Taking Stock With Teens

Transcription

1 Taking Stock With Teens A Collaborative GEN Z Insights Project 2018 Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst Certification, found at the end of this report or at the following site:

2 Disclosures Disclosures for universe of: Samuel Kemp, Nicole Miller Regan, Erinn Murphy, Mike Olson 1. I or a household member has a financial interest in the securities of the following companies: none 2. I or a household member is an officer, director, or advisory board member of the following companies: none 3. I have received compensation within the past 12 months from the following companies: none 4. Piper Jaffray or its affiliates beneficially own 1% or more of any class of common equities of the following companies: BOJA 5. Piper Jaffray has received compensation for investment banking services from or has had a client relationship with the following companies within the past 12 months: BBRG, BOJA, DFRG, ELF, FNKO, GDDY, SE, SFIX 6. Piper Jaffray expects to receive or intends to seek compensation for investment banking services from the following companies in the next 3 months: BBRG, DFRG, FNKO, SE, SFIX 7. Within the past 12 months Piper Jaffray was a managing underwriter of a public offering of, or dealer manager of a tender offer for, the securities of the following companies: ELF, FNKO, GDDY, SE, SFIX 8. Piper Jaffray has received compensation for non-investment banking services from or has had a client relationship with the following companies within the past 12 months: CROX, DFRG, TACO, UEIC 9. Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis: AAPL, AKAM, AMZN, ANGI, ATVI, BBRG, BJRI, BKNG, BOJA, CAKE, CMG, CROX, DECK, DFRG, DLB, DNKN, DRI, EA, EAT, EBAY, EL, ELF, ETSY, EXPE, FB, FINL, FL, FRGI, GCO, GDDY, GIII, GRPN, HABT, IAC, JCP, JWN, KORS, KSS, LB, MCD, MELI, MTCH, NDLS, NFLX, NKE, PBPB, PLAY, PVH, QSR, RUTH, SBUX, SE, SHAK, SHOO, SNAP, SONC, TACO, TIVO, TPR, TRIP, TTWO, UAA, ULTA, WEB, WWW, YELP, ZNGA, ZOES 10. Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sell the securities of these companies on a principal basis: ADS GR, FNKO, GOOG, RL, SFIX, SHOP, TTD, UEIC, VFC

3 Investment Risks Risks to achievement of investment objectives include, but are not limited to, the following: Reliance on key top management Changing consumer preferences Changes in input costs and raw materials Markdown risks Product flow and inventory disruptions Competition Lack of pricing power Deleveraging of fixed expenses Foreign exchange rate risk General macroeconomic uncertainty

4 35th Semi-Annual Proprietary Teen Research Project National survey of teens measuring: Spending Patterns Channel Preferences Product Trends & Cycles 6,000 Responses 1,400 teens Electronic surveys UPPER-INCOME GROUP $100,000 Household income Represents top 20% of U.S. household units 16.4 Average Age 40% Part-Time Employed 4,600 teens Electronic surveys $56,000 Household income Aligns more closely with U.S. median AVERAGE-INCOME GROUP Survey is executed in partnership with DECA The source for all charts/tables within this report is Piper Jaffray. 4 Taking Stock With Teens

5 Executive Summary Overall spending is up 6% vs. Fall and up 2% from a year ago Food reaccelerates as teen s No. 1 wallet priority back to 24% peak Ongoing shift in male wallet toward video games (new peak) closing in on fashion $ Seeing strong rotation in female wallet towards beauty with skincare spend +18% Y/Y Department stores & legacy channels continue to shed share; online hits new highs Streetwear & 1990s fashion intensifies Vans (new peak), Supreme, Champion, TH Nike moderating as adidas accelerates Nike male footwear share -1,400 bps Y/Y Intent to buy iphone reaches high; 84% of GenZ will choose iphone next (82% last Fall) Digital video game downloads march higher now 55% vs. 45% LY & 37% Fall 2015 Snapchat & Instagram engagement ticks higher; Facebook engagement stabilizing 5 Taking Stock With Teens

6 Stock Highlights: Global Fashion and Lifestyle Brands Analyst: Erinn Murphy ADS-GR (+): LARGE SHARE GAINS ACROSS THE BOARD; CONTINUED STRENGTH WEAKENS BEAR CASE Mounting evidence brand momentum is not being driven by legacy Originals (Superstar & Stan Smith). Sequential improvement or stability (only one question) from Fall 2017 in every income group/category (similar story as Fall 2017), with material improvement in most. Brand is top malefashion trend per 9% of teens (vs. 4% in Fall 2017) relative to Nike/Jordan, which has been at 12% for the last two surveys. We are OW ADS. VFC (+/=): UNPRECEDENTED VANS MOMENTUM (24% OF SALES), NORTH FACE (20%) FLAT BUT PATAGONIA GAINS Vans continues to find traction across all demographic/socioeconomic groups and categories. Importantly, Vans 15% mindshare rise since Fall 2016 (from 7% to 9% to 14% to 22% this survey) among trend setting upper-income females has only been eclipsed by Nike s 18% move higher that started in Fall As an active brand, Patagonia pushed its mindshare lead over The North Face among upper-income teens to a new peak. That said, TNF saw stable mindshare vs. Fall. We are OW VFC. NKE (-): TEEN SENTIMENT NOT YET REFLECTING FUNDAMENTAL INFLECTION IN NORTH AMERICA Mindshare declines (~MSD% range) across most categories continued. Converse also appears to be moderating after a multi-year, cycle-driven spike. Fall 2018 is likely a better read on the NA fundamental inflection management has recently referenced, but we saw no supporting evidence in this survey. We believe a return to positive regional growth could be at much lower levels than investors anticipate. We are Neutral. RL (-): FALLS OUT OF TOP-10 APPAREL BRANDS AMONG MEN FOR THE FIRST TIME AS MINDSHARE LOSS CONTINUES After nine straight surveys as No. 2 for upper income male apparel, RL began to slide during 2017 and is now tied for No. 12. ULTA (+): OVERTAKES SEPHORA AS NO.1 BRAND FOR AVERAGE-INCOME TEENS; LOYALTY SHARE TRENDS UPWARD Mindshare as preferred beauty destination increased by 400 bps from Fall 2017 for average-income teens, slightly offset by a slight moderation among upper-income teens. Share as No. 2 preferred loyalty program resumed its upward trend, up 500 bps vs. Fall EL (-/=): PORTFOLIO MINDSHARE CONTINUES TO MODERATE; OVERALL BEAUTY CATEGORY GAINS MOMENTUM EL s aggregate mindshare among upper-income teens continued to decline, down 400 bps Y/Y. However, teen beauty spending is at an alltime high, with spending on skincare increasing +18% Y/Y to a new peak and cosmetics spend rebounding from Fall. HANDBAGS (+/=): MIXED READS; UPPER-INCOME SPENDING UP DD, BUT TOTAL TEEN SPENDING REMAINS BELOW SPRING 6 Taking Stock With Teens

7 Stock Highlights: Restaurants Analyst: Nicole Miller Regan SBUX (+/=): MOST PREFERRED PUBLIC COMPANY BRAND AMONG TEENS Starbucks notably maintained its position as the most preferred public brand in our survey overall (12% preference for upper & 9% preference for average income teens vs. 11% & 12%, respectively, during Fall 2017) and within the coffee category where it remains the overwhelmingly favorite brand. That said, we saw a trend similar to the 2017 survey cycle whereby private brand Chick-fil-A marginally displaced Starbucks and moved into the top spot among upper income teens. We note that Starbucks still remains the most preferred brand among average income teens. For added context, the latest survey trends remain muted relative to historical peak levels of 18% preference for upper income teens (in both Fall 2013 & 2007 cycles), 16% share ( 2008), and 15% share (Fall 2014, 2009, & Fall 2007) reflecting what has been an approximate 100 bps loss during the past few survey cycles. We remain confident in our long-term thesis (OW rated) for Starbucks based around the company s 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 RELATIVELY STEADY BRAND SCORES Exiting this season's survey, Chipotle remained steady as the third most preferred public brand among upper income teens (7% mindshare was down sequentially vs. Fall 2017) while moving down to the sixth most preferred brand among average income teens. Among average income teens Chipotle's rank (to #6 from #4) and mindshare (to 3% from 4%) slipped relative to Fall 2017; however, we believe these moves remain generally consistent within the context of the broader survey and brand activity. At the cuisine level, the company remained the overwhelmingly most-preferred upper income teen brand within the Hispanic cuisine category. We reiterate our bullish outlook on Chipotle shares (OW rated) grounded by when (not if) improvement occurs. Supported by the recent appointment of a new CEO we believe the company remains well-positioned to leverage strong unit-level economics and drive a healthy unit growth pipeline over the long-term. MCD (+): SURVEY RESULTS HIGHLIGHT STEADY BRAND SCORES DESPITE ONGOING COMPETITIVE INTRUSION McDonald s showed steady mind share levels among upper (#4 brand) and average income teens (#3 brand) in the latest survey cycle. Similar to prior survey cycles, we continue to see strong competition from non-burger names (such as Chick-fil-A) materialize. From a cuisine perspective, McDonald s remains the most preferred hamburger brand across both sets of teens. We believe an ongoing culture change and updated vision around culinary/marketing tactics, and continued investment in/around technology initiatives leave McDonald's solidly positioned as the company leverages its core global brand through EOTF efforts. 7 Taking Stock With Teens

8 Stock Highlights: Internet Analyst: Sam Kemp FB (+): FACEBOOK USAGE STABLE, INSTAGRAM REMAINS A KEY CATALYST Teens showed stable engagement with Facebook, with 45% of teens indicating they have used Facebook in the past month; 32% of teens listing Facebook as a top 3 social network remained consistent, down slightly from 33% in Fall Furthermore, we are not observing any cohort degradation that is, for example, current 18 year olds who adopted Facebook when they were 13 are not abandoning Facebook. We expect investor concern around engagement to persist, however, but note that teens account for only a ~HSD percent of Facebook users, making time spent degradation a minimal headwind to Facebook for several years. Instagram continues to be a high-use platform for teens, with 82% of teens indicating they have used it in the past month, up from 81% in our Fall 2017 survey. We are encouraged by Instagram s consistent strong showing and rising engagement, reflecting a strong defensive positive vs. Snapchat s presence as teens favorite platform (though by a shrinking margin). All else equal, we would rather see teens engaged with Instagram as the long-term branding potential within Instagram appears to be stronger than core Facebook. 65% of those surveyed indicated they believe Instagram is a good channel for brands/retailers to reach them, 3x higher than Facebook at 22%. SNAP (=): SNAPCHAT MAINTAINS ENGAGEMENT, BUT REMAIN CAUTIOUS Snapchat remains the king of teens social lives, with 83% indicating use in the past month (vs. 82% in 2017) and 83% naming it as a top three social platform (vs. 82%). Teens are clearly engaged with Snapchat s unique approach to social (narrow network, direct messaging), and we believe this provides near-term support to Snapchat daily active user (DAU) growth. We are remaining Neutral on SNAP as Snapchat s user base has 93% crossover with Instagram s user base, making it a platform without unique reach and an inferior ad product to Instagram s ad format and Facebook s holistic targeting abilities. Moreover, we believe Snap s organizational challenges present meaningful risk to future innovation. 8 Taking Stock With Teens

9 Stock Highlights: Consumer Technology & ecommerce Analyst: Mike Olson AMZN (=/+): SURVEY SHOWS SLIGHT DECLINE IN MINDSHARE, BUT AMAZON STILL DRAMATICALLY ABOVE OTHERS; INCREASING PRIME ADOPTION A CONTINUED THEME Amazon teen mindshare (preferred shopping site) fell 2ppts (Fall-17 at 44%), but was up y/y; closest most preferred shopping website is Nike.com at 6%. Prime adoption continues to be very strong; our survey implies high-70m U.S. households have Prime. EBAY (=/-): EBAY MINDSHARE AMONG TEENS DECLINED TO LOWEST LEVEL RECORDED IN OUR SURVEY ebay mindshare declined to 1.8% in -18 (3% in Fall-17), the lowest we ve seen for ebay in our teen survey and a trend to watch as the company works to shift brand perception. We remain Neutral as EBAY s current valuation (11x 19E EBITDA) fairly represents the company s growth opportunity, in our view. AAPL (+): TEENS CONTINUE TO INCREASE IPHONE OWNERSHIP Apple continued to grow smartphone share among teens with 82% of teens owning an iphone vs. 78% in Fall-17. This is further bolstered by 84% expecting their next phone to be an iphone, up from 82% in Fall-17. We view the survey as a positive data point for new X-gen phones coming this Fall; we also saw increasing interest in the Apple Watch. NFLX (+): LEADING THE PACK IN VIDEO CONSUMPTION Teens spend 39% of their time watching Netflix (up from 37% in Fall-17). Closest competitor is YouTube at 30% and pay TV at 20%. ATVI(+), EA(+), TTWO(+): TEEN VIDEO GAME BUDGET ALLOCATION UP, FULL GAME DOWNLOADS UP We saw a slight increase in % of teen budgets allocated to video games (from 7% of teen budgets in Fall-17 to 8% in our current survey). We also note that the proportion of respondents who digitally download >50% of titles on consoles has increased to 55% from 50% in Fall-17. ZNGA (=/+): SEE SLIGHT INCREASE IN MOBILE GAME INTEREST, BUT SLIGHT DECLINE IN WILLINGNESS TO SPEND Mobile gaming interest was up slightly and willingness to spend in-game was down slightly after reaching an all-time high in Fall-17. We believe this suggests a relatively stable growth environment for mobile games. 9 Taking Stock With Teens

10 Global Fashion & Lifestyle Brands Clothing, Shoes, & Accessories 38% of Teen Spending

11 Teen Spending Up 6% vs. Fall 2017 & Up 2% vs $2,600/Yr what teens estimate they spend each year GenZ contributes $830B (~7% U.S. retail sales)* $3,000 $2,500 $2,000 $1,500 $1,000 $ Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall *Source: Fung Global Retail & Technology 11 Taking Stock With Teens

12 What s In Your Wallet? Food, Video Games & Beauty Male s Wallet Share Female s Wallet Share 1 Food 24% 1 Clothing 25% 2 Clothing 16% 2 Food 25% 3 Video Games 13% 3 Personal Care/ Accessories 17% 12 Taking Stock With Teens

13 Seeing Strong Signs Of 1990s & Streetwear Cycle Upper-Income Favorite Apparel Brand (All Teens) 1 Nike 29% 1 Nike 31% 1 Nike 23% 1 Nike 23% 2 American Eagle 9% 2 American Eagle 10% 2 American Eagle 11% 2 American Eagle 10% 3 Forever 21 5% 3 Forever 21 5% 3 Adidas 4% 3 Adidas 6% 4 Ralph Lauren 4% 4 lululemon 3% 4 Forever 21 4% 4 Forever 21 5% 5 Urban Outfitters 3% 5 H&M 3% 5 Hollister 4% 5 Urban Outfitters 5% 6 H&M 3% Adidas 3% 6 PacSun 3% 6 PacSun 4% 7 PacSun 2% 7 Hollister 2% 7 lululemon 3% 7 Supreme 3% 8 Adidas 2% 8 Urban Outfitters 2% 8 H&M 3% 8 H&M 3% 9 Vineyard Vines 2% Vans 2% 9 Urban Outfitters 3% 9 lululemon 3% 10 Victoria's Secret 2% 10 PacSun 2% 10 Supreme 3% 10 Gucci 2% Ralph Lauren 2% adidas doubles its mindshare from 3% to 6% as it moves from No. 5 to No. 3 Nike, while still No. 1, moves from 31% share as preferred apparel brand to 23% Urban Outfitters returns to the top-5; believe this is reflection of current fashion cycle Supreme moves higher within top-10 (No. 7); Gucci makes its debut in top Taking Stock With Teens

14 Athletic Trend Moves Deeper Into Casual Trend Upper-Income Favorite Footwear Brand (All Teens) 1 Nike 51% 1 Nike 52% 1 Nike 46% 1 Nike 42% 2 Vans 9% 2 Vans 9% 2 Vans 12% 2 Vans 16% 3 Converse 7% 3 Adidas 8% 3 Adidas 11% 3 Adidas 14% 4 Adidas 6% 4 Converse 6% 4 Converse 7% 4 Converse 4% 5 Steve Madden 2% 5 Steve Madden 3% 5 Birkenstock 2% 5 DSW 3% 6 Sperry 2% 6 Sperry 2% 6 DSW 2% 6 Steve Madden 3% 7 DSW 2% 7 DSW 2% 7 Foot Locker 2% 7 Foot Locker 2% 8 Birkenstock 2% 8 Foot Locker 1% 8 Sperry 2% 8 Nordstrom 1% 9 Foot Locker 1% 9 Birkenstock 1% 9 New Balance 1% 9 New Balance 1% 10 Nordstrom 1% 10 Payless ShoeSource 1% 10 Steve Madden 1% 10 Sperry 1% Seeing more pressure on Nike within this footwear ranking vs. apparel; moves 1,000 bps from 52% to 42% share Vans hits a new survey peak at 16% share up from 12% former peak (Fall) and 9% LY adidas hits a new peak in footwear survey now 14% mindshare vs. 8% last year Converse continues to slip; Steve Madden stabilizes in line with historic trend 14 Taking Stock With Teens

15 Athletic Apparel Still Strong, Albeit With Lower Nike Share Upper-Income Favorite Apparel Brand (All Teens) 35% of preferred apparel brands are athletic, down from 41% last but up from 33% in Fall adidas continued to gain, contributing 300 bps of incremental mindshare Y/Y 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Average = 22% 41% 35% 32% 33% 35% 28% 26% 15 Taking Stock With Teens

16 Athletic Footwear Dominant Trend Upper-Income Favorite Footwear Brand (Females) 66% of females prefer an athletic brand of footwear, up from 63% last year & down from 67% last fall (below) 84% of males prefer an athletic brand of footwear, down from 86% last year and last fall 70% 60% Nike Converse Vans Adidas Puma Under Armour 50% 40% 30% 20% 10% 0% 16 Taking Stock With Teens

17 Biggest Surprises In Branded Softlines Data Largest $ Gainer Largest $ Decliners Leading Streetwear Emergence Benefiting From 90s/Logo Revival plus Supreme TNF Share Stable But Patagonia More Popular 17 Taking Stock With Teens vs. Patagonia plus Champion

18 The Big Three Athletic Brands (Y/Y Comparison) Nike (No. 1 brand) broad based share loss continues, despite ongoing athletic strength Nike post share across the board as a preferred apparel & footwear brand (both genders) Nike/Jordan declined as top-fashion trend for males from 18% to 12% As a performance athletic brand, Nike lost ~MSD% mindshare Y/Y among both genders & both categories Adidas (No. 3 brand) remains the single largest gainer in survey Adidas gained significant Y/Y share across every segment of the data Adidas is No. 1 new brand that males are wearing (highest share ever for No. 1 in the category) & No. 2 for females As performance athletic brand, adidas gained ~MSD% mindshare Y/Y among both genders & categories Under Armour being boxed out by resurgent adidas & retro-category growth As a preferred apparel brand, UAA was No. 13 vs. No. 13 last year As a preferred footwear brand, UAA was No. 24 vs. No 14 last year Among upper-income females, UAA only received one vote as preferred apparel brand, while Champion received two votes Under Armour still cited as the No. 1 old brand that males are no longer wearing for the third straight survey and debuted at No. 10 among females (tied w/nike) 18 Taking Stock With Teens

19 Brands That Made Significant Upwards Moves In Top 20 Supreme GUCCI Champion 19 Taking Stock With Teens

20 Brands That Made Significant Upwards Moves In Top 20 Supreme Improved rank and mindshare sequentially after debuting last Fall No. 5 up & coming male brand (No. 7 in Fall); Remains No. 10 preferred website vs. last Fall (debuted at No. 10) Street brand with minority investment from The Carlyle Group Remained No. 10 for avg. income handbags after debuting last Fall GIII is PVH s licensee for handbags; ~$130-$150M category Champion GUCCI Moved from No. 44 upper-income male apparel brand last Fall to No. 10 (tied with Vineyard Vines); No. 40 to No. 25 among avg. income Jumped from No. 15 preferred apparel brand last Fall to No. 10 Moved from No. 10 to No. 6 preferred apparel brand among males No. 4 preferred handbag among both income groups Tommy Hilfiger (~43% of PVH sales) saw strength among males Remained in top 20 as preferred apparel brand for males after debuting there for first time last Fall ranked No. 15 in upper income and No. 12 in avg. income 20 Taking Stock With Teens

21 Vans Upward Trajectory Continues As Brand Reach Expands Upper-Income Favorite Footwear Brand (All Teens) Vans hits the highest level in our survey history at 16% Women s was driving the most significant piece of this increase (22% vs. 9% last year) Appears to be taking mindshare from NKE s Converse brand in canvas Listed as a top-ten fashion trend for males & females and an up & coming brand for both 1 Nike 51% 1 Nike 52% 1 Nike 46% 1 Nike 42% 2 Vans 9% 2 Vans 9% 2 Vans 12% 2 Vans 16% 3 Converse 7% 3 Adidas 8% 3 Adidas 11% 3 Adidas 14% 4 Adidas 6% 4 Converse 6% 4 Converse 7% 4 Converse 4% 5 Steve Madden 2% 5 Steve Madden 3% 5 Birkenstock 2% 5 DSW 3% 6 Sperry 2% 6 Sperry 2% 6 DSW 2% 6 Steve Madden 3% 7 DSW 2% 7 DSW 2% 7 Foot Locker 2% 7 Foot Locker 2% 8 Birkenstock 2% 8 Foot Locker 1% 8 Sperry Top-Sider 2% 8 Nordstrom 1% 9 Foot Locker 1% 9 Birkenstock 1% 9 New Balance 1% 9 New Balance 1% 10 Nordstrom 1% 10 Payless ShoeSource 1% 10 Steve Madden 1% 10 Sperry Top-Sider 1% UGG 1% 21 Taking Stock With Teens

22 The Biggest Losers After ranking in the top five upper-income male brands since Fall 2010 (avg. 8.6%), RL fell to No. 12 (1.7%) the first time RL was not in the top-ten within our survey (dating back to 2002) Trends among average-income males follow a similar multi-year trajectory with recent brand weakening; however, a major negative inflection ( 2018 for upper-income) has yet to occur Ongoing sequential and Y/Y mindshare declines across most categories declines led by upper-income footwear Converse sequential and Y/Y mindshare declines nearly all categories, with most pronounced pressure in female fashion trends 22 Taking Stock With Teens

23 Channel Preferences Continue Shifting Toward Online Time Spent Shopping By Channel; Upper-Income Teen Over the last four years, time spent shopping in these two channels is unchanged in aggregate However, composition has changed online has picked up the ~200 bps per year traditional channels have lost since % 45% Dept. Store/Specialty Online Only etailers 20% 18% % Time Spent Specialty/Dept. Stores 44% 42% 40% 38% 36% 38% 16% 14% 12% 10% 8% 6% 4% 2% % Time Spent Online 34% Fall Fall Fall Fall Fall % 23 Taking Stock With Teens

24 Amazon Remains Unchallenged Among Online Websites Favorite Website To Purchase From, Upper-Income Teens 1 Amazon 40% 1 Amazon 43% 1 Amazon 46% 1 Amazon 44% 2 Nike 8% 2 Nike 5% 2 Nike 5% 2 Nike 6% 3 American Eagle 4% 3 American Eagle 5% 3 American Eagle 5% 3 American Eagle 4% 4 ebay 3% 4 Forever 21 3% 4 ebay 3% 4 Urban Outfitters 3% 5 Forever 21 2% 5 ebay 2% 5 Forever 21 3% 5 Forever 21 3% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 PacSun 2% 7 Nordstrom 1% 7 Victoria's Secret 2% 7 Fashion Nova 2% 7 ebay 2% 8 Victoria's Secret 1% 8 lululemon 1% 8 lululemon 2% 8 lululemon 2% 9 Hollister 1% PacSun 1% 9 PacSun 2% 9 Zaful 2% PacSun 1% 10 Zumiez 1% 10 Supreme 1% 10 Supreme 1% >70% Of Softlines Dollar Growth In North America 24 Taking Stock With Teens

25 Fashion: All Athletic; Preppy Softening; Vans/Street Strong Top Fashion Trends Right Now, Upper-Income Males 1 Nike/Jordans 19% 1 Nike / Jordans 18% 1 Nike / Jordans 12% 1 Nike / Jordans 12% 2 Jogger Pants 8% 2 Jogger Pants 8% 2 Supreme 8% 2 Athletic Wear 10% 3 Vineyard Vines 7% 3 Athletic Wear 6% 3 Jogger Pants 5% 3 Adidas 9% 4 Athletic Wear 6% 4 Khakis / Chinos 5% Ripped Jeans 5% 4 Jogger Pants 7% 5 Khakis/Chinos 6% 5 Adidas 4% 5 Khakis / Chinos 5% Supreme 7% 6 Preppy 6% 6 Leggings / lululemon 4% 6 Adidas 4% 6 Khakis / Chinos 4% 7 Ralph Lauren 4% 7 Ripped Jeans 3% 7 Vineyard Vines 4% Ripped Jeans 4% 8 Tall Socks 4% 8 Preppy 3% 8 Preppy 3% 8 Vans 3% 9 Boat Shoes 3% 9 Jeans 3% 9 Jeans 3% 9 Jeans 3% 10 Adidas 2% 10 Timberland 2% Vans 3% 10 Preppy 3% Athletic Wear 3% Athletic (In Top 10) 27% Athletic (In Top 10) 31% Athletic (In Top 10) 19% Athletic (In Top 10) 31% Preppy (In Top 10) 25% Preppy (In Top 10) 8% Preppy (In Top 10) 12% Preppy (In Top 10) 7% Top Fashion Trends Right Now, Upper-Income Female 1 Leggings/lululemon 25% 1 Leggings / lululemon 25% 1 Ripped Jeans 12% 1 Leggings / lululemon 29% 2 Birkenstock 6% 2 Chokers 11% 2 Off the Shoulder Tops 11% 2 Ripped Jeans 8% 3 Victoria's Secret 5% 3 Converse 5% 3 Birkenstock 10% 3 Jeans 5% 4 Converse 4% 4 Victoria's Secret 4% 4 Jeans 9% 4 Victoria's Secret 4% 5 Ripped Jeans 4% 5 Adidas 4% 5 Leggings / lululemon 8% 5 Vans 4% 6 Jeans 3% 6 Ripped Jeans 4% 6 Converse 4% 6 Boots 3% 7 Adidas 3% 7 Jeans 3% 7 Crop Tops 3% 7 Converse 3% 8 Bralettes 3% 8 Boots 3% 8 Chokers 2% Crop Tops 3% 9 Nike / Jordans 3% 9 Nike / Jordans 2% American Eagle 2% 9 Off the Shoulder Tops 2% 10 Chokers 3% 10 UGG 2% Vans 2% 10 Nike / Jordans 2% 25 Taking Stock With Teens

26 Mixed Reads on Handbags; Encouraged by DD UI Spending All Female Teens $106 is what all female teens estimate they spend each year on handbags/accessories this is up MSD% from Fall 2017 but MSD% below of last year Upper-Income Spending Drives Recovery From Fall upper-income teen spending on handbags increased by DD both sequentially and Y/Y, while averageincome spending declined by -1% sequentially and by DD on a Y/Y basis. Spending Intent Modestly Getting Better 66% of all females do not plan to purchase a handbag in the next six months, an improvement from 72% in Fall. This is still above the multi-year average of 61% Handbags remain the second lowest dollar spend category for females behind fragrance. Image Source: coach.com, Piper Jaffray & Co 26 Taking Stock With Teens

27 Handbag Brand Preferences Upper-Income Females 1 Michael Kors 34% 1 Michael Kors 33% 1 Michael Kors 31% 1 Michael Kors 28% 2 Kate Spade 19% 2 Kate Spade 19% 2 Kate Spade 16% 2 Kate Spade 17% 3 Coach 10% 3 Coach 9% 3 Coach 14% 3 Coach 14% 4 Louis Vuitton 5% 4 Longchamp 5% 4 Louis Vuitton 6% 4 Gucci 9% 5 Longchamp 3% 5 Louis Vuitton 5% 5 Vera Bradley 6% 5 Louis Vuitton 7% Vera Bradley 3% 6 Gucci 4% 6 Gucci 5% 6 Vera Bradley 3% 7 Chanel 2% 7 Tory Burch 3% 7 Longchamp 3% 7 Chanel 2% 8 Gucci 2% 8 Vera Bradley 2% 8 Calvin Klein 2% 8 Tory Burch 2% 9 Tory Burch 2% 9 Target 2% 9 Chanel 2% Target 2% 10 Fossil 1% 10 Chanel 2% 10 Target 1% 10 Longchamp 2% Tory Burch 1% Average-Income Females 1 Michael Kors 44% 1 Michael Kors 40% 1 Michael Kors 35% 1 Michael Kors 39% 2 Coach 13% 2 Coach 14% 2 Coach 13% 2 Kate Spade 13% 3 Kate Spade 10% 3 Kate Spade 12% 3 Kate Spade 12% 3 Coach 12% 4 Vera Bradley 5% 4 Vera Bradley 4% 4 Gucci 7% 4 Gucci 6% 5 Gucci 3% 5 Louis Vuitton 3% 5 Vera Bradley 5% 5 Louis Vuitton 5% 6 Louis Vuitton 3% 6 Gucci 3% 6 Louis Vuitton 4% 6 Vera Bradley 4% 7 Chanel 2% 7 Target 2% 7 Chanel 2% 7 Chanel 2% 8 Fossil 1% 8 Tory Burch 2% 8 Guess 2% 8 Fossil 2% Target 1% 9 Chanel 2% 9 Longchamp 1% 9 Nine West 1% 10 Betsey Johnson 1% 10 Guess 1% 10 Calvin Klein 1% Calvin Klein 1% 27 Taking Stock With Teens

28 Watch Brands Upper-Income Teens 75% of teens do NOT plan to purchase a watch in next six months up from 72% in Fall and 71% last. 23% of teens intend to purchase a smartwatch in the next six months, up from 19% in Fall and the multi-year average of 17%. Apple takes its highest share in watch survey history 1 Rolex 37% 1 Rolex 37% 1 Rolex 44% 1 Rolex 41% 2 Michael Kors 17% 2 Michael Kors 15% 2 Michael Kors 12% 2 Apple 12% 3 Apple 5% 3 Fossil 8% 3 Apple 7% 3 Michael Kors 11% Casio 5% 4 Apple 6% 4 Fossil 5% 4 Fossil 7% 5 Fossil 5% 5 Casio 4% 5 Nixon 4% 5 Casio 2% 6 Nixon 3% 6 Nixon 2% 6 Casio 3% 6 Fitbit 2% 7 Nike 2% 7 Gucci 2% 7 Fitbit 2% 7 Nixon 2% 8 Timex 2% 8 Nike 2% 8 Garmin 1% 8 Gucci 1% 9 Fitbit 1% 9 Citizen 2% Timex 1% 9 Patek Philippe 1% 10 Gucci 1% 10 Garmin 1% 10 Nike 1% Timex 1% Kate Spade 1% MVMT 1% 28 Taking Stock With Teens

29 Global Fashion & Lifestyle Brands Beauty & Personal Care 18% of Female Teen Spending

30 TEEN HABITS UNDERSCORE PEAK BEAUTY SPENDING Beauty Overview (All Female Teens) TEEN BEAUTY SPENDING REACHES ALL-TIME HIGH Overall teen beauty wallets reached an all-time survey high of $368, up 4% Y/Y Skincare spending increased by 18% Y/Y and cosmetics recovered nicely from Fall, offset by ongoing softness in fragrance TEENS ARE BOTH WEARING & SHOPPING FOR MAKEUP MORE OFTEN 88% of UI teens and 81% of AI teens wear makeup sometimes or everyday, up from 85% and 80% respectively in Fall 2017 UI makeup shopping trips increased from 14.4 in Fall 2017 to 15.5 in 2018, while AI trips increased from 16.9 to 17.3 for the same two periods ONLINE INFLUENCERS & FRIENDS REMAIN DOMINANT SOURCES OF BRAND DISCOVERY 71% of teen females learn about brands/trends from online influencers, while 68% learn about brands and trends from friends; both shares are steady from Fall 2017 Magazine editor and advertisement penetration decreased from 20% in Fall to 17%, while beauty retailer/brand direct penetration declined from 39% to 34%. TEEN PREFERENCE FOR SPECIALTY CHANNELS ACCELERATES 74% of teens listed a specialty channel as their No. 1 beauty destination, up from 73% in 2017 and a new peak 30 Taking Stock With Teens

31 TEEN SPENDING ON BEAUTY UP 4% Y/Y Beauty Overview (All Female Teens) $168/Yr SKINCARE SPEND DRIVES TOTAL BEAUTY WALLET GROWTH Make-up $200 Skincare Cosmetics Fragrances -3% Y/Y $180 $160 $173 $168 $140 $120 $119 $140 $100 $140/Yr $80 $60 $63 $60 Skin Care $40 $20 18% Y/Y $0 $60/Yr Fragrance -4% Y/Y 31 Taking Stock With Teens

32 BEAUTY WALLET FOR TEENS REPRESENTS 18% OF WALLET Beauty Wallet Segmentation (All Female Teens) Cosmetics share returns to ~8% after falling to 7% in Fall 2017 Skincare spending reaches all-time high of 7%, up from 6% in 2017 Fragrance spending remains 3% of teenage female wallet share 9% Skincare Cosmetics Fragrances 8% 8% 8% %of Total Wallet 7% 6% 5% 4% 3% 6% 3% 7% 3% 2% 1% 0% 32 Taking Stock With Teens

33 SPECIALTY INCREASINGLY MOST IMPORTANT CHANNEL Channel Overview (Upper-Income Female) Specialty formats continue to outpace legacy channels. Reversal in preference occurred in 2015 and reaccelerated in the last six months Specialty now at 74% vs. 22% legacy channels (mass = 20% vs. department stores = 2%) 80% Mass, Dept & Drug Stores Specialty 70% 74% 60% 66% 50% 40% 30% 27% 20% 10% 0% Fall Fall Fall Channel Reversal: Specialty stores outpace legacy formats Fall Fall % 33 Taking Stock With Teens

34 IN-STORE STILL MAJORITY OF TIME SPENT Channel Preference (Online Vs. In Store) Teens overwhelmingly prefer to shop for color cosmetics in-store vs. online when asked in a binary question Preference for in-store has remained fairly consistent since we began asking teens preferences PREFERENCE TO SHOP IN-STORE VS. ONLINE FOR COSMETICS 95% 90% 91% 90% 91% 90% 85% 80% 75% 70% Fall Fall Taking Stock With Teens

35 SEPHORA/ULTA NO. 1 BEAUTY DESTINATIONS FOR TEENS Preferred Beauty Destinations Gap between Sephora and Ulta among UI females widens to 1,600 bps from 600 bps in Fall Ulta is now the No. 1 beauty destination for AI females at 33% share, with Sephora share decreasing by 300 bps from Fall 2017 PREFERRED BEAUTY DESTINATIONS (UPPER-INCOME, FEMALES) 1 Sephora 41% 1 Sephora 37% 1 Sephora 35% 1 Sephora 44% 2 Ulta 20% 2 Ulta 34% 2 Ulta 29% 2 Ulta 28% 3 Target 12% 3 Target 9% 3 Target 12% 3 Target 11% 4 CVS 4% 4 CVS 5% 4 CVS 5% 4 CVS 3% 5 Walmart 4% 5 Walmart 4% 5 Walmart 4% 5 Walmart 3% 6 MAC 3% 6 MAC 2% 6 Walgreens 2% 6 Walgreens 2% 7 Walgreens 3% 7 Walgreens 2% 7 Macy's 1% 7 MAC 1% 8 Macy's 2% 8 Nordstrom 1% 8 MAC 1% 8 Macy's 1% 9 Nordstrom 2% Macy's 1% 9 Pharmacy/Drug Store 1% 9 Bluemercury 1% 10 Sally Beauty 1% Sally Beauty Supply 1% 10 Nordstrom 1% 10 Four Brands Tied PREFERRED BEAUTY DESTINATIONS (AVERAGE-INCOME, FEMALES) 1 Ulta 29% 1 Ulta 32% 1 Sephora 33% 1 Ulta 33% 2 Sephora 27% 2 Sephora 29% 2 Ulta 29% 2 Sephora 30% 3 Walmart 12% 3 Walmart 11% 3 Walmart 11% 3 Walmart 11% 4 Target 10% 4 Target 10% 4 Target 9% 4 Target 10% 5 MAC 3% 5 Walgreens 2% 5 Walgreens 3% 5 Walgreens 2% 6 Walgreens 3% 6 CVS 2% 6 MAC 2% 6 CVS 2% 7 CVS 2% MAC 2% 7 Macy's 1% MAC 2% 8 Macy's 2% 8 Macy's 1% 8 Bath & Body Works 1% 8 Bath & Body Works 1% 9 Bath & Body Works 1% 9 Bath & Body Works 1% CVS 1% T.J. Maxx 1% Sally Beauty 1% Sally Beauty 1% 10 Sally Beauty 1% 10 Macy's 1% 35 Taking Stock With Teens

36 LOYALTY MATTERS IN BEAUTY FOR GENZ Preferred Loyalty Programs 56% of upper-income female teens belong to a beauty loyalty program up from 52% last year Sephora holds the No. 1 share as preferred loyalty program at 53% vs. Ulta at No. 2 with 35% share; Ulta share is picking up to historical norm as Sephora share is declining from Fall 2017 LOYALTY PROGRAM PARTICIPATION (UPPER-INCOME, FEMALES) 2015 Fall Fall Fall Yes 33% 36% 39% 47% 52% 52% 56% No 67% 64% 61% 53% 48% 48% 44% PREFERRED LOYALTY PROGRAM (UPPER-INCOME, FEMALES) Rank 2017 % Rank Fall 2017 % Rank 2018 % 1 Sephora 46% 1 Sephora 55% 1 Sephora 53% 2 Ulta 39% 2 Ulta 30% 2 Ulta 35% 3 MAC 3% 3 CVS 2% 3 Etsy 3% 4 CVS 2% 4 MAC 1% 4 MAC 1% 5 Ipsy 1% Ipsy 1% 5 Three Brands Tied SEPHORA & ULTA MINDSHARE (UPPER-INCOME, FEMALES) 60% 50% 40% 30% 20% 10% 0% Fall 2013 Sephora Beauty Insider 2014 Fall Fall Ulta Ultamate Rewards Fall % 39% Fall % 35% Taking Stock With Teens

37 TOP COSMETIC BRANDS MAC stayed No. 4 from 2017 among upper-income teens; moved down from No. 1 to No. 2 among average-income teens Tarte (owned by Kosé) moves up to No. 1 for both upper-income and average-income teens; previously No. 6 among upper-income and No. 7 among average-income teens during 2017 e.l.f. rank inches up to No. 8 from No. 9 in 2017 among average-income teens but declines from No. 5 in Fall 2017 PREFERRED COSMETICS BRANDS (UPPER-INCOME, FEMALES) 1 MAC 12% 1 Too Faced 11% 1 Maybelline 11% 1 Tarte 14% 2 Maybelline 9% 2 Maybelline 10% 2 Urban Decay 11% 2 Too Faced 10% 3 Urban Decay 9% 3 Urban Decay 9% 3 MAC 10% 3 Anastasia Beverly Hills 8% 4 CoverGirl 8% 4 CoverGirl 8% 4 Too Faced 8% 4 MAC 8% 5 Too Faced 6% MAC 8% 5 Tarte 6% 5 Maybelline 7% 6 Sephora 5% 6 Tarte 6% 6 Anastasia Beverly Hills 6% 6 Urban Decay 6% 7 Clinique 4% 7 Sephora 5% 7 Benefit 4% 7 CoverGirl 5% 8 L'Oreal 4% 8 Bare Escentuals 5% 8 Bare Escentuals 4% 8 Sephora 4% 9 Benefit 4% 9 Anastasia Beverly Hills 4% e.l.f. 4% 9 Benefit 4% 10 Tarte 4% Benefit 4% 10 L'Oreal 3% 10 L'Oreal 4% NYX 4% CoverGirl 3% PREFERRED COSMETICS BRANDS (AVERAGE-INCOME, FEMALES) 1 MAC 15% 1 MAC 11% 1 MAC 10% 1 Tarte 11% 2 CoverGirl 9% 2 Urban Decay 9% 2 Maybelline 9% 2 MAC 10% 3 Maybelline 9% 3 CoverGirl 9% 3 Too Faced 7% 3 Maybelline 8% 4 Urban Decay 7% 4 Too Faced 8% 4 Urban Decay 7% 4 Too Faced 8% 5 Too Faced 5% 5 Maybelline 8% 5 e.l.f. 7% 5 CoverGirl 6% 6 Name Withheld 5% 6 Sephora 6% 6 Tarte 7% 6 Urban Decay 6% 7 Sephora 5% 7 Tarte 6% 7 CoverGirl 6% 7 Anastasia Beverly Hills 5% 8 NYX 4% 8 Anastasia Beverly Hills 5% 8 Sephora 6% 8 e.l.f. 5% 9 Anastasia 4% 9 e.l.f. 5% 9 Anastasia Beverly Hills 5% 9 Sephora 5% 10 Bare Escentuals 4% 10 Bare Escentuals 4% 10 Fenty Beauty by Rihanna 3% 10 Fenty 3% 37 Taking Stock With Teens

38 TOP SKINCARE BRANDS Mass brands remain top-of-mind for teen skincare; Clinique stable skincare share across both income sets Maria Badescu continues to rise on the top-10 list; No. 5 for UI females and No. 7 for AI females PREFERRED SKINCARE BRANDS (UPPER-INCOME, FEMALES) 1 Neutrogena 31% 1 Neutrogena 27% 1 Neutrogena 28% 1 Neutrogena 24% 2 Clean & Clear 9% 2 Clean & Clear 7% 2 Clinique 7% 2 Cetaphil 7% 3 Clinique 7% 3 Clinique 7% 3 Clean & Clear 6% Clinique 7% 4 Proactiv 7% 4 Cetaphil 5% 4 Proactiv 6% 4 Clean & Clear 6% 5 Cetaphil 5% Proactiv 5% 5 Cetaphil 5% 5 Mario Badescu 4% 6 Aveeno 3% 6 CeraVe 3% 6 Mario Badescu 3% 6 Proactiv 3% 7 Clearasil 2% 7 LUSH 2% 7 Aveeno 3% 7 Origins 2% 8 Biore 2% 8 Biore 2% 8 LUSH 3% CeraVe 2% 9 LUSH 2% Sephora 2% 9 CeraVe 2% 9 LUSH 2% 10 Mary Kay 2% 10 Aveeno 2% 10 Simple Skincare 2% 10 Aveeno 2% Biore 2% PREFERRED SKINCARE BRANDS (AVERAGE-INCOME, FEMALES) 1 Neutrogena 24% 1 Neutrogena 24% 1 Neutrogena 22% 1 Neutrogena 20% 2 Clean & Clear 10% 2 Clean & Clear 8% 2 Clean & Clear 9% 2 Clean & Clear 8% 3 Proactiv 9% 3 Proactiv 8% 3 Proactiv 8% 3 Proactiv 6% 4 Clinique 5% 4 Clinique 6% 4 Clinique 5% 4 Clinique 5% 5 Cetaphil 3% 5 Biore 4% 5 Cetaphil 5% 5 Cetaphil 5% 6 Aveeno 3% 6 Aveeno 3% 6 Biore 3% 6 Biore 4% 7 Biore 3% 7 Mary-Kay 3% 7 Mario Badescu 3% 7 Mario Badescu 4% 8 Clearasil 3% 8 Olay 3% 8 Mary Kay 2% 8 Aveeno 2% 9 Mary Kay 2% Cetaphil 2% Aveeno 2% 9 Olay 2% 10 Dove 2% 10 Sephora 2% 10 CeraVe 2% 10 CeraVe 2% Sephora 2% St. Ives 2% 38 Taking Stock With Teens

39 EL SHARE MODERATES; TIME TO MAKE AN ACQUISITION? Consolidated UI Cosmetics Brand Share (Upper-Income Females) Estee Lauder s portfolio of brands lost 400 bps of cosmetics share Y/Y, led by Clinique (mindshare declined -200 bps Y/Y) and by Too Faced (mindshare declined -100 bps Y/Y) EL COSMETIC BRAND SHARE (UPPER INCOME, FEMALES) 35% 30% 25% 20% Too Faced acquired in December 20% 25% 22% 21% 15% 10% 5% 0% 39 Taking Stock With Teens

40 Restaurants Food 24% of Teen Spending

41 Restaurant Spending Trends FOOD VS. CLOTHING SPEND AMONG UPPER INCOME TEENS 30.0% 15.0% Clothing Spend Food Spend 20.0% 10.0% 0.0% 10.0% 20.0% 10.0% 5.0% 0.0% (5.0%) (10.0%) Net Food Spend 30.0% Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Fall Food Clothing Delta (15.0%) Restaurants have steadily grown in importance within the broader teen wallet. Restaurants represented 24% of overall spending for upper income teens in This is within the context of the longer-term trend of food spend outpacing clothing spend and is up vs. Fall 2017 s 22% results and in-line with all time highs of 24% seen in Restaurant spending continues to outpace clothing spend which remains the second largest category at 20% of the upper income teen wallet. 41 Taking Stock With Teens

42 Restaurant Spending Trends PREFERENCE FOR LIMITED SERVICE BRANDS 100% 90% 80% 70% 57% 56% 59% 52% 50% 48% 46% 46% 43% 40% 41% 38% 39% 38% 40% 36% 36% 37% 35% 60% Full-Service 50% Limited-Service 40% 30% 20% 43% 44% 41% 48% 50% 52% 54% 54% 57% 60% 59% 62% 61% 62% 60% 64% 64% 63% 65% 10% 0% Fall Fall Fall Fall Fall Fall Fall Fall Fall Teens are showing a continued preference for limited service restaurants relative to full service brands. This is the continuation of a longer-term trend we have observed going back to 2009, at least, when teen brand preferences were primarily focused around full service brands. We believe this is fueled by Fast Casual preference coupled with affordability considerations. 42 Taking Stock With Teens

43 Restaurant Spending Trends PREFERRED BRANDS (UPPER INCOME) Chick-fil-A Starbucks (12%) Chipotle McDonald's Panera Fall Starbucks (11%) Chick-fil-A Chipotle McDonald's Dunkin Donuts Chick-fil-A Starbucks (12%) Chipotle Buffalo Wild Wings Panera Fall Starbucks (14%) Chipotle Chick-fil-A Taco Bell McDonald's Starbucks (14%) Chipotle Chick-fil-A Panera McDonald's Fall Starbucks (14%) Chipotle Chick-fil-A McDonald's Panera Chipotle Starbucks (13%) Chick-fil-A Panera Olive Garden Fall Starbucks (15%) Chipotle Chick-fil-A McDonald's Dunkin Donuts Starbucks (12%) Chipotle Chick-fil-A McDonald's Panera Fall Starbucks (18%) Chipotle McDonald's Chick-fil-A Panera Starbucks (12%) Chipotle Panera Chick-fil-A McDonald's Fall Starbucks (14%) Chipotle McDonald's Olive Garden Chick-fil-A Starbucks (10%) Chipotle McDonald's Olive Garden Chick-fil-A Fall Starbucks (9%) Chipotle McDonald's Olive Garden Dunkin Donuts Starbucks (8%) Chipotle McDonald's Olive Garden Chick-fil-A Fall Chipotle Starbucks (8%) McDonald's Olive Garden Chili's Starbucks (9%) Chipotle Olive Garden T.G.I. Friday's Chili's 2018 Chick-fil-A Starbucks (12%) Chipotle McDonald's Panera Estimated Average Check By ~$6.00 $5.55 $11.09 $6.19 $11.61 Preferred Brand PREFERRED BRANDS (AVERAGE INCOME) Starbucks (9%) Chick-fil-A McDonald's Taco Bell Buffalo Wild Wings Fall Starbucks (12%) Chick-fil-A McDonald's Olive Garden Buffalo Wild Wings Starbucks (12%) Chick-fil-A McDonald's Chipotle Buffalo Wild Wings Fall Starbucks (12%) Chick-fil-A McDonald's Olive Garden Chipotle Starbucks (10%) McDonald's Chick-fil-A Olive Garden Buffalo Wild Wings Fall Starbucks (12%) McDonald's Chipotle Chick-fil-A Olive Garden Starbucks (14%) McDonald's Chipotle Chick-fil-A Olive Garden Fall Starbucks (14%) McDonald's Chipotle Chick-fil-A Taco Bell Starbucks (11%) McDonald's Chipotle Olive Garden Taco Bell Fall Starbucks (14%) McDonald's Olive Garden Taco Bell Chipotle Starbucks (11%) McDonald's Olive Garden Taco Bell Buffalo Wild Wings Fall Starbucks (10%) McDonald's Olive Garden Red Lobster Taco Bell Starbucks (10%) McDonald's Olive Garden Taco Bell Red Lobster Fall Starbucks (8%) McDonald's Olive Garden Taco Bell Applebee's Starbucks (9%) McDonald's Olive Garden Taco Bell Applebee's Fall McDonalds Starbucks (7%) Olive Garden Taco Bell Apple Bee's Starbucks (8%) Olive Garden McDonald's Applebee's Chili's 2018 Starbucks (9%) Chick-fil-A McDonald's Taco Bell Buffalo Wild Wings Estimated Average Check By $5.55 ~$6.00 $6.19 $6.10 $18.14 Preferred Brand 43 Taking Stock With Teens

44 Media & Devices Music, Video Games, & Mobile 25% of Teen Spending

45 Remarkably Stable Social Platform Use Social platform use trends continue at a steady pace, with Snapchat and Instagram inching up use, Twitter showing rebounding use and Facebook maintaining use. Instagram and Snapchat have extremely high user overlap, but Instagram is a better channel for branding, has better ad units, and stronger advertiser engagement. Which social platform do you use at least once per month? 2016 Fall Fall Snapchat 75% 80% 81% 82% 83% Instagram 74% 79% 79% 81% 82% Twitter 58% 56% 56% 50% 53% Facebook 60% 52% 51% 45% 45% Pinterest 27% 25% 25% 23% 24% Google+ 23% 22% 19% 16% 13% What is your favorite social platform? 2016 Fall Fall Snapchat 24% 35% 39% 47% 45% Instagram 23% 24% 23% 24% 26% Twitter 16% 13% 11% 7% 9% Facebook 15% 13% 11% 9% 8% Pinterest 1% 1% 1% 1% 1% Google+ 1% 1% 0% 0% 0% % using Platform 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Strong, Early Adoption of Snapchat & Instagram Facebook Twitter Snapchat Instagram Age 45 Taking Stock With Teens

46 FB: Stable Use a Positive Sign of Relevance Facebook use has taken step-downs in platform use for several years, but moderation occurred in our 2018 survey. Importantly, out longitudinal data suggests that users are maintaining use; churn is not occurring. While declining engagement is an investor concern, should it materialize in a substantial way it is unlikely to be a meaningful headwind for several years as teens are a HSD % of MAUs. % using Platform 70% 60% 50% 40% 30% 20% Facebook Engagement Declines Moderating Fall Fall % 60% 50% 40% 30% 20% Longitudinal Data Suggests Stable Cohorts 14 & 15 Year Olds as of 2015, Followed Through to Graduation 14 Year Olds 15 Year Olds 10% 10% 0% Total Age 0% -15 Fall Fall Fall Taking Stock With Teens

47 IG: Strength Continues, Best Brand Channel Instagram use inched up and is neck-and-neck with Snapchat, gaining 200bps as favorite platform among teens. We asked teens the best channel to reach them: Instagram is the clear winner. We believe this reflects Instagram s use case, which is much more brand-friendly. Instagram has largely the same user base as Snapchat, but a better ad unit and advertiser engagement. % using Platform 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Instagram: Youngest Cohort Soft, Steady Overall Fall Fall Total Age 70% 60% 50% 40% 30% 20% 10% 0% Instagram Leading Channel for Brand Engagement Questions: What is the best way for a retailer/brand to communicate with you about new products or promotions? 47 Taking Stock With Teens

48 Snapchat: Maintains Engagement Snapchat remains the No. 1 platform among teens (~80bps ahead of Instagram). The percent of teens indicating Snapchat is their #1 platform declined slightly. Snap pitches itself as having unique access to a hard-to-reach demographic, but our survey suggests its user base is nearly identical to Instagram. % using Platform 90% 80% 70% 60% 50% 40% 30% 20% Young Users Less Involved on Snapchat Fall Fall % 90% 80% 70% 60% 50% 40% 30% Heavy Overlap of User Base (% of Respondents) No Use 13% Snapchat Only 6% Instagram Only 6% Snapchat & Instagram 75% 10% 20% 0% Total Age 10% 0% 48 Taking Stock With Teens

49 Amazon Mindshare Down Slightly, But Remains Dramatically Above All Others Amazon mindshare takes a slight step back for male and female respondents. ebay mindshare dropped from 3.0% to 1.8%; lowest level recorded in our survey. Concentration of mindshare remains high, with 68% of preferred website responses (unaided) among the top 10 platforms. Walmart has 0.17% of mindshare, Target has 0.26%; limited threat. PREFERRED WEBSITES (UPPER-INCOME) 1 Amazon 40% 1 Amazon 43% 1 Amazon 46% 1 Amazon 44% 2 Nike 8% 2 Nike 5% 2 Nike 5% 2 Nike 6% 3 American Eagle 4% 3 American Eagle 5% 3 American Eagle 5% 3 American Eagle 4% 4 ebay 3% 4 Forever 21 3% 4 ebay 3% 4 Urban Outfitters 3% 5 Forever 21 2% 5 ebay 2% 5 Forever 21 3% 5 Forever 21 3% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 Urban Outfitters 2% 6 PacSun 2% 7 Nordstrom 1% 7 Victoria's Secret 2% 7 Fashion Nova 2% 7 ebay 2% 8 Victoria's Secret 1% 8 lululemon 1% 8 lululemon 2% 8 lululemon 2% 9 Hollister 1% PacSun 1% 9 PacSun 2% 9 Zaful 2% PacSun 1% 10 Zumiez 1% 10 Supreme 1% 10 Supreme 1% PREFERRED WEBSITES BY GENDER (UPPER-INCOME) Females 1 Amazon 27% 1 Amazon 30% 1 Amazon 33% 1 Amazon 31% 2 American Eagle 8% 2 American Eagle 11% 2 American Eagle 10% 2 American Eagle 8% 3 Forever 21 6% 3 Forever 21 7% 3 Forever 21 7% 3 Forever 21 7% 4 Urban Outfitters 5% 4 Urban Outfitters 5% 4 Fashion Nova 5% 4 Urban Outfitters 5% 5 Victoria's Secret 3% 5 Victoria's Secret 5% 5 lululemon 4% 5 Zaful 4% 6 Nordstrom 3% 6 Lululemon 3% 6 Urban Outfitters 4% 6 Lululemon 3% 7 Brandy Melville 3% 7 Fashion Nova 2% 7 Nordstrom 2% 7 Fashion Nova 3% 8 Hollister 2% 8 Hollister 2% 8 Hollister 2% 8 Romwe 2% 9 Etsy 2% Nordstrom 2% Nike 2% 9 PacSun 2% 10 Free People 2% 10 Tobi 2% PacSun 2% 10 Revolve 1% 49 Taking Stock With Teens Males 1 Amazon 48% 1 Amazon 51% 1 Amazon 55% 1 Amazon 53% 2 Nike 12% 2 Nike 8% 2 Nike 8% 2 Nike 9% 3 ebay 5% 3 ebay 3% 3 ebay 4% 3 ebay 2% 4 Vineyard Vines 1% 4 PacSun 2% 4 Supreme 2% PacSun 2% 5 Zumiez 1% Zumiez 2% 5 PacSun 2% 5 Supreme 2% 6 Eastbay 1% 6 Adidas 1% 6 Adidas 2% 6 Adidas 2% 7 Adidas 1% Foot Locker 1% 7 Eastbay 1% 7 Urban Outfitters 2% PacSun 1% 8 Eastbay 1% Zumiez 1% 8 Foot Locker 1% 9 Foot Locker 1% H&M 1% 9 Dick's Sporting Goods 1% 9 Eastbay 1% 10 Ralph Lauren 1% 10 Aliexpress 1% H&M 1% Grailed 1% Supreme 1% Dick's Sporting Goods 1%

50 Profile of Prime Growth Prime Adoption is at 70% vs. 66% in Adoption increased in each income bracket in our -18 survey. Our survey suggests that high-70m households have Prime memberships in the U.S.; while a staggering number, our non-teen surveys and Amazon filings suggest similar levels. 40% of new Prime members are coming from the top 2 quintiles of household income. 90% Amazon Prime Penetration by Household Income 90M Prime Members by Income Quintile 80% 70% 60% 50% 2015 Fall Fall Fall M 70M 60M 50M $112K+ $68K-$112K $41K-$68K $21K-$41K $0K-$21K 40% 40M 30% 20% 10% 0% $21K-$41K $41K-$68K $68K-$112K $112K+ 30M 20M 10M M Fall Fall Fall Fall Fall Taking Stock With Teens

51 Teen iphone Ownership Up Nicely iphone Ownership 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Own an iphone Expect next phone to be: iphone ownership of 82% is highest we ve seen with upside remaining, as 84% of teens say next phone will be an iphone. 25% Apple Watch Intention 20% 15% 10% 5% Own A Smartwatch Plan to buy Apple Watch 0% Apple Watch interest is up significantly with 20% planning to buy an Apple Watch in the next 6 months vs. 17% in Taking Stock With Teens

52 Netflix Expanding Lead Teen Daily Video Consumption 2H15 1H16 2H16 1H17 2H17 1H18 38% 38% 37% 38% 37% 39% 29% 26% 25% 26% 23% 22% 21% 23% 20% 26% 29% 30% Netflix Cable TV YouTube On avg., Teens spend 39% of their daily video consumption on Netflix, up from 37% in our Fall 2017 survey. Netflix was well ahead of runner up YouTube at 30% and Cable/Sat TV at 20%. Teen Daily Video Consumption 2H15 1H16 2H16 1H17 2H17 1H18 8% 8% 5% 5% 6% 6% 6% 6% 4% 4% 4% 3% 3% 3% 3% 3% Hulu Amazon Prime Other streaming Cable/Sat was the only platform to lose ground, which was taken up by Netflix, YouTube and Hulu. 52 Taking Stock With Teens

53 Console Video Game Takeaways DO YOU ALREADY OWN OR EXPECT YOUR HOUSEHOLD TO BUY THE PS4 OR XBOX ONE IN THE NEXT TWO YEARS? Sales of Current Gen Consoles Outpacing Prior Cycle* Anticipate purchase Already own one PS4 and Xbox One Launched Nov % 37% 39% 52% 54% 58% 62% 62% 65% 52% 49% 41% 33% 34% 26% 22% 17% 17% 18% 2013 Fall Fall Fall Fall Fall % of respondents anticipate buying a current gen console or already own one, compared to 79% in Fall New console ownership is flat at 62%. Percentage of teens who anticipate downloading >50% of games onto console is now 55%, up from 50% in fall and 37% in Fall-15, when we first asked the question. 53 Taking Stock With Teens

54 Console Video Game Takeaways HOW MUCH ARE TEENS SPENDING ANNUALLY ON VIDEO GAMES? Expected spend by male teens on video games (as % of total budget) is 13% for 2018, while total expected spend (male & female) is up 23% to $225. Only food (24%) and clothing (16%) exceed male teen spending on video games (13%). Average video game spend by teens over the past 15 years is $179. $250 $225 - Expected Video Game Spend in % - Budget Spent On Video Games in % $200 12% 10% $150 8% $100 6% 4% $50 2% $0 0% 2011 Fall Fall Fall Fall 2014 Video Game Spend (Male+Female) 2015 Fall Video Game Spend Allocation (Male) Fall Fall Taking Stock With Teens

55 Teen Mobile Game Trends DO YOU PLAY GAMES ON YOUR MOBILE PHONE OR TABLET? 75% play games on smartphone or tablet, compared with 72% in the fall. % of Students 2013 % of Students Fall 2013 % of Students 2014 % of Students Fall 2014 % of Students 2015 % of Students Fall 2015 % of Students 2016 % of Students Fall 2016 % of Students 2017 % of Students Fall 2017 % of Students 2018 Yes 83% 81% 85% 80% 81% 79% 81% 77% 73% 72% 75% No 17% 19% 15% 20% 19% 21% 19% 23% 27% 28% 25% WHEN PLAYING GAMES ON YOUR MOBILE DEVICE, DO YOU BUY VIRTUAL GOODS LIKE ENERGY, COINS OR EXTRA LEVELS? 27% of teens who play mobile games spend money in game (modestly down from fall). % of Students 2013 % of Students Fall 2013 % of Students 2014 % of Students Fall 2014 % of Students 2015 % of Students Fall 2015 % of Students 2016 % of Students Fall 2016 % of Students 2017 % of Students Fall 2017 % of Students 2018 Yes 16% 18% 18% 22% 21% 24% 26% 24% 28% 28% 27% No 84% 82% 82% 78% 79% 76% 74% 76% 72% 72% 73% 55 Taking Stock With Teens

56 Appendix

57 Project Framework & Key Demographics ALL TEENS Fall Fall Fall Fall Teens Surveyed 7,200 6,200 9,400 6,500 10,000 5,500 6,100 6,000 Gender - Female 47% 49% 44% 44% 45% 45% 46% 45% Gender - Male 53% 51% 56% 56% 55% 55% 54% 55% Average Age Percentage Of Teens Part-Time Employe 35% 35% 36% 39% 34% 39% 35% 40% Average Household Income $73,000 $67,000 $68,000 $62,500 $68,800 $66,100 $66,100 $66,296 UPPER-INCOME TEEN SURVEY Fall 2014 Fall 2015 Fall 2016 Fall Teens Surveyed - Upper Income 2,200 1,400 2,700 1,300 2,800 1,400 1,500 1,400 Gender - Female 46% 46% 41% 46% 41% 42% 43% 43% Gender - Male 54% 54% 59% 54% 59% 58% 57% 57% Average Age Percentage Of Teens Part-Time Employe 36% 36% 33% 40% 31% 39% 38% 44% Average Household Income $109,000 $104,000 $107,000 $101,000 $109,000 $100,000 $101,000 $100,480 AVERAGE-INCOME TEEN SURVEY Fall 2014 Fall 2015 Fall 2016 Fall Teens Surveyed - Average Income 5,000 4,800 6,700 5,200 7,200 4,100 4,600 4,600 Gender - Female 48% 49% 45% 44% 46% 46% 47% 45% Gender - Male 52% 51% 55% 56% 54% 54% 53% 55% Average Age Percentage Of Teens Part-Time Employe 35% 34% 37% 39% 36% 39% 35% 39% Average Household Income $56,000 $56,000 $52,000 $53,000 $53,000 $55,000 $55,000 $56, Taking Stock With Teens

58 What Is In A Teen s Wallet Today? All Upper-Income Teens 19% 38% 43% Basic Needs Electronics, Cars, & Other Selfie Budget Clothing, Accessories, Personal Care, & Shoes Social Budget Food, Video Games, Music, Movies, Events, & Books Female Male 58 Taking Stock With Teens

59 Spending by Category by Income Demographic SPENDING BY CATEGORY (UPPER-INCOME, ALL TEENS) Spending by Category - All Teens 2014 Fall Fall Fall Fall Video Games / Systems 7% 7% 8% 7% 7% 7% 8% 7% 8% Music / Movies (DVD/CD) 6% 6% 6% 6% 5% 5% 5% 5% 5% Electronics / Gadgets 8% 8% 8% 8% 8% 8% 7% 8% 7% Clothing 21% 21% 20% 20% 20% 21% 19% 20% 20% Accessories / Personal Care / Cosmetics 9% 10% 10% 9% 10% 9% 9% 9% 10% Shoes 9% 8% 7% 9% 8% 8% 8% 8% 8% Food 21% 20% 23% 22% 22% 23% 24% 22% 24% Concerts / Movies / Sporting Events 6% 6% 6% 6% 5% 6% 6% 5% 4% Car 9% 9% 8% 7% 9% 6% 9% 9% 9% Books / Magazines 2% 2% 2% 2% 2% 1% 1% 1% 1% Furniture / Room Accessories 1% 2% 1% 1% 1% 2% 2% 2% 2% Other 3% 3% 4% 3% 3% 4% 4% 4% 3% Total Fashion (Clothing, Access & Footwear) 38% 39% 36% 38% 38% 38% 36% 38% 38% SPENDING BY CATEGORY (AVERAGE-INCOME, ALL TEENS) Spending by Category - All Teens 2014 Fall Fall Fall Fall Video games / systems 7% 7% 7% 7% 8% 8% 8% 8% 9% Music / movies (DVD/CD) 7% 6% 6% 6% 6% 5% 5% 5% 5% Electronics / gadgets 8% 8% 8% 8% 8% 8% 7% 7% 7% Clothing 21% 20% 20% 20% 18% 20% 19% 20% 19% Accessories/personal care/cosmetics 11% 10% 11% 10% 11% 11% 10% 10% 11% Shoes 10% 9% 9% 10% 9% 10% 9% 10% 9% Food 18% 17% 21% 19% 20% 21% 22% 20% 21% Concerts/Movies/Sporting events 5% 5% 5% 5% 5% 5% 4% 5% 4% Car 9% 9% 8% 9% 9% 8% 9% 8% 10% Books/magazines 2% 2% 2% 2% 2% 2% 2% 1% 1% Furniture / room accessories 2% 2% 2% 2% 2% 2% 2% 2% 2% Other 3% 3% 3% 4% 4% 4% 4% 4% 3% Total Fashion (Clothing, Access & Footwear) 41% 40% 40% 39% 38% 40% 39% 40% 39% 59 Taking Stock With Teens

60 Top Fashion Trends Right Now TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, MALES) 1 Nike/Jordans 19% 1 Nike / Jordans 18% 1 Nike / Jordans 12% 1 Nike / Jordans 12% 2 Jogger Pants 8% 2 Jogger Pants 8% 2 Supreme 8% 2 Athletic Wear 10% 3 Vineyard Vines 7% 3 Athletic Wear 6% 3 Jogger Pants 5% 3 Adidas 9% 4 Athletic Wear 6% 4 Khakis / Chinos 5% Ripped Jeans 5% 4 Jogger Pants 7% 5 Khakis/Chinos 6% 5 Adidas 4% 5 Khakis / Chinos 5% Supreme 7% 6 Preppy 6% 6 Leggings / lululemon 4% 6 Adidas 4% 6 Khakis / Chinos 4% 7 Ralph Lauren 4% 7 Ripped Jeans 3% 7 Vineyard Vines 4% Ripped Jeans 4% 8 Tall Socks 4% 8 Preppy 3% 8 Preppy 3% 8 Vans 3% 9 Boat Shoes 3% 9 Jeans 3% 9 Jeans 3% 9 Jeans 3% 10 Adidas 2% 10 Timberland 2% Vans 3% 10 Preppy 3% TOP FASHION TRENDS RIGHT NOW (UPPER-INCOME, FEMALES) 1 Leggings/lululemon 25% 1 Leggings / lululemon 25% 1 Ripped Jeans 12% 1 Leggings / lululemon 29% 2 Birkenstock 6% 2 Chokers 11% 2 Off the Shoulder Tops 11% 2 Ripped Jeans 8% 3 Victoria's Secret 5% 3 Converse 5% 3 Birkenstock 10% 3 Jeans 5% 4 Converse 4% 4 Victoria's Secret 4% 4 Jeans 9% 4 Victoria's Secret 4% 5 Ripped Jeans 4% 5 Adidas 4% 5 Leggings / lululemon 8% 5 Vans 4% 6 Jeans 3% 6 Ripped Jeans 4% 6 Converse 4% 6 Boots 3% 7 Adidas 3% 7 Jeans 3% 7 Crop Tops 3% 7 Converse 3% 8 Bralettes 3% 8 Boots 3% 8 Chokers 2% Crop Tops 3% 9 Nike / Jordans 3% 9 Nike / Jordans 2% American Eagle 2% 9 Off the Shoulder Tops 2% 10 Chokers 3% 10 UGG 2% Vans 2% 10 Nike / Jordans 2% 60 Taking Stock With Teens

61 Uptrending Brands BRANDS STARTING TO WEAR (UPPER-INCOME, MALES) 1 Nike 13% 1 Adidas 10% 1 Adidas 12% 1 Adidas 19% 2 Ralph Lauren 10% 2 Nike 9% 2 Nike 9% 2 Nike 9% 3 Adidas 8% 3 Ralph Lauren 6% 3 Ralph Lauren 5% 3 American Eagle 5% 4 American Eagle 5% 4 American Eagle 5% 4 American Eagle 5% 4 Vans 4% 5 Vineyard Vines 5% 5 Under Armour 4% 5 Under Armour 5% 5 Champion 4% 6 Under Armour 5% 6 Patagonia 3% 6 Vineyard Vines 4% Supreme 4% 7 Vans 3% 7 Vans 3% 7 Vans 4% 7 Under Armour 4% 8 H&M 2% 8 lululemon 2% Supreme 3% 8 lululemon 4% 9 lululemon 2% 9 Gucci 2% 9 Patagonia 3% 9 Vineyard Vines 3% 10 Hollister 2% 10 Vineyard Vines 2% 10 lululemon 2% 10 Ralph Lauren 3% BRANDS STARTING TO WEAR (UPPER-INCOME, FEMALES) 1 American Eagle 9% 1 American Eagle 7% 1 American Eagle 9% 1 lululemon 8% 2 Urban Outfitters 5% 2 Urban Outfitters 6% 2 Forever 21 6% 2 Adidas 6% 3 Free People 5% 3 Nike 6% 3 Adidas 5% 3 Urban Outfitters 6% Nike 5% 4 Forever 21 5% 4 PacSun 5% 4 Vans 5% 5 lululemon 4% 5 Adidas 4% 5 Nike 4% 5 American Eagle 5% 6 Victoria's Secret 4% lululemon 4% 6 lululemon 4% Nike 5% 7 Adidas 4% 7 Victoria's Secret 4% 7 Free People 4% 7 PacSun 4% 8 PacSun 4% 8 H&M 4% 8 Vans 4% 8 Brandy Melville 4% 9 Forever 21 4% 9 PacSun 3% 9 Urban Outfitters 3% 9 Forever 21 3% 10 Brandy Melville 3% 10 Free People 3% 10 Three Brands Tied 3% Free People 3% Victoria's Secret 3% 61 Taking Stock With Teens

62 Downtrending Brands BRANDS NO LONGER WORN (UPPER-INCOME, MALES) 1 Adidas 10% 1 Under Armour 11% 1 Under Armour 10% 1 Under Armour 12% 2 Gap 10% 2 Gap 10% 2 Gap 9% 2 Adidas 9% 3 Under Armour 7% 3 Adidas 9% 3 Adidas 9% 3 Nike 9% 4 Nike 6% 4 Nike 7% 4 Reebok 7% 4 Gap 8% 5 Reebok 6% 5 Reebok 6% 5 Nike 7% 5 Reebok 8% 6 Skechers 5% 6 Aeropostale 6% 6 Skechers 5% 6 Skechers 5% 7 Puma 5% 7 Puma 4% 7 Puma 5% 7 American Eagle 4% 8 Abercrombie & Fitch 4% 8 American Eagle 4% 8 Old Navy 4% 8 Hollister 4% 9 Hollister 4% 9 Hollister 4% 9 Hollister 4% 9 Aeropostale 3% 10 Aeropostale 3% 10 Skechers 3% 10 American Eagle 3% 10 Champion 3% Champion 3% Puma 3% BRANDS NO LONGER WORN (UPPER-INCOME, FEMALES) 1 Justice 29% 1 Aeropostale 26% 1 Justice 27% 1 Justice 26% 2 Aeropostale 17% 2 Justice 21% 2 Aeropostale 20% 2 Aeropostale 19% 3 Abercrombie & Fitch 12% 3 Hollister 10% 3 Hollister 8% 3 Hollister 11% 4 Hollister 9% 4 Abercrombie & Fitch 9% 4 Abercrombie & Fitch 6% 4 Abercrombie & Fitch 8% 5 Gap 4% 5 American Eagle 3% 5 Gap 4% 5 Forever 21 3% 6 Forever 21 3% 6 Forever 21 3% 6 American Eagle 2% 6 American Eagle 3% 7 American Eagle 1% 7 Old Navy 2% 7 Forever 21 2% Gap 3% Old Navy 1% 8 Gap 2% 8 Old Navy 2% 8 Old Navy 2% 9 H&M 1% 9 Adidas 2% 9 Roxy 2% 9 Victoria's Secret 2% Ralph Lauren 1% 10 Nike 1% 10 Nike 2% 10 Nike 1% Victoria's Secret 1% Under Armour 62 Taking Stock With Teens

63 Top Clothing Brands Among Upper-Income 63 Taking Stock With Teens PREFERRED CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) 1 Nike 29% 1 Nike 31% 1 Nike 23% 1 Nike 23% 2 American Eagle 9% 2 American Eagle 10% 2 American Eagle 11% 2 American Eagle 10% 3 Forever 21 5% 3 Forever 21 5% 3 Adidas 4% 3 Adidas 6% 4 Ralph Lauren 4% 4 lululemon 3% 4 Forever 21 4% 4 Forever 21 5% 5 Urban Outfitters 3% 5 H&M 3% 5 Hollister 4% 5 Urban Outfitters 5% 6 H&M 3% Adidas 3% 6 PacSun 3% 6 PacSun 4% 7 PacSun 2% 7 Hollister 2% 7 lululemon 3% 7 Supreme 3% 8 Adidas 2% 8 Urban Outfitters 2% 8 H&M 3% 8 H&M 3% 9 Vineyard Vines 2% Vans 2% 9 Urban Outfitters 3% 9 lululemon 3% 10 Victoria's Secret 2% 10 PacSun 2% 10 Supreme 3% 10 Gucci 2% Ralph Lauren 2% PREFERRED CLOTHING BRANDS (UPPER-INCOME, MALES) 1 Nike 44% 1 Nike 47% 1 Nike 36% 1 Nike 38% 2 Ralph Lauren 6% 2 Adidas 4% 2 Adidas 6% 2 Adidas 9% 3 American Eagle 4% 3 American Eagle 4% 3 American Eagle 5% 3 Supreme 5% 4 Adidas 3% 4 Ralph Lauren 4% 4 Supreme 4% 4 American Eagle 5% 5 Vineyard Vines 3% 5 Vans 3% 5 Ralph Lauren 4% 5 PacSun 3% 6 H&M 3% 6 Under Armour 3% 6 Vans 4% 6 Gucci 2% 7 Vans 2% 7 H&M 2% 7 Vineyard Vines 3% 7 Under Armour 2% 8 Under Armour 2% Supreme 2% Hollister 3% 8 H&M 2% 9 PacSun 1% 9 Hollister 2% 9 H&M 2% 9 Vans 2% Hollister 1% 10 Vineyard Vines 2% 10 Gucci 2% 10 Champion 2% Vineyard Vines 2% PREFERRED CLOTHING BRANDS (UPPER-INCOME, FEMALES) 1 American Eagle 17% 1 American Eagle 18% 1 American Eagle 20% 1 American Eagle 17% 2 Forever 21 11% 2 Forever 21 11% 2 Forever 21 9% 2 Forever 21 11% 3 Nike 7% 3 Nike 8% 3 Nike 7% 3 Urban Outfitters 10% 4 Urban Outfitters 7% 4 lululemon 6% 4 Urban Outfitters 5% 4 Nike 6% 5 Victoria's Secret 5% 5 Urban Outfitters 5% 5 PacSun 5% 5 PacSun 5% 6 H&M 3% 6 Victoria's Secret 5% 6 Hollister 5% 6 lululemon 4% 7 PacSun 3% 7 H&M 4% 7 lululemon 5% 7 Victoria's Secret 4% 8 lululemon 3% 8 Hollister 4% 8 Victoria's Secret 4% 8 H&M 3% 9 Brandy Melville 3% PacSun 4% 9 H&M 3% 9 Free People 3% 10 Free People 3% 10 Free People 2% 10 Target 2% 10 Target 2% Nordstrom 3%

64 Top Clothing Brands Among Average-Income PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS) 1 Nike 27% 1 Nike 27% 1 Nike 24% 1 Nike 25% 2 American Eagle 8% 2 American Eagle 10% 2 American Eagle 10% 2 American Eagle 10% 3 Forever 21 6% 3 Forever 21 5% 3 Forever 21 6% 3 Forever 21 5% 4 Ralph Lauren 5% 4 Ralph Lauren 4% 4 Adidas 4% 4 Adidas 5% 5 Hollister 3% 5 Victoria's Secret 4% 5 Victoria's Secret 4% 5 Victoria's Secret 3% 6 Victoria's Secret 3% 6 Hollister 3% 6 H&M 4% 6 Hollister 3% 7 H&M 3% 7 H&M 3% 7 Hollister 3% 7 Ralph Lauren 3% 8 Adidas 2% 8 Adidas 3% 8 Ralph Lauren 3% 8 H&M 2% 9 rue21 2% 9 PacSun 3% 9 PacSun 2% 9 PacSun 2% 10 PacSun 2% 10 rue21 2% 10 Vans 2% 10 rue21 2% PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, MALES) 1 Nike 40% 1 Nike 40% 1 Nike 36% 1 Nike 36% 2 Ralph Lauren 7% 2 Ralph Lauren 6% 2 Adidas 6% 2 Adidas 7% 3 American Eagle 5% 3 American Eagle 5% 3 American Eagle 6% 3 American Eagle 6% 4 Adidas 3% 4 Adidas 5% 4 Ralph Lauren 5% 4 Ralph Lauren 5% 5 Hollister 3% 5 Hollister 3% 5 H&M 3% 5 Supreme 3% 6 Under Armour 3% 6 H&M 3% 6 Supreme 3% 6 Hollister 3% 7 H&M 2% 7 PacSun 2% 7 Hollister 3% 7 Under Armour 2% 8 Vans 2% Under Armour 2% 8 Gucci 3% 8 H&M 2% 9 PacSun 2% 9 Vans 2% 9 Under Armour 2% 9 Gucci 2% 10 Levi's 2% 10 Supreme 2% 10 Vans 2% PacSun 2% PREFERRED CLOTHING BRANDS (AVERAGE-INCOME, FEMALES) 1 American Eagle 12% 1 American Eagle 15% 1 American Eagle 15% 1 American Eagle 15% 2 Forever 21 12% 2 Forever 21 11% 2 Forever 21 12% 2 Nike 13% 3 Nike 12% 3 Nike 11% 3 Nike 11% 3 Forever 21 10% 4 Victoria's Secret 7% 4 Victoria's Secret 8% 4 Victoria's Secret 8% 4 Victoria's Secret 6% 5 rue21 4% 5 Hollister 4% 5 H&M 4% 5 rue21 3% 6 Hollister 4% 6 rue21 4% 6 Hollister 4% 6 Hollister 3% 7 H&M 3% 7 H&M 3% 7 rue21 3% 7 H&M 3% 8 PacSun 3% 8 PacSun 3% 8 PacSun 3% 8 Urban Outfitters 3% 9 Hot Topic 2% 9 lululemon 3% 9 Urban Outfitters 3% 9 PacSun 2% Ralph Lauren 2% 10 Hot Topic 2% 10 Hot Topic 2% 10 Adidas 2% 64 Taking Stock With Teens

65 Top Footwear Brands Among Upper-Income PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS) 1 Nike 51% 1 Nike 52% 1 Nike 46% 1 Nike 42% 2 Vans 9% 2 Vans 9% 2 Vans 12% 2 Vans 16% 3 Converse 7% 3 Adidas 8% 3 Adidas 11% 3 Adidas 14% 4 Adidas 6% 4 Converse 6% 4 Converse 7% 4 Converse 4% 5 Steve Madden 2% 5 Steve Madden 3% 5 Birkenstock 2% 5 DSW 3% 6 Sperry 2% 6 Sperry 2% 6 DSW 2% 6 Steve Madden 3% 7 DSW 2% 7 DSW 2% 7 Foot Locker 2% 7 Foot Locker 2% 8 Birkenstock 2% 8 Foot Locker 1% 8 Sperry 2% 8 Nordstrom 1% 9 Foot Locker 1% 9 Birkenstock 1% 9 New Balance 1% 9 New Balance 1% 10 Nordstrom 1% 10 Payless ShoeSource 1% 10 Steve Madden 1% 10 Sperry 1% PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, MALES) 1 Nike 66% 1 Nike 67% 1 Nike 59% 1 Nike 53% 2 Vans 11% 2 Vans 9% 2 Adidas 14% 2 Adidas 17% 3 Adidas 6% 3 Adidas 8% 3 Vans 10% 3 Vans 11% 4 Sperry 3% 4 Sperry 3% 4 Sperry 2% 4 Converse 2% 5 Foot Locker 2% 5 Foot Locker 1% 5 New Balance 2% 5 Foot Locker 2% 6 Converse 2% 6 Converse 1% 6 Foot Locker 2% 6 New Balance 2% 7 Under Armour 1% New Balance 1% 7 Converse 2% 7 Sperry 2% 8 ASICS 1% 8 Under Armour 1% 8 Finish Line 1% 8 Flight Club 1% New Balance 1% 9 Skechers 1% 9 Under Armour 1% 9 Asics 1% 10 Finish Line 0% 10 Ralph Lauren 0% 10 Four Brands Tied 0% 10 Seven Brands Tied 0% 65 Taking Stock With Teens PREFERRED FOOTWEAR BRANDS (UPPER-INCOME, FEMALES) 1 Nike 30% 1 Nike 33% 1 Nike 30% 1 Nike 27% 2 Converse 15% 2 Converse 14% 2 Converse 15% 2 Vans 22% 3 Vans 7% 3 Vans 9% 3 Vans 14% 3 Adidas 9% 4 Steve Madden 5% 4 Adidas 7% 4 Adidas 7% 4 Converse 7% 5 Adidas 5% 5 Steve Madden 6% 5 Birkenstock 5% 5 DSW 6% 6 DSW 5% 6 DSW 5% 6 DSW 4% 6 Steve Madden 6% 7 Birkenstock 4% 7 Birkenstock 2% 7 Steve Madden 3% 7 Nordstrom 3% 8 Nordstrom 2% 8 UGG 2% 8 Nordstrom 1% 8 Birkenstock 2% 9 UGG 2% 9 Payless ShoeSource 2% Foot Locker 1% 9 UGG Australia 2% 10 Michael Kors 1% 10 Nordstrom 2% 10 Payless ShoeSource 1% 10 Foot Locker 1% Sperry 1% Famous Footwear 1%

66 Top Footwear Brands Among Average-Income PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS) 1 Nike 53% 1 Nike 50% 1 Nike 48% 1 Nike 48% 2 Vans 9% 2 Vans 9% 2 Vans 10% 2 Vans 13% 3 Converse 7% 3 Adidas 8% 3 Adidas 10% 3 Adidas 12% 4 Adidas 5% 4 Converse 6% 4 Converse 7% 4 Converse 6% 5 Foot Locker 3% 5 Foot Locker 2% 5 Foot Locker 2% 5 Foot Locker 2% 6 Sperry 2% 6 Sperry 2% 6 Birkenstock 2% 6 Steve Madden 1% 7 Birkenstock 2% 7 Steve Madden 1% 7 Sperry 2% 7 Sperry 1% 8 Steve Madden 1% 8 Birkenstock 1% 8 Steve Madden 1% 8 Journeys 1% 9 Payless ShoeSource 1% DSW 1% 9 Puma 1% New Balance 1% 10 Under Armour 1% 10 Under Armour 1% DSW 1% 10 Birkenstock 1% PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, MALES) 1 Nike 65% 1 Nike 61% 1 Nike 57% 1 Nike 57% 2 Vans 9% 2 Adidas 9% 2 Adidas 13% 2 Adidas 15% 3 Adidas 6% 3 Vans 8% 3 Vans 9% 3 Vans 9% 4 Foot Locker 3% 4 Sperry 3% 4 Sperry 3% 4 Foot Locker 3% 5 Sperry 2% 5 Foot Locker 2% 5 Foot Locker 2% 5 Converse 2% 6 Converse 2% 6 Converse 2% 6 Converse 2% 6 New Balance 1% 7 Under Armour 1% 7 Under Armour 1% 7 Gucci 1% 7 Sperry 1% 8 New Balance 1% 8 New Balance 1% Under Armour 1% 8 Under Armour 1% 9 ASICS 1% 9 Ariat 1% 9 New Balance 1% 9 Finish Line 1% 10 Ralph Lauren 1% Ralph Lauren 1% 10 Puma 1% 10 Ariat 1% PREFERRED FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES) 1 Nike 38% 1 Nike 37% 1 Nike 38% 1 Nike 37% 2 Converse 12% 2 Converse 12% 2 Vans 12% 2 Vans 17% 3 Vans 9% 3 Vans 11% 3 Converse 12% 3 Converse 11% 4 Adidas 4% 4 Adidas 6% 4 Adidas 7% 4 Adidas 9% 5 Birkenstock 3% 5 Steve Madden 3% 5 Birkenstock 4% 5 Steve Madden 3% 6 Foot Locker 2% 6 Birkenstock 2% 6 Steve Madden 3% 6 Journeys 2% 7 Steve Madden 2% DSW 2% 7 Foot Locker 2% 7 Birkenstock 2% 8 Sperry 2% Foot Locker 2% 8 DSW 2% 8 DSW 1% 9 Payless ShoeSource 2% 9 Journeys 1% 9 Journeys 1% 9 Foot Locker 1% 10 DSW 1% 10 Sperry 1% 10 Puma 1% 10 Payless ShoeSource 1% 66 Taking Stock With Teens

67 Top Athletic Clothing Brands Among Upper-Income PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, ALL TEENS) 1 Nike 71% 1 Nike 69% 1 Nike 67% 1 Nike 61% 2 lululemon 7% 2 Adidas 8% 2 Adidas 10% 2 Adidas 12% 3 Adidas 7% 3 lululemon 7% 3 lululemon 7% 3 lululemon 11% 4 Under Armour 6% 4 Under Armour 7% 4 Under Armour 6% 4 Under Armour 5% 5 Athleta 1% 5 Patagonia 1% 5 Patagonia 1% 5 Patagonia 1% The North Face 1% The North Face 1% PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, MALES) 1 Nike 76% 1 Nike 71% 1 Nike 70% 1 Nike 67% 2 Under Armour 7% 2 Under Armour 10% 2 Adidas 11% 2 Adidas 13% 3 Adidas 7% 3 Adidas 6% 3 Under Armour 9% 3 Under Armour 7% 4 lululemon 1% 4 lululemon 2% 4 lululemon 1% 4 lululemon 3% 5 Columbia 1% 5 Bauer 1% 5 Patagonia 1% 5 Patagonia 2% PREFERRED ATHLETIC CLOTHING BRANDS (UPPER-INCOME, FEMALES) 1 Nike 65% 1 Nike 65% 1 Nike 63% 1 Nike 54% 2 lululemon 15% 2 lululemon 14% 2 lululemon 15% 2 lululemon 21% 3 Adidas 7% 3 Adidas 9% 3 Adidas 9% 3 Adidas 11% 4 Under Armour 4% 4 Under Armour 3% 4 Under Armour 3% 4 Under Armour 3% 5 Athleta 1% 5 Fabletics 1% 5 Athleta 1% 5 Athleta 1% The North Face 1% 67 Taking Stock With Teens

68 Top Athletic Clothing Brands Among Average-Income PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, ALL TEENS) 1 Nike 72% 1 Nike 69% 1 Nike 69% 1 Nike 68% 2 Under Armour 9% 2 Adidas 9% 2 Adidas 11% 2 Adidas 12% 3 Adidas 7% 3 Under Armour 8% 3 Under Armour 8% 3 Under Armour 7% 4 lululemon 2% 4 lululemon 3% 4 lululemon 3% 4 lululemon 3% 5 Victoria's Secret 1% 5 The North Face 1% 5 Victoria's Secret 1% 5 Patagonia 1% PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, MALES) 1 Nike 71% 1 Nike 69% 1 Nike 68% 1 Nike 67% 2 Under Armour 11% 2 Under Armour 10% 2 Adidas 11% 2 Adidas 13% 3 Adidas 8% 3 Adidas 10% 3 Under Armour 10% 3 Under Armour 8% 4 Columbia 1% 4 lululemon 1% 4 lululemon 1% 4 Patagonia 1% The North Face 1% 5 The North Face 1% 5 The North Face 1% 5 lululemon 1% PREFERRED ATHLETIC CLOTHING BRANDS (AVERAGE-INCOME, FEMALES) 1 Nike 73% 1 Nike 70% 1 Nike 70% 1 Nike 69% 2 Under Armour 7% 2 Adidas 8% 2 Adidas 10% 2 Adidas 11% 3 Adidas 6% 3 lululemon 6% 3 Under Armour 6% 3 lululemon 6% 4 lululemon 5% 4 Under Armour 6% 4 lululemon 5% 4 Under Armour 5% 5 Victoria's Secret 1% 5 The North Face 1% 5 Victoria's Secret 2% 5 Victoria's Sec 1% Victoria's Secret 1% 68 Taking Stock With Teens

69 Top Athletic Footwear Brands Among Upper-Income PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, ALL TEENS) 1 Nike 83% 1 Nike 80% 1 Nike 77% 1 Nike 73% 2 Adidas 7% 2 Adidas 8% 2 Adidas 13% 2 Adidas 16% 3 ASICS 2% 3 New Balance 2% 3 New Balance 2% 3 New Balance 2% New Balance 2% 4 ASICS 2% 4 ASICS 2% 4 ASICS 1% 5 Under Armour 1% Under Armour 2% 5 Under Armour 2% Under Armour 1% PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, MALES) 1 Nike 80% 1 Nike 78% 1 Nike 74% 1 Nike 70% 2 Adidas 8% 2 Adidas 8% 2 Adidas 15% 2 Adidas 17% 3 New Balance 2% 3 Under Armour 2% 3 Under Armour 2% 3 New Balance 2% 4 Under Armour 2% 4 New Balance 2% 4 New Balance 2% 4 Under Armour 2% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% PREFERRED ATHLETIC FOOTWEAR BRANDS (UPPER-INCOME, FEMALES) 1 Nike 86% 1 Nike 82% 1 Nike 81% 1 Nike 77% 2 Adidas 5% 2 Adidas 8% 2 Adidas 9% 2 Adidas 14% 3 ASICS 2% 3 ASICS 3% 3 ASICS 2% 3 New Balance 2% 4 New Balance 1% 4 New Balance 1% 4 New Balance 2% 4 Brooks 1% 5 Brooks 1% 5 Brooks 1% 5 Under Armour 1% 5 ASICS 1% Saucony 1% Under Armour 1% 69 Taking Stock With Teens

70 Top Athletic Footwear Brands Among Average-Income PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, ALL TEENS) 1 Nike 82% 1 Nike 80% 1 Nike 77% 1 Nike 76% 2 Adidas 6% 2 Adidas 8% 2 Adidas 11% 2 Adidas 12% 3 Under Armour 2% 3 Under Armour 2% 3 Under Armour 2% 3 New Balance 2% 4 ASICS 1% 4 New Balance 2% 4 New Balance 1% 4 Under Armour 2% 5 New Balance 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, MALES) 1 Nike 78% 1 Nike 77% 1 Nike 72% 1 Nike 74% 2 Adidas 8% 2 Adidas 10% 2 Adidas 14% 2 Adidas 14% 3 Under Armour 3% 3 Under Armour 3% 3 Under Armour 3% 3 Under Armour 2% 4 New Balance 2% 4 New Balance 2% 4 New Balance 1% 4 New Balance 2% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% 5 ASICS 1% PREFERRED ATHLETIC FOOTWEAR BRANDS (AVERAGE-INCOME, FEMALES) 1 Nike 86% 1 Nike 83% 1 Nike 82% 1 Nike 79% 2 Adidas 5% 2 Adidas 7% 2 Adidas 8% 2 Adidas 11% 3 ASICS 1% 3 Under Armour 1% 3 ASICS 1% 3 New Balance 1% 4 Under Armour 1% 4 ASICS 1% 4 Under Armour 1% 4 ASICS 1% 5 Brooks 1% 5 New Balance 1% 5 New Balance 1% 5 Under Armour 1% 70 Taking Stock With Teens

71 Meet Our Senior Analyst Team Erinn Murphy Managing Director Sr. Research Analyst Global Fashion & Lifestyle Brands Nicole Miller Regan Managing Director Sr. Research Analyst Restaurants Mike Olson Managing Director Sr. Research Analyst Consumer Technology & ecommerce Sam Kemp Vice President Sr. Research Analyst Internet 71 Taking Stock With Teens

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73 Stock prices as of April 6 close