nomura - oct 11, 12 - international brands - global retail databook

7/31/2019 Nomura - Oct 11, 12 - International Brands - Global Retail Databook

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International brandsRETAIL

EQUITY RESEARCH

Retail diaries: Global retail databook Sept

After months of weakness,metrics start to improve;Correction in luxury multiples

October 11, 2012

Turnaround of trends in August as retail sales and CCI increase

After showing weakness for the last few months, retail metrics began to

show some improvement, with Hong Kong, Australia, Japan and Germany

all seeing y-y growth momentum recover in August and the US continued

its strength. On Consumer Confidence Index (CCI) as well, the trend was

mostly rising. We also saw a momentum rebound in Swiss watch export

value; however, absolute value term continues to decline. Travel data

(PRK & ASK) showed improvement across all regions except Africa. In a

nutshell, we think it is too early to say a sustained recovery is in the works;

however retail health is looking better after the last few weak months.

Which have been the best performers? Which have underperformed?

The retail subsectors performance was mixed in Sept. Luggage continued

as the best performer, followed by OEM. Luxury corrected and China

branded retail was the worst-performing subsector. In terms of individual

stocks, Michael Kors and GAP top the YTD list, while Anta and VIP led the

pack last month. Inditex saw the most positive EPS upgrades from the

street.Organic growth and SSSG trend: Broadly in line with our estimates

Prada's 2Q12 continued to have strong SSSG, but slowed a bit in Italy and

North America. The outlook was also cautious, in line with other luxury

names. Otherwise, the luxury earnings season was mixed; mid-market

retailers (eg, GAP, H&M, Inditex) mostly beat the markets expectation,

while cosmetics names were in line. Chinese retailers delivered mostly in

line results.

Samsonite is our top pick, but keep tabs on luxury

Although Samsonite (Buy) is up 30% since its recent trough in July, we

believe potential upside still remains, led by its sharp discount to Tumi and

strong fundamentals. Regarding Li&Fung, we dont expect many near-termcatalysts, thus we maintain our Neutral. Esprit's 2H12 results showed its

poor performance might not only come from transformation spending but

also weaker sales momentum. We maintain our Neutral due to a lack of

catalysts. Correction in valuation for luxury likely makes a case for entry

points, but Prada is still trading rich vs our cautious outlook on sector.

London again takes the crown of Global Fashion Capital in 2012

The combination of Kate Middleton and the Summer Olympics helped

London retain its crown as the top Global Fashion Capital in 2012,

followed by New York, Barcelona, Paris and Madrid.

Cautious in the short term on China-branded retailers

We are cautious on retailers short-term performance and expect weak3Q12 data to be released. We believe China retail sales may improve in

4Q12, benefiting from FAI growth acceleration and last years low base.

Anchor themes

Retail diaries - The monthlyglobal retail databook. In thisdata-centric retail diaries

monthly, we keep track ofglobal datapoints on retail,consumer health, valuations,price performance, relativecomparisons, news flow,company events.

Research analysts

Hong Kong Retail

Tanuj Shori - NIHK

[email protected]+852 2252 1407

Sarah Xing - NIHK


Vivien Hu - NIHK


Vishnuvardana Reddy - NSFSPL

[email protected]+91 22 3053 2847

ee Appendix A-1 for analystcertification, importantdisclosures and the status ofnon-US analysts.


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Nomura | International brands October 11, 2012

2

Company upcoming events

Fig. 1: Important upcoming events

Source: Bloomberg, Nomura research

Company name Ticker Event Date TimeHigh End Brands/Luxury

Luxottica LUX IM Q3 2012 Earnings Release 10/25/2012

Christian Dior CDI FP Annual General Meeting 10/26/2012 21:30

Hermes RMS FP Dash 2012-Diversified Asset Show 10/24/2012 21:10PPR PP FP Q3 2012 Sales and Revenue Release 10/25/2012

Burberry BRBY LN Q2 2013 Sales and Revenue Release 10/11/2012

Hugo Boss BOSS GR Q3 2012 Earnings Release 10/30/2012

Coach COH US Q1 2013 Earnings Release 10/23/2012 19:00

Tiffany & Co TIF US

Wells Fargo Securities Retail and Restaurants

Summit 10/02/2012

Department Stores

Macy's M US September 2012 Sales and Revenue Release 10/04/2012

Nordstrom JWN US September 2012 Sales and Revenue Release 10/04/2012

Saks SKS US September 2012 Sales and Revenue Release 10/04/2012

Kohl's KSS US September 2012 Sales and Revenue Release 10/04/2012

JC Penney JCP US

Limited LTD US September 2012 Sales and Revenue Release 10/04/2012

Target TGT US September 2012 Sales and Revenue Release 10/04/2012

Next NXT LN Q3 2013 Sales and Revenue Release 10/31/2012 14:00Global middle-range/mass market

Abercrombie & Fitch ANF US

Telsey Advisory Group (TAG) Fall Consumer

Conference 10/03/2012

American Eagle AEO US



GAP GPS US September 2012 Sales and Revenue Release 10/04/2012

H&M HMB SS September 2012 Sales and Revenue Release 10/15/2012

OEM

Yue Yuen 551 HK China Corporate Day 10/15/2012

Luggage

VIP VIP IN Q2 2013 Earnings Release 10/24/2012

Beauty and personal care

Avon AVP US Q3 2012 Earnings Release

Nu Skin NUS US



Q3 2012 Earnings Release 10/25/2012

Revlon REV US Q3 2012 Earnings Release 10/26/2012

Fancl Corp 4921 JP S1 2013 Earnings Release 10/26/2012

Shiseido 4911 JP S1 2013 Earnings Release 10/31/2012

Kose 4922 JP S1 2013 Earnings Release 10/26/2012

LG Household 051900 KS Q3 2012 Earnings Release 10/27/2012

China Branded Retailer

I.T 999 HK S1 2013 Earnings Release 10/24/2012


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3

Fig. 2: HK Coverage Stock List

Note: Currency: HKD. Closing prices as of 10 Oct 2012; Ratings and Price Targets are as of the date of the most recentlypublished report (http://www.Nomura.com) rather than the date of this document


Sector P/E and performance comparison

Fig. 3: Luxury sector and Prada trading P/E comparison

From August 2011 to September 2012

Note: Closing prices as of September 28, 2012


Fig. 4: Global mass-mid market sector, luggage andSamsonite trading P/E comparison




Fig. 5: Beauty and personal care sector and LOccitanetrading P/E comparison




Fig. 6: Global mass-mid market sector and Esprit trading P/Ecomparison




Company Ticker Rating Target Price Live Price

Prada 1913 HK Neutral 57.70 59.75

Esprit 330 HK Neutral 12.50 12.92

Li & Fung 494 HK Neutral 13.60 11.98

Samsonite 1910 HK Buy 18.00 14.86

L'Occitane 973 HK Buy 22.60 21

Intime Department Store 1833 HK Buy 11.00 8.33

New World Dept Store China 825 HK Neutral 4.60 4.41Parkson Retail Group 3368 HK Neutral 6.80 6.39

Golden Eagle Retail Group 3308 HK Buy 17.60 15.18

13.0

15.0

17.0

19.0

21.0

23.0

25.0

27.0

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Luxury Sector T rading PE Luxury Sector Mean Luxury Sector Mean+2std Luxury Sector Mean+1std

Luxury Sector Mean-1std Luxury Sector Mean-2std Prada Trading PE

9.0

11.0

13.0

15.0

17.0

19.0

21.0

Aug-1

1

Sep-1

1

Oct-11

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-12

Apr-12

May-1

2

Jun-1

2

Jul-12

Aug-1

2

Sep-1

2

Global Mass Market Sector Trading PE Global Mass Market Sector Mean Global Mass Market Sector Mean+2std

Global Mass Market Sector Mean+1std Global Mass Market Sector Mean-1std Global Mass Market Sector Mean-2std

S am so ni te T ra di n g P E L ug ga ge S ec to r T ra di ng P E

14.0

15.0

16.0

17.0

18.0

19.0

20.0

21.0

22.0

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Be au ty a nd Pe rs on al Ca re Se ct or Tra di ng PE Be au ty a nd Pe rso na l Ca re Se ct or Me an

Be au ty an d P ers on al Ca re S ect or Me an +2 st d Be au ty an d P erso na l Ca re S ec to r Me an +1 st d

Be au ty an d P ers on al Ca re S ect or Me an -1 st d Be au ty an d P erso na l Ca re S ec to r Me an -2 st d

L'Occitane Trading PE

5.0

10.0

15.0

20.0

25.0

30.0

Aug-1

1

Sep-1

1

Oct-11

Nov-1

1

Dec-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-12

Apr-12

May-1

2

Jun-1

2

Jul-12

Aug-1

2

Sep-1

2

Globa l M ass M arket S ec tor T rad ing P E Globa l M ass M arket S ec tor M ean Globa l M ass M arket S ec tor M ean+2s td

Globa l M ass M arket S ec tor M ean+1s td Globa l M ass M arket S ec tor M ean-1s td Globa l M ass M arket S ec tor M ean-2s td

Esprit Trading PE


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Fig. 7: HK-listed retailer sector, US dept store and LF tradingP/E comparison




Fig. 8: Department store trading P/E




9.0

11.0

13.0

15.0

17.0

19.0

21.0

23.0

25.0

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

H K- li st ed Re ta il er Tr ad in g PE H K- li st ed Re ta il er Se ct or Me an H K- li st ed Re ta il er Sec to r M ea n+2 std

HK- l i sted Reta il e r S ec tor Mean+1s td HK- l is ted Retai l er Sec tor Mean-1s td HK- l is ted Reta i le r S ec tor M ean-2s td

Li & Fung Trading PE US Dept Store Sector

11.0

12.0

13.0

14.0

15.0

16.0

17.0

18.0

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Dept Store Sector Trading PE Dept Store Sector Mean Dept Store Sector Mean+2std

Dept Store Sector Mean+1std Dept Store Sector Mean-1std Dept Store Sector Mean-2std


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Fig. 9: HK-listed international brands cross-sectorperformance comparison (YTD and 1M)



Fig. 10: YTD absolute performance (%)

Top 10 outperformers



Fig. 11: YTD absolute performance (%)

Top 10 underperformers



Fig. 12: 1M absolute performance (%)

Top 10 outperformers



Fig. 13: 1M absolute performance (%)

Top 10 underperformers



Fig. 14: FY12 EPS upgrades over the past 4 weeks (times)

Top 10 upgrades



24.2

20.7 20.5

15.612.9

4.61.6

(6.2)

(16.4)

(20.9)

(0.3)

15.414.1

(4.1)

3.51.5

(2.7)

(0.2)(1.7)

(11.6)

(25.0)

(20.0)

(15.0)

(10.0)(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Co

verage

Lu

ggage

OE

M HighEnd

Brands/Luxury

GlobalMiddle-

Ra

nge/MassMarket

Be

auty,Skinand

P

ersonalCare

De

partmentStores

HK

ListedRetailer

Su

pplyChain

Ch

inaBranded

Retailer

YTD Absolute Performance (%) 1M Absolute Performance (%)

79.6 80.0

49.138.5 37.5

21.5 24.9 17.127.8 26.8

0.0

20.0

40.0

60.0

80.0100.0

MichaelKors

GAP

Prada

Ferragamo

Inditex

Sitoy

American

Eagle

Tod's L

G

Household

L'Occitane

YTD Absolute Performance(%)

(23.1) (24.3)(30.5) (30.9) (31.7) (33.1) (35.4)

(39.9) (42.1)(49.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

0.0

I.T

Shiseido

Aber

crombie&

Fitch

J

CPenney

Parkson

LiNing

Anta

ChinaLilang

PCDStores

Po

rtsDesign

YTD Absolute Performance(%)

30.1 29.2

21.416.9 16.8 15.2

12.2 11.0 10.76.2

0.05.0

10.015.020.025.030.035.0

Anta

VIP

Sitoy

Revlon

YueYuen

ChowTai

Fook

Tumi

Inditex

Giordano

LiNing

1M Absolute Performance(%)

(7.4) (7.4) (8.9) (9.1)(10.5) (11.4) (12.5)

(25.9) (27.7) (29.3)(40.0)

(30.0)(20.0)

(10.0)

0.0

HugoBoss

JCPenney

Lifestyle

I.T

Christian

Dior

LVMH

Saks

Burberry

Ports

Design

China

Lilang

1MAbsolute Performance %

20

13 1210 10

6 6 5 4 4

0

5

1015

20

25

Inditex

Nike

Richemont

Pr

ada

Next

L'Oreal

He

rmes

Michael

Kors

Yu

eYuen

To

d's

FY 12 EPS Upgrade in last 4 Weeks


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Fig. 15: FY12 EPS downgrades over the past 4 weeks (times)

Top 10 downgrades



Fig. 16: FY12 EPS % change in the past 4 weeks

Top 10 positive change



Fig. 17: FY12 EPS % change in the past 4 weeks

Top 10 negative change



Fig. 18: CY12 P/E

Top 10

Notes:

(1) Closing prices as of September 28, 2012

(2) Excluding JC Penny and Li Ning; JC Penny's CY12PE is exceptionally highbecause of very low EPS estimates while Li Ning has negative CY12PE because of

negative EPS estimates.


Fig. 19: CY12 P/E

Bottom 10

Notes:

(1) Closing prices as of September 28, 2012

(2) Excluding JC Penny and Li Ning; JC Penny's CY12PE is exceptionally high

because of very low EPS estimates while Li Ning has negative CY12PE because of

negative EPS estimates.


Fig. 20: Quarterly luxury weighted avg organic growth trend

V.S. Prada

Note:

(1)includes Bulgari, Coach, Burberry, Hermes, Hugo Boss, LVMH, Gucci, Bottega

Veneta, YSL, Other PPR brands, Richemont, SFER, Swatch, Tiffany, Tods, MichaelKors and Prada(2)weighted by the latest FY sales

Source: Company data, Nomura research

24

17

116 6 6 5 5 5 4

05

1015202530

H

&M

B

urberry

E

sprit

N

ext

L

'Oreal

C

howTai

Fook

C

hinaLilang

G

olden

Eagle

H

ugoBoss

A

morepacific

FY 12 EPS Downgrade in last 4 Weeks

7.44.7 3.9 3.5 3.3 2.9 2.1 2.0 1.8 1.7

0.02.04.06.08.0

LiNing

Inditex

Michael

Kors

Prada

Giordan

o

I.T Ric

hemo

nt

Yue

Yuen

Brunello

Cucinelli

Nike

FY12 EPS % Change in Last 4 WKs

(2.1) (2.3) (3.1) (3.2) (3.3) (3.3) (4.7) (5.0) (6.4)

(39.0)(45.0)(40.0)(35.0)(30.0)(25.0)(20.0)(15.0)(10.0)(5.0)0.0

G

oldenEagle

Li&Fung

NewWorld

Hengdeli

H&M

Parkson

Sitoy

PortsDesign

Burberry

Esprit

FY12 EPS % Change in Last 4 WKs

49.7

39.132. 9 32. 9

27.7 27.5 27.4 27.3 25.6 25.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

MichaelKors

(KORS

US)

BrunelloCucinelli

(BC

IM)

Tumi(TUMIUS)

Hermes(RMS

FP)

Ferragamo

(SFER

IM)

Esprit(330HK)

FanclCorp(4921

JP)

Inditex(ITX

SM)

Prada(1913

HK)

EsteeLauder(EL

US)

CY12 PE

11.1 10.5 10.1 9.98.7 8.2

7.46.3 5.8 5.2

0.0

2.0

4.06.0

8.0

10.0

12.0

Macy's

(MUS)

YueYu

en(551

H

K)

Hengd

eli(3389

H

K)

Sitoy(1023

HK

)

Anta(2

020HK)

Maoye

(848

HK

)

I.T(999

HK)

PCDStores

(331HK)

ChinaLilang

(1234

HK)

PortsD

esign

(589

HK)

CY12PE

3%

12%

16% 16% 15%

18%

22%

21%

16%17%

13%

24%

24%

35%

24%

42%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Global Weighted Avg Prada


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Fig. 21: Quarterly mass-mid market weighted avg SSSGtrend

V.S. Esprit

Note:

(1) values have been calendarised and weighted by sales of the latest FY

(2) 2Q12 data includeAbercrombie & Fitch, American Eagle, Gap, H&M and AdidasSource: Company data, Nomura research

Fig. 22: Quarterly beauty and personal care weighted avgsales growth trend

V.S. L'Occitane

Note:

(1) includes LOreal, Estee Lauder, Avon, Revlon, Nu Skin, LOccitane, LGHousehold, Fancl and Shiseido

(2) weighted by the latest FY sales


Fig. 23: CY2Q12 results snapshot-Luxury

Notes: (1) Asia Pacific excludes Japan besides Burberry; (2) Overall sales growth in China for Bottega Veneta and earnings growth is for 1H12; (3) Earnings as a % growth andGPM change is for 1H12; (4) GPM ex-hedging; (5) Overall sales growth for global and SSSG for Americas and China; (6) Overall sales growth instead of organic growth


1%

4%

5%

2%

3%

0%0%

4%

2%

-5%

0%

-3%

0%

-1%

-9%

-2%

1%

-5%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Weighted Avg Esprit

25% 25%

12%

10%

23%

24%

19%

2%

11%

12%

11%

11%

9%

6%

6%

4%

6% 6%

0%

5%

10%

15%

20%

25%

30%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

L'Occitane Global Weighted Avg

Earnings% growth

GPM chg(in bps)

Actual vsNomura

estimatesOutlook

Overall Americas Europe Asia Pacif ic China Overall Americas EuropeAsia

PacificChina y-y y-y

Prada 19% 14% 25% 27% 28% 20% 6% 32% 20% 19% 34.4 156 In line

Market conditions are expected to remain verychallenging for the short term with some moregeneral volatility but the Directors remainconfident about the near future and will continueto pursue the retail focused strategy

PPR Luxury(2) 18% 22% 12% 17% na na na na na na 30.4 na

Gucci(2) 10% 19% 2% 7% 16% na na na na na 18.7 na

Bottega Veneta(2) 37% 43% 37% 52% 62% na na na na na 58.4 na

YSL(2) 42% 36% 38% 78% na na na na na na 370.0 na

LVMH(3) 11% 12% 6% 13% 15% na na na na na 28.0 -148 A little bit missTargeting market share gains for all brands andcontinue upmarket positioning

Hermes 13% 8% 12% 27% na na na na na na na na naContinue to follow its strategy of expanding thedistribution network, reinforcing productioncapacity and securing control over sourcing

Ferragamo(4) 17% 16% 24% 19% na 7% na na na na 24.0 190 Topline in line

July trading was good and August wassurprisingly positive in both Europe and the U.S.;In China, performance remains mixed across tier1, 2 and 3 cities.

Richemont 13% 6% 19% 12% na na na na na na na na Beat

The prevailing economic uncertainties, themoderation in sales growth since May and thevery strong basis of comparison do not preventthe company from maintaining ambitiousinvestment programme.

Burberry 11% 2% 16% 18% na 6%marginally

positive

high-single-

digit20% mid-teens na na Miss

Continue to invest in retail, digital and marketingstrategies to drive long-term sustainable gro wth,while remaining responsive to the changingexternal environment.

Hugo Boss(3) 14% 11% 15% 5% 13% 4% na na na

negativehigh-

single-digit

18.0 100 Beat

Expected currency adjusted sales growth to be

10% in 2012 and around 70 organic opening ofretail stores.

Coach(5) na na na na na 13% 2% na nadouble-

digit27.0 80 Almost in line

Confident in the ability to continue to drive salesand earnings at a double-digit percentage paceover planning horizon

Michael Kors(6) 71% 67% 110% na na 37% 38% 24% na na 162.0 420 Big beatCompany expects total revenue for 2QFY13 tobe in the range of $490mn to $500million andSSSG ~30%.

Tiffany 3% 0% 8% 3% na -1% -5% 2% -5% na 1.0 -270 Almost in lineManagement continues to expect an earningsdecline in the third quarter followed by aresumption of growth in the fourth quarter.

Average 19% 16% 25% 16% 19% 12% 12% 13% 8% na 40.6 58

Weighted Avg 14% 12% 14% 15% 17% 12% 5% 22% 11% na 29.6 -62

OrganicGrowth

Retail LFLgrowth

BV/YSL beatexpectations,Gucci moredefensive thanpeers

Sustained H2 sales growth and furtherimprovement in full year operating and financialperformance


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Fig. 24: CY2Q12 results snapshot

Mass-market, beauty and personal-care, department-store, China-branded retailers

Notes:(1) SSSG, earnings as % chg and GPM % chg are for 1H12; (2) Comps instead of SSSG; (3) SSSG was YTD data; (4) earnings as % chg and GPM % chg are for 1H12;(5) organic growth instead of SSSG; (6) sales growth, SSSG, earnings % chg and GPM % chg are for 1H12; (7) Earning % change and GPM % change are for FY12


Sales %

growthSSSG

Earnings %

growthGPM chg (in bps) Actual vs Nomura estimates Outlook

Global Mass Market y-y y-y y-y y-y

Esprit(7) -22.0% -5.4% -92.5% -348 MissTransformation plan 2014/15 on track, goodprogress made in first year

Samsonite(1) 9.7% 9.3% 31.5% -130Topline in line and bottomlinebeat

Continue to invest in advertising andpromotions and R&D to drive future salesahead of the market

Abercrombie & Fitch 4.0% -10.0% -51.6% -110 EPS in line, Comps weaker

3Q guidance assumes expense deleverageto offset GM gains on down 10% comps,which implies EPS in the $0.60 area, belowcons of $0.72.

American Eagle 11.0% 9.0% 62.0% 210 BeatThe company guided 3Q EPS to $0.37-$0.38 (vs. cons of $0.37), based on a mid-single-digit comp increase.

GAP 6.0% 4.0% 40.0% 297 BeatMgmt raised annual guidance to $1.95-$2.00(vs. previous $1.78-$1.83).

H&M 15.0% 2.0% 23.0% 0 BeatPlan to open around 275 new stores netduring the full year and online sales will belaunched in the autumn in the US.

Inditex 18.8% 11.0% 33.7% 54 Beat Online support sales

Adidas(2) 14.8% 7.0% 17.0% -90 Small missForecast adidas Group sales to increase ata rate approaching 10% on a currency-neutral basis.

Average 7.2% 3.4% 7.9% -15

Weighted Avg 8.5% 2.2% 15.4% 57

Beauty and Personal Care y-y y-y y-y y-y

L'Occitane(3) 18.8% 0.8% na na Top-line in line ,SSSG missPositive from new stores and acquisition ofnew brand.

L'Oreal(4) 11.6% 5.7% 9.1% -50 In lineThe Company expected FY12 LFL salesgrowth in excess of market growth at c.4%with positive margin development.

Oriflame(4)(5) 2.0% 1.0% 30.0% 100 BeatThe Company reiterated its outlook ofgradual sales growth improvement andpositive operating margin development.

Shiseido(5) -5.0% -3.0% na -100 na

The Company targeted to improveprofitability in FY2012 and will achieve anoperating margin of 8% in Fy2013 and maketi as close to 10% as possible.

Kose(5) 2.6% 2.9% -49.9% 0 naExpect stable growth in operating profitsfrom FY13

Amorepacific 11.5% na -6.6% 20 In line

The Company stressted that the OPM in2H12 will get lower as China managementplans to increase marketing activity in2H12F.

LG Household 13.0% na 11.1% na In lineMore potential upsides likely in the comingquarters.

Average 7.8% 1.5% -1.3% -6

Weighted Avg 8.1% 3.4% 5.0% -42

Department Store y-y y-y y-y y-y

Macy's 3.0% 3.0% 20.6% 10 BeatManagement reiterated its comp estimate of+3.7%.

Nordstrom 7.4% 4.5% -5.9% -100 Slightly beat

Management signaled its confidence in thecurrent business (coming off a successfulAnniversary Sale and ongoing strength atRack stores) with its FY12 EPS guidanceraise(from $3.30-$3.45 to $3.40-$3.50).

Kohl's -1.0% -2.7% -6.6% -170 BeatManagement guided total sales +1-3% andcomps 0-2% in 3Q12.

JC Penny -22.6% -21.7% -693.8% -510 Miss

Instead of a laundry list of new brands, theCompany walked through the upcomingstore design changes and how the customerexperience will evolve into a new one.

Limited -2.4% 8.0% -2.3% 270 Miss

The Company guided 3Q12 EPS to $0/15-

$0.20 and raised FY12 guidance to $2.73-$2.88 from $2.63-$2.83.

Marks & Spencer -0.7% -2.8% na na In line

Expected the short term trading outlookcontinue to be challenging, the Company ismaking strong progress against goal ofbecoming an international, multi-channelretailer.

Average -2.7% -2.0% -137.6% -100

Weighted Avg -2.7% -2.4% -132.8% -116

China Branded Retailer y-y y-y y-y y-y

Daphne(6) 28.9% 17.0% 9.6% -50 BeatManagement maintained full-year SSSGguidance of 12% for 2012.

Belle-footwear(6) 17.2% mid-single-digit -100 In lineManagement stated that 3Q12 SSSG maycome in slower than 2Q12.

Belle-sportswear(6) 12.3% flattish -30 In lineManagement stated that 3Q12 SSSG maycome in slower than 2Q12.

11.7%


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Nomuras brand-related key researchfrom around the world (by date; mostrecent at top) Hennes & Mauritz - Significant 3Q EPS miss; cut FY 12E EPS 2%

Burberry - Retail sales update; lowering EPS/rating

Luxury Datawatch - Inventory; a building issue into 2H

Richemont - Tourist flows/pricing/FX supports FY outlook

Burberry - Dynamic margin management unpicked

Salvatore Ferragamo - Brand momentum strong as group invests

Retail Weekend Reading - If JCP Shops Take Share, Who From?

J.C. Penney Company, Inc. - Are We There Yet? (No, Long Way to Go)

Retail Weekend Reading - The Analyst Day Effect

Ann Taylor - Holiday Preview; Both Brands Positioned Well

Abercrombie & Fitch - There Is Nothing to See Here

American Eagle - AEOs Special Div Sends a Strong Message

lululemon - Taxes Save the Day; Raise Ests and TP

Nomura First Look: lululemon (LULU US, Neutral) - Some Tax Noise, but an

In-Line Qtr

Retail Weekend Reading - Balanced, Under-bought or Over-bought?

New World Dept Store China (825 HK, Neutral)-TP raised to HKD4.60 on

earnings revisions

China department stores-Execute to win

Retailing-Shift from downsizing to growth strategies

Japanese retailing sector-Effect of anti-Japan protests in China

First Look-Fast Retailing (9983 JP)(Neutral)-Rise in customers, fall in spend in

August

Dunelm - Downgrade to Neutral on valuation Next - Strong 1H but weaker-than-planned August

Home Retail Group - 2Q a little worse than expected; but 2H key

Inditex - Expect strong 1H EPS +22%; Raise FY13 EPS

Debenhams - Investor day highlights retailing strengths

Quick Note - Kingfisher (KGF LN, Buy) - 1H: Weather/FX impact expected;

Buy for LT

Retail Datawatch - Outlook remains muted; stock picking key

Morrison (Wm) plc - Moving to Neutral from Buy

Tesco - Improving volume trends encourage

L'Oreal - At the root of LOrals top-line issues Quick Note - Reckitt Benckiser (RB/ LN, Buy) - Voluntary discontinuation of

Suboxone tablet

Quick Note - Nestl R (NESN VX, Reduce) - Wish You Were Here: Nestle

Investor Seminar

Associated British Foods - Core business strength offset by bits & pieces

First Look - Associated British Foods (ABF LN, Buy) - Better than expected

pre-close trading update

Cloetta AB - Initiating coverage: Buy rating, TP EUR 16.5

Quick Note - Henkel (pref) (HEN3 GY, Buy) - Wish you were here Henkel

investor day


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10

Summary of macro indicator trends

Fig. 25: Macro indicator trends

Retail sales, CCI, Swiss watches, RPK and ASK

Note: Positive sequential indicators include up and up sharply; total sequential

indicators include up sharply, up, flat, down and down sharply

Source: CEIC, Bloomberg, Websites, Nomura research

Fig. 26: Macro indicator trends

Department stores, automobiles, hotels, wines, diamonds and Macaugaming

Notes:

(1) Positive sequential indicators include up and up sharply; total sequential indicatorsinclude up sharply, up, flat, down and down sharply

(2) Department store including US luxury dept store SSSG, US softline dept storeSSSG, Japan nationwide dept store sales

(3) Hotel occupancy rate includes US and Paris and July data not available for Paris

Source: Bloomberg, Websites, Nomura research

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

% of Total up % of CCI up % of value by country up % of PRK up % of ASK up

0

0.2

0.4

0.6

0.8

1

1.2

Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

% o f d ep t s to re s al es u p % o f US l ux ur y c ar s al es u p % o f h ot el o cc up an cy r at e u p

% o f win e ind ex up % o f d iam ond p ri ce i nd ex up % o f M ac au g am in g d at a up


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11

Brand diaries

London edges New York as the global fashion capital in 2012

http://www.languagemonitor.com/category/fashion/fashion-capitals/

On 4 September 2012, Global Language Monitorreleased its ninth annual ranking for

Global Fashion Capitals among 55 cities. London again topped the list, largely because

of the combination of Kate Middleton (a widely acknowledged fashion icon), and the

2012 Summer Olympic Games. In the total nine-year annual rankings, New York had

taken the crown five times, while London had led twice and Paris and Milan each once,

respectively.

Fig. 27: Top 10 of Global Fashion Capitals in 2012

Source: Global Language Monitor

What does the industry say? (click to go to this section)

Louis Vuitton risks logo fatigue as Chinese tastes mature

Chinas new consumers become more emotional-McKinsey

Asias wealthy surpass North Americans for the first time

Chinas corruption crackdown takes shine off luxury boom

Foreign retailers are focused on China

Milan runway not all black and white

Consumers expectations high for luxury brands on mobile

Brand Buzz - Who is doing/saying what? (click to go to this section)

Ferragamo starts online sales channel

H&Ms new luxury brand & Other Stories to launch Spring 2013

Richemont buys Peter Millar

Neiman Marcus to launch an e-commerce site in China

Samsonite takes on VIP, to enter sub Rs 1000 luggage market by Diwali

Gap names new creative direct, head of design

Tiffany to build watch offer after Swatch dispute

Globetrotting - Who is going where? (click to go to this section)Burberry London, UK;

Salvatore Ferragamo Brisbane, Australia;

Zara Westfield Bondi Junction, Australia;

Uniqlo New Jersey, US;

H&M Colorado, US and;

H&M-Kuala Lumpur, Malaysia

Ranking City Commentary

1. (1) London Competitors stymied by Kate Middleton and now the hugely successful Summer Olympics.

2. (2) New York That toddling town is waiting in the wings for London to stumble.

3. (7) Barcelona Iberia rules with two fashion capitals in the Top Five.

4. (3) Paris Topped haute couture category, of course.

5. (12) Madrid Mak ing a s trong move toward the top.

6. (13) Rome Edging Milano this time out.

7. (25) Sao Paulo The Queen of Latin America, again.

8. (4) Milan Slipping a few spots, but never for long.

9. (5) Los Angeles The City of Angels strengthening its hold as a true fashion capital.

10. (10) Berl in Remains among the el ite and deservedly so.


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What does the industry say?

Louis Vuitton risks logo fatigue as Chinese tastes matureThe tastes of Chinas population are changing in ways that may weaken the brands that

expanded most aggressively there. As more Louis Vuitton bags, Gucci wallets and

Omega watches flood cities like Beijing and Shanghai, consumers are eschewing readily

available logoed products in favour of more distinctive alternatives. As Chinese

shoppers become better informed about trends, luxury companies have to work harder to

sell to them than they did five years ago. Its a question of balance, said executive

director of Paris consultant Luxe Corp. Vuitton has 39 boutiques in China, while Guccihas 54 and Burberry has 66. Hermes has 21 and Prada has about 20. The so-called

absolute luxury segment where Hermes competes is the fastest-growing part of the

market and should continue to outperform the rest until at least 2014, Bain & Co. predicts.

(http://www.bloomberg.com/news/2012-09-24/vuitton-gucci-risk-first-mover-disadvantage-in-china.html)

Chinas new consumers become more emotional-McKinseyMore self-indulgent, individualistic and brand loyal than before, Chinas mainstream

consumer class will comprise 400mn people with incomes above RMB106,00

(USD16,800) by 2020. That wealthier class of consumers, who are more emotionally

driven and brand-conscious, will make up 51% of city-dwellers by 2020, up from 6% in

2010, McKinsey researchers predict. That means brands strategies would be built

around emotions, niches and diverse brand portfolios in the future.(http://in.reuters.com/article/2012/09/25/us-china-economy-consumers-survey-idINBRE88O09020120925 )

Asias wealthy surpass North Americans for the first timeThe number of rich Asians surpassed North Americans for the first time last year, but

their fortunes shrank slightly, according to Capgemini and Royal Bank of Canada Wealth

Management. The Asia-Pacific region is now home to 3.37mn high net worth individuals

(HNWI) - people with USD1mn or more to invest - compared with 3.35mn in North

America and 3.17mn in Europe. Asia's wealthy 54% of whom are concentrated in

Japan, almost 17% in China and more than 5% in Australia - saw their total fortunes slip

to USD10.7trn last year from USD10.8trn in 2010, and lag North America's USD11.4trn.(http://www.straitstimes.com/breaking-news/money/story/asias-wealthy-surpass-north-americans-1st-time-report-20120919)

Chinas corruption crackdown takes shine off luxury boomThe government imposed a frugal working style rule on its civil servants, which goes

into effect on October 1, barring them from spending public money on lavish banquets or

fancy cars, and from accepting expensive gifts. Chinese police inspectors are now

studying up on how to recognize luxury brands to help them expose corruption. There is

definitely a general moving away from the bling and the gold taps. This is a permanent

shift, said chairman of the Hurun Report. He also said while many Chinese consumers

are pulling back on spending because of a weakening economy, there is also a

heightened sensitivity surrounding luxury purchases.

(http://www.reuters.com/article/2012/09/24/us-china-luxury-idUSBRE88N03R20120924 )

Foreign retailers are focused on ChinaAccording to the Global Retail Index (a survey carried out among 200 retailers worldwide),

international retailers view China and India as their top growth markets. Multi-national

operators said they expect sales to increase in both countries, while those operating

elsewhere remain cautious about future growth, according to the report released at the

World Retail Congress in London. The report stated that companies polled appreciate that

Chinas economy is slowing, but they didnt believe it was in anything like a recession.

More firms are reviewing opportunities in second- and third-tier cities, as well as having to

offer specialised kinds of retail offerings. In the third-tier cities being targeted, it is all about

building strong infrastructure, and having a strong local presence.(

http://www.livetradingnews.com/foreign-retailers-are-focused-on-china-86910.htm)


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Milan runway not all black and whiteIts note all black and white in Milan this season. Womens collections coming off the

runway for next years warmer weather are all about the pastoral-relaxing looks in both

silhouette and colour, with flowing styles and floral patterns that blend with the prevailing

pastel palette. Flowers are the repeating motif for the 2013 season. In recent years, the

collections have tended to blur the seasons. As many labels have added separate lines

for resort wear, beachwear and the like, season-and activity-specific pieces have

disappeared from the main collections. Eveningwear, at the same time, is gaining

prominence, becoming an all-day affair.

(http://www.huffingtonpost.com/huff-wires/20120921/eu-milan-fashion-week-day-3/)

Consumers expectations high for luxury brands on mobileLuxury brands have been slow to the mobile party, with marketers steering clients toward

traditional brick-and-mortar locations where products could be displayed in elegant

surroundings and customers were treated to an impeccable shopping experience. But

now luxury brands are making up for lost time. In an August Martini Media survey of

digital agencies with luxury brand experience, 43% of respondents said their luxury

clients were moving more quickly to digital advertising than their mass-market accounts.

A survey from 1Q12 by the Luxury Institute and Plastic Mobile found that loyalty

programs (46%) and early access to sales (45%) were the leading features these

consumers anticipated a luxury brand mobile app would provide.(http://finchannel.com/Main_News/Tech/116490_Consumers'_Expectations_High_for_Luxury_Brands_on_Mobile/ )

Brand buzz

Ferragamo starts online sales channelAs Salvatore Ferragamo enjoys a sales growth of 36% in China in the first quarter this

year, it is intending to attract more Chinese customers by authorizing a Chinese website

to sell its products. From October 11, Chinese customers will be able to purchase its

products on xiu.com, a Chinese e-commerce website for fashion products. The Chinese

website announced the news at its official Weibo on sina.com recently.(http://europe.chinadaily.com.cn/business/2012-09/25/content_15780835.htm)

H&Ms new luxury brand & Other Stories to launch Spring 2013According to The Telegraph, & Other Stories is set to launch in Spring 2013 with an e-

commerce site and stores in selected European countries. It is going to be a womens

wear only store, with a focus on accessories, jewellery and beauty. & Other Stories is

about bringing everything she can wear into one place, focusing on the whole look, said

a statement released by H&M, We believe shoes, bags, jewellery, lingerie and beauty

are key for styling and just as important as clothing.(http://fashionista.com/2012/09/hms-new-luxury-line-other-stories-to-launch-spring-2013/)

Richemont buys Peter MillarOn September 21, Richemont added the upmarket leisurewear brand Peter Millar to its

wardrobe, which already holds Chloe clothes and Cartier jewellery. Peter Millar wasbacked by US PE group Winona Capital, which bought a stake in 2009 when the brands

sales were growing at more than 30% each year.

(http://www.independent.co.uk/news/business/news/richemont-buys-peter-millar-8163814.html )

Neiman Marcus will launch and e-commerce site in ChinaUS luxury specialty goods retailer Neiman Marcus has invested USD28mn in HK-based

e-commerce company Glamour Sales Holding. The company says the deal is its first

move into the luxury retail market in China and plans to offer what it calls and expertly

curated mix of full-price, current season offerings to Chinese luxury customers through

the site, which will also feature editorial content, fashion expertise and behind-the-

scenes videos.

(http://www.internetretailer.com/2012/09/24/neiman-marcus-will-launch-e-

commerce-site-china)


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Samsonite takes on VIP, to enter sub Rs 1000 luggage market by DiwaliRamesh Tainwala, Samsonite president of Asia Pacific and Middle East, revealed a

project codenamed Project Pappu to launch a luggage priced less than Rs1000. The

idea was can we sell a product priced below Rs1000 and maintain quality standard at the

same time? We had to completely rethink on sourcing and design, Tainwala said.

Samsonites existing range starts at Rs2000. The new product took nearly two years in

the making, will hit the Indian market before Diwali.(http://articles.economictimes.indiatimes.com/2012-09-21/news/34002329_1_samsonite-president-ramesh-tainwala-luggage-market )

Gap names new creative director, head of designGap has tapped Rebekka Bay as creative director and executive VP for Gap global

design. Beginning October 1, she will be responsible for product sold online and in nearly

1,600 stores in 42 countries in which Gap operates. Bay knows fast fashion and she

conceptualized, developed and launched COS, the timeless modern tactile functional

brand of H&M parent Hennes & Mauritz.(http://www.mediabistro.com/unbeige/gap-names-new-creative-director-head-of-global-design_b23411 )

Tiffany to build watch offer after Swatch disputeAccording to Reuters, Tiffany & Co. has stated that it sees big potential in its watch

business and plans to build it back up to the level it achieved two decades ago, with

about 9% of sales attributed to timepieces. At present, Tiffany & Co. is said to win about2% of its sales from its watch collection that has apparently been wound down since it

was announced that the brand and Swatch Group would sever their ties in 2011. In

March this year WatchPro reported that Swatch had ended the partnership with Tiffany,

calling it necessary action following Tiffany & Co.s systematic efforts to block and delay

development of the business. Tiffany has dismissed these claims and has said that it

honored its obligations under the agreement.

(http://www.watchpro.com/13957-tiffany-to-build-watch-offer-after-swatch-dispute/)


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Globetrotting brands

Fig. 28: A quick look at how various brands have been expanding their geographical presence over the past month

Source: Nomura research, based on company news reported by various media


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16

Valuation and performance

Valuation metrics

Fig. 29: High-end brands/luxury valuation

Source: Bloomberg consensus estimates for non-rated stocks, Nomura estimates. Closing prices as of September 28, 2012

Fig. 30: Luxury P/E vs. EPS CAGR

Note: Point on axis indicates no available data. Closing prices as of September 28,2012


Fig. 31: Luxury EV/EBITDA vs. EBITDA CAGR

Note: Point on axis indicates no available data. Closing prices as of September

28, 2012


Fig. 32: Department store valuation

Source: Bloomberg consensus estimates for non-rated stocks, Nomura estimates Note: Closing prices as of

September 28, 2012

Div yld (%) ROE (%) Net margin (%) Net debt to equity (%)

CY12F CY13F CY12F CY13F CY12F CY12F CY13F CY12F CY13F CY12F CY12F CY12FHigh End Brands/Luxury

Prada (1913 HK) Neutral 19,106.3 57.90 25.6 20.3 15.2 12.3 0.8 1.0 26.5 21.2 35.9 26.2 29.1 18.2 n.cash

Luxottica (LUX IM) Reduce 16,673.6 27.53 22.4 19.7 11.2 10.3 1.2 2.2 13.5 6.1 24.4 13.4 14.5 8.0 47.8

Tod's (TOD IM) Reduce 3,314.6 84.10 17.5 15.9 9.9 9.1 1.9 3.2 7.4 6.7 9.2 9.5 19.4 15.4 n.cash

Ferragamo (SFER IM) Neutral 3,510.7 16.19 27.7 21.5 12.7 11.0 1.1 2.0 12.9 10.0 21.2 28.5 37.5 8.8 14.1

LVMH (MC FP) Neutral 76,517.7 117.00 15.5 14.0 10.8 9.2 1.2 2.6 15.5 6.6 16.2 10.6 15.1 13.7 12.6

Christian Dior (CDI FP) N.R. 24,428.7 104.40 12.5 10.9 5.7 5.2 0.8 2.7 17.1 10.0 16.8 14.4 13.0 5.2 18.7

Hermes (RMS FP) N.R. 28,409.6 209.00 32.9 29.4 18.8 16.8 2.8 1.2 18.0 10.1 11.8 11.8 29.7 20.1 n.cash

PPR (PP FP) Buy 19,383.6 119.40 12.2 10.9 9.0 8.3 0.8 3.4 8.4 4.1 16.9 12.0 9.8 9.3 21.5

Burberry (BRBY LN) Neutral 7,144.8 10.01 14.3 12.5 7.8 6.8 0.9 2.8 14.9 13.4 17.5 14.8 30.8 15.2 n.cash

Richemont (CFR VX) Buy 34,496.0 56.40 16.1 14.2 9.8 8.9 0.8 1.0 13.7 7.0 26.6 14.0 17.9 17.4 n.cash

Swatch (UHR VX) Buy 20,960.3 375.20 14.2 12.4 9.1 8.0 1.1 1.7 10.7 7.2 12.2 14.5 15.8 19.0 n.cash

Hugo Boss (BOSS GR) Neutral 6,202.1 68.42 14.7 13.4 9.8 9.0 1.3 5.1 10.8 7.9 12.6 9.5 49.7 14.0 17.5

Coach (COH US) Buy 15,976.1 56.02 14.6 12.7 8.3 7.3 0.9 1.8 12.3 11.7 18.6 14.8 60.4 21.9 n.cash

Michael Kors (KORS US) Buy 10,281.0 53.18 49.7 39.5 24.5 19.1 1.3 0.0 40.6 24.7 52.3 25.9 47.9 12.6 n.cash

Tiffany & Co (TIF US) Neutral 7,836.3 61.88 15.7 13.8 8.6 7.8 1.3 2.0 8.6 9.9 10.6 13.8 19.0 12.8 n.cash

Brunello Cucinelli (BC IM) Neutral 1,177.6 13.45 39.1 31.0 20.2 16.6 2.9 0.6 14.4 14.0 1.8 26.2 24.1 7.6 10.4

Chow Tai Fook (1929 HK) N.R. 14,237.3 11.04 16.1 13.4 12.1 10.0 1.3 1.5 16.1 22.3 4.7 20.6 23.5 10.5 n.cash

Hengdeli (3389 HK) N.R. 1,274.5 2.25 10.1 9.0 7.3 6.5 2.1 3.5 9.6 14.0 (2.7) 12.8 15.4 6.6 14.4

Average 20.6 17.5 11.7 10.1 1.4 2.1 15.1 11.5 17.0 16.3 26.3 13.1

Average-excl. Hermes, M Kors and B Cucinelli 16.6 14.3 9.8 8.6 1.2 2.4 13.2 10.5 16.0 15.3 24.7 13.1

EV/EBITDA Revenue growth (%) EPS growth (%)PEG

(CY12P/E vs CY11-

13F CAGR)

Nomura

Rating

Market cap

(US$mn)Closing price

P/E

Prada

Luxottica

Tod's

Ferragamo

LVMH

Christian Dior

Hermes

PPR

Burberry

Richemont

Swatch Hugo Boss

Coach

Michael Kors

Tiffany

Brunello Cucinelli

Chow Tai Fook

Hengdeli

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0

EPSCAGR

P/E

P/E (CY12F) vs EPS CAGR (11-13F)

Prada

Luxittoca

Tod's

FerragamoLVMH

Christian Dior HermesPPR

Burberry

RichemontSwatch

Hugo Boss

Coach

Michael Kors

Tiffany

Brunello Cucinelli

Chow Tai Fook

Hengdeli

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0

EBITDACAGR

EV/EBITDA

EV/EBITDA (CY12F) vs EBITDA CAGR (11-13F)


CY12F CY13F CY12F CY13F CY12F CY12F CY13F CY12F CY13F CY12F CY12F CY12F

Department StoresMacy's (M US) Buy 15,142.9 37.62 11.1 9.4 5.5 5.3 0.6 2.1 5.1 2.2 20.1 17.2 22.6 5.1 74.7

Nordstrom (JWN US) Buy 11,091.0 55.18 16.2 14.2 7.6 6.9 1.4 2.0 10.1 6.8 9.9 13.6 33.6 6.1 53.9

Saks (SKS US) N.R. 1,574.4 10.31 22.0 18.5 6.2 5.6 1.1 0.0 5.8 4.5 20.3 19.3 7.1 2.7 14.5

Parkson (3368 HK) Neutral 2,355.9 6.50 13.8 12.4 6.5 5.7 4.5 3.2 18.2 15.3 (4.5) 11.3 19.6 20.9 n.cash

Golden Eagle (3308 HK) Buy 3,793.6 15.22 19.1 16.3 12.3 10.2 1.8 1.5 17.9 21.7 3.5 17.7 25.1 33.1 n.cash

New World (825 HK) Neutral 935.0 4.30 11.9 10.6 3.5 3.0 1.7 3.3 10.3 18.4 2.6 11.9 10.3 16.0 n.cash

Lifestyle (1212 HK) N.R. 3,437.6 16.02 14.2 12.7 10.3 9.2 2.3 2.9 10.0 10.7 0.4 12.1 21.2 33.6 5.0

Kohl's (KSS US) Neutral 12,011.5 51.22 11.3 10.6 5.4 5.4 1.7 2.3 3.2 2.4 7.1 6.1 17.3 5.7 52.2

JC Penney (JCP US) Neutral 5,321.5 24.29 na na 12.9 7.0 na 1.8 na na na na 0.5 (0.7) 47.1

Limited (LTD US) Buy 14,158.0 49.26 16.6 14.4 8.4 7.8 1.1 3.1 0.8 4.2 16.3 15.1 na 8.5 n.cash

Target (TGT US) N.R. 41,565.6 63.47 14.4 13.0 7.8 7.4 2.0 2.0 4.6 5.3 4.0 10.4 17.9 4.0 96.1

Next (NXT LN) Buy 9,135.4 34.50 12.3 11.2 8.3 8.0 1.1 2.9 2.8 3.6 11.9 10.0 114.5 0.0 0.0

Maoye (848 HK) N.R. 948.8 1.37 8.2 7.5 7.0 6.3 0.7 4.1 13.4 21.8 12.5 10.4 11.7 19.8 51.9

Intime (1833 HK) Buy 2,166.6 8.40 14.9 12.5 12.6 10.6 1.2 2.7 23.3 23.6 6.3 19.3 13.2 24.0 24.4

Average 14.3 12.6 8.2 7.0 1.6 2.4 9.7 10.8 8.5 13.4 24.2 12.8

P/ENomura

Rating

Market cap



(CY12P/E vs CY11-

13F CAGR)


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17

Fig. 33: Dept store P/E vs. EPS CAGR

Source: Bloomberg, Nomura research. Closing prices as of September 28, 2012

Fig. 34: Dept store EV/EBITDA vs. EBITDA CAGR


Fig. 35:Global mid-range/mass-market valuation

Source: Bloomberg consensus estimates for non-rated companies, Nomura estimates. Closing prices as of September 28, 2012

Fig. 36: Global mid-range/mass-market P/E vs. EPS CAGR


28, 2012


Fig. 37: Global mid-range/mass-market EV/EBITDA vs.EBITDA CAGR


28, 2012


Macy's

Nordstrom

Saks

Parkson

Golden Eagle

New World Lifestyle

Kohl's

JC Penny

Limited

Target

NextMaoye

Intime

0.0

5.0

10.0

15.0

20.0

25.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EPSCAGR

P/E


Macy's Nordstrom

Saks

Parkson

Golden Eagle

New World

Lifestyle

Khol's

Limited

Target

Next

Intime

(1.0)

4.0

9.0

14.0

19.0

24.0

29.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

EBITDACAGR

EV/EBITDA




Global Middle-Range/Mass Market

Abercrombie & Fitch (ANF US) Neutral 2,800.9 33.92 11.2 10.3 4.4 4.2 0.5 1.9 9.3 5.1 35.0 8.8 14.6 5.7 n.cash

American Eagle (AEO US) Buy 4,144.3 21.08 15.2 12.8 6.1 5.6 0.4 2.0 6.4 1.4 66.1 18.0 15.6 8.1 n.cash

GAP (GPS US) Neutral 17,207.9 35.78 17.0 15.3 7.4 7.0 0.8 1.3 4.8 1.2 33.8 11.2 30.8 6.1 n.cash

Nike (NKE US) N.R. 43,084.6 94.91 18.6 16.8 11.2 10.3 2.5 1.6 3.0 6.3 4.3 10.6 22.2 9.5 n.cash

Adidas (ADS GR) Buy 17,240.8 64.00 17.5 14.9 9.8 8.6 na 1.9 (21.9) 5.6 (18.2) 17.5 14.3 5.3 n.cash

H&M (HMB SS) Neutral 57,581.3 228.20 22.8 20.0 15.3 14.4 2.5 4.2 11.2 11.0 4.5 14.0 15.5 13.4 n.cash

Inditex (ITX SM) Neutral 77,555.3 96.63 27.3 23.4 15.5 13.5 1.7 2.1 10.5 11.0 15.2 16.7 26.5 14.6 n.cash

Esprit (330 HK) Neutral 1,984.5 11.92 27.5 11.0 8.4 5.0 5.4 3.4 (8.5) (2.5) (55.9) 150.4 5.3 3.1 n.cash

Giordano (709 HK) N.R. 1,295.3 6.52 12.9 11.4 8.7 7.4 1.5 5.7 6.3 15.3 5.0 12.8 27.0 12.4 n.cash

Anta (2020 HK) N.R. 1,917.0 5.96 8.7 10.9 4.5 5.5 na 7.4 (11.5) (11.4) (20.0) (20.4) 20.9 17.7 n.cash

Li Ning (2331 HK) N.R. 562.4 4.13 na na 7.6 4.4 3.7 0.7 na na na na 0.7 (0.5) 3.9

Average 17.9 14.7 9.0 7.8 2.1 2.9 1.0 4.3 7.0 24.0 17.6 8.7

P/ENomura

Rating

Market cap



(CY12P/E vs CY11-

13F CAGR)

Abercrombie & Fitch

American Eagle

GAP

Nike

Adidas

H&M

Inditex

Esprit

Giordano

Anta Li Ning0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0

EPSCAGR

P/E


Abercrombie& Fitch

American Eagle

GAP

Nike

AdidasH&M

InditexEsprit

Giordano

(6.0)

(1.0)

4.0

9.0

14.0

19.0

24.0

29.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

EBITDACAGR

EV/EBITDA



18/84


18

Fig. 38: Supply chain/OEM valuation

Source: Bloomberg consensus estimates for non-rated companies, Nomura estimates. Closing prices as of September 28, 2012

Fig. 39: Supply chain/OEM P/E vs. EPS CAGR


Fig. 40: Supply chain/OEM EV/EBITDA vs EBITDA CAGR


28, 2012


Fig. 41: Luggage valuation

Source: Bloomberg consensus for non-rated companies, Nomura estimates. Closing prices as of September 28, 2012

Fig. 42: Luggage P/E vs. EPS CAGR


Fig. 43: Luggage EV/EBITDA vs. EBITDA CAGR




Supply Chain

Li & Fung (494 HK) Neutral 12,955.0 12.02 14.8 12.1 11.0 9.3 0.5 4.5 16.3 14.1 24.7 22.7 18.8 3.7 27.2

DKSH (DKSH SW) N.R. 3,973.8 58.75 21.5 18.7 12.0 10.7 na 1.4 16.6 9.8 na 14.5 16.6 2.0 6.0

Average 18.1 15.4 11.5 10.0 0.5 2.9 16.4 11.9 24.7 18.6 17.7 2.8

OEM

Stella (1836 HK) N.R. 1,958.7 19.12 13.3 11.6 9.2 7.9 1.6 5.2 3.7 10.4 2.8 14.5 17.0 9.6 n.cash

Sitoy (1023 HK) N.R. 541.2 4.19 9.9 8.5 6.7 5.5 1.1 3.8 7.3 18.8 1.9 16.2 28.9 11.4 n.cash

Yue Yuen (551 HK) N.R. 5,550.1 26.10 10.5 9.1 1.1 1.0 0.7 4.0 8.9 9.7 13.9 15.7 14.2 7.0 n.cash

Average 11.2 9.7 5.7 4.8 1.1 4.3 6.6 13.0 6.2 15.5 20.0 9.4

P/ENomuraRating

Market cap(US$mn)

Closing priceEV/EBITDA Revenue growth (%) EPS growth (%)PEG

(CY12P/E vs CY11-13F CAGR)

Li & Fung

DKSH

StellaSitoy

Yue Yuen

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0 5.0 10.0 15.0 20.0 25.0

EPSCAGR

P/E


Li & Fung

DKSH

Stella

Sitoy

Yue Yuen

0.0

5.0

10.0

15.0

20.0

25.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

EB

ITDACAGR

EV/EBITDA




Luggage

Samsonite (1910 HK) Buy 2,700.2 14.88 16.4 14.1 1.1 1.0 0.9 1.8 14.4 13.8 20.4 16.6 16.8 9.2 n.cash

VIP (VIP IN) N.R. 247.2 92.45 20.1 18.9 12.3 11.7 na 1.6 6.1 9.7 (13.6) 6.5 25.1 7.1 n.cash

Tumi (TUMI US) N.R. 1,597.6 23.54 32.9 29.3 18.0 15.8 0.6 na 19.6 17.9 126.4 12.3 na 11.5 39.7

Average 23.1 20.8 10.5 9.5 0.7 1.7 13.4 13.8 44.4 11.8 21.0 9.3

P/ENomuraRating

Market cap(US$mn)



Samsonite

VIP

Tumi

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

EPSCAGR

P/E


Samsonite

VIP

Tumi

(4.0)

1.0

6.0

11.0

16.0

21.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

EBITDACAGR

EV/EBITDA



19/84


19

Fig. 44: Personal care and beauty valuation

Source: Bloomberg consensus estimates for non-rated stocks, Nomura estimates. Closing prices as of September 28, 2012

Fig. 45: Personal care and beauty P/E vs EPS CAGR


28, 2012


Fig. 46: Personal care and beauty EV/EBITDA vs EBITDACAGR


Fig. 47: China-branded retailer valuation

Source: Bloomberg, Nomura estimates. Closing prices as of September 28, 2012



Beauty, Skin and Personal Care

Avon (AVP US) N.R. 6,891.5 15.95 19.9 16.2 10.4 9.2 na 5.7 (5.0) 1.2 (32.1) 23.0 23.4 3.1 142.9

Estee Lauder (EL US) N.R. 23,945.7 61.57 25.5 22.3 13.5 12.1 2.3 1.1 2.5 6.2 8.3 14.3 33.1 9.5 n.cash

Nu Skin (NUS US) N.R. 2,325.4 38.83 12.0 10.6 5.9 5.4 0.6 2.1 16.3 6.9 31.2 12.9 33.9 10.2 n.cash

Revlon (REV US) N.R. 808.3 15.44 11.3 9.6 7.1 6.8 0.4 na 1.8 3.5 33.8 18.3 na 5.4 n.cash

L'Oreal (OR FP) Reduce 75,190.2 96.26 20.5 19.1 13.6 12.5 2.2 2.2 5.9 5.2 11.4 7.7 15.5 12.5 n.cash

Oriflame (ORI SS) Reduce 1,903.7 224.90 12.2 11.0 8.5 7.7 1.0 6.8 5.7 6.4 13.5 11.5 53.8 7.8 93.3

L'Occitane (973 HK) Buy 3,904.6 20.50 22.4 18.9 13.0 11.0 1.3 1.5 16.4 17.5 16.7 18.1 20.1 13.3 n.cash

Fancl Corp (4921 JP) Neutral 768.7 919.00 27.4 23.4 3.6 3.3 37.0 3.7 (3.8) 1.0 (13.4) 17.1 2.8 2.5 n.cash

Shiseido (4911 JP) N.R. 5,497.9 1,071.00 20.5 18.1 6.8 6.4 1.3 4.7 2.3 3.4 17.4 13.3 7.5 3.0 30.2

Kose (4922 JP) Neutral 1,414.5 1,819.00 16.3 14.5 4.2 3.9 1.6 2.2 0.3 2.9 7.3 12.8 6.1 3.8 n.cash

Amorepacific (090430 KS) Neutral 6,200.2 1,180,000.00 18.0 18.0 13.3 11.4 1.9 0.5 10.7 19.2 19.0 0.4 20.1 15.5 n.cash

LG Household (051900 KS) Buy 8,914.1 635,000.00 23.7 19.4 16.5 13.9 0.8 0.8 16.9 13.6 38.7 21.7 33.3 10.4 22.1

Sa Sa Intl (178 HK) N.R. 1,935.9 5.32 19.4 16.2 13.3 11.1 1.1 3.7 15.4 17.8 16.6 20.3 45.7 10.7 n.cash

Average 19.2 16.7 10.0 8.8 4.3 2.9 6.6 8.1 13.0 14.7 24.6 8.3

P/ENomuraRating

Market cap(US$mn)



Avon

Estee Lauder

Nu Skin

Relvon

L'Oreal

Oriflame

L'Occitane

Fancl

Shiseido

Kose

Amorep acific

LG Household

Sa Sa

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0

EPSCAGR

P/E


Avon

Estee Lauder

Nu Skin

RelvonL'Oreal

Oriflame

L'Occitane

FanclShiseido

Kose

Amorepacific

LG HouseholdSa Sa

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

EBITDACAGR

EV/EBITDA




China Branded Retailer

Daphne (210 HK) Buy 1,652.8 7.78 13.7 11.4 7.0 5.7 1.2 2.5 22.1 17.0 3.7 19.5 23.7 10.0 n.cash

Belle (1880 HK) Buy 15,271.1 14.04 20.8 17.4 13.5 11.0 1.3 1.5 16.8 17.6 12.3 19.0 22.6 14.1 n.cash

Trinity (891 HK) Buy 1,151.4 5.20 16.2 14.1 11.7 9.7 1.3 4.4 18.8 16.5 9.2 15.1 16.6 17.9 n.cash

Ports Design (589 HK) Neutral 430.0 5.99 5.2 4.5 2.7 2.3 0.3 12.2 21.4 17.7 20.6 15.1 27.3 21.3 n.cash

I.T (999 HK) Buy 521.1 3.29 7.4 6.4 4.3 3.7 0.5 5.5 21.8 13.8 15.8 15.5 22.6 8.2 n.cash

China Lilang (1234 HK) Reduce 631.8 4.08 5.8 7.2 2.7 3.2 na 11.3 16.8 (8.9) 12.9 (20.1) 29.7 21.8 n.cash

Average 11.5 10.2 7.0 5.9 0.9 6.2 19.6 12.3 12.4 10.7 23.8 15.6

P/ENomuraRating

Market cap(US$mn)




20/84


20

Fig. 48: China-branded retailers P/E vs. EPS CAGR


Fig. 49: China-branded retailers EV/EBITDA vs. EBITDACAGR


Fig. 50: HK-listed retailer valuation

Source: Bloomberg consensus estimates for non-rated stocks, Nomura estimates. Note: Closing prices as of September 28, 2012

Fig. 51: HK-listed retailer P/E vs. EPS CAGR

Note: Point on axis indicates no available data. Closing prices as of September 28,2012


Fig. 52: HK-listed EV/EBITDA vs. EBITDA CAGR


Daphne

Belle

Trinity

Ports Design

I.T

China Lilang

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

0.0 5.0 10.0 15.0 20.0 25.0

EPS

CAGR

P/E


DaphneBelle

Trinity

Ports Design

I.T

China Lilang

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EBIT

DACAGR

EV/EBITDA




HK Listed Retailer

Daphne (210 HK) Buy 1,652.8 7.78 13.7 11.4 7.0 5.7 1.2 2.5 22.1 17.0 3.7 19.5 23.7 10.0 n.cash

Belle (1880 HK) Buy 15,271.1 14.04 20.8 17.4 13.5 11.0 1.3 1.5 16.8 17.6 12.3 19.0 22.6 14.1 n.cash

Trinity (891 HK) Buy 1,151.4 5.20 16.2 14.1 11.7 9.7 1.3 4.4 18.8 16.5 9.2 15.1 16.6 17.9 n.cash

Ports Design (589 HK) Neutral 430.0 5.99 5.2 4.5 2.7 2.3 0.3 12.2 21.4 17.7 20.6 15.1 27.3 21.3 n.cash

I.T (999 HK) Buy 521.1 3.29 7.4 6.4 4.3 3.7 0.5 5.5 21.8 13.8 15.8 15.5 22.6 8.2 n.cash

China Lilang (1234 HK) Reduce 631.8 4.08 5.8 7.2 2.7 3.2 na 11.3 16.8 (8.9) 12.9 (20.1) 29.7 21.8 n.cash






C.banner (1028 HK) N.R. 696.4 2.70 13.7 10.7 8.4 6.6 1.1 1.8 23.0 24.3 (1.7) 28.1 na 12.5 n.cash

Giordano (709 HK) N.R. 1,295.3 6.52 12.9 11.4 8.7 7.4 1.5 5.7 6.3 15.3 5.0 12.8 27.0 12.4 n.cash

Hengdeli (3389 HK) N.R. 1,274.5 2.25 10.1 9.0 7.3 6.5 2.1 3.5 9.6 14.0 (2.7) 12.8 15.4 6.6 14.4

Parkson (3368 HK) Neutral 2,355.9 6.50 13.8 12.4 6.5 5.7 4.5 3.2 18.2 15.3 (4.5) 11.3 19.6 20.9 n.cash

Golden Eagle (3308 HK) Buy 3,793.6 15.22 19.1 16.3 12.3 10.2 1.8 1.5 17.9 21.7 3.5 17.7 25.1 33.1 n.cash

New World (825 HK) Neutral 935.0 4.30 11.9 10.6 3.5 3.0 1.7 3.3 10.3 18.4 2.6 11.9 10.3 16.0 n.cash

Maoye (848 HK) N.R. 948.8 1.37 8.2 7.5 7.0 6.3 0.7 4.1 13.4 21.8 12.5 10.4 11.7 19.8 51.9

Intime (1833 HK) Buy 2,166.6 8.40 14.9 12.5 12.6 10.6 1.2 2.7 23.3 23.6 6.3 19.3 13.2 24.0 24.4

PCD Stores (331 HK) N.R. 336.8 0.62 6.3 4.6 3.6 2.7 0.3 8.0 9.4 21.5 8.1 37.5 13.4 23.8 n.cash

Anta (2020 HK) N.R. 1,917.0 5.96 8.7 10.9 4.5 5.5 na 7.4 (11.5) (11.4) (20.0) (20.4) 20.9 17.7 n.cash

Li Ning (2331 HK) N.R. 562.4 4.13 na na 7.6 4.4 3.7 0.7 na na na na 0.7 (0.5) 3.9

Sa Sa Intl (178 HK) N.R. 1,935.9 5.32 19.4 16.2 13.3 11.1 1.1 3.7 15.4 17.8 16.6 20.3 45.7 10.7 n.cash

Average 14.3 11.8 8.1 6.7 1.6 4.1 14.5 14.5 6.5 20.9 19.8 14.7

P/ENomura

Rating

Market cap



(CY12P/E vs CY11-

13F CAGR)

Samsonite

Belle

C. banner

Trinity

Ports Design

I.T

China Lilang

Prada

Esprit

Li & Fung

Intime

L'Occitane

Giordano

Hengdeli

Parkson

Golden Eagle

New World

MaoyeDaphne

PCD Stores

AntaLi Ning

Sa Sa

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0 5.0 10.0 15.0 20.0 25.0

EPSCAGR

P/E


DaphneBelleC.bannerTrinity

Ports Design

I.T

China Lilang

Prada

Esprit

LI & Fung

SamsoniteL'Occitane

Giordano

Hengdeli

Parkson

Golden Eagle

New World

Maoye

Intime

PCD StoresSa Sa

(6.0)

(1.0)

4.0

9.0

14.0

19.0

24.0

29.0

34.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EBITDACAGR

EV/EBITDA



21/84


21

Fig. 53: HK-listed international brands coverage valuation

Source: Bloomberg, Nomura estimates. Closing prices as of September 28, 2012

Fig. 54: HK-listed international brands coverage P/E vs. EPSCAGR


Fig. 55: HK-listed international brands coverage EV/EBITDAvs. EBITDA CAGR


P/E charts

Fig. 56: Prada P/E


Fig. 57: Prada premium/discount to peers




Coverage






Coverage Average 21.3 15.3 9.8 7.7 1.8 2.4 13.0 12.8 8.4 46.8 18.0 9.5

P/ENomuraRating

Market cap(US$mn)



Prada

Esprit

Li & Fung

SamsoniteL'Occitane

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0

EPSCAGR

P/E


Prada

Esprit

Li & FungSamsonite

L'Occitane

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EBITDACAGR

EV/EBITDA


6.00

11.00

16.00

21.00

26.00

31.00

Aug-11

Sep-11

Oct

-11

Nov

-11

Dec

-11

Jan

-12

Feb-12

Mar-12

Apr-12

May-12

Jun

-12

Jul-12

Aug-12

Sep-12

Mean = 20.4

+1SD = 22.6

-1SD = 18.2

0%

10%

20%

30%

40%

50%

60%

Aug-1

1

Sep-1

1

Oct-1

1

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

Jul-1

2

Aug-1

2

Sep-1

2

Prada Premium/Discount to peers


22/84


22

Fig. 58: Samsonite P/E


Fig. 59: Samsonite premium/discount to global mass market


Fig. 60: LOccitane P/E


Fig. 61: LOccitane premium/discount to peers


Fig. 62: Esprit P/E


Fig. 63: Esprit premium/discount to peers


6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Mean = 13.3

+1SD = 14.9

-1SD = 11.8

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Samsonite Premium/Discount to peers

6.00

11.00

16.00

21.00

26.00

31.00

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Mean = 21.0

+1SD = 23.8

-1SD = 18.3

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Aug-1

1

Sep-1

1

Oct-11

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-12

Apr-12

May-1

2

Jun-1

2

Jul-12

Aug-1

2

Sep-1

2

L'Occitane Premium/Discount to peers

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Esprit Premium/Discount to peers


23/84


23

Fig. 64: Li & Fung P/E


Fig. 65: Li & Fung premium/discount to HK-listed retailers


Stock performance and Street action

Fig. 66: High-end brands/luxury stock performance and Street action

Source: Bloomberg consensus estimates for non-rated stocks, Nomura research


Fig. 67: High-end brands/luxury stock TP % change and EPS % change in the past four weeks

For four weeks ended September 28, 2012


-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Li & Fung Premium/Discount to peers

3M (US$mn) 6M (US$mn) 1M 3M 6M 12M YTD 1M YTD FY12 EPS FY13 EPSFY12 EPS

Upgrade

FY13 EPS

Upgrade

FY12 EPS

Downgrad

FY13 EPS

Downgrad Buy Sell Hold

High End Brands/Luxury

Prada Neutral 19,106.3 57.90 19.8 19.4 (1.5) 12.3 14.7 63.3 64.7 2.5 49.1 3.5 3.5 10.0 13.0 0.0 0.0 9.9 13.0 2.0 5.0 19.0

Luxottica Reduce 16,673.6 27.53 38.9 33.8 (4.2) (0.3) 1.4 39.3 26.3 (0.2) 10.8 (0.2) 0.1 1.0 1.0 1.0 1.0 1.5 10.0 5.0 8.0 27.5

Tod's Reduce 3,314.6 84.10 17.0 16.4 (1.0) 6.5 (0.3) 25.2 32.6 3.1 17.1 0.7 0.6 4.0 3.0 1.0 2.0 1.9 4.0 8.0 12.0 39.8

Ferragamo Neutral 3,510.7 16.19 12.0 14.8 (5.4) (1.3) 4.2 44.7 54.0 (1.3) 38.5 0.2 1.1 2.0 2.0 2.0 0.0 5.1 8.0 1.0 7.0 25.6

LVMH Neutral 76,517.7 117.00 145.7 158.0 (11.4) (2.4) (9.2) 13.4 5.1 (7.3) (10.5) (0.1) 0.0 1.0 1.0 2.0 2.0 (0.9) 23.0 1.0 10.0 50.2

Christian Dior N.R. 24,428.7 104.40 11.7 14.5 (10.5) (3.6) (9.3) 17.3 10.9 (6.5) (4.6) 1.3 1.4 1.0 1.0 1.0 1.0 (1.8) 12.0 1.0 2.0 28.1

Hermes N.R. 28,409.6 209.00 10.7 12.6 (6.7) (13.7) (17.3) (10.1) (9.6) (2.7) (25.2) 0.5 0.2 6.0 5.0 3.0 5.0 (1.8) 1.0 11.0 8.0 12.8

PPR Buy 19,383.6 119.40 48.3 58.9 (5.2) 6.4 (7.4) 15.0 6.4 (1.2) (9.2) (0.5) 0.2 1.0 1.0 3.0 3.0 0.7 15.0 5.0 7.0 58.2

Burberry Neutral 7,144.8 1,001.00 4,527.3 4,282.3 (25.9) (24.5) (33.1) (16.7) (15.5) (21.8) (31.1) (6.4) (6.4) 0.0 0.0 17.0 17.0 (17.6) 7.0 2.0 17.0 98.0

Richemont Buy 34,496.0 56.40 114.8 113.4 (4.6) 8.8 (0.4) 30.5 18.7 (0.5) 3.1 2.1 2.1 12.0 12.0 1.0 1.0 (1.5) 17.0 3.0 12.0 94.8

Swatch Buy 20,960.3 375.20 71.0 76.7 (5.2) 0.5 (9.7) 15.4 6.7 (1.2) (8.8) 0.8 0.7 4.0 3.0 2.0 2.0 (1.4) 16.0 2.0 11.0 98.0

Hugo Boss Neutral 6,202.1 68.42 14.6 8.9 (7.4) (12.0) (20.5) 6.3 16.2 (3.3) 0.6 (0.8) (0.8) 0.0 1.0 5.0 4.0 (1.5) 19.0 2.0 7.0 33.7

Coach Buy 15,976.1 56.02 306.7 267.1 (0.4) (4.2) (27.5) 3.7 (8.2) 3.7 (23.8) (0.7) (0.7) 1.0 1.0 3.0 2.0 0.3 24.0 0.0 9.0 99.1

Michael Kors Buy 10,281.0 53.18 175.5 153.6 (0.6) 27.1 14.1 na 95.2 3.5 79.6 3.9 3.9 5.0 4.0 0.0 0.0 6.5 10.0 1.0 0.0 69.6

Tiffany & Co Neutral 7,836.3 61.88 130.1 138.4 (1.4) 16.9 (10.5) (4.4) (6.6) 2.7 (22.2) (0.2) (0.2) 0.0 0.0 3.0 3.0 0.8 13.0 1.0 12.0 93.1

Brunello Cucinelli Neutral 1,177.6 13.45 2.4 na (2.0) 19.7 na na na 2.0 na 1.8 0.0 1.0 0.0 0.0 0.0 2.3 3.0 0.0 3.0 29.1

Chow Tai Fook N.R. 14,237.3 11.04 9.5 9.0 15.2 15.0 (10.2) na (20.7) 19.3 (36.3) (1.4) (1.4) 0.0 0.0 6.0 6.0 3.6 11.0 3.0 8.0 10.6

Hengdeli N.R. 1,274.5 2.25 3.4 3.9 5.1 (7.8) (31.4) (26.2) (11.4) 9.2 (27.0) (3.2) (4.7) 0.0 0.0 2.0 2.0 (4.3) 11 4 4 48.0

Average 314.4 316.6 (4.1) 2.4 (9.0) 14.5 15.6 0.0 0.0 0.1 (0.0) 0.1

NameNomura

Rating

Market cap

(US$mn)

Closing

price

Street target

Price

% Change in

Last 4 Weeks

ADTV Absolute Performance (%)Relative

Performance (%)

EPS % Changes

in Last 4 Weeks

EPS Upgrades and Downgrade

in last 4 weeks

Stree recommendations

in Total Free Float

(%)

9.9

6.5

5.1

3.62.3 1.9 1.5

0.8 0.7 0.3

(0.9) (1.4) (1.5) (1.5) (1.8) (1.8)

(4.3)

(17.6)(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

Prada

MichaelKors

Ferragamo

ChowTaiFook

BrunelloCucinelli

Tod's

Luxottica

Tiffany&Co

PPR

Coach

LVMH

Swatch

Richemont

HugoBoss

ChristianDior

Hermes

Hengdeli

Burberry

Target Price % Change in Last 4 Weeks FY12 EPS % Change in Last 4 Weeks FY13 EPS % Change in Last 4 Weeks


24/84


25/84


26/84


26

Fig. 76: Consensus global mid-range/mass market stockrecommendation %

As of September 28, 2012


Fig. 77: Global mid-range/mass market stock YTD absoluteperformance (%)

YTD through September 28, 2012


Fig. 78: Supply chain/ OEM stock performance and Street action

Source: Bloomberg consensus estimates for non-rated stocks, Nomura research. Note: Closing prices as of September 28, 2012

Fig. 79: Supply chain TP % change and EPS % change byconsensus in the past four weeks



Fig. 80: OEM TP % change and EPS % change by consensusin the past four weeks



Fig. 81: Consensus supply chain stock recommendation %



Fig. 82: Consensus OEM stock recommendation %



8266 64

46 43 3827 23 23 23

9

7

0 14

6

37 3650

70

1827

36 37

5748

67

40 4127 22

0

10

20

30

40

50

60

70

80

90

100

Giordano

Adidas

AmericanEagle

Inditex

Nike

GAP

Abercrombie&Fitch

H&M

Anta

Esprit

LiNing

Buy Rec as of % Tota l Rec Sel l Rec as of % Total Rec Hold Rec as of % Total Rec

92.9

50.4

37.9

24.519.0 15.8

2.3

(1.5)

(30.5)(33.1) (35.4)

12.9

(60.0)

(40.0)

(20.0)

0.0

20.0

40.0

60.0

80.0

100.0

GAP

Inditex

AmericanEagle

Adidas

Esprit

Giordano

H&M

Nike

Abercrombie&Fitch

LiNing

Anta

Average

YTD Absolute Performance (%)

3M (US$mn) 6M (US$mn) 1M 3M 6M 12M YTD 1M YTD FY12 EPS FY13 EPSFY12 EPSUpgrade

FY13 EPSUpgrade

FY12 EPSDowngrad

FY13 EPSDowngrad Buy Sell Hold

Supply Chain

Li & Fung Neutral 12,955.0 12.02 51.1 401.7 (6.5) (18.9) (32.5) (12.4) (16.4) (10.0) (29.3) (2.3) (2.0) 0.0 1.0 4.0 3.0 (2.6) 5.0 9.0 7.0 66.0

DKSH N.R. 3,973.8 58.75 3.9 4.6 3.2 13.0 21.5 n a na (12.3) n a 1.3 0.6 1.0 1.0 0.0 0.0 0.8 6.0 0 .0 5 .0 35.0

Average 27.5 203.2 (1.7) (3.0) (5.5) (12.4) (16.4) (11.2) (29.3) (0.5) (0.7) (0.9)

OEM

Stella N.R. 1,958.7 19.12 0.8 9.1 4.0 0.1 1.5 10.0 13.3 (10.1) (7.3) (1.6) (2.7) 0.0 0.0 0.0 0.0 (0.3) 7.0 0.0 4.0 59.2

Sitoy N.R. 541.2 4.19 0.2 0.2 21.4 22.2 22.5 na 42.0 7 .4 21.5 (4.7) (4.7) 0.0 0.0 3.0 0.0 1.2 6.0 0 .0 0 .0 18.8

Yue Yuen N.R. 5,550.1 26.10 2.8 25.4 16.8 7 .9 (4.2) 36.8 6 .3 2.7 (14.2) 2.0 0.3 4.0 2.0 1.0 1.0 (3.2) 5.0 1.0 4.0 45.5

Average 1.3 11.6 14.1 10.0 6.6 23.4 20.5 0.0 (0.0) (1.4) (2.4) (0.8)

Name

Nomura

Rating

Market cap

(US$mn)

Closing

price

Street targetPrice

% Change inLast 4 Weeks

ADTV Absolute Performance (%)Relative

Performance (%)EPS % Changesin Last 4 Weeks

EPS Upgrades and Downgradein last 4 weeks

Stree recommendationsin Total Free Float

(%)

0.8

(2.6)(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

DKSH Li & Fung

T arge t P ri ce % Ch an ge in L as t 4 Wee ks F Y1 2 EPS % Ch an ge i n L as t 4 Wee ks F Y1 3 EPS % Ch an ge in L as t 4 Wee ks

1.2

(0.3)

(3.2)

(6.0)

(5.0)

(4.0)

(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

3.0

Sitoy Stella Yue Yuen

T ar ge t P ri ce % Ch an ge i n L as t 4 W ee ks F Y1 2 E PS % C ha ng e i n L as t 4 We ek s F Y1 3 E PS % C ha ng e i n L as t 4 We ek s

55

24

43

45

33

0

10

20

30

40

50

60

70

80

90

100

DKSH Li & Fung

Buy Rec as of % Total Rec Sell Rec as of % Total Rec Hold Rec as of % Total Rec

100

64

50

10

36 40

0

10

20

30

40

50

60

70

80

90

100

Sitoy Stella Yue Yuen

Buy Rec as of % Total Rec Sell Rec as of % Total Rec Hold Rec as of % Total Rec


27/84


28/84


28

Fig. 89: Personal care and beauty stock performance and Street action

Source: Bloomberg consensus estimates for non-rated stocks, Nomura research. Note: Closing prices as of September 28, 2012

Fig. 90: Personal care and beauty stock TP % change and EPS % change by consensus in the past four weeks



Fig. 91: Consensus personal-care and beauty stockrecommendation %



Fig. 92: Personal-care and beauty stock YTD absoluteperformance (%)

YTD through September 28, 2012


3M (US$mn) 6M (US$mn) 1M 3M 6M 12M YTD 1M YTD FY12 EPS FY13 EPSFY12 EPSUpgrade

FY13 EPSUpgrade

FY12 EPSDowngrad

FY13 EPSDowngrad Buy Sell Hold

nomura - oct 11, 12 - international brands - global retail databook

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