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1 APPAREL, ACCESSORIES &
FOOTWEAR
M A R K E T M O N I T O R | F A L L 2 0 1 4
Apparel, Accessories, and Footwear
2 APPAREL, ACCESSORIES &
FOOTWEAR
Representative Apparel, Accessories & Footwear Transactions
3 APPAREL, ACCESSORIES &
FOOTWEAR
Contents
Industry Update
Public Stock Performance & Valuations
M&A Activity & Valuations
Moss Adams Overview
Firm Contacts
4
5
9
12
14
4 APPAREL, ACCESSORIES &
FOOTWEAR
Source: U.S. Department of Commerce, CapitalIQ, and Moss Adams Capital estimates.
Consumer Environment Improves, Still-cautious Consumer
• Consumer Confidence (July reached 90.9) soared to highs last seen in late 2007, on strengthening job and home markets, strong stock market performance
• Labor markets remain stable, with steady job creation (1.6 mm jobs added from January through July), and jobless rate hitting 6.2% in July, improving from 6.6% in January. However, continued shrinkage in the labor force remains a concern; labor force participation rate has tumbled to 62.9% (July reading), its worst level since 1978
• Improvements in employment and consumer macro have been countered by loom of inflation (high gas prices, coupled with rising food costs), putting pressure on shoppers to curb spending
• Competition for share of consumer wallet has intensified from increased durables (auto, electronics, home) and health category spending
• Retail environment remains challenging, due in part to an apathetic consumer, lack of fashion newness, an elevated promotional retail environment, weather conditions; Q4 ’13 and Q1 ’14 comparable-store sales performance for a median of selected chain retailers posted declines of 3 to 4%
• Apparel retailer sales are expected to grow 3 to 4% in 2014, boosted by product innovation/differentiation, new fashion trends, promotions; average spending for Back-to-School is projected to be up 5% to $669 in 2014, according to a NRF trade survey
• Key industry trends include (i) attractive price-value propositions / differentiated products, (ii) omni-channel, (iii) wholesale brands selling direct-to-consumer, (iv) international growth, (v) consumer focus on active/healthy lifestyles, and (vi) private label lines for mass retailers
Same-Store Sales Growth – Chain Retailers
Consumer Spending Indicators
Q113 Q213 Q313 Q413 Q114
Abercrombie & Fitch -15.0% -10.0% -14.0% -8.0% -4.0%
Aeropostale -14.0% -15.0% -15.0% -15.0% -13.0%
American Apparel 8.0% 7.0% 2.0% -3.0% -7.0%
American Eagle -5.0% -7.0% -7.0% -7.0% -10.0%
Buckle 1.2% 3.2% -0.5% -2.8% -0.9%
DSW -2.4% 4.4% -0.7% 0.0% -3.7%
Gap 2.0% 5.0% 1.0% 1.0% -1.0%
Genesco -4.0% -2.0% -1.0% 1.0% 1.0%
Guess? North America -9.8% -2.0% -5.0% -4.4% -3.8%
Tilly's 1.1% -0.5% -2.4% -4.9% -6.8%
Urban Outfitters 9.0% 8.5% 7.1% 1.0% 0.0%
Wet Seal -2.9% 3.7% 0.8% -16.5% -16.9%
Zumiez -0.7% 0.9% 1.5% -2.2% 1.8%
Median -2.4% 0.9% -0.7% -3.0% -3.8%
Industry Update
Apparel Retailer Sales
y/y growth
Unemployment Rate
Consumer Confidence (right-axis)
0
10
20
30
40
50
60
70
80
90
100
-12%-10%
-8%-6%-4%-2%0%2%4%6%8%
10%12%
5 APPAREL, ACCESSORIES &
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-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Aspirational+4%
Diversified -Mid/Small Cap
+9%
S&P 500+17%
Performance+17%
Diversified -Large Cap
+30%
Diversified – Large Cap, Performance Segments Higher
Source: CapitalIQ.
Note: The indices in the chart above are composed of the public companies included on slide 7 and 8.
1 Year Performance: Apparel, Accessories and Footwear vs. S&P
6 APPAREL, ACCESSORIES &
FOOTWEAR
9.0%
18.5%
9.1%
26.7%
21.8%
S&P 500
Diversified -Mid/Small Cap
Diversified -Large Cap
Aspirational
Performance
5.0%
2.7%
5.8%
7.4%
10.2%
S&P 500
Diversified -Mid/Small
Cap
Diversified -Large Cap
Aspirational
Performance
Source: CapitalIQ.
Public Market Valuations Next 12 Months: Estimated Growth
• The outlook for companies in Apparel, Accessories and Footwear, is positive, with 6% sales and 14% EBITDA growth projected for a median of selected apparel companies over the next 12 months
• In comparison, companies in the S&P 500 are projected to have sales and EBITDA growth of 5% and 9%, respectively, for the next 12 months
• Apparel, Accessories and Footwear companies, on a trailing EBITDA valuation basis, are trading at the high range of historical valuation levels
• Since 2011, Apparel, Accessories and Footwear companies have largely traded at a premium to the overall market, on a EBITDA multiple basis
Apparel and Footwear
12.1x
S&P 50010.9x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
EV
/ T
TM
EB
ITD
A
Sales EBITDA
Note: Apparel, Accessories and Footwear is composed of the public companies included on slide 7 and 8.
Apparel Industry Sales Outlook Higher than Market
7 APPAREL, ACCESSORIES &
FOOTWEAR
Source: CapitalIQ, company filings.
Note: Not meaningful (NM) if EV/Sales is greater than 10x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.
Public Company Valuations (9/15/14) ($mm, except where noted)
Operating Statistics EV Valuation Statistics
($ millions, except per share data) Capitalization TTM 2014P Forward TTM 2014P Forward
CompanyMarket
CapEnterprise
Value Sales EBITDAGross
MarginEBITDAMargin
Sales Growth
EBITDA Margin Sales EBITDA Sales EBITDA
Performance
Nike, Inc. $73,922 $70,213 $27,799 $4,312 44.8% 15.5% 10.2% 14.4% 2.5 x 16.3 x 2.4 x 16.9 x
Adidas AG 15,755 16,161 19,654 1,713 48.8% 8.7% -5.3% 8.9% 0.8 x 9.4 x 0.9 x 9.6 x
Under Armour, Inc. 14,587 14,484 2,657 342 49.0% 12.9% 29.2% 13.8% 5.5 x 42.3 x 4.8 x 34.9 x
PUMA SE 3,615 3,260 3,956 102 46.4% 2.6% -8.3% 7.0% 0.8 x 32.1 x 0.9 x 12.4 x
Columbia Sportswear Company 2,642 2,272 1,805 204 45.0% 11.3% 20.3% 10.9% 1.3 x 11.1 x 1.1 x 10.3 x
Average $22,104 $21,278 $11,174 $1,334 46.8% 10.2% 9.2% 11.0% 2.2 x 22.3 x 2.0 x 16.8 xMedian $14,587 $14,484 $3,956 $342 46.4% 11.3% 10.2% 10.9% 1.3 x 16.3 x 1.1 x 12.4 x
Aspirational
Michael Kors Holdings Limited $15,808 $14,683 $3,589 $1,182 61.0% 32.9% 31.1% 32.0% 4.1 x 12.4 x 3.7 x 11.7 x
Ralph Lauren Corporation 15,607 14,812 7,505 1,368 57.9% 18.2% 7.4% 17.5% 2.0 x 10.8 x 1.9 x 10.9 x
Coach, Inc. 10,354 9,626 4,806 1,441 70.3% 30.0% -10.5% 24.6% 2.0 x 6.7 x 2.2 x 8.8 x
Kate Spade & Company 3,861 4,093 1,419 60 57.1% 4.2% -14.4% 12.7% 2.9 x NM 3.8 x 29.8 x
Vince Holding Corp 1,139 1,279 316 61 48.1% 19.4% 19.7% 22.1% 4.0 x 20.8 x 3.7 x 16.7 x
Average $9,354 $8,899 $3,527 $822 58.9% 21.0% 6.7% 21.8% 3.0 x 12.7 x 3.1 x 15.6 xMedian $10,354 $9,626 $3,589 $1,182 57.9% 19.4% 7.4% 22.1% 2.9 x 11.6 x 3.7 x 11.7 x
8 APPAREL, ACCESSORIES &
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Source: CapitalIQ, company filings.
Public Company Valuations (9/15/14)
Note: Not meaningful (NM) if EV/Sales is greater than 10x, or EV/EBITDA is greater than 40x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.
($mm, except where noted)
Operating Statistics EV Valuation Statistics
($ millions, except per share data) Capitalization TTM 2014P Forward TTM 2014P Forward
CompanyMarket
CapEnterprise
Value Sales EBITDAGross
MarginEBITDAMargin
Sales Growth
EBITDA Margin Sales EBITDA Sales EBITDA
Diversified - Large Cap
V.F. Corporation $29,327 $30,861 $11,770 $1,990 48.4% 16.9% 8.0% 17.1% 2.6 x 15.5 x 2.5 x 14.6 x
PVH Corp. 10,566 14,012 8,251 1,211 52.5% 14.7% 2.5% 14.8% 1.7 x 11.6 x 1.7 x 11.3 x
Deckers Outdoor Corp. 3,362 3,124 1,588 249 47.7% 15.7% 12.0% 15.2% 2.0 x 12.5 x 1.8 x 11.8 x
Skechers USA Inc. 3,148 2,909 2,109 211 45.1% 10.0% 23.5% 10.9% 1.4 x 13.8 x 1.3 x 11.7 x
Wolverine World Wide Inc. 2,683 3,586 2,699 307 39.7% 11.4% 3.1% 11.7% 1.3 x 11.7 x 1.3 x 11.0 x
Iconix Brand Group, Inc. 2,335 3,744 448 292 NA 65.2% 5.8% 62.5% 8.4 x 12.8 x 8.2 x 13.1 x
Steven Madden, Ltd. 2,206 2,017 1,338 211 36.2% 15.7% 5.5% 15.1% 1.5 x 9.6 x 1.5 x 9.7 x
Average $7,661 $8,607 $4,029 $639 44.9% 21.4% 8.6% 21.0% 2.7 x 12.5 x 2.6 x 11.9 xMedian $3,148 $3,586 $2,109 $292 46.4% 15.7% 5.8% 15.1% 1.7 x 12.5 x 1.7 x 11.9 x
Diversified - Mid/Small Cap
G-III Apparel Group, Ltd. $1,795 $1,843 $1,932 $152 34.8% 7.9% 22.9% 8.3% 1.0 x 12.1 x 0.9 x 10.5 x
Crocs, Inc. 1,200 977 1,207 121 51.3% 10.0% 2.3% 10.7% 0.8 x 8.1 x 0.8 x 7.5 x
Brown Shoe Co. Inc. 1,197 1,350 2,530 158 40.4% 6.2% 2.7% 6.8% 0.5 x 8.6 x 0.5 x 7.6 x
Oxford Industries Inc. 1,076 1,179 952 122 55.8% 12.8% 9.3% 12.5% 1.2 x 9.7 x 1.2 x 9.4 x
Billabong International Limited 506 566 1,061 52 51.8% 4.9% -19.1% 5.7% 0.5 x 10.8 x 0.6 x 10.1 x
Quiksilver Inc. 337 1,095 1,657 44 48.9% 2.7% -9.5% 3.2% 0.7 x 24.9 x 0.7 x 21.0 x
Perry Ellis International Inc. 310 409 899 35 33.8% 3.9% 0.5% 5.3% 0.5 x 11.8 x 0.4 x 8.4 x
Weyco Group Inc. 299 302 299 32 38.9% 10.6% 2.8% NA 1.0 x 9.5 x 1.0 x NA
Rocky Brands, Inc. 114 154 266 18 33.4% 6.8% 19.0% 7.5% 0.6 x 8.4 x 0.5 x 7.0 x
Average $759 $875 $1,200 $82 43.2% 7.3% 3.4% 7.5% 0.8 x 11.5 x 0.7 x 10.2 xMedian $506 $977 $1,061 $52 40.4% 6.8% 2.7% 7.2% 0.7 x 9.7 x 0.7 x 8.9 x
9 APPAREL, ACCESSORIES &
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U.S. middle market M&A transaction volume in Q2 2014 rose 23% from one year ago and was up slightly compared to Q1 2014
In deal value terms, U.S. middle market M&A activity in Q2 2014 grew approximately 40% from a year earlier and was up more than 27% compared to the prior quarter
Q2 2014 EBITDA multiples of middle market transactions declined after enjoying two quarters of transactions that were valued almost one full turn of EBITDA higher
EBITDA multiples are approximately where they were one year ago and inline with where they have been for most of the last two years
Mid-Market M&A: Volume and Values Up Slightly Over Last Quarter, Up Significantly Over Last Year
U.S. Middle Market M&A 1 U.S. Middle Market M&A Valuations 2
2) Middle market M&A includes transactions with disclosed EBITDA, where EV < $500 million and EV/EBITDA < 10x. Note: transactions with disclosed EBITDA represent <5% of all transactions.
1) Middle market M&A includes transactions with undisclosed values, and disclosed values where EV < $500 million.
2,855 2,953 2,927
3,080 2,984
3,682 3,681 3,852
3,539 3,453
3,622
3,986
3,134
3,319
4,092 4,054 3,997 4,095
$32
$43
$56 $55
$47
$71 $72 $70
$52$56
$52
$66
$44
$50
$65
$71
$55
$70
$0
$20
$40
$60
$80
$100
$120
$140
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010 2011 2012 2013 2014
Tran
saction
Valu
e ($b
n)N
um
ber
of
Tra
nsa
ctio
ns
Number Value
Source: CapitalIQ.
4.8x
6.7x
6.4x
7.0x6.7x 6.8x 6.8x 6.9x
5.9x
6.4x6.2x 6.2x 6.4x
6.0x6.2x
7.2x7.0x
6.1x
0.0 x
1.0 x
2.0 x
3.0 x
4.0 x
5.0 x
6.0 x
7.0 x
8.0 x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010 2011 2012 2013 2014
EV
/Tra
ilin
g E
BIT
DA
Mu
ltip
le
10 APPAREL, ACCESSORIES &
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Notable M&A Activity (Past Year)
Source: CapitalIQ, PitchBook, company filings, news releases.
($mm, except where noted)
EV Multiple
Date Acquirer Target Category Stake Deal Size TTM Sales TTM EBITDA
8/20/14 Bain Capital TOMS Shoes Shoes, eyewear, sunglasses 50% 625.0$ - -
8/14/14 Steven Madden Dolce Vita Women's footwear 100% 65.3 0.6x -
8/7/14 Bruckmann, Rosser, Sherrill & Co. Evolv Sports & Designs Climbing footwear - - - -
7/18/14 Topson Downs Of California Rachel Roy Women's clothing, shoes, jewelry, handbags 50% - - -
7/16/14 Lacrosse Footwear White's Boots Boots 100% - - -
6/25/14 Hanesbrands DBApparel Intimate apparel 100% 545.4 0.6x -
6/19/14 Gildan Activewear Doris Legwear, lingerie 100% 110.9 1.3x 8.6x
6/18/14 Samsonite Gregory Mountain Backpacks 100% 85.0 2.4x -
6/10/14 Manhattan Beachwear CMK Manufacturing (Green Dragon, Pink Lotus) Women apparel 100% - - -
6/2/14 iXO Private Equity SPAG (Olly Gan) Men's apparel 100% 74.8 1.1x 6.5x
4/29/14 Columbia Sportswear prAna Outdoor and yoga apparel 100% 190.0 - 13.0x
4/22/14 Freeman Spogli, Investcorp totes ISOTONER Umbrellas, gloves, rainwear, rain boots 100% 525.0 - -
3/14/14 Brown Shoe Franco Sarto Women's shoes - 65.0 - -
3/13/14 Triacta Love for denim Jeans 70% 69.6 1.8x -
1/19/14 Electra Private Equity Beaconsfield Footwear (Hotter Shoes) Footwear 0% 328.9 - -
12/19/13 Sycamore Partners Jones Group Apparel, footwear, jeanswear, jewelry, handbags 100% 2,228.7 0.6x 9.8x
12/19/13 L Capital Vicini Footwear 30% 366.8 NM -
12/10/13 Bain Capital Metro Sportswear (Canada Goose) Outerwear - 250.0 1.7x -
12/10/13 Leonard Green & Partners Lucky Brand Denim, apparel, shoes, accessories, jewelry 100% 225.0 - -
12/2/13 Crestview Partners, Maybrook Capital NYDJ (Not Your Daughter's Jeans) Women's jeans and apparel 100% - - -
12/2/13 L Capital 2XU Athletic apparel 40% 68.2 - -
11/8/13 Essilor Costa Polarized sunglasses 100% 317.6 1.3x 13.1x
11/4/13 Brentwood Associates Allen Edmonds Men’s footwear and accessories 100% 200.0 1.7x -
10/24/13 Permira R. Griggs (Dr. Martens) Footwear 100% 485.2 2.0x -
10/23/13 Altamont Capital Partners Mervin Manufacturing (Gnu, Lib Tech) Snowboarding and skateboarding products 100% 51.5 1.6x -
Median $212.5 1.5x 9.8x
11 APPAREL, ACCESSORIES &
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acquires on June, 18 2014
invests in on August, 7 2014
313
292
200
228
255 245
212
125
160
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013 2013YTD
2014YTD
Nu
mb
er o
f Tra
nsa
ctio
ns
Overview of Selected Transactions
Global Apparel, Accessories and Footwear M&A 1
• Global Apparel, Accessories and Footwear M&A activity is up 28% in 2014 year-to-date from the prior year.
1) Includes US, Canada, and developed Europe and Asia.
• Evolv Sports & Designs, based in Buena Park, CA, designs, produces and sells rock climbing, approach and lifestyle footwear; Evolv is one of the leading brands in the global rock climbing shoe market and produces the #1 selling model in the U.S.
• Bruckmann, Rosser, Sherrill & Co. (“BRS”), which also owns travel and outdoor apparel brand Royal Robbins, completed an investment in Evolv
• Stephen Sherrill, co-founder and Managing Director of BRS, said, “We have been very impressed with the accomplishments of Brian Chung, Chris Sharma and the rest of the Evolv team in building an enthusiast and authentic brand. We look forward to supporting the Company’s growth strategy of expanding into related outdoor product categories while staying focused on its core offerings of performance climbing shoes.”
• BRS is a New York based private equity firm focused on investing in middle market consumer goods and services businesses
• Salt Lake City-based Gregory Mountain Products, an iconic technical outdoor backpack brand, supplies outdoor performance equipment and apparel; Gregory posted revenues of $34.9 for the year ended December 31, 2013
• Samsonite acquired Gregory from Black Diamond (NasdaqGS:BDE) for $85 million in cash. The purchase represents a valuation of 2.4x sales
• Samsonite says the brand complements the High Sierra product line, which also makes backpacks, and broadens the company's exposure to the outdoor category
• Black Diamond says the sale is part of a plan to focus on its fastest-growing brands; The seller will use part of the proceeds to repay about $26.7 million in debt under its credit facility, and reinvest the rest of the proceeds into developing outdoor performance brands Black Diamond and POC
• Hong Kong-based Samsonite makes luggage, business and computer bags, outdoor and casual bags, and travel accessories under the Samsonite, American Tourister, High Sierra, Hartmann, Lipault and Speck brand names
Source: CapitalIQ, company filings, news releases.
12 APPAREL, ACCESSORIES &
FOOTWEAR
Firm Overview
• Investment
Banking
• FINRA
Broker/Dealer
• Sale of Companies
• Capital Formation
• Management
Buyouts
• Evaluate Strategic
Alternatives
Moss Adams Capital LLC
• Corporate
Accounting
Services
• Corporate Tax
Services
• Internal Control
Systems
• SALT
• Due Diligence
Moss Adams Accounting & Tax Practice
• Business
Consulting
• Compensation
Planning
• Human Resources
Planning
• Market Research
• Succession
Planning
Moss Adams Advisory Services
• Technical
Valuations
• Litigation
• Appraisals
• Estate Valuations
• Stock & Option
Valuations
Moss Adams Valuation
Group
• Information
Technology
Consulting
• Information
Systems Design
• Financial Systems
Information Technology
Group
• Registered
Investment
Advisors
• Asset Management
• Investment
Advisors
• Wealth
Management
Moss Adams Wealth
Advisors
Founded in 1913
Focused on Middle Market & Emerging Cos.
Headquartered in Seattle, Washington
Over 2,000 Employees
22 Offices in Western United States
16,000 Corporate Clients
13 APPAREL, ACCESSORIES &
FOOTWEAR
Our Affiliation with CFxB consists of 150+ M&A Professionals in more than 25 countries
Mazars Africa 40 offices
Mazars Asia 25 offices
Mazars Middle East 15 offices
Mazars Europe 140 offices Mazars M&A 20 offices
Mazars South America 20 offices
Moss Adams Capital 3 offices Moss Adams LLP 22 offices
MNP Corporate Finance 10 offices MNP LLP 70 offices
BKD Corporate Finance 4 offices BKD LLP 33 offices
William Buck CAA 6 offices
Weiser Mazars 6 offices
Mazars Canada 1 office
CH Reynolds CF 1 office
CFxBorder – Global M&A Reach Through Local Relationships
14 APPAREL, ACCESSORIES &
FOOTWEAR
Contact Us
Moss Adams Capital LLC 2040 Main Street Suite 900 Irvine, California 92614 Burr J. Dalton Director Tyler Dale Vice President
Apparel, Accessories & Footwear Richard M. Anderson Managing Director (949) 221-4006 [email protected]
999 Third Avenue Suite 2800 Seattle, Washington 98104 Harman K. Wales Managing Director Wiley P. Kitchell Managing Director
Geoffrey B. Haydon Vice President 949-221-4085 [email protected]
