Proprietary and Confidential QUARTERLY REPORT MACROECONOMIC & MARKET UPDATE April 18, 2019 Perry Ellis Take-Private Transaction Announced Winner of “The Deal” Middle Market Deal of the Year Award (See pg. 5 for details) DAVID SHIFFMAN CATHY LEONHARDT SCOTT MOSES JEFF DERMAN GREGORY GRAMBLING PATRICK FURLONG Managing Director Managing Director Managing Director Managing Director Managing Director Director Co-Head of Retail Co-Head of Retail Head of Food Retail (212) 508-1625 (212) 508-1674 (212) 508-1643 (212) 508-1642 (212) 508-1660 (212) 508-1675 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] To be added to the distribution list, please email Andrew Connolly at [email protected] Proprietary and Confidential TABLE OF CONTENTS SECTION I Macroeconomic Update 8 II Financial and M&A Markets Update 21 III Retail Market Update 26 IV Retail Trading and Operating Comparables Analysis 32 1 Proprietary and Confidential GLOBAL RETAIL GROUP Senior Team Peter J. Solomon Marc Cooper David Shiffman Cathy Leonhardt Michael Founder and Chief Executive Managing Director, Managing Director, Gottschalk Chairman Officer Co-Head of Retail Co-Head of Retail Managing Director, Head of Consumer Scott Moses Jeffrey Derman Gregory Patrick Furlong Flore Gimello Managing Director Managing Grambling Director Vice President Head of Food Director Managing Director Retail & Restaurants Additional Team Members Eric Bormel, Associate Gaurav Ghosh, Associate Brandon Yoshimura, Associate Joshua Heft, Associate We advise clients in all retail and ▪ We are a globally recognized strategic advisor to leading retail, consumer sectors, including: consumer, apparel, footwear and e-commerce companies ▪ Unparalleled breadth and depth of industry knowledge, relationships Branded Apparel, Grocery & Food Retail and execution experience Footwear & Accessories Health, Wellness & Beauty ▪ Strategy is to be the dominant retail centric advisory group Consumer Products Home Improvement ▪ Our expertise encompasses the convergence of retail, consumer, Department Stores / Jewelry / Luxury e-commerce and digital media Broadlines / Mass Merchants Off Price ▪ Collaborative effort with our tech, media and telecom bankers to provide clients a unique cross-sector perspective and approach that Discount & Dollar Restaurants leverages their knowledge, insights and sector relationships Drug Chain Specialty Hardlines ▪ Provide M&A, restructuring and financing advisory services to E-Commerce Specialty Softlines clients ranging from multi-national, large-capitalization corporations Fitness / Performance Sporting Goods/Outdoor to smaller, high-growth, privately-held companies Apparel 2 Proprietary and Confidential SELECTED RETAIL GROUP TRANSACTIONS PENDING PENDING PENDING PENDING M A R C H 2 0 1 9 FEBRUARY 2019 $300,000,000 $35,000,000 $100,000,000 Has divested Has acquired Senior Secured Credit Facility Strategic Review provided by from to Serving as financial advisor to the Serving as restructuring advisor to Special Committee of Independent Serving as financial advisor to Payless ShoeSource in its Chapter 11 Served as financial advisor to Served as financial advisor to Serving as financial advisor to Fred’s Directors OpCapita bankruptcy proceedings Charming Charlie Genesco DECEMBER 2018 DECEMBER 2018 DECEMBER 2018 NOVEMBER 2018 OCTOBER 2018 OCTOBER 2018 €3,250,000,000 $113,000,000 Has been sold to Has sold select real estate assets to Has been sold to Has sold 179 stores’ pharmacy Has divested prescription files to and formed a joint venture with Has acquired to to operate Served as financial advisor to Served as financial advisor to Served as financial advisor to Served as financial advisor to Served as financial advisor to Served as financial advisor to Martin’s Super Markets Best Market Fred’s Hudson’s Bay Company Hibbett Sports SUPERVALU OCTOBER 2018 OCTOBER 2018 OCTOBER 2018 OCTOBER 2018 SEPTEMBER 2018 AUGUST 2018 $160,000,000 $437,000,000 $275,000,000 $2,500,000,000 Has been sold to Has agreed to be sold to Has divested Has been sold to a newly Senior Secured Credit Facility formed entity controlled by Senior Secured Credit Facility George Feldenkreis to Served as co-financial advisor to Served as financial advisor to Served as financial advisor to V.F. Served as financial advisor to the Served as financial advisor to Served as financial advisor to Charlesbank Capital Partners and Key Food Corporation Special Committee of Perry Ellis Bare Necessities Stein Mart Partners Group AUGUST 2018 J U N E 2 0 1 8 M A Y 2 0 1 8 MARCH 2018 MARCH 2018 FEBRUARY 2018 ** $558,000,000 $305,000,000 $788,000,000 Has acquired the remaining Has acquired the assets of outstanding equity interests of Has been sold to Spin off of Has acquired Has agreed to acquire from Served as financial advisor to Served as financial advisor to the Served as financial advisor to Served as financial advisor to Served as financial advisor to Charlesbank Special Committee of The Finish Line DSW Groupe Rocher Apollo Co-Manager Reflects sell-side / strategic advisory engagements. 3 ** Natixis, a PJ SOLOMON affiliate, acted as the underwriting party on this transaction. Proprietary and Confidential SELECTED RETAIL GROUP TRANSACTIONS (CONT’D) FEBRUARY 2018 NOVEMBER 2017 AUGUST 2017 AUGUST 2017 ** J U L Y 2 0 1 7 J U N E 2 0 1 7 ** $3,900,000,000 $325,000,000 $1 billion Senior Notes Senior Secured Credit Facilities $2.9 billion First Lien Term Loan Has merged with Has sold select assets to Has sold select assets to Strategic investment by Indiana Grocery Group Served as financial advisor to Served as financial advisor to Served as financial advisor to Served as joint Lead Arranger Served as financial advisor to Served as joint Lead Arranger Flight Club El Rancho Central Grocers and Bookrunner Marsh Supermarkets and Bookrunner M A Y 2 0 1 7 A P R I L 2 0 1 7 ****A P R I L 2 0 1 7 A P R I L 2 0 1 7 M A R C H 2 0 1 7 M A R C H 2 0 1 7 ** $446,000,000 $925,000,000 $840,000,000 $248,000,000 Has been sold to Has been sold to Centre Lane Partners and Grand $30 million Revolving Credit Facility $525 million Term Loan B Wealth (subsidiary of Yue Yuen $165 million Term Loan $675 million First Lien Term Loan $315 million Delayed-Draw Fungible Industrial (Holdings) Limited) have $53 million Commercial Mortgage $250 million Second Lien Term Loan Term Loan B recapitalized Haggar, resulting in | Grand Wealth acquiring 100% of shares outstanding Served as financial advisor to Served as financial advisor to Served as joint Lead Arranger Served as financial advisor to Served as financial advisor to Kenneth Cole Productions and Nutraceutical International Corporation and Bookrunner Served as Co-Manager Haggar ModCloth Natixis provided real estate financing FEBRUARY 2017 FEBRUARY 2017 JANUARY 2017 DECEMBER 2016 * DECEMBER 2016 NOVEMBER 2016 $174,200,000 $950,000,000 Has been sold to Has divested Has agreed to acquire 865 stores Has sold select pharmacy assets to Has been sold to Has been sold to and certain assets from to | Served as financial advisor to MBS Textbook Exchange and Served as restructuring advisor to Served as financial advisor to Provided a fairness opinion to the Served as financial advisor to Served as financial advisor to owner Leonard Riggio Nasty Gal on its Section 363 sale The Finish Line Board of Directors of Fred’s Inc. Southeastern Grocers Mi Pueblo SEPTEMBER 2016 SEPTEMBER 2016 AUGUST 2016 J U N E 2 0 1 6 J U N E 2 0 1 6 M A Y 2 0 1 6 $145,000,000 $196,600,000 $106,000,000 Has divested Has been sold to Formed a JV to distribute Calvin Klein, Tommy Hilfiger, Warner’s, Has acquired Has sold its core business to Olga and Speedo in Mexico Served as financial advisor to Served as financial advisor to Served as financial advisor to Served as financial advisor to Brooks Served as financial advisor to Served as financial advisor to Tractor Supply Company HSNi Skullcandy Brothers regarding strategic alternatives Haggen PVH * Terminated transactions. Reflects sell-side / strategic advisory engagements. 4 ** Natixis, a PJ SOLOMON affiliate, acted as the underwriting party on this transaction. Proprietary and Confidential TAKE-PRIVATE OF PJ SOLOMON SERVED AS LEADING DESIGNER FINANCIAL ADVISOR TO THE & DISTRIBUTOR OF SPECIAL COMMITTEE OF BRANDED APPAREL PERRY ELLIS ▪ Provided flexibility for Perry Ellis to execute on its & ACCESSORIES long-term strategy of owning and operating brands ▪ PJ SOLOMON assisted the Special Committee in negotiating the Feldenkreis Merger, as well as with soliciting other potential strategic and financial acquirers by utilizing its expertise in retail and On October 22, 2018, Perry Ellis International branded apparel announced the successful completion of its ▪ Following the Special Committee’s approval of the previously announced acquisition by an entity Feldenkreis Merger, PJ SOLOMON carefully controlled by George Feldenkreis for $437 million, evaluated an unsolicited proposal from privately- or $27.50 per share in cash held Randa Accessories to acquire Perry Ellis at $28.90 per share in cash Perry Ellis is a leading distributor and licensor of high quality men’s and women’s apparel, accessories and ▪ The transaction highlights PJ SOLOMON’s fragrances. Perry Ellis owns a portfolio of nationally recognized brands, including Perry Ellis and Original expertise in retail and the firm’s commitment to Penguin by Munsingwear and also licenses trademarks realizing successful outcomes for its clients in from third parties, including Nike, Jag, Callaway,