Fatima-Ezzahia Bouayau-Amine, Yegoi Biyukhanov, uuilhem Boivath, Seua Kaiacaoglu, veionika Safonova

Agenua
!
1. Naiket anu company analysis
2. Buyout iationale anu value cieation leveis
S. valuation anu ueal
4. Exit stiategy
An inuustiy uominateu by clothing anu subject to cyclical
giowth
u
2uu
4uu
6uu
8uu
1uuu
12uu
14uu
16uu
18uu
2uuu
Clothing Spoitsweai Footweai Appaiel
! #$%
&'%
'% ! (#%
-4%
-S%
-2%
-1%
u%
1%
2%
S%
4%
S%
6%
2uu7 2uu8 2uu9 2u1u 2u11 2u12 2u1S 2u14 2u1S 2u16 2u17
Appaiel Clothing Spoitsweai Footweai
)*+,-. /0 -.1 2332*14 /0567-*8 9%(:!(; <*12=5+,0 >8 3*+56?-7 9@>0;
The appaiel inuustiy is laigely composeu by clothing. It is subject to
cyclical giowth
The main giowth uiivei is the economy's health
Souice: Euiomonitoi 2u1S
#
A2*=1- 202487/7
The inuustiy is uepenuent on the emeiging maikets
)*+,-. /0 -.1 2332*14 /0567-*8 9%(:!(; <*12=5+,0 >8 *1B/+0 9@>0;

Asia-Pacific iepiesents S2% of the appaiel woiluwiue sales anu has been
giowing to levels above 6% lately.

Souice: Euiomonitoi 2u1S
u
2uu
4uu
6uu
8uu
1uuu
12uu
14uu
16uu
CC'
#C%
#&'
!%%
!(% ! #$%
-8%
-6%
-4%
-2%
u%
2%
4%
6%
8%
1u%
2uu7 2uu8 2uu9 2u1u 2u11 2u12 2u1S 2u14 2u1S 2u16 2u17
Woilu Asia pacific
Westein euiope Noith ameiica
Latin ameiica
$
A2*=1- 202487/7
Inuustiy is highly fiagmenteu but has been consoliuating
lately
A2*=1- 7.2*17 /0 -.1 ?4+-./0B D2*=1- 9&%!&;
The clothing inuustiy is highly
fiagmenteu thanks to little baiiieis to
entiy
Buiing 2uu4-2u11 peiiou, fiagmentation
lesseneu: in 2u11, majoi bianus
accounteu foi 18% of total value sales
Inuustiy consoliuation is paitly uue to
the iise of veitically-integiateu ietaileis
such as B&N anu Inuitex
The expansion of theii stoie footpiint
has enableu these playeis to captuie a
laigei shaie of the maiket u%
2%
4%
6%
8%
1u%
12%
14%
16%
18%
2u%
u,u%
1u,u%
2u,u%
Su,u%
4u,u%
Su,u%
6u,u%
7u,u%
8u,u%
9u,u%
1uu,u%
2uu4 2uuS 2uu6 2uu7 2uu8 2uu9 2u1u 2u11
Najoi clothing bianus
Rest of the maiket
Najoi clothing as a % of the total maiket
Souice: Euiomonitoi 2u1S
%
E+DD10-7
A2*=1- 202487/7
A gioup with coie bianus anu maikets, expanuing in fast-
giowing businesses
)4+>24 72417 >8 >*205 9@D;
Bollistei anu A&F aie the majoi
bianus of the company
Bollistei was estimateu to giow at a
2S% iate foi FY 2u12
A&F anu Abeiciombie Kius baiely
achieve pie-ciisis volumes
uilly Bicks is still veiy small
compaieu to othei bianus but is
giowing veiy fast
Souice: Euiomonitoi 2u1S
-2uu
Suu
8uu
1Suu
18uu
2Suu
2uu6 2uu7 2uu8 2uu9 2u1u 2u11
Abeiciombie & Fitch Abeiciombie
Bollistei uilly Bicks
u
1uuu
2uuu
Suuu
4uuu
Suuu
2uu9 2u1u 2u11
0.S. Stoies Inteinational Stoies Biiect to Customeis
Bue to A&F oiigins, the laigest shaie of
sales is iealizeu in the 0S
Inteinational sales aie now the key
giowth uiiveis
Biiect sales via ueuicateu website have
also been expanuing
F2417 >*12=5+,0 >8 -831 +G 7-+*1 9@D;
$H
&H
%H
CCH
EI)J
K%L M K!!
!(H
$'H
(H
EI)J
N%O M K!!
&
E+DD10-7
E+D3208 202487/7
A&F is less piofitable than peeis uue to impoitant Su&A
costs
)*+77 D2*B/0 >10?.D2*=
Souice: Euiomonitoi 2u1S
Su%
4u%
Su%
6u%
7u%
2u12 2u11 2u1u 2uu9
Ameiican Eagle ANF uAP
u%
S%
1u%
1S%
2u12 2u11 2u1u 2uu9
Ameiican Eagle ANF uAP
P31*2-/0B D2*B/0 >10?.D2*=
u%
2%
4%
6%
8%
1u%
2u12 2u11 2u1u 2uu9
Ameiican Eagle ANF uAP
Q1- 3*+R/- D2*B/0 >10?.D2*=
Abeiciombie & Fitch is well above listeu
competitois in teims of gioss maigin
Bowevei, opeiating anu net piofit maigins
lag behinu, mainly uue to Su&A expenses
(ovei SS% of A&F ievenues vs. S% to 2S% of
competitois')
0veiall, A&F is impioving its peifoimance
ovei time while otheis aie eithei stagnant oi
ueclining
'
E+D3208 202487/7
E+DD10-7
A&F has only staiteu to impiove its inventoiy tuinovei anu
to ieshuffle its ieal estate poitfolio
S0T10-+*8 -6*0+T1* 9@D;
Inventoiy tuinovei of A&F is way
highei than competitois', although
it impioveu in 2u12
Souice: Companies financials
Capex is a ieflection of new stoies
openings anu closuies: A&F is in
the piocess of optimization of its
stoie base
uAP incieases its capital
expenuituies while Ameiican
Eagle is ielatively flat
E231U
u
2u
4u
6u
8u
1uu
12u
14u
2u12 2u11 2u1u 2uu9
Ameiican Eagle ANF uAP
u%
2%
4%
6%
8%
1u%
12%
14%
2u12 2u11 2u1u 2uu9
Ameiican Eagle ANF uAP
(
E+D3208 202487/7
E+DD10-7
E+DD10-7
A&F is an inteiesting LB0 taiget as it is cuiiently
unueivalueu anu has impoitant giowth potential
Souice: uoogle Finance
ID1*/?20 V2B41 P6-R/--1*7
I>1*?*+D>/1 205 W/-?.
)IX
)
A2*=1- 31*G+*D20?1
Agenua
*+
1. Naiket anu company analysis
2. Buyout iationale anu value cieation leveis
S. valuation anu ueal
4. Exit stiategy
Why is selling to a PE funu the best option.
J1D2/0 /051310510- F144 -+ ?+D31-/-/+0 F144 -+ 2 5/T1*7/R/15
-1U-/41 B*+63
F144 -+ 2 XV G605
Y+3:4/01
31*G+*D20?1
Beclining sales in majoi
A&F uioup bianus, minoi
bianus stiuggling to
bieak thiough
Little cioss-selling anu
uistiibution syneigies
Bistiibution anu cioss-
selling syneigies
Futuie giowth will be
maximiseu
<+--+D:4/01
31*G+*D20?1
Buiably uecieasing, low
anu volatile maigins
Syneigies allow
ueciease in Su&A costs
Costs iationalisation
allows piofitability
inciease
Incentive to inciease
substantially
piofitability
A202B1D10-
Z VD34+8117
Low peifoimance is
putting both management
anu employees at iisk
Nanagement likely
to be ieplaceu by
buyei's piotgs
Piobable heaucount
ueciease to iealise
syneigies

Possibly unchangeu
management thanks
to its iecogniseu
expeitise
Piobable heaucount
ueciease to iealise
syneigies
0nchangeu
management,
incentiviseu
thanks to a
management
package
Possible layoffs to
ieuuce costs
P6-?+D1
: : : [ [[
**
Expansion of the piouuct line
I?-/+0 SD32?- J2-/+0241
Intiouuction of
spoitsweai line:
Suifing
Swimming
Fitness
outfits
Applies to Bollistei
anu AnF stoies
[&H *1T10617
31* 7-+*1
20062448
Fast giowth of
spoitsweai segment
Alignment with the
bianu image
Expansion of taiget
customei base
Enlaigement of
accessoiies
offeiing:
}eweliy
Sunglasses
Watches
Applies to Bollistei
anu AnF stoies

[&H *1T10617
31* 7-+*1
20062448
Inciease in puichases
pei customei
Bigh maigin items
Complete looks
offeiing
SD341D10-2-/+0
Paitneiship with
spoitsweai
manufactuieis
A&F bianuing
Paitneiships
with spoits
events oiganizeis
Puichases fiom
exteinal
piouuceis
A&F bianuing
*!
J1T1061 B*+,-. 41T1*7
Rationalization of maiketing
I?-/+0 SD32?- J2-/+0241
Incieaseu exposuie to
exteinal auuience iathei
than in-stoie:
Billboaius
Nagazines
Nostly focuseu on
Bollistei bianu
No inciease in
maiketing spenu
Reallocate buuget fiom
in-stoie expeiience to
exteinal auveitising
tools
Raise awaieness using
uiiect exposuie
Naintain the piemium
positioning anu the
spiiit of the bianus
Social meuia campaigns
viial content
0nline games
Covei all bianus
Sponsoiship of summei
spoit events
Covei all bianus
[&H *1T10617
31* 7-+*1
20062448
*#
J1T1061 B*+,-. 41T1*7
Shift in geogiaphic focus
2,9
8,8
u,u
1,u
2,u
S,u
4,u
S,u
6,u
7,u
8,u
9,u
1u,u
0S stoie Inteinational
stoie
Revenue pei stoie in 2u11

Aveiage ievenue
pei stoie -
S,S
u
1uu
2uu
Suu
4uu
Suu
6uu
7uu
8uu
9uu
1uuu
LA Euiope Asia Canaua Niuule
East
0S stoies
2u11 2u17
Y.1 B1+B*23./?24 3*1710?1 D67- >1
?.20B15\ ,1 *156?1 -.1 ]F 7-+*17 205
1U3205 /0-1*02-/+02448
E6**10-48 ]F 7-+*17 2*1 31*G+*D/0B
3++*48 ?+D32*15 -+ /0-1*02-/+024 7-+*17
Actual anu taiget bieakuown of numbei of stoies
pei iegion
*$
J1T1061 B*+,-. 41T1*7
F-+*1
+310/0B7\
(' 31* 812*
E+7- +G +310/0B^
?4+76*1 31*
7-+*1
Five-yeai stoie locations management plan
F-+*1
?4+76*17\
'% 31* 812*
0SB u,2Sm
0SB S,Sm
Y+-24 ?+7-
31* 812*
0SB 414m
0SB 12,Sm
4S Bollistei
1S A&F
1u uilly hicks
S Abeiciombie
Natuial closuie
A&F anu Abeiciombie
0veilapping stoies in
the same mall
E*/-1*/2
*%
J1T1061 B*+,-. 41T1*7
0nline stiategy
I?-/+0 SD32?- J2-/+0241
Selling piouuct thiough
othei online platfoim
(Asos, Zalanuo..)
Impioving website
expeiience (moie
languages, eigonomic..)
Impiove ueliveiy seivices
No iisk of
cannibalization
Taigeting new kinu of
customeis
Incieasing sales with
bettei maigins
A2/0-2/0 #%H
B*+,-.
*&
J1T1061 B*+,-. 41T1*7
S,S
4,u
S,2
S,S
S,4
S,S
S,6
S,7
S,8
S,9
4,u
2u11 2u17
VT+46-/+0 +G 72417 31*
7-+*1
[!CH
Expansion of piouuct line
Rationalization of maiketing
New geogiaphic mix
J1T1061 /D3*+T1D10-
5*/T1*7
m$
Summaiy of stoie ievenue giowth initiatives
17
J1T1061 B*+,-. 41T1*7
Cost ieuuction leveis
E+7- /-1D SD32?- I?-/+0
Closuies of
unueipeifoiming stoies in
the 0S allow foi inciease in
opeiating maigin
Beciease of stoie
expenseu by u,4% of
ievenue pei annum
Stoies expense

Cut the in-stoie
piomotional activities in
A&F stoies in establisheu
maikets
Naiketing expense

Intiouuce stiict inventoiy
management system
Inventoiy cost

Beciease inventoiy
tuinovei fiom ~8u to
~7u uays of sales
u,S% of ievenue in
maiketing cost
saving
*(
E+7- *156?-/+0 41T1*7
Consoliuation of
uistiibution centeis:
centializeu hubs in majoi
iegions
Bistiibution expense

Saving in
uistiibution expense
of u,1% of ievenue
Agenua
*)
1. Naiket anu company analysis
2. Buyout iationale anu value cieation leveis
S. valuation anu ueal
4. Exit stiategy
_2462-/+0 F6DD2*8
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&$
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$&
&%
&!
&&
,-./012345 67.8 9:0;
<=72.7/>02 60?@7=7A:4.
<=72.7/>02 60?@7=7A:4.B 243 0C @=4?-1?
60?@7=7A:4 60?@72-4.
88
_2462-/+0 F6DD2*8 ]7/0B `244 F-*11- X*+a1?-/+07
SD34/15 X6*?.271 3*/?1 +G L%@ 2 7.2*1b
?+07-/-6-/0B 2 &LH +T1* -.1 ?4+7/0B 3*/?1 +0 -.1
#!
7-
+G c1?1D>1* &%!&
valuation using Wall Stieet analyst
consensus estimates at WACC of
8,6% alloweu us to aiiive at a faii
value of the company
Baseu on the 4 uiffeient valuation
methouologies a numbei of
valuation ianges weie examineu
A piice of 6u$ a shaie was chosen
as the one that ieflects the possible
piice that might be paiu by the
stiategic buyei if a competitive
tenuei was oiganizeu
Y.1 *1764-/0B 3*/?1 /D34/17\
Entiy EBITBA'12 multiple of 7,u4x
Beal Enteipiise value of 4,S$bn
Beal Equity value of S,1$bn
!+
E+DD10-7
A iange of financing stiuctuies
was iuentifieu foi the buyout, of
compaiable iisk piofiles
Equity contiibution of the
management anu the sponsoi
vaiy fiom SS% to 4S% of the
total uses
A ievolving cieuit facility in the
amount of 4uu$m was
establisheu to mitigate any
unexpecteu cash shoitfalls
All stiuctuies assume
iefinancing of existing of 6S$m.
In oiuei to ciaft the most
appealing financing stiuctuie
Tiansaction Stiuctuie
1uuu
2uuu
12uu
7uu
1uuu
1648
1S98
1u4S
1994
176S
2u1S
1S16
226S
646 646
u%
2u%
4u%
6u%
8u%
1uu%
Stiuctuie 1 Stiuctuie 2 Stiuctuie S Stiuctuie 4
Teim Loan A Teim Loan B
Senioi Suboiuinateu Notes Total Equity Contiibution
Cash on Banu
I *20B1 +G 3*+3+715 -*2072?-/+0 7-*6?-6*17
IG-1* ?2*1G64 +31*2-/+024 205 31*G+*D20?1 202487/7
6051* 5/GG1*10- 7?102*/+7b /- ,27 51?/515 -+ *1-2/0 -.1
F-*6?-6*1 !b >101R/?/24 G+* >+-. 73+07+* 205
D202B1D10-
!*
E+DD10-7
Bebt Allocation anu Capital 0ptimization
The pioposeu financing stiuctuie foi the
LB0 is compiiseu of:
Teim Loan B:
Size: 12uu$m
Piicing: LIB0R + SSubp
Teim: 9 yeais
Repayment: 1% pei annum, bullet
Senioi Suboiuinateu Notes:
Size: 1648$m
Piicing: 1u% coupon pei annum
Teim: 1u yeais
Inteiest expenses compiiseu of mainly
suboiuinateu note coupon payments
Bue to cash shoitfall, ievolvei is tiiggeieu in
the fiist S yeais, iepaiu fully by 2u16
Cash is applieu, meaning that all the cash
geneiateu is uiiecteu to make optional loan
iepayments
No commitment chaige was negotiateu
12uu 1188 1176
1uu1
7uS
267
1648 1648 1648
1648
1648
1648
1648
Pio
Foima
2u12
2u1S 2u14 2u1S 2u16 2u17 2u18
Teim Loan B Senioi Suboiuinateu Notes
W/020?/0B F-*6?-6*1 VT+46-/+0
4S,6 4S,4 4S,2
S8,6
27,S
1u,4
164,8 164,8 164,8
164,8
164,8
164,8
1,u
1,2 u,2
2u1S 2u14 2u1S 2u16 2u17 2u18
Teim Loan Suboiuinateu Notes Revolvei
S0-1*17- VU310717 /0 @D
!!
E+DD10-7
Key Cieuit Statistics
Bue to stiong cash geneiation capabilities
A&F quickly ieuuces uebt loauing
0nce teim loan A has been iepaiu, cash
position becomes positive, allowing foi
auuitional cushion
Even though unuei LB0 scenaiio cieuit
statistics significantly above inuustiy
aveiages, company is able to sustain it in
oui view
EBITBAcash inteiest expense aie consiueieu
stiong to sustain uebt loauing
As expansion stiategy kicks in anu uebt is
being ieimbuiseu, the company will show
significant balance sheet impiovements
Bebt to total capitalization will stanu at 4u%
post exit, uue to suboiuinateu notes only,
leaving the company in a gieat conuition foi
potential buyeis
7,7
S,8
4,2
S,u
2,u
1,4
7,7
S,8
4,2
S,u
2,u
1,2
2u1S 2u14 2u1S 2u16 2u17 2u18
Total uebt EBITBA Net uebtEBITBA
Y+-24 c1>-^V<SYcI Z Q1- c1>-^V<SYcI
V<SYcI 205 c1>- d+25/0B
1,76
2,S1
2,99
S,87
S,u9
6,Su
6S,S% 6S,u%
6u,S%
SS,6%
47,S%
S9,9%
u,u%
1u,u%
2u,u%
Su,u%
4u,u%
Su,u%
6u,u%
7u,u%
u,uu
1,uu
2,uu
S,uu
4,uu
S,uu
6,uu
7,uu
2u1S 2u14 2u1S 2u16 2u17 2u18
EBITBACash inteiest expense % Bebt to Total Capitaliation
!#
E+DD10-7
CAPEX & B&A Statistics
E23/-24 VU3105/-6*17 M d<P ?271 T7e `244 F-*11-
17-/D2-17
Bue to aggiessive expansion stiategy,
CAPEX significantly exceeus Wall Stieet
Piojections
Bowevei, we believe that these
investments will pay off in teims of top-
line expansion anu maigin optimization
Even at these levels of CAPEX, the
company expeiiences no uifficulties in
seivicing uebt
Bepieciation expenses allow foi tax shielu
anu pioviue ioom foi auuitional EBIT
expansion
Assumeu to be equal to CAPEX in the yeai
aftei the exit anu in aftei
414 414 414 414 414 414
2uu
21u
22u
2Su 24u
24S
1u6,9%
97,u%
88,u%
79,9%
72,4%
69,u%
u,u%
2u,u%
4u,u%
6u,u%
8u,u%
1uu,u%
12u,u%
u
1uu
2uu
Suu
4uu
Suu
2u1S 2u14 2u1S 2u16 2u17 2u18
CAPEX - LB0 case CAPEX - Wall Stieet estimates
% Inciease ovei estimateu
c13*1?/2-/+0 M d<P ?271 T7e `244 F-*11-
17-/D2-17
2S4
281
S1S
S47
S8S
414
221 217 21S 212 212 212
2u1S 2u14 2u1S 2u16 2u17 2u18
B&A - LB0 case B&A - Wall Stieet Estimates
!$
E+DD10-7
EBITBA & EBIT Impiovement
#'#
$((
&!'
'('
)''
**#)
(B!#D
)B'#D
**B!#D
*!B'#D
*$B!#D
*%B)*D
+B++D
%B++D
*+B++D
*%B++D
!+B++D
+
!++
$++
&++
(++
*+++
*!++
!+*# !+*$ !+*% !+*& !+*' !+*(
EFG<,H EFG<,H I7=J-2J
V<SYcI Z V<SYcI D2*B/0 7.+, 7-1258 B*+,-.
EBITBA shows steauy giowth uue to the
cost-cutting initiatives anu paitially uue to
B&A incieases
EBITBA maigin shows inciease uue to
efficiencies iesulting fiom policies
implementeu post - LB0
In the fiist yeais lowei than consensus
estimates uue to aggiessive expansion anu
iesulting Nu&A anu stoie ielateu
expenses
EBIT maigin anu EBIT impiove uue to the
giowth in the top-line, opeiating efficiencies
anu tax shielu pioviueu by inciease B&A on
new CAPEX
V<SY Z V<SY D2*B/0 B*+,-.
**)
!+'
#*$
$$*
%)!
'!%
!B&D
$B*D
%B&D
'B*D
(B&D
*+B*D
+B+D
!B+D
$B+D
&B+D
(B+D
*+B+D
*!B+D
+
*++
!++
#++
$++
%++
&++
'++
(++
!+*# !+*$ !+*% !+*& !+*' !+*(
EFG< EFG< ?7=J-2
2S
E+DD10-7
Equity value at Exit
Vf6/-8 _2461 VT+46-/+0
Stanuaiu holuing peiiou of S yeais was
applieu to the case of A&F
Bue to stiong opeiating stiategy anu cash
geneiation, coie uebt is being iepaiu ovei
the holuing peiiou, leauing to uiamatic
inciease in equity value in 2u17 exit yeai
Conseivatively assumes same exit multiple
as entiy multiple of 7,u4x
IRR - Assuming Exit in 2017E
Exit Multiple
23,1% 6,0x 6,5x 7,0x 7,5x 8,0x
6,0x 17,6% 17,6% 17,6% 17,6% 17,6%
6,0x 17,8% 17,8% 17,8% 17,8% 17,8%
6,5x 20,6% 20,6% 20,6% 20,6% 20,6%
7,0x 23,1% 23,1% 23,1% 23,1% 23,1%
7,5x 25,4% 25,4% 25,4% 25,4% 25,4%
8,0x 27,6% 27,6% 27,6% 27,6% 27,6%
IRR - Assuming 0.7x Entry Multiple
Exit Year
2015 2016 2017 2018 2019
0,2% 16,1% 23,1% 24,9% 25,0%
6,0x -13,4% 8,1% 17,8% 21,1% 22,0%
6,5x -6,1% 12,3% 20,6% 23,1% 23,6%
7,0x 0,2% 16,1% 23,1% 24,9% 25,0%
7,5x 5,8% 19,5% 25,4% 26,7% 26,3%
8,0x 10,9% 22,6% 27,6% 28,3% 27,5%
-2S8
6uS
1767
S189
496S
2882 28S2
2649
2SSS
191S
2u1S 2u14 2u1S 2u16 2u17
Equity value at Exit Net Bebt
!&
E+DD10-7
IRR uecomposition in the case of Su% equity anu 7u% uebt
Souice: Team estimates
9,S%
u,S%
u,u%
1S,2%
2S,u%
Revenue effect Naigin effect Nultiple effect Leveiage effect IRR
In the case of 7u% uebt anu Su% equity, ietuin is geneiateu foi 4u% via sales inciease anu foi S7% via
leveiage effect. 0veiall IRR is at 2S% in a S-yeai hoiizon
E+DD10-7
27
An attiactive management package
Souice: Team estimates
A202B1D10- /0/-/24 /0T17-D10-\ $7Sm,
getting S% of the company's total equity
J2-?.1- D1?.20/7D\ peifoimance taiget is
set at a IRR of 2u%. If beaten, the
management shaie uoubles
E+D31072-/+0 J2-?.1- 1GG1?- +0 SJJ
Nike }effiies
Chaiiman & CE0
4u%
Baviu Cupps
ueneial Counsel &
Secietaiy
2u%
Nichael Kiamei
CF0
2u%
Leslee Beeio
Beau of Stiategy
2u%
X2*-/?/32-/+07
!(
u%
2u%
4u%
6u%
u
%

2
%

4
%

6
%

8
%

1
u
%

1
2
%

1
4
%

1
6
%

1
8
%

2
u
%

2
2
%

2
4
%

2
6
%

2
8
%

S
u
%

S
2
%

S
4
%

S
6
%

S
8
%

4
u
%

Sponsois Nanagement
Souice: Abeiciombie & Fitch investoi ielations
Agenua
!)
1. Naiket anu company analysis
2. Buyout iationale anu value cieation leveis
S. valuation anu ueal
4. Exit stiategy
Exit Stiategy
W6052D10-247
F-*2-1B/?
J2-/+0241
E.24410B17
VT2462-/+0
SXP
F1?+052*8
<68+6-
Ncap: 17,uS$bn
EBITBA: 2,S1$bn
Ncap: 21,77$bn
EBITBA: 2,u1 $bn
Ncap: 1u,8S$bn
EBITBA: 1,68$bn
IP0 guaiantees
a faii piice
A0N > S$bn
EBITBA > Suu$m
Requiies pievious
squeeze out
Bepenuing on
economic outlook
Listing on NYSE
with uBR on LSE
Appaiel inuustiy
may not seem
appealing
Low piice likely
If stiategic leveis
uo not geneiateu
iequiieu
peifoimance
Stiategic buyei likely to pay high piemium of 2u-Su%
0ne of these might be inteiesteu in impioving theii inteinational
positions anu piouuct ianges by foiming a new paitneiship with A&F
Possess laige cash anu lenuing capability anu will be able to pay the
piice
Foi uAP anu Noiustiom, theie might be anti-tiust iegulatoiy issues
Cyclicality of the inuustiy might hampei puichase ability of the
companies
Employees might be against takeovei by uiiect competitois
Futuie piouuct ianges, tienus anu positioning of the bianu may not
coinciue
#+
[[ [ :
IXXVQcSEVF
#*
Pio Foima Income Statement
!"#$%& ()*)&%&")
Actual Estimated Projected
In USD mln., except per share data 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue
Net Store Sales 2 633 3 051 3 586 3 891 3 728 3 981 4 249 4 452 4 621 4 691
Direct-to-consumer sales 290 405 552 599 779 1 012 1 316 1 711 2 224 2 447
Other 5 12 18 20 20 20 20 20 20 20
Total Revenue 2 928 3 468 4 156 4 510 4 527 5 013 5 584 6 182 6 865 7 157
Cost of Sales -1 045 -1 256 -1 639 -1 694 -1 678 -1 833 -2 014 -2 199 -2 407 -2 474
Gross Profit 1 883 2 212 2 517 2 816 2 849 3 180 3 571 3 984 4 458 4 684
Stores & Distribution Expense -1 425 -1 589 -1 888 -1 988 -2 290 -2 511 -2 769 -3 035 -3 335 -3 441
MG&A Expense -353 -400 -437 -474 -453 -477 -503 -526 -550 -537
Other Operating Expense 14 10 -3 19 13 14 16 17 19 20
Operating Profit 119 233 189 374 119 207 314 441 592 725
Revolving Credit Facility -1 -1 0 0 0 0
Term Loan A 0 0 0 0 0 0
Term Loan B -46 -45 -45 -39 -27 -10
Senior Subordinated Notes -165 -165 -165 -165 -165 -165
Cash Interest Expense -211 -211 -210 -203 -192 -175
Amortization of deferred financing fees -8 -8 -8 -8 -8 -8
Total Interest Expense -219 -219 -218 -211 -200 -183
Interest Income 0 0 0 0 0 2
Interest Expense, net 2 -3 -4 -7 -219 -219 -218 -211 -200 -181
Pre-tax Income 121 230 185 366 -100 -12 96 230 393 544
Income Tax -41 -78 -60 -130 35 4 -34 -80 -137 -191
Net Income From Continuing Operations 80 151 126 236 -65 -8 63 149 255 354
Income/Loss from Discontinuing Op -79 0 1 0 0 0 0 0 0 0
Net Income 1 151 127 236 -65 -8 63 149 255 354
Net Income margin 0,05% 4,37% 3,05% 5,24% -1,44% -0,16% 1,12% 2,41% 3,72% 4,94%
EBITDA 358 462 422 626 373 488 627 787 977 1139
#!
Pio Foima Balance Sheet
+*,*"#& (-&&)
Estimated Projected
2012 Adjustments Pro Forma 2012 2013 2014 2015 2016 2017 2018
Assets
Current Assets + -
Cash & Equivalents 646 -645,7 0 0 0 0 0 0 319
Marketaeble Securities 0 0 1701 1762 2713 2431 2301 2401
Receivables 100 100 100 111 123 137 152 158
Inventories 362 362 357 389 426 463 505 517
Deferred Income Taxes 55 55 73 80 90 99 110 115
Other Current Assets 105 105 106 117 130 144 160 167
Total Current Assets 1267 622 2336 2459 3482 3273 3228 3676

PPE, net 1308 1308 1468 1601 1702 1769 1798 1798
Non-current marketable securities 0 0 0 0 0 0 0 0
Deferred Financing Fees 67,2 67 60 52 44 36 29 21
Other assets 366 366 106 117 130 144 160 167
Goodwill & Intangible Assets 3324,3 3324 3324 3324 3324 3324 3324 3324
Total Assets 2942 5688 7294 7553 8682 8547 8539 8986

Liabilities
Current Liabilities
Accounts Payable 143 143 154 171 190 210 233 243
Accrued Expenses 392 392 393 436 485 537 597 622
Deffered Lease Credit 39 39 44 48 51 53 54 54
Income Tax Payable 114 114 114 114 114 114 114 114
Total Current Liabilities 688 688 706 769 841 915 998 1033

Long-term Liabilities
Revolving Credit Facility 46 8 0 0 0 0
Term Loan A 0 0 0 0 0 0 0 0
Term Loan B 1200 1200 1188 1176 1000,98 704,771 267 0
Senior Subordinated Notes 1648 1648 1648 1648 1648 1648 1648 1648
Deferred Income Tax 1 0,6 16,1 17,6 18,7 19,4 19,7 19,7
Deferred Lease Credits 168 168,4 189,0 206,1 219,0 227,7 231,4 231,4
Long-term debt (Leaseold Financial Obl) 64 -63,9 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Other Liabilities 245 0,0 1828,2 2064,4 3227,3 3155,5 3243,0 3568,6

Total Liabilities 1166 5621,5 5888,7 6954,9 6670,4 6407,0 6500,8

Shareholder's equity
Total Shareholder's Equity 1776 1737,5 -1775,7 1737 1672 1665 1727 1876 2132 2485
Total Shareholder's Equity & Liabilities 2942 7294 7553 8682 8547 8539 8986
##
Pio Foima Cash Flow Statement
.*/- 0,$1 ()*)&%&")
Projected
2012 2013 2014 2015 2016 2017 2018
Cash from Operating Activities
Net Income 236 -65 -8 63 149 255 354
Depreciation and amortization 253 254 281 313 347 385 414
Non-cash chage for asset impairment 68 169 175 201 198 197 208
Loss on Disposal/Write-off of Assets 22 56 58 66 65 65 69
Deferred Lease Credits Amortization -48 -54 -59 -63 -65 -66 -66
Other 16 16 16 16 16 16 16
Inventories (Inc/Dec) 208 5 -32 -37 -37 -42 -12
Other Assets & Liabilities -21 0 -11 -13 -14 -16 -7
Accounts Receivable (Inc/Dec) -10 0 -11 -13 -13 -15 -6
Deferred Income Taxes (Inc/Dec) 22 -18 -8 -9 -10 -11 -5
Accrued Expenses (Inc/Dec) 17 1 42 50 52 59 25
Accounts Payable (Inc/Dec) -69 12 17 19 20 23 9
Deferred Lease Credits (Inc/Dec) -2 5 4 3 2 1 0
Income Taxes (Inc/Dec) 37 0 0 0 0 0 0
Total Change in Working Capital 182 4 1 0 0 -1 5
Net Cash from Operating Activities 379 464 597 710 852 999
Cash from Investing Activities
Capital Expendiure -414 -414 -414 -414 -414 -414
Other Investing 0 0 0 0 0 0
Net Cash from Investing Activities -414 -414 -414 -414 -414 -414
Cash from Financing Activities
Revolving Credit Facility 46 -38 -8 0 0 0
Term Loan A 0 0 0 0 0 0
Term Loan B -12 -12 -175 -296 -438 -267
Senior Subordinated Notes
Cash flow from Financing Activities 34 -50 -183 -296 -438 -267
Beginning Cash Balance 0 0 0 0 0 0
Change in Cash 0 0 0 0 0 319
Ending Cash Balance 0 0 0 0 0 319
#$
Weighteu Cost of Capital Calculation
WEIGHTED COST OF CAPITAL CALCULATION
WACC Calculation - Netherlands
Capital Structure
Debt-to-total capitalization 2%
Equity-to-total capitalization 98%
Cost of Debt
Cost of Debt 5,00% <==== Estimation
Tax Rate 35% <==== Normalized US Tax Rate
After Tax of debt 3,25%
Cost of Equity
Risk Free Rate 1,8% <===== US 10 y treasury bond yield
Market Risk Premium 4,0% <===== Duff & Phelps Equity Risk Premium
Levered Beta 1,71 <===== Thomson One Banker
Cost of Equity 8,6%
WACC 8,6%
Market Cap Calculation
Share Price 46,99 <==== As of 3rd of April 2013
Shares Outstanding 85,64 <==== As of 3rd of April 2013
Total Market Capitalization 4024,2 <==== As of 3rd of April 2013
Value of Debt 64 <==== 2012 proxy statements
Total Capitalization 4088
#%
BCF - Wall Stieet Consensus Estimates
DISCOUNTED CASH FLOW ANALYSIS
Source: Credit Suisse Research Reports, case of a next best buyer, made according to the Street Estimates
Assumptions
WACC 8,56%
Tax Rate 35%
Perpetual growth rate 1,00%
EBITDA 358 462 422 626 664 713 769 820 1 046 1 104
% margin 12,22% 13,33% 10,15% 13,89% 14,12% 14,45% 14,88% 15,06% 15,24% 15,42%
Less: Depreciation & Amortization 239 229 233 253 221 217 213 212 212 212
EBIAT 78 155 129 244 280 315 358 396 400 420

Plus: Depreciation & Amortization 239 229 233 253 221 217 213 212 212 212
Less: Capital Expenditure 414 414 414 414 200 210 220 230 240 245
Less: Increase in Net Working Capital 0 -1 20 30 35 45

Unlevered Free Cash Flow 301 323 331 348 337 342
Discount Period 0,5 1,5 2,5 3,5 4,5 5,5
Discount Factor 0,96 0,88 0,81 0,75 0,69 0,64
Present Value of Free Cash Flows 289 285 269 261 233 218
Scenario 1
Terminal Year Free Cash Flow 346
WACC 8,56%
Capitalization rate 7,56%
Terminal Value 4574
Present Value Factor 0,64
PV of terminal value 2912,309
PV of Free Cash Flows 1555
Total Enterprise Value 4468
Less: Net Debt -582
Total Equity Value 5049
Total Shares Outstanding 85,64
Current Price per Share 46,99
Share Price as per DCF 58,96
Premium/Discount to Current Price 25,5% #&
Business Plan Scenaiios
Base Case 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net Store Revenue 3728 3981 4249 4452 4621 4691 4761 4832 4905
Direct to Customers 779 1012 1316 1711 2224 2447 2618 2722 2750
Other 20 20 20 20 20 20 20 20 20
Total Revenue 4527 5013 5584 6182 6865 7157 7399 7575 7675
COGS -1678 -1833 -2014 -2199 -2407 -2474 -2520 -2542 -2537
Stores Expense -2290 -2511 -2769 -3035 -3335 -3441 -3521 -3567 -3575
MG&A -453 -477 -503 -526 -550 -537 -518 -493 -461
Other 13 14 16 17 19 20 21 21 22
Downside 1
Net Store Revenue 3654 3901 4164 4363 4529 4597 4666 4736 4807
Direct to Customers 763 992 1290 1677 2180 2398 2565 2668 2695
Other 19 19 19 19 20 20 20 20 20
Total Revenue 4436 4913 5473 6059 6728 7014 7251 7423 7521
COGS -1711 -1869 -2054 -2243 -2455 -2523 -2570 -2593 -2588
Stores Expense -2336 -2561 -2824 -3095 -3402 -3510 -3591 -3638 -3647
MG&A -462 -486 -513 -536 -561 -548 -529 -503 -470
Other 13 14 16 18 20 21 21 22 22
Downside 2
Net Store Revenue 3616 3861 4121 4318 4483 4550 4618 4687 4758
Direct to Customers 755 982 1277 1660 2157 2373 2539 2641 2667
Other 19 19 19 19 19 19 19 20 20
Total Revenue 4391 4862 5417 5997 6659 6942 7177 7348 7445
COGS -1711 -1869 -2054 -2243 -2455 -2523 -2570 -2593 -2588
Stores Expense -2336 -2561 -2824 -3095 -3402 -3510 -3591 -3638 -3647
MG&A -462 -486 -513 -536 -561 -548 -529 -503 -470
Other 13 14 16 18 20 21 21 22 22 #'