% 2 Nike 5% 2 Nike 8% 3 Forever 21 5% 3 eBay 4% 3 Forever 21 5% 3 American Eagle 4% 4 eBay 5% 4 Forever 21 3% 4 eBay 3% 4 eBay 3% 5 Victoria's Secret 3% 5 Urban Outfitters 3% 5 American Eagle 3% 5 Forever 21 2% 6 American Eagle 2% 6 American Eagle 2% Victoria's Secret 3% 6 Urban Outfitters 2% Mindshare 7 Urban Outfitters 2% 7 Eastbay 2% 7 Urban Outfitters 3% 7 Nordstrom 1% 8 Eastbay 1% 8 Victoria's Secret 2% 8 Eastbay 2% 8 Victoria's Secret 1% concentration among 9 Brandy Melville 1% 9 Nordstrom 2% 9 Dick's Sporting Goods 1% 9 Hollister 1% 10 Wanelo 1% 10 PacSun 1% 10 PacSun 1% PacSun 1% the top 5 preferred eCommerce sites has increased 7ppts over the past two years. PREFERRED WEBSITES BY GENDER (UPPER-INCOME) Females Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Amazon 23%1Amazon 28%1Amazon 29%1Amazon 27% 2 Forever 21 11% 2 Forever 21 9% 2 Forever 21 11% 2 American Eagle 8% eBay mindshare 3 Victoria's Secret 8% 3 Urban Outfitters 6% 3 Victoria's Secret 6% 3 Forever 21 6% 4 eBay 4% 4 American Eagle 5% 4 American Eagle 5% 4 Urban Outfitters 5% unchanged, which is 5 American Eagle 4% 5 Victoria's Secret 4% 5 Urban Outfitters 5% 5 Victoria's Secret 3% 6 Urban Outfitters 3% 6 Nordstrom 4% 6 Nike 2% 6 Nordstrom 3% incrementally positive 7 Brandy Melville 3% 7 Brandy Melville 3% Sephora 2% 7 Brandy Melville 3% 8 Wanelo 3% 8 Hollister 3% 8 Hollister 2% 8 Hollister 2% relative to previous 9 Charlotte Russe 2% 9 Free People 3% lululemon 2% 9 Etsy 2% 10 Nordstrom 2% 10 Nike 2% 10 PacSun 2% 10 Free People 2% decline. Males Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Amazon 47%1Amazon 45%1Amazon 50%1Amazon 48% 2 Nike 12% 2 Nike 12% 2 Nike 7% 2 Nike 12% 3 eBay 5% 3 eBay 6% 3 eBay 5% 3 eBay 5% 4 Eastbay 2% 4 Eastbay 3% 4 Eastbay 3% 4 Vineyard Vines 1% 5 Steam 2% 5 Dick's Sporting Goods 2% 5 Dick's Sporting Goods 2% 5 Zumiez 1% 6 American Eagle 1% 6 Foot Locker 2% 6 Foot Locker 2% 6 Eastbay 1% Dick's Sporting Goods 1% 7 PacSun 1% 7 Zumiez 2% 7 Adidas 1% 8 Foot Locker 1% 8 Vineyard Vines 1% 8 Supreme 1% PacSun 1% 9 Zappos 1% 9 Ralph Lauren 1% 9 Ralph Lauren 1% 9 Foot Locker 1% 10 PacSun 1% 10 Tilly's 1% 10 Three Sites Tied 1% 10 Ralph Lauren 1% Ralph Lauren 1% Supreme 1%
53 | Taking Stock With Teens Profile of Prime Adoption Prime adoption has increased across all PRIME MEMBERSHIP PENETRATION BY HOUSEHOLD INCOME income brackets in
80% Spring 2014 each of the past six Fall 2014 70% Spring 2015 surveys. Fall 2015 60% Spring 2016 Fall 2016 50% Our survey and other 40% past PJC consumer
30% surveys suggest that
20% there are 63M-66M
10% Prime households in
0% the United States. $21K-$41K $41K-$68K $68K-$112K $112K+ Total
PRIME MEMBERSHIP BY INCOME QUINTILE (000S) 70,000 $112K+ 60,000 $68K-$112K $41K-$68K 50,000 $21K-$41K 40,000 $0K-$21K 30,000
20,000
10,000
0 Spring Fall 2013 Spring Fall 2014 Spring Fall 2015 Spring Fall 2016 2013 2014 2015 2016
54 | Taking Stock With Teens Oh Snap! FB Engagement Declines Snapchat continues to gain steam as most Which social platform do you use at least once per month? engaged and Spring 2015 Fall 2015 Spring 2016 Fall 2016 Snapchat 68% 74% 75% 80% preferred social Instagram 73% 76% 74% 79% platform. Twitter 57% 58% 58% 56% Facebook 47% 56% 60% 52% Pinterest 25% 25% 27% 25% Google+ 14% 24% 23% 22% Decline in Facebook engagement; likely What is your favorite social platform? Spring 2015 Fall 2015 Spring 2016 Fall 2016 due to mix of younger Snapchat 11% 17% 24% 35% teens, Messenger Instagram 29% 29% 23% 24% Twitter 21% 18% 16% 13% divergence, and Facebook 12% 13% 15% 13% shifting use cases for Pinterest 2% 1% 1% 1% social. Google+ 1% 1% 1% 1%
Younger Teens Likely Drawing Down Aggregate Facebook Number Instagram steps up 90% engagement; view 80% Instagram’s default 70% 60% public model as 50% Facebook distinguished from 40% Twitter 30% Instagram Snapchat, highly % using Platform using % 20% Snapchat defensible. 10% 0% 14 15 16 17 18 Age
55 | Taking Stock With Teens Teen iPhone Ownership Spikes iPhone ownership of 74% is highest rating ever with upside iPhone Ownership remaining–79% of 90% teens say next phone 80% 70% will be an iPhone. 60% 50% Apple Watch interest 40% Own an iPhone 30% Expect Next Phone An iPhone remains modest with 20% 11% of teens planning 10% on buying an Apple 0% Watch in the next 6 months vs. 10% in
Apple Watch Intention Spring 2016. 18%
16%
14%
12%
10% Own A Smartwatch 8% Plan to buy Apple Watch 6%
4%
2%
0% Fall-14 Spring-15 Fall-15 Spring-16 Fall-16
56 | Taking Stock With Teens Stock Highlights: Internet Analyst: Gene Munster
AMZN (+): SURVEY SHOWS MAINTAINED MINDSHARE & INCREASING PRIME ADOPTION Amazon maintained mindshare among teens vs. Spring 2016 and gained 200bps y/y; at 40% mindshare in the US, Amazon outstripped our pre-2014 expectations of moderation in the low 30% range. Prime adoption continues to be strong; survey implies 63M-66M U.S. households have Prime; if the 2nd, 3rd and 4th income quintiles adopt Prime to the extent that upper income has, it would add ~20% to Prime membership in the United States. The next leg of the Amazon story will likely be further penetration of member retail consumption.
EBAY (=): MAINTAINING MINDSHARE AN INCREMENTAL POSITIVE eBay saw stabilized mindshare at 3.5%, which is positive vs. the decline from 8% in Fall 2013. We remain Neutral as EBAY’s current valuation (9x ’18E EBITDA) fairly represents the company’s low-growth outlook, in our view.
FB (+): ENGAGEMENT DECLINE LARGELY EXPECTED; SNAPCHAT AND INSTAGRAM CO-EXISTING Facebook saw declines in the percent of teens indicating they use the platform, which is likely the result of 1) declining engagement as new social platforms shift user behavior, 2) younger teens (less engaged) replacing older teens (more engaged) in survey population, and 3) shifting use case towards Messenger may actually be creating two separate social networks in teens’ minds. Decline in Facebook engagement is largely baked into buyside expectations. Instagram growing despite Snapchat popularity – difference between default public (Instagram) and default private (Snapchat) proving to be a defensive moat
AAPL (+): TEENS CONTINUE TO INCREASE IPHONE OWNERSHIP Apple continued to grow smartphone share among teens with 74% of teens owning an iPhone vs 69% in Spring-16. We note this is the biggest survey/survey increase in iPhone ownership since the Fall-14 survey as the iPhone 6 launched. We view the survey as a positive data point on iPhone 7 demand despite there being less overall fanfare around the launch compared to the iPhone 6.
57 | Taking Stock With Teens Console Video Game Takeaways 76% of respondents anticipate buying a DO YOU ALREADY OWN OR EXPECT YOUR HOUSEHOLD TO BUY THE PS4 next-gen console or OR XBOX ONE IN THE NEXT TWO YEARS? already own one, compared to 78% in Spring 2016. New console ownership up to 54% vs 52% in spring.
58 | Taking Stock With Teens Console Video Game Takeaways Teen expected spend on video games HOW MUCH ARE TEENS SPENDING ANNUALLY ON VIDEO GAMES? dipped slightly to $191 for Fall 2016 $191 ‐ Expected Video Game Spend in 2016 $250 14% after reaching a new 12% ‐ Budget Spent On Video Games in 2016 high of $214 in Spring 12% $200 2016, but remains at 10% elevated levels.
$150 8%
6% food (20%) $100 Only and clothing (16%) 4%
$50 exceed male teen 2% spending on video
$0 0% games (12%). 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016
Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Spring Video Game Spend Video Game Spend Allocation
CIRCLE OF LIFE: REQUIRED ITEMS FOR SURVIVAL OF MALE TEENS
59 | Taking Stock With Teens Teen Mobile Game Trends Stable 77% play games on smartphone or tablet, DO YOU PLAY GAMES ON YOUR MOBILE PHONE OR TABLET? compared with 81% in the spring.
% of % of % of % o f Students % of Students % of Students % o f Students % of Spring Students Spring Students Spring Students Spring Students 24% of teens who 2013 Fall 2013 2014 Fall 2014 2015 Fall 2015 2016 Fall 2016 play mobile games Yes 83% 81% 85% 80% 81% 79% 81% 77% spend money in game No 17% 19% 15% 20% 19% 21% 19% 23% (vs. 26% in the spring).
WHEN PLAYING GAMES ON YOUR MOBILE DEVICE, DO YOU BUY VIRTUAL GOODS LIKE ENERGY, COINS OR EXTRA LEVELS?
% of % of % of % of Students % of Students % of Students % of Students % of Spring Students Spring Students Spring Students Spring Students 2013 Fall 2013 2014 Fall 2014 2015 Fall 2015 2016 Fall 2016 Yes 16% 18% 18% 22% 21% 24% 26% 24%
No 84% 82% 82% 78% 79% 76% 74% 76%
60 | Taking Stock With Teens Stock Highlights: Video Games & Digital Media Analyst: Mike Olson
CONSOLE VIDEO GAMES
ATVI(+), EA(+), TTWO(+): SURVEY POINTS TO FASTER UPTAKE OF NEXT-GEN CONSOLES COMPARED TO PRIOR CYCLE, TIME SPENT PLAYING VIDEO GAMES STABLE Video game publishers (ATVI, EA, TTWO) will be beneficiaries of a faster uptake of next-gen consoles with 76% of respondents expecting to buy a PS4 or Xbox One within the next two years or already owning one. This compares to 78% in our Spring survey and 73% in Fall of 2015.
GameStop GME(+): SURVEY SHOWS THAT FULL GAME DOWNLOADS AREN’T REPLACING DISCS OVERNIGHT 40% of teens said they expect at least half of their video game purchases to be full-game downloads this year, flat from 40% in the Spring, but the percentage of teens (28%) that said they won't download any of their games (prefer to buy all games on a disc) slightly increased (from 26% in Spring), suggesting the shift to digital full game downloads isn't happening overnight.
MOBILE GAMES GLUU(=/-) and ZNGA (=/-): SURVEY POINTS TO MODEST DECLINES IN MOBILE GAME INTEREST AND WILLINGNESS TO SPEND ON FREE TO PLAY Mobile gaming interest and willingness to spend in-game declined modestly from all-time highs recorded in Spring 2016. We see these mobile gaming data points as a slight negative for GLUU (OW) and ZNGA (Neutral).
61 | Taking Stock With Teens Video and Music Trends Netflix and YouTube continue to dominate teens’ video TEEN DAILY VIDEO CONSUMPTION consumption with YouTube surpassing Cable TV for the first time increasing to 26% as Cable TV shrunk to 25%.
On-demand music services like Spotify continue to gain market share among TEEN MUSIC CONSUMPTION ACROSS PLATFORMS teens (increased to 34% from 27%), as more traditional platforms and Pandora continue to lose share.
62 | Taking Stock With Teens DIS Well Positioned In Next 12 Months Our survey points to another solid 12 months for the Disney Studio. Disney films MOST ANTICIPATED FILMS IN THE NEXT 12 MONTHS dominated the most anticipated list with Rogue One, Beauty and the Beast, Pirates of the Caribbean, Thor and Doctor Strange taking the No. 2, No. 3 and No. 4, No. 6, No. 7 spots.
63 | Taking Stock With Teens Stock Highlights: Media and Entertainment Analyst: Stan Meyers
DIS (+): SURVEY POINTS TO ANOTHER SOLID 12-MONTH RUN FOR THE DISNEY STUDIO Our survey points to another solid 12 months for the Disney Studio. Disney films dominated the most anticipated list with Rogue One, Beauty and the Beast, Pirates of the Caribbean, Thor and Doctor Strange taking the No. 2, No. 3 and No. 4, No. 6, No. 7 spots in the survey.
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 and YouTube continue to dominate teens’ video consumption with YouTube surpassing Cable TV for the first time (increasing to 26%), as Cable TV shrinks to 25%. 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, instead shifting to on-demand platforms such as Spotify and Apple Music. Teens spent 15% of their time listening to Pandora – down from 18% in the spring. Other on- demand services like Spotify jumped to 34% from 27% in the spring and 21% a year ago. We believe this trend is already built into the stock and see a great entry point ahead of its on-demand product launch.
64 | Taking Stock With Teens Questions & Answers
SPEAKER COVERAGE Neely Tamminga Multi-Brand Retail & Specialty Commerce Erinn Murphy Global Fashion & Lifestyle Brands Stephanie Wissink Household, Beauty & Children's Products Matthew O’Brien Medical Technology: Orthopedics, Dental & Vision Care Nicole Miller Regan Restaurants Gene Munster Internet Michael Olson Online Content Stan Meyers Media & Entertainment
65 | Taking Stock With Teens Appendix Project Framework & Key Demographics
ALL TEENS Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Teens Surveyed 10,000 6,500 9,400 6,200 7,200 7,500 8,650 5,200 Gender - Female 45% 44% 44% 49% 47% 47% 47% 47% Gender - Male 55% 56% 56% 51% 53% 53% 53% 53% Average Age 16.0 16.5 16.0 16.3 16.0 16.4 16.2 16.3 Percentage Of Teens Part-Time Employed 34% 39% 36% 35% 35% 33% 35% 36% Average Household Income $68,800 $62,500 $68,000 $67,000 $73,000 $63,000 $67,000 $69,000
UPPER-INCOME TEEN SURVEY Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Teens Surveyed - Upper Income 2,800 1,300 2,700 1,400 2,200 1,300 2,400 1,600 Gender - Female 41% 46% 41% 46% 46% 43% 44% 45% Gender - Male 59% 54% 59% 54% 54% 57% 56% 55% Average Age 15.8 16.5 15.9 16.2 16.1 16.2 16.1 16.1 Percentage Of Teens Part-Time Employed 31% 40% 33% 36% 36% 33% 34% 33% Average Household Income $109,000 $101,000 $107,000 $104,000 $109,000 $103,000 $105,000 $104,000
AVERAGE-INCOME TEEN SURVEY Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Teens Surveyed - Average Income 7,200 5,200 6,700 4,800 5,000 6,200 6,250 3,600 Gender - Female 46% 44% 45% 49% 48% 48% 49% 47% Gender - Male 54% 56% 55% 51% 52% 52% 51% 53% Average Age 16.0 16.4 16.1 16.4 16.0 16.4 16.2 16.5 Percentage Of Teens Part-Time Employed 36% 39% 37% 34% 35% 33% 35% 38% Average Household Income $53,000 $53,000 $52,000 $56,000 $56,000 $55,000 $53,000 $54,000
60% West, 17% 50%
40% South, 45% 30%
20% Midwest, 30%
Views On The EconomyViews OnThe 10% Getting Better Staying the Same Getting Worse
0% 2011 2012 2013 2014 2015 2016 Northeast, 8%
67 | Taking Stock With Teens Spending by Category by Income Demographic
SPENDING BY CATEGORY (UPPER-INCOME, ALL TEENS)
Spending by Category - All Teens Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Video Games / Systems 7%7%7%8%7%7%7%6% Music / Movies (DVD/CD) 5% 5% 6% 6% 6% 6% 6% 7% Electronics / Gadgets 8%8%8%8%8%8%7%8% Clothing 21% 20% 20% 20% 21% 21% 21% 21% Accessories / Personal Care / Cosmetics 9% 10% 9% 10% 10% 9% 9% 10% Shoes 8%8%9%7%8%9%9%8% Food 23% 22% 22% 23% 20% 21% 20% 18% Concerts / Movies / Sporting Events 6% 5% 6% 6% 6% 6% 6% 6% Car 6% 9% 7% 8% 9% 9% 9% 8% Books / Magazines 1%2%2%2%2%2%2%2% Furniture / Room Accessories 2%1%1%1%2%1%2%2% Other 4% 3% 3% 4% 3% 3% 3% 3% Total Fashion (Clothing, Access & Footwear) 38% 38% 38% 36% 39% 38% 39% 40%
SPENDING BY CATEGORY (AVERAGE-INCOME, ALL TEENS)
Spending by Category - All Teens Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Video games / systems 8%8%7%7%7%7%7%6% Music / movies (DVD/CD) 5% 6% 6% 6% 6% 7% 6% 7% Electronics / gadgets 8%8%8%8%8%8%8%8% Clothing 20% 18% 20% 20% 20% 21% 21% 20% Accessories/personal care/cosmetics 11% 11% 10% 11% 10% 11% 11% 10% Shoes 10% 9% 10% 9% 9% 10% 10% 8% Food 21% 20% 19% 21% 17% 18% 16% 18% Concerts/Movies/Sporting events 5% 5% 5% 5% 5% 5% 5% 6% Car 8% 9% 9% 8% 9% 9% 10% 10% Books/magazines 2%2%2%2%2%2%2%2% Furniture / room accessories 2%2%2%2%2%2%2%2% Other 4% 4% 4% 3% 3% 3% 3% 3% Total Fashion (Clothing, Access & Footwear) 40% 38% 39% 40% 40% 41% 42% 39%
68 | Taking Stock With Teens Aggregated Spending by Category
SPENDING BY CATEGORY (ALL TEENS)
Spending by Category - All Teens Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Video Games / Systems 7%8%7%8%7%7%7%6% Music / Movies (DVD/CD) 5% 6% 6% 6% 6% 7% 6% 7% Electronics / Gadgets 8%8%8%8%8%8%7%8% Clothing 20% 19% 20% 20% 21% 21% 21% 20% Accessories / Personal Care / Cosmetics 10% 10% 10% 11% 10% 11% 10% 11% Shoes 9% 9% 9% 8% 9% 9% 10% 9% Food 21% 21% 20% 21% 18% 18% 17% 17% Concerts / Movies / Sporting Events 5% 5% 6% 5% 5% 5% 5% 5% Car 8% 9% 9% 8% 9% 9% 10% 10% Books / Magazines 2%2%2%2%2%2%2%2% Furniture / Room Accessories 2%2%2%2%2%2%2%2% Other 4% 3% 4% 3% 3% 3% 3% 3% Total Fashion (Clothing, Access & Footwear) 40% 38% 39% 39% 40% 41% 41% 40%
69 | Taking Stock With Teens Shopping Channel Preferences
TIME SPENT IN SHOPPING CHANNELS (UPPER-INCOME, FEMALES) Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Specialty 33% 31% 33% 30% 32% 33% 31% 33% Major Chain / Dept Store / Off Price 28% 29% 31% 33% 31% 29% 32% 20% Discount 13% 14% 13% 13% 13% 14% 13% 17% Outlet 11% 11% 10% 11% 11% 11% 12% 14% Mail Order 6%6%6%6%5%6%6%4% Online Only E-Tailers 9% 9% 8% 9% 7% 8% 7% 13%
TIME SPENT IN SHOPPING CHANNELS (UPPER-INCOME, ALL TEENS)
Fall 2016 Spring 2016 Fall 2015 Spring 2015 Fall 2014 Spring 2014 Fall 2013 Spring 2013 Specialty 26% 27% 27% 26% 27% 27% 27% 26% Major Chain / Dept Store / Off Price 27% 29% 29% 31% 30% 28% 30% 20% Discount 12% 13% 12% 12% 13% 13% 12% 15% Outlet 15% 12% 13% 12% 13% 13% 14% 15% Mail Order 6%6%6%6%6%7%6%4% Online Only E-Tailers 15% 14% 14% 13% 11% 13% 10% 18%
70 | Taking Stock With Teens Off-Price Ticks Down Among Teens
IS IT POPULAR TO SHOP AT OFF-PRICE STORES? (UPPER-INCOME, YES)
80% Female Male
70%
60%
50%
40%
30% Spring 2013 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016
IF YOU SHOP AT OFF-PRICE STORES, DO YOU PREFER OFF-PRICE (UPPER-INCOME, YES)
80% Female Male
70%
60%
50%
40%
30% Spring 2013 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016
71 | Taking Stock With Teens Top Fashion Trends Right Now
TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, MALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike/Jordans 17% 1 Nike/Jordans 18% 1 Nike/Jordans 20% 1 Nike/Jordans 19% 2 Jogger Pants 10% 2 Preppy 8% 2 Jogger Pants 12% 2 Jogger Pants 8% 3 Ralph Lauren 9% Ralph Lauren 8% 3 Ralph Lauren 6% 3 Vineyard Vines 7% 4 Preppy 8% 4 Vineyard Vines 8% 4 Preppy 6% 4 Athletic Wear 6% 5 Vineyard Vines 7% 5 Jogger Pants 7% 5 Athletic Wear 5% 5 Khakis/Chinos 6% 6 Khakis/Chinos 5% 6 Boat Shoes 5% 6 Hair / Man Buns 5% 6 Preppy 6% 7 Athletic Wear 4% Khakis/Chinos 5% Khakis/Chinos 5% 7 Ralph Lauren 4% 8 Timberland 4% 8 Athletic Wear 4% 8 Vineyard Vines 4% 8 Tall Socks 4% 9 Boat Shoes 3% 9 Tall Socks 4% 9 Boat Shoes 3% 9 Boat Shoes 3% Tall Socks 3% 10 Shoes 3% 10 Tall Socks 2% 10 Adidas 2%
TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Leggings/lululemon 33% 1 Leggings/lululemon 24% 1 Leggings/lululemon 23% 1 Leggings/lululemon 25% 2 Victoria's Secret 5% 2 Nike 5% 2 Victoria's Secret 7% 2 Birkenstock 6% 3 Boots 4% 3 Birkenstock 5% 3 Converse 6% 3 Victoria's Secret 5% 4 UGG Australia 4% 4 Converse 4% 4 Nike 6% 4 Converse 4% 5 Nike 4% 5 Victoria's Secret 4% 5 Boots 3% 5 Ripped Jeans 4% 6 Crop Tops 3% 6 Crop Tops 3% 6 Crop Tops 3% 6 Jeans 3% 7 Converse 2% 7 Short Shorts 2% 7 Athletic Wear 2% 7 Adidas 3% 8 High-Waist Pants/Skirts 2% 8 Rompers 2% 8 Jeans 2% 8 Bralettes 3% 9 Birkenstock 2% Vineyard Vines 2% 9 Michael Kors 2% 9 Nike 3% Dresses 2% 10 Dresses 2% 10 Adidas 2% 10 Chokers 3%
72 | Taking Stock With Teens Uptrending Brands
BRANDS STARTING TO WEAR (UPPER-INCOME, MALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 15% 1 Nike 13% 1 Nike 11% 1 Nike 13% 2 Ralph Lauren 9% 2 Ralph Lauren 11% 2 Ralph Lauren 10% 2 Ralph Lauren 10% 3 Under Armour 6% 3 Adidas 6% 3 Adidas 7% 3 Adidas 8% 4 Vineyard Vines 5% 4 Vineyard Vines 6% 4 American Eagle 4% 4 American Eagle 5% 5 American Eagle 4% 5 Under Armour 4% 5 Vineyard Vines 3% 5 Vineyard Vines 5% 6 Adidas 3% 6 American Eagle 4% 6 Under Armour 3% 6 Under Armour 5% 7 Vans 3% 7 Vans 3% 7 Vans 3% 7 Vans 3% 8 Sperry Top-Sider 2% 8 H&M 2% 8 Hollister 2% 8 H&M 2% 9 Express 2% 9 Tommy Hilfiger 2% 9 New Balance 2% 9 Lululemon 2% Hollister 2%10RVCA 2%10Four Brands Tied 2% 10 Hollister 2% J. Crew 2%
BRANDS STARTING TO WEAR (UPPER-INCOME, FEMALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 lululemon 6% 1 Free People 7% 1 American Eagle 7% 1 American Eagle 9% 2 Nike 6% 2 Brandy Melville 5% 2 Nike 6% 2 Urban Outfitters 5% 3 Victoria's Secret 5% 3 lululemon 5% 3 Forever 21 5% 3 Free People 5% 4 Forever 21 5% 4 Forever 21 4% 4 H&M 4% Nike 5% 5 H&M 5% 5 American Eagle 4% 5 Victoria's Secret 4% 5 lululemon 4% 6 American Eagle 4% 6 PacSun 4% 6 Express 4% 6 Victoria's Secret 4% 7 Urban Outfitters 3% 7 Victoria's Secret 4% 7 Adidas 3% 7 Adidas 4% 8 Free People 3% 8 Urban Outfitters 3% Free People 3% 8 PacSun 4% 9 PacSun 3% 9 Nike 3% Hollister 3% 9 Forever 21 4% 10 Express 3% 10 H&M 3% lululemon 3% 10 Brandy Melville 3%
73 | Taking Stock With Teens Downtrending Brands
BRANDS NO LONGER WORN (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Gap 14% 1 Gap 13% 1 Gap 13% 1 Adidas 10% 2 Adidas 10% 2 Adidas 10% 2 Adidas 9% 2 Gap 10% 3 Abercrombie & Fitch 8% 3 Abercrombie & Fitch 8% 3 Abercrombie & Fitch 7% 3 Under Armour 7% 4 Aeropostale 6% 4 Under Armour 6% 4 Nike 7% 4 Nike 6% 5 Hollister 5% 5 Nike 5% 5 Under Armour 6% 5 Reebok 6% 6 Nike 5% 6 Aeropostale 4% 6 Hollister 5% 6 Skechers 5% 7 American Eagle 4% 7 Hollister 4% 7 Reebok 5% 7 Puma 5% Under Armour 4% 8 Reebok 4% 8 Aeropostale 4% 8 Abercrombie & Fitch 4% 9 Reebok 3% 9 Skechers 4% 9 American Eagle 4% 9 Hollister 4% 10 DC Shoes 3% 10 Ralph Lauren 3% 10 Skechers 3% 10 Aeropostale 3% Puma 3%
BRANDS NO LONGER WORN (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Aeropostale 28% 1 Aeropostale 22% 1 Aeropostale 26% 1 Justice 29% 2 Abercrombie & Fitch 19% 2 Justice 20% 2 Justice 20% 2 Aeropostale 17% 3 Justice 14% 3 Abercrombie & Fitch 18% 3 Abercrombie & Fitch 12% 3 Abercrombie & Fitch 12% 4 Hollister 11% 4 Hollister 8% 4 Hollister 9% 4 Hollister 9% 5 Gap 5% 5 Gap 7% 5 Gap 5% 5 Gap 4% 6 Forever 21 2% 6 Old Navy 2% 6 Old Navy 3% 6 Forever 21 3% 7 Old Navy 2% 7 American Eagle 2% 7 Forever 21 2% 7 American Eagle 1% 8 American Eagle 2% 8 Forever 21 2% 8 American Eagle 2% Old Navy 1% 9dELiA*s 1%9dELiA*s 2%9Nike 2%9H&M 1% Miss Me Jeans 1% 10 Target 1% 10 Target 1% Ralph Lauren 1% Victoria's Secret 1%
74 | Taking Stock With Teens Top Clothing Brands Among Upper-Income
PREFERRED CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 24% 1 Nike 27% 1 Nike 21% 1 Nike 29% 2 Forever 21 8% 2 Forever 21 7% 2 American Eagle 8% 2 American Eagle 9% 3 American Eagle 6% 3 American Eagle 6% 3 Forever 21 7% 3 Forever 21 5% 4 Ralph Lauren 4% 4 Ralph Lauren 5% 4 Ralph Lauren 6% 4 Ralph Lauren 4% 5 Victoria's Secret 4% 5 Urban Outfitters 3% 5 Hollister 4% 5 Urban Outfitters 3% 6 Urban Outfitters 3% 6 PacSun 2% 6 PacSun 3% 6 H&M 3% 7 Hollister 2% 7 Free People 2% 7 Urban Outfitters 3% 7 PacSun 2% 8 Nordstrom 2% 8 H&M 2% Victoria's Secret 3% 8 Adidas 2% 9 Free People 2% 9 Vineyard Vines 2% 9 H&M 3% 9 Vineyard Vines 2% PacSun 0.02 10 Nordstrom 2% 10 Adidas 2% 10 Victoria's Secret 2%
PREFERRED CLOTHING BRANDS (UPPER-INCOME, FEMALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Forever 21 16% 1 Forever 21 15% 1 Forever 21 14% 1 American Eagle 17% 2 Victoria's Secret 7% 2 American Eagle 10% 2 American Eagle 11% 2 Forever 21 11% 3 American Eagle 7% 3 Urban Outfitters 7% 3 Nike 7% 3 Nike 7% 4 Nike 6% 4 Nike 6% 4 Victoria's Secret 6% 4 Urban Outfitters 7% 5 Urban Outfitters 5% 5 Free People 6% 5 Urban Outfitters 5% 5 Victoria's Secret 5% 6 Nordstrom 4% 6 Nordstrom 4% 6 Hollister 5% 6 H&M 3% 7 Free People 4% 7 Victoria's Secret 4% 7 PacSun 4% 7 PacSun 3% 8 Hollister 3% 8 PacSun 4% 8 H&M 4% 8 lululemon 3% 9 PacSun 3% 9 lululemon 3% 9 Nordstrom 3% 9 Brandy Melville 3% 10 Four Brands Tied 2% 10 Hollister 3% 10 Charlotte Russe 2% 10 Free People 3% Nordstrom 3%
PREFERRED CLOTHING BRANDS (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 40% 1 Nike 42% 1 Nike 33% 1 Nike 44% 2 Ralph Lauren 7% 2 Ralph Lauren 8% 2 Ralph Lauren 10% 2 Ralph Lauren 6% 3 American Eagle 4% 3 American Eagle 4% 3 American Eagle 5% 3 American Eagle 4% 4 Vineyard Vines 3% 4 Vineyard Vines 3% 4 Adidas 3% 4 Adidas 3% 5 Vans 2% 5 Adidas 2% 5 PacSun 3% 5 Vineyard Vines 3% 6 Adidas 2% 6 H&M 2% 6 Hollister 2% 6 H&M 3% Kohl's 2% 7 PacSun 2% 7 Abercrombie & Fitch 2% 7 Vans 2% 8 J.Crew 2% 8 Abercrombie & Fitch 2% 8 Vans 2% 8 Under Armour 2% Under Armour 2% 9 Kohl's 1% 9 Supreme 2% 9 PacSun 1% 10 Hollister 2% 10 Hollister 1% 10 Vineyard Vines 2% Hollister 1% Vans 1%
75 | Taking Stock With Teens Top Clothing Brands Among Average-Income
PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 19% 1 Nike 21% 1 Nike 23% 1 Nike 27% 2 Forever 21 7% 2 American Eagle 8% 2 American Eagle 9% 2 American Eagle 8% 3 American Eagle 7% 3 Forever 21 6% 3 Forever 21 5% 3 Forever 21 6% 4 Ralph Lauren 5% 4 Ralph Lauren 5% 4 Ralph Lauren 5% 4 Ralph Lauren 5% 5 Hollister 4% 5 Hollister 4% 5 Victoria's Secret 4% 5 Hollister 3% 6 Victoria's Secret 4% 6 Victoria's Secret 4% 6 Hollister 4% 6 Victoria's Secret 3% 7 PacSun 3% 7 PacSun 2% 7 H&M 2% 7 H&M 3% 8 H&M 2% 8 H&M 2% 8 Under Armour 2% 8 Adidas 2% 9 Kohl's 2% 9 Hot Topic 2% 9 PacSun 2% 9 rue21 2% 10 Three Brands Tied 10 Aeropostale 2% 10 Aeropostale 2% 10 PacSun 2% PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Forever 21 14% 1 Forever 21 12% 1 Forever 21 11% 1 American Eagle 12% 2 American Eagle 8% 2 American Eagle 10% 2 American Eagle 11% 2 Forever 21 12% 3 Victoria's Secret 8% 3 Victoria's Secret 8% 3 Nike 10% 3 Nike 12% 4 Nike 6% 4 Nike 7% 4 Victoria's Secret 10% 4 Victoria's Secret 7% 5 Hollister 5% 5 Hollister 6% 5 Hollister 4% 5 rue21 4% 6 Charlotte Russe 4% 6 PacSun 3% 6 rue21 3% 6 Hollister 4% 7 Urban Outfitters 3% 7 rue21 3% 7 H&M 2% 7 H&M 3% 8 PacSun 3% 8 H&M 3% 8 Hot Topic 2% 8 PacSun 3% 9 H&M 3% 9 Hot Topic 3% 9 Charlotte Russe 2% 9 Hot Topic 2% 10 rue21 2% 10 Aeropostale 2% 10 Aeropostale 2% Ralph Lauren 2%
PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 33% 1 Nike 33% 1 Nike 34% 1 Nike 40% 2 Ralph Lauren 8% 2 Ralph Lauren 8% 2 Ralph Lauren 8% 2 Ralph Lauren 7% 3 American Eagle 6% 3 American Eagle 7% 3 American Eagle 7% 3 American Eagle 5% 4 PacSun 3% 4 Hollister 3% 4 Under Armour 3% 4 Adidas 3% 5 Hollister 3% 5 Under Armour 3% 5 Hollister 3% 5 Hollister 3% 6 H&M 2% 6 PacSun 2% 6 PacSun 2% 6 Under Armour 3% 7 Kohl's 2% 7 Adidas 2% 7 H&M 2% 7 H&M 2% 8 Adidas 2% 8 Vans 2% 8 Adidas 2% 8 Vans 2% Vans 2% 9 Levi's 2% 9 Aeropostale 2% 9 PacSun 2% 10 Aeropostale 2% 10 H&M 2% 10 Vans 2% 10 Levi's 2%
76 | Taking Stock With Teens Top Footwear Brands Among Upper-Income
PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Nike 46%1Nike 50%1Nike 48%1Nike 51% 2 Vans 9% 2 Vans 9% 2 Vans 10% 2 Vans 9% 3 Converse 5% 3 Converse 7% 3 Converse 7% 3 Converse 7% 4 DSW 3% 4 Sperry 4% 4 Adidas 4% 4 Adidas 6% Steve Madden 3% 5 Steve Madden 3% 5 Sperry 3% 5 Steve Madden 2% 6 Sperry 3% 6 DSW 3% 6 DSW 3% 6 Sperry 2% 7 UGG 2% 7 Adidas 2% 7 Steve Madden 3% 7 DSW 2% 8 Adidas 2% 8 Foot Locker 1% 8 Foot Locker 2% 8 Birkenstock 2% 9 Nordstrom 1% 9 Birkenstock 1% 9 UGG 1% 9 Foot Locker 1% 10 Payless ShoeSource 1% Nordstrom 1% 10 TOMS 1% 10 Nordstrom 1%
PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 22% 1 Nike 28% 1 Nike 32% 1 Nike 30% 2 Converse 10% 2 Converse 12% 2 Converse 14% 2 Converse 15% 3 Vans 9% 3 Vans 10% 3 Vans 9% 3 Vans 7% 4 DSW 7% 4 Steve Madden 8% 4 DSW 7% 4 Steve Madden 5% Steve Madden 7% 5 DSW 7% 5 Steve Madden 5% 5 Adidas 5% 6 UGG 4% 6 Birkenstock 3% 6 Adidas 3% 6 DSW 5% 7 Nordstrom 3% 7 Nordstrom 3% 7 UGG 3% 7 Birkenstock 4% 8 Payless ShoeSource 3% 8 Tory Burch 3% 8 Sperry 2% 8 Nordstrom 2% 9 Sperry 2% 9 UGG 2% 9 TOMS 2% 9 UGG 2% 10 Famous Footwear 2% 10 Sperry 2% 10 Foot Locker 2% 10 Michael Kors 1% Payless ShoeSource 2% Sperry 1% PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 67% 1 Nike 66% 1 Nike 63% 1 Nike 66% 2 Vans 8% 2 Vans 9% 2 Vans 10% 2 Vans 11% 3 Sperry 3% 3 Sperry 5% 3 Adidas 6% 3 Adidas 6% 4 Adidas 3% 4 Adidas 3% 4 Sperry 4% 4 Sperry 3% 5 Converse 2% 5 Converse 2% 5 Converse 2% 5 Foot Locker 2% Foot Locker 2% 6 Foot Locker 2% 6 Foot Locker 2% 6 Converse 2% 7 New Balance 1% 7 New Balance 1% 7 Asics 1% 7 Under Armour 1% 8 ASICS 1% 8 Ralph Lauren 1% 8 Champs Sports 1% 8 ASICS 1% Ralph Lauren 1% 9 Under Armour 1% 9 Clarks 1% New Balance 1% 10 Clarks 1% 10 Champs Sports 0% 10 Under Armour 0% 10 Finish Line 0% Timberland 1% Puma 0% New Balance 0%
77 | Taking Stock With Teens Top Footwear Brands Among Average-Income
PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Nike 46%1Nike 51%1Nike 54%1Nike 53% 2 Vans 11% 2 Vans 10% 2 Vans 9% 2 Vans 9% 3 Converse 7% 3 Converse 6% 3 Converse 6% 3 Converse 7% 4 Sperry 3% 4 Sperry 3% 4 Adidas 4% 4 Adidas 5% 5 Adidas 2% 5 Adidas 2% 5 Sperry 2% 5 Foot Locker 3% 6 Steve Madden 2% 6 Foot Locker 2% 6 Foot Locker 2% 6 Sperry 2% 7 Foot Locker 2% 7 Steve Madden 1% 7 Steve Madden 1% 7 Birkenstock 2% 8 Payless ShoeSource 1% 8 Payless ShoeSource 1% 8 DSW 1% 8 Steve Madden 1% 9 UGG 1% 9 DSW 1% 9 Under Armour 1% 9 Payless ShoeSource 1% 10 Three Brands Tied 1% 10 Birkenstock 1% 10 Journeys 1% 10 Under Armour 1% Payless ShoeSource 1% UGG 1%
PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 30% 1 Nike 35% 1 Nike 41% 1 Nike 38% 2 Vans 12% 2 Converse 12% 2 Converse 11% 2 Converse 12% 3 Converse 10% 3 Vans 11% 3 Vans 8% 3 Vans 9% 4 Steve Madden 4% 4 Steve Madden 3% 4 Steve Madden 3% 4 Adidas 4% 5 Payless ShoeSource 3% 5 Sperry 2% 5 Adidas 3% 5 Birkenstock 3% 6 Sperry 3% 6 DSW 2% 6 DSW 2% 6 Foot Locker 2% 7 UGG 2% 7 Payless ShoeSource 2% 7 UGG 2% 7 Steve Madden 2% 8 Tory Burch 2% 8 Birkenstock 2% 8 Payless ShoeSource 2% 8 Sperry 2% 9 DSW 2% 9 Journeys 2% 9 Birkenstock 2% 9 Payless ShoeSource 2% 10 TOMS 2% 10 UGG 2% 10 Foot Locker 2% 10 DSW 1%
PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 63% 1 Nike 65% 1 Nike 65% 1 Nike 65% 2 Vans 9% 2 Vans 9% 2 Vans 9% 2 Vans 9% 3 Sperry 4% 3 Adidas 4% 3 Adidas 4% 3 Adidas 6% 4 Adidas 3% 4 Sperry 3% 4 Converse 2% 4 Foot Locker 3% 5 Converse 3% 5 Converse 2% 5 Sperry 2% 5 Sperry 2% 6 Foot Locker 2% 6 Foot Locker 2% 6 Foot Locker 2% 6 Converse 2% 7 New Balance 1% 7 Ralph Lauren 1% 7 Under Armour 1% 7 Under Armour 1% 8 Ralph Lauren 1% 8 Under Armour 1% 8 Ariat 1% 8 New Balance 1% 9 DC Shoes 1% 9 Ariat 1% 9 ASICS 1% 9 ASICS 1% 10 Champs Sports 1% 10 DC Shoes 1% 10 Ralph Lauren 1% 10 Ralph Lauren 1% Skechers 1%
78 | Taking Stock With Teens Top Athletic Clothing Brands Among Upper-Income
PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 72% 1 Nike 72% 1 Nike 71% 1 Nike 71% 2 Under Armour 7% 2 lululemon 7% 2 Adidas 7% 2 lululemon 7% 3 lululemon 4% 3 Under Armour 6% 3 Under Armour 5% 3 Adidas 7% 4 Adidas 4% 4 Adidas 4% 4 lululemon 5% 4 Under Armour 6% 5 The North Face 1% 5 The North Face 1% 5 The North Face 1% 5 Athleta 1% The North Face 1%
PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 70% 1 Nike 67% 1 Nike 69% 1 Nike 65% 2 lululemon 8% 2 lululemon 15% 2 lululemon 9% 2 lululemon 15% 3 Under Armour 5% 3 Under Armour 5% 3 Adidas 5% 3 Adidas 7% 4 Adidas 3% 4 Adidas 3% 4 Under Armour 4% 4 Under Armour 4% 5 The North Face 1% 5 The North Face 1% 5 Athleta 2% 5 Athleta 1%
PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 73% 1 Nike 75% 1 Nike 73% 1 Nike 76% 2 Under Armour 8% 2 Under Armour 6% 2 Adidas 8% 2 Under Armour 7% 3 Adidas 4% 3 Adidas 5% 3 Under Armour 7% 3 Adidas 7% 4 The North Face 1% 4 Bauer 1% 4 The North Face 2% 4 lululemon 1% 5 Bauer 1% 5 The North Face 1% 5 Bauer 1% 5 Columbia 1% Patagonia 1%
79 | Taking Stock With Teens Top Athletic Clothing Brands Among Average-Income
PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Nike71%1Nike70%1Nike69%1Nike72% 2 Under Armour 7% 2 Under Armour 10% 2 Under Armour 10% 2 Under Armour 9% 3 Adidas 5% 3 Adidas 5% 3 Adidas 5% 3 Adidas 7% 4 lululemon 2% 4 lululemon 2% 4 lululemon 2% 4 lululemon 2% 5 The North Face 1% 5 The North Face 1% 5 The North Face 1% 5 Victoria's Secret 1%
PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 72% 1 Nike 72% 1 Nike 70% 1 Nike 73% 2 Under Armour 6% 2 Under Armour 8% 2 Under Armour 9% 2 Under Armour 7% 3 Adidas 5% 3 lululemon 4% 3 Adidas 4% 3 Adidas 6% 4 lululemon 4% 4 Adidas 4% 4 lululemon 4% 4 lululemon 5% 5 The North Face 1% 5 The North Face 1% 5 Victoria's Secret 1% 5 Victoria's Secret 1%
PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, MALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 71% 1 Nike 69% 1 Nike 68% 1 Nike 71% 2 Under Armour 9% 2 Under Armour 11% 2 Under Armour 12% 2 Under Armour 11% 3 Adidas 6% 3 Adidas 6% 3 Adidas 6% 3 Adidas 8% 4 Puma 1% 4 The North Face 1% 4 The North Face 1% 4 Columbia 1% The North Face 1% 5 Mossy Oak 0% 5 Columbia 0% The North Face 1%
80 | Taking Stock With Teens Top Athletic Footwear Brands Among Upper-Income
PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 81% 1 Nike 83% 1 Nike 81% 1 Nike 83% 2 Adidas 4% 2 Adidas 4% 2 Adidas 6% 2 Adidas 7% 3 New Balance 2% 3 ASICS 2% 3 ASICS 2% 3 ASICS 2% 4 ASICS 1% 4 New Balance 2% 4 New Balance 1% New Balance 2% 5 Under Armour 1% 5 Under Armour 1% 5 Under Armour 1% 5 Under Armour 1%
PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 82% 1 Nike 87% 1 Nike 85% 1 Nike 86% 2 Adidas 3% 2 Adidas 3% 2 Adidas 4% 2 Adidas 5% 3 ASICS 2% 3 ASICS 2% 3 ASICS 2% 3 ASICS 2% 4 Mizuno 2% 4 Mizuno 1% 4 Brooks 1% 4 New Balance 1% New Balance 2% 5 New Balance 1% 5 Mizuno 1% 5 Brooks 1%
PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 79% 1 Nike 80% 1 Nike 78% 1 Nike 80% 2 Adidas 4% 2 Adidas 6% 2 Adidas 8% 2 Adidas 8% 3 Under Armour 2% 3 New Balance 2% 3 New Balance 2% 3 New Balance 2% 4 New Balance 2% 4 Under Armour 2% 4 Under Armour 2% 4 Under Armour 2% 5 ASICS 1% 5 ASICS 2% 5 ASICS 1% 5 ASICS 1%
81 | Taking Stock With Teens Top Athletic Footwear Brands Among Average-Income
PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Nike82%1Nike81%1Nike80%1Nike82% 2 Adidas 5% 2 Adidas 4% 2 Adidas 5% 2 Adidas 6% 3 Under Armour 1% 3 Under Armour 3% 3 Under Armour 3% 3 Under Armour 2% 4 ASICS 1% 4 ASICS 2% 4 ASICS 1% 4 ASICS 1% 5 New Balance 1% 5 New Balance 1% 5 New Balance 1% 5 New Balance 1%
PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Nike 85% 1 Nike 84% 1 Nike 84% 1 Nike 86% 2 Adidas 3% 2 Adidas 3% 2 Adidas 4% 2 Adidas 5% 3 ASICS 1% 3 ASICS 2% 3 Under Armour 1% 3 ASICS 1% 4 Under Armour 1% 4 Under Armour 1% 4 ASICS 1% 4 Under Armour 1% 5 Mizuno 1% 5 Mizuno 1% 5 Mizuno 1% 5 Brooks 1%
PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, MALES)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1Nike80%1Nike78%1Nike77%1Nike78% 2 Adidas 6% 2 Adidas 6% 2 Adidas 6% 2 Adidas 8% 3 Under Armour 2% 3 Under Armour 4% 3 Under Armour 3% 3 Under Armour 3% 4 ASICS 1% 4 ASICS 1% 4 New Balance 1% 4 New Balance 2% 5 New Balance 1% 5 New Balance 1% 5 ASICS 1% 5 ASICS 1%
82 | Taking Stock With Teens Top Sports Among Upper-Income
FAVORITE SPORT (UPPER-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Soccer 14% 1 Soccer 16% 1 Soccer 16% 1 Soccer 16% 2 Basketball 11% 2 Basketball 12% 2 Basketball 13% 2 Basketball 13% 3 Running 10% 3 Football 10% 3 Running 10% 3 Football 11% 4 Football 8% 4 Running 8% 4 Football 9% 4 Running 7% 5 Baseball 6% 5 Baseball 6% 5 Baseball 6% 5 Baseball 6%
FAVORITE SPORT (UPPER-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Soccer 16% 1 Soccer 19% 1 Soccer 18% 1 Soccer 16% 2 Running 14% 2 Running 12% 2 Running 15% 2 Volleyball 10% 3 Volleyball 8% 3 Volleyball 9% 3 Volleyball 7% 3 Running 10% 4 Swimming 8% 4 Camping 6% 4 Basketball 7% 4 Swimming 7% 5 Cheerleading 7% 5 Basketball 6% 5 Swimming 6% 5 Dancing 7%
FAVORITE SPORT (UPPER-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Basketball 16% 1 Football 16% 1 Basketball 18% 1 Basketball 19% 2 Football 14% 2 Basketball 16% 2 Football 15% 2 Football 17% 3 Soccer 13% 3 Soccer 14% 3 Soccer 13% 3 Soccer 15% 4 Baseball 11% 4 Baseball 11% 4 Baseball 10% 4 Baseball 9% 5 Lacrosse 6% 5 Lacrosse 5% 5 Running 5% 5 Running 5%
83 | Taking Stock With Teens Top Sports Among Average-Income
FAVORITE SPORT (AVERAGE-INCOME, ALL TEENS) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Soccer 15% 1 Football 14% 1 Basketball 14% 1 Basketball 15% 2 Basketball 13% 2 Basketball 14% 2 Soccer 14% 2 Football 14% 3 Football 11% 3 Soccer 14% 3 Football 13% 3 Soccer 14% 4 Running 10% 4 Running 7% 4 Running 8% 4 Running 6% 5 Volleyball 6% 5 Volleyball 6% 5 Baseball 6% 5 Baseball 6%
FAVORITE SPORT (AVERAGE-INCOME, FEMALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Soccer 17% 1 Soccer 17% 1 Soccer 16% 1 Soccer 16% 2 Running 14% 2 Volleyball 13% 2 Running 11% 2 Volleyball 13% 3 Volleyball 12% 3 Running 10% 3 Volleyball 11% 3 Basketball 9% 4 Basketball 8% 4 Basketball 9% 4 Basketball 9% 4 Running 9% 5 Swimming 7% 5 Swimming 6% 5 Camping 7% 5 Swimming 6%
FAVORITE SPORT (AVERAGE-INCOME, MALES) Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Football 19% 1 Football 23% 1 Football 20% 1 Football 22% 2 Basketball 18% 2 Basketball 19% 2 Basketball 18% 2 Basketball 20% 3 Soccer 13% 3 Soccer 11% 3 Soccer 13% 3 Soccer 13% 4 Baseball 8% 4 Baseball 10% 4 Baseball 10% 4 Baseball 11% 5 Running 6% 5 Running 4% 5 Running 5% 5 Running 4%
84 | Taking Stock With Teens Preferred Camera Brands Among Teens
WHAT BRAND CAMCORDER DO YOU CURRENTLY OWN? (ALL TEENS)
Rank Spring 2015 Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Canon 27% 1 Canon 26% 1 Canon 29% 1 Canon 32% 2 Nikon 21% 2 GoPro 21% 2 GoPro 22% 2 GoPro 24% 3GoPro 15%3 Nikon 20% 3 Nikon 21% 3 Nikon 19% 4 Sony 11% 4 Sony 13% 4 Sony 9% 4 Sony 9% 5 Kodak 7% 5 Apple 5% 5 Apple 5% 5 Samsung 4% 6 Samsung 5% 6 Samsung 4% 6 Kodak 5% 6 Kodak 4% 7 Apple 4% 7 Kodak 4% 7 Samsung 3% 7 Apple 3% 8 Flip 2% 8 Flip 1% 8 Flip 1% 8 Fujifilm 1% 9 Nokia 2% 9 Panasonic 1% 9 Fujifilm 1% 9 Polaroid 1% 10 Fujifilm 1% 10 Nokia 1% 10 Polaroid 1% 10 Panasonic 1%
WHAT BRAND CAMCORDER WOULD YOU PURCHASE? (ALL TEENS)
Rank Spring 2015 % Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Canon 27% 1 Canon 28% 1 Canon 33% 1 Canon 39% 2 GoPro 24% 2 GoPro 24% 2 GoPro 23% 2 GoPro 23% 3 Nikon 20% 3 Nikon 19% 3 Nikon 19% 3 Nikon 15% 4 Sony 9% 4 Sony 8% 4 Sony 7% 4 Sony 7% 5 Kodak 4% 5 Apple 5% 5 Kodak 6% 5 Apple 4% 6 Apple 4% 6 Samsung 4% 6 Apple 4% 6 Kodak 4% 7 Samsung 3% 7 Kodak 3% 7 Samsung 2% 7 Polaroid 2% 8 Polaroid 2% 8 Polaroid 2% 8 Polaroid 2% 8 Samsung 1% 9 Nokia 2% 9 Nokia 1% 9 Fujifilm 1% 9 Nokia 1% 10 Fujifilm 1% 10 Fujifilm 1% 10 Logitech 1% 10 Logitech 0% Elgato 0%
85 | Taking Stock With Teens Competition Increasing Across De-concentration Viable Players across top tier brands in tandem with declining count overall BRAND SHARE AND CONCENTRATION (UPPER-INCOME, FEMALES) indicates the viability of mid-tier brands.
Social media has evened the playing field for niche brands – improving visibility for authentic smaller brands and disrupting larger brands.
86 | Taking Stock With Teens Estee Lauder Portfolio Declines Estee Lauder’s portfolio of brands lost 200bps of share this season and Y/Y, led my MAC which declined 400bps Y/Y EL COSMETIC BRAND SHARE (UPPER INCOME, FEMALES) for upper income
EL Brand Share EL Americas Sales females.
35% 12%
10% 30% 8% 25% 22% 22% 6% 20% 20% 17% 4%
15% 2%
0% 10% -2% 5% -4%
0% -6%
87 | Taking Stock With Teens Fragrance: Specialty Store Brands Highly innovative Remain Top of Mind brands are best positioned to retain teen customers. PREFERRED FRAGRANCE BRANDS (UPPER-INCOME, FEMALES)
Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Victoria's Secret 27% 1 Victoria's Secret 30% 1 Victoria's Secret 28% 2 Bath & Body Works 21% 2 Bath & Body Works 22% 2 Bath & Body Works 27% Mass brands ceding 3 Marc Jacobs 7% 3 Marc Jacobs 5% 3 Chanel 6% 4 Juicy Couture 6% 4 Chanel 4% 4 Marc Jacobs 5% share to authentic 5 Chanel 3% 5 Juicy Couture 4% 5 Juicy Couture 3% 6 One Direction 2% 6 Burberry 2% 6 Versace 2% social media 7 Taylor Sw ift 2% 7 Dolce & Gabbana 2% 7 Calvin Klein 1% Versace 2% Versace 2% Gucci 1% backed/built indie 9 Polo Ralph Lauren 1% 9 Polo Ralph Lauren 2% 9 Polo Ralph Lauren 1% 10 Aquolina 1% 10 One Direction 1% Taylor Sw ift 1% brands. Coach 1% Taylor Sw ift 1%
PREFERRED FRAGRANCE BRANDS (AVERAGE-INCOME, FEMALES)
Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Victoria's Secret 24% 1 Bath & Body Works 29% 1 Victoria's Secret 31% 2 Bath & Body Works 24% 2 Victoria's Secret 29% 2 Bath & Body Works 31% 3 Juicy Couture 3% 3 Juicy Couture 4% 3 Chanel 3% 4 Marc Jacobs 3% 4 Chanel 3% 4 Juicy Couture 3% 5 Chanel 2% 5 Marc Jacobs 3% 5 Marc Jacobs 2% 6 Polo Ralph Lauren 2% 6 Polo Ralph Lauren 2% 6 Rue 21 2% 7 One Direction 1% 7 Rue 21 1% 7 Calvin Klein 2% 8 Versace 1% 8 AXE 1% 8 Polo Ralph Lauren 1% 9 Nicki Minaj 1% 9 Dolce & Gabbana 1% 9 Versace 1% Taylor Sw ift 1% 10 Justin Bieber 1% 10 Gucci 1% Taylor Sw if t 1%
88 | Taking Stock With Teens Fragrance: Top 3 Brands Remain Males continue to Consistent for Males rank Old Spice, Ralph Lauren and AXE as their top preferred PREFERRED FRAGRANCE BRANDS (UPPER-INCOME, MALES) brands. Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Old Spice 24% 1 Ralph Lauren 20% 1 Old Spice 24% 2 Ralph Lauren 19% 2 Old Spice 13% 2 Ralph Lauren 17% 3 AXE 14% 3 AXE 8% 3 AXE 13% 4 Gucci 4% 4 Calvin Klein 6% 4 Gucci 6% 5 Versace 4% 5 Gucci 5% 5 Versace 4% 6 Calvin Klein 3% 6 Versace 5% 6 Calvin Klein 4% Nike 3% 7 Hollister 3% 7 Chanel 2% 8 Degree 2% 8 Chanel 3% 8 Nautica 2% 9 Hollister 2% Nautica 3% 9 Armani 2% 10 Abercrombie & Fitch 1% 10 American Eagle 2% 10 Degree 2% Giorgio Armani 1% Nike 2%
PREFERRED FRAGRANCE BRANDS (AVERAGE-INCOME, MALES)
Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Ralph Lauren 20% 1 Ralph Lauren 20% 1 Ralph Lauren 20% 2 AXE 15% 2 AXE 13% 2 Old Spice 14% 3 Old Spice 13% 3 Old Spice 12% 3 AXE 13% 4 Versace 4% 4 Calvin Klein 4% 4 Versace 5% 5 Calvin Klein 4% 5 Versace 4% 5 Calvin Klein 5% 6 Gucci 3% 6 Gucci 3% 6 Gucci 4% 7 American Eagle 3% 7 Armani 3% 7 Armani 2% 8 adidas 3% 8 Rue21 3% 8 Hollister 2% 9 Hollister 3% 9 American Eagle 3% 9 American Eagle 2% 10 Giorgio Armani 2% 10 Hollister 3% 10 adidas 2%
89 | Taking Stock With Teens Discovery Supports Specialty Retail Ulta continues to gain Formats share for average income females – Sephora is the PREFERRED BEAUTY DESTINATIONS (UPPER-INCOME, FEMALES) preferred beauty Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Sephora 38% 1 Sephora 38% 1 Sephora 41% location for upper- 2 Ulta 19% 2 Ulta 21% 2 Ulta 20% 3 Target 14% 3 Target 12% 3 Target 12% income teens. 4CVS 6%4CVS 7%4CVS 4% 5 MAC 3% 5 MAC 5% 5 Walmart 4% 6 Walmart 3% 6 Walmart 3% 6 MAC 3% 7 Macy's 3% 7 Macy's 3% 7 Walgreens 3% 8 Nordstrom 2% 8 Walgreens 2% 8 Macy's 2% 9 Walgreens 2% 9 Nordstrom 2% 9 Nordstrom 2% 10 Rite-Aid 1% 10 Bare Escentuals 1% 10 Sally Beauty 1% Online 1% Sally Beauty 1%
PREFERRED BEAUTY DESTINATIONS (AVERAGE-INCOME, FEMALES) Rank Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % 1 Sephora 24% 1 Ulta 27% 1 Ulta 29% 2 Ulta 23% 2 Sephora 24% 2 Sephora 27% 3 Walmart 14% 3 Walmart 13% 3 Walmart 12% 4 Target 10% 4 Target 9% 4 Target 10% 5MAC 6%5MAC 4%5MAC 3% 6 Walgreens 4% 6 Walgreens 3% 6 Walgreens 3% 7 Macy's 2% 7 CVS 3% 7 CVS 2% 8 CVS 2% 8 Macy's 2% 8 Macy's 2% 9 Sally Beauty Supply 2% 9 Sally Beauty 1% 9 Bath & Body Works 1% 10 Dillard's 1% 10 Bath & Body Works 1% Sally Beauty 1%
90 | Taking Stock With Teens Specialty Retail Favored For Loyalty Loyalty program Programs participation continues to grow as specialty remains the BEAUTY LOYALTY PROGRAM PARTICIPATION preferred beauty (UPPER-INCOME, FEMALES) destination among Fall 2014 Spring 2015 Fall 2015 Spring 2016 Fall 2016 Yes 32% 33% 36% 39% 47% upper-income No 68% 67% 64% 61% 53% females; outpacing legacy formats.
PREFERRED BEAUTY LOYALTY PROGRAM (UPPER-INCOME, FEMALES)
Fall 2015 % Rank Spring 2016 % Rank Fall 2016 % Sephora 56% 1 Sephora 55% 1 Sephora 55% Ulta 24% 2 Ulta 24% 2 Ulta 24% CV S 4% 3 MA C 3% 3 MA C 4% MAC 3% 4 Bare Escentuals 3% 4 Clinique 1% Bare Escentuals 3% 5 CVS 2% 5 Bare Escentuals 1% Macy's 1% 6 Macy's 1% CVS 1% Mary Kay 1% Nordstrom 1% 7 Birchbox 1% Victoria's Secret 1% Sally Beauty 1% Target 1% Walgreens 1% Victoria's Secret 1% Walgreens 1% Avon 1% 10 Clinique 1% 10 Bath & Body Works 1% CoverGirl 1% e.l.f. 1% Mary Kay 1% e.l.f. 1% Ipsy 1% Nordstrom 1% Lipsy 1% Mary-Kay 1% Proactiv 1% Neutrogena 1% Walgreens 1% Sally Beauty Supply 1% Too Faced 1% Urban Decay 1%
91 | Taking Stock With Teens Meet Our Senior Analyst Team
Neely Tamminga Erinn Murphy Steph Wissink Managing Director Principal Managing Director Sr. Research Analyst Sr. Research Analyst Sr. Research Analyst Multi-Brand Retail & Global Fashion & Household, Beauty & Specialty Commerce Lifestyle Brands Children’s Products
Matt O’Brien Nicole Miller Regan Gene Munster Managing Director Managing Director Managing Director Sr. Research Analyst Sr. Research Analyst Sr. Research Analyst Medical Technology: Restaurants Internet Orthopedics, Dental & Vision Care
Mike Olson Stan Meyers Managing Director Asst. Vice President Sr. Research Analyst Research Analyst Online Content Media & Entertainment
92 | Taking Stock With Teens Ratings, Stock Prices, and Price Targets
Price Price Price Target MktCap Ticker Company Rating 10/12/16 Target Justification (Bil.) ADS.GR adidas AG Overweight €155.65 €173 30x FY17E EPS €32.569 EBAY eBay Inc. Neutral $31.50 $25 8.5x 2017E EV/EBITDA $35.564 EL Estee Lauder Companies Inc. Neutral $88.18 $90 24x FY18E EPS $32.352 VFC V.F. Corporation Overweight $54.73 $63 18x FY17E EPS $22.699 UA Under Armour, Inc. Overweight $38.52 $44 60x FY17E EPS $16.845 CMG Chipotle Mexican Grill, Inc. Overweight $418.52 $483 ~20x FY18E EV/EBITDA disc. 2 yrs at 10% $12.186 ZNGA Zynga, Inc. Neutral $2.94 $3 10x EV/'17E EBITDA $2.593 ANF Abercrombie & Fitch Co. Overweight $16.13 $28 6x FY18E EV/EBITDA $1.091 ZUMZ Zumiez Inc. Overweight $22.47 $28 9x FY18E EV/EBITDA $0.558 GLUU Glu Mobile Inc. Overweight $2.11 $3 1x EV/FY17E Sales $0.281
As of October 12, 2016 Source: Piper Jaffray estimates, FactSet, Bloomberg
93 | Taking Stock With Teens Important Research Disclosures
Analyst Certification – Nicole Miller Regan, Gene Munster, Erinn Murphy, Matthew O’Brien, Michael Olson, Neely Tamminga, Steph Wissink, and Stan Meyers, Research Analysts: 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 the firm's overall revenues, which include investment banking revenues.
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94 | Taking Stock With Teens Important Research Disclosures
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95 | Taking Stock With Teens