deep dive: us retail—store closure and management · pdf fileclosure and management ......

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

KeyTakeaways

1) Among the major US retailers that we track, so far this year,eight have announced store closures and another six haveannounced management changes.

2) Storeclosureannouncementsare concentrated among thedepartment stores and specialty retailers. Those facingbankruptcy proceedings—Wet Seal, American Apparel andThe Limited—plan to close their entire store network.Macy’s plans to close 9% of its total store base, Sears 6%,Kmart 13%, BCBG 21%. JCPenney has plans to cut stores inthe near future.

3) Managementchanges: Since the start of 2017, six majorretailers have announced management changes, includingRalph Lauren, Tiffany & Co., Abercrombie & Fitch, Barneys,Givenchy and Coach.

4) Thesharedrationalebehindthestoreclosuresincludereconfiguringthestorenetworkduetotheshifttoonlineshopping,stemminglossesfromunprofitablestoresandreallocatingresourcestofocusareas.Managementchangesannouncedwerejustifiedbydisappointingfinancialperformance(Tiffany&Co.),conflictingviewswithfounders(RalphLauren)andplannedsuccession(Barneys).

Deep Dive:

US Retail—Store Closure and

Management Change Tracker

Deborah Weinswig

Managing Director,

Fung Global Retail & Technology

deborahweinswig@fung1937.com

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

ExecutiveSummarySincethestartof2017,severalmajorUSretailershaveannouncedstoreclosures,bankruptciesandmanagementchanges.

Inthisregularupdatereport,wetrackmajorannouncementsfromretailers,suchasstoreclosures,bankruptciesandmanagementchanges,whichwebelievecouldprovideinsightsintotheoverallhealthoftheretailindustry.

SummaryofMajorAnnouncements• Storeclosures:Eightmajorretailershaveannouncedstoreclosure

planssincethestartof2017.Macy’sisclosing9%ofitstotalstorebase,Sears6%,Kmart13%andBCBG21%.JCPenneyhaveplanstocutstoresinthenearfuture.WetSeal,AmericanApparelandTheLimitedareclosingtheirentirestorenetwork.

• Bankruptcies:WetSeal,AmericanApparelandTheLimitedarefacingbankruptcyproceedings.

• Managementchanges:Since the start of 2017, six major retailershave announced management changes, including Ralph Lauren,Tiffany & Co., Abercrombie & Fitch, Barneys, Givenchy and Coach.

ConclusionsDrawnfromourProprietaryDatabase• Storeclosures:Mostoftheretailersthatareclosingstoresfallwithin

thedepartmentstoreandspecialtyretailcategory.Thesharedrationalebehindthedecisionstoclosethestoresareprimarily:1)toreconfigurethestorenetworkduetotheshifttoonlineshopping;2)tostemlossesfromunprofitablestores;and3)toreallocateresourcestofocusareas.

• Managementchanges:Thesechangesareconcentratedattheluxuryandspecialtyretailers.Therationalebehindthemanagementchangesincludesdisappointingfinancialperformance(Tiffany),conflictingviewswithfounders(RalphLauren)andplannedsuccession(Barneys).

Wewillcontinuetomonitortheretailindustryformajorannouncementsandprovidetimelyupdatesforourreaders.

Figure1.OpeningsandClosingsofPrivateEstablishments,USRetailIndustry

Source:USBureauofLaborStatistics

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Table1:YTD2017AnnouncedStoreClosuresAnnouncementDate Segment Retailer

StoreClosings

%ofTotalStoreBase Status

ReasonsForStoreClosure Long-TermPlan

UseofFreed-UpCapital FinancialImpact

Jan2017 Departmentstores

JCPenney TBC TBC Underreview

Resourceallocation,competitionfrome-commerce

Underreview.Estimated300(or30%)storesinthenexttwoyears(Cowen&Coestimates)

Freeupcashtoinvestine-commercedevelopmentanditsbeststores

TBC

BeginningJan2017

Apparel WetSeal 171 100% Bankruptcyproceedingsinprogress

Poorbusinessperformanceledtobankruptcy,sluggishmalltraffic,changingconsumerpreferencesandtherisingpopularityofonlineshopping

Underliquidation,asunabletoacquirefreshcapitalorbuyers

NA WetSeallistedassetsof$10–50millionandliabilitiesof$50–100million

Jan18,2017 Apparel BCBG 120 21% Inprogress.Thelocationsthatwillbeclosedareholdingliquidationsales

Facingfinancialdistressandstrugglingtoadapttotheshifttodigitalcommerce

Underreview.BCBGispreparingforapossiblebankruptcyfiling(MinneapolisStarTribune)

Easethedebtburdenandupgradetheonlineplatform

TBC

Jan4,2017 Departmentstores

Macy’s 68 9% Completebymid-2017

Resourceallocationandcostreduction

~100closingsannouncedinAugust2016

Invest$250million(outof$500millionsavings)intogrowinge-commerce,Bluemercury,Macy’sBackstageandChina

Annualexpensesavingsof~$550million,reducesalesby~$575million

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

AnnouncementDate Segment Retailer

StoreClosings

%ofTotalStoreBase Status

ReasonsForStoreClosure Long-TermPlan

UseofFreed-UpCapital FinancialImpact

Jan5,2017 Departmentstores

SearsandKmart

42Searsand108Kmartstores

6%forSearsand13%forKmart

Inprocess Closenon-profitablestores,disappointingholidayresults

IntegratedRetailstrategytotransformthecompany“fromastore-based,asset-intensivebusinessmodelintoamembership-focused,asset-lightbusinessmodel”

FocusonmoreprofitablestoresanditsShopYourWaymembershipplatform

TBC

Jan2017 Apparel AmericanApparel

110 100% Bankruptcyinprocess

Failedattemptatreorganizingafterfirstbankruptcyfilingin2015,decliningsales,hypersexualizedimagelostappealandhigh-interestdebt

NA NA AliquidationsaleofintellectualpropertyandotherassetsaresoldtoGildanActivewearIncfor$88million(storesarenotincluded)

Jan17,2017 Apparel TheLimited

250 100% Bankruptcyinprocess

Fallingmalltraffic,decliningpopularityinstyles,falteringmanagementteam

Currentlyevaluatingstrategicalternativesforitse-commercebusinessandintellectualproperty

NA Anaffiliateofprivate-equityfirmSycamorePartnersagreedtoprovidea$25.75millionstalkinghorsebidforthecompany’sintellectualproperty

Source:Variouscompanies’data/Bloomberg/FungGlobalRetailTechnology

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Table2:YTD2017AnnouncedManagementChangesDateAnnounced In/Out Company Name Title Profile Reason StatusJan4,2017 + Coach KevinG.Wills Chief

FinancialOfficer

KevinWillsjoinsCoachfromAlixPartnersLLP,aglobalbusinessadvisoryfirm,wherehehasservedasManagingDirectorandCFOsinceMarch2014andspecializedincorporateturnaround,capitalrestructuringandM&As.PriortoAlixPartners,heservedfor16yearsinvariousseniorleadershippositionsatSaks.

WillswillreplaceAndreaShawResnick,theinterimCFO.ResnickwillcontinueastheGlobalHeadofInvestorRelationsandCorporateCommunicationsforCoach.

EffectivenolaterthanMarch2017

Jan30,2017 + Abercrombie&Fitch

WillA.Smith ChiefMarketingOfficer

WillSmithjoinsAbercrombiefromCaleresInc.,whereheservedinseniormarketingrolesforthepastnineyears.HeworkedforiconiccompaniessuchasKraft,AtlanticRecords,andLizClaiborne,invariousbrandandmarketingrolespriortojoiningCaleresInc.

Smith’sintroductionaimstostrengthenAbercrombie’sconnectionwiththecustomersandtoenhancethepowerandclarityofthebrandidentities.

Effectiveimmediately

Feb1,2017 + Abercrombie&Fitch

FranHorowitz ChiefExecutiveOfficer

FranHorowitz,PresidentandChiefMerchandisingOfficer,ispromotedtoCEO.ShehasshownstrongleadershipintheturnaroundofHollisterandpreviouslyhadservedvariouspositionsatAnnTaylor,Loft,Express,Bloomingdale’s,BergdorfGoodman,BonwitTellerandSaksFifthAvenue.

ThepromotionofHorowitzendsatwo-yearperiodwhenthecompanywasrunbyanOfficeoftheChairmanthatincludedHorowitzandExecutiveChairmanArthurMartinez,whichwasestablishedafterthedepartureofthenCEOChristosAngelides.

Effectiveimmediately

Feb1,2017 + Abercrombie&Fitch

JoanneCrevoiserat

ChiefOperatingOfficer

JoanneCrevoiserat,ExecutiveVicePresidentandCFO,waspromotedtoCOOwhilecontinuinginhercurrentrole.PriortojoiningAbercrombie,sheservedinanumberofseniormanagementrolesatKohl’sInc.andseniorfinancepositionswithWal-MartStoresandMayDepartmentStores.

Effectiveimmediately

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

DateAnnounced In/Out Company Name Title Profile Reason Status

Feb2,2017 + Barneys DaniellaVitale ChiefExecutiveOfficer

PriortoDaniellaVitale’spromotiontoCEO,sheservedastheCOOofBarneys,overseeingallwomen’smerchandising,businessdevelopment,digitalstrategyandstoreoperations.Previously,sheworkedatGucci,GiorgioArmaniandFerragamoUSA.

Thechangeisaplannedsuccession.VitalewasthedesignatedheirapparentofMarkLee,ExecutiveChairmanandformerlyCEOofBarneys.

Effectiveimmediately

Feb2,2017 - Barneys MarkLee ChiefExecutiveOfficer

MarkLeeservedasCEOofBarneysandwillnowassumetheroleofExecutiveChairman.

Effectiveimmediately

Feb2,2017 - Givenchy RiccardoTisci CreativeDirector

RiccardoTisciservedastheCreativeDirectorofGivenchyfor12yearsbeforedepartingandwasresponsiblefortransformingGivenchyintooneofLVMH’smostsuccessfulbrands.Herevivedthebrandandwasanearlyadopterofsocialmedia.

Thereasonforthedeparturewasnotgiven.Tisciattributedhisdeparturetopersonalreasons.TherehasbeenunconfirmedspeculationthathewillbejoiningVersace.

Givenchystatedthatasuccessorwillbeannouncedsoon.

Feb2,2017 - RalphLauren StefanLarsson

PresidentandChiefExecutiveOfficer

StefanLarssonhasservedasthePresidentandCEOofRalphLaurenforlessthantwoyears.Duringhistenure,hecutjobs,closedstores,improvedtheonlineexperienceandstreamlinedthesupplychain.PriortojoiningRalphLauren,Larsson’sbackgroundwasinbudgetapparel:heservedastheGlobalPresidentofOldNavyandH&M.

Therehasbeenaclashofviewsonhowtoevolvethecreativeandconsumer-facingpartsofthebusinessbetweenStefanLarssonandRalphLauren,thecompany’sExecutiveChairmanandChiefCreativeOfficer.

ThecompanyhascommencedasearchforanewCEO.Intheinterim,CFOJaneNeilsenwillleadthecompany.

Feb5,2017 - Tiffany&Co. FredericCumenal

ChiefExecutiveOfficer

FredericCumenalservedasCEOforTiffanyandhasheldseniorroleswhenheoversawthecompany’sglobalexpansionanddevelopmentofnewcollections.HeservedasPresidentandCEOofMoet&ChandonpriortojoiningTiffany.

Theboardisdisappointedwiththerecentfinancialperformanceandweakholidaysales

TiffanyhascommencedasearchforanewCEO.

Feb5,2017 + Tiffany&Co. MichaelJ.Kowalski

ChiefExecutiveOfficer(Interim)

MichaelKowalskiistheChairmanoftheBoardofDirectorsandpreviousCEOofTiffany.HewillserveastheinterimCEOwhilecontinuingtoserveasChairman.

ChairmanandpreviousCEOMichaelKowalskiwillserveasinterimCEO.

Source:Variouscompanies’data/Bloomberg/FungGlobalRetailTechnology

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February10,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

TableofContentsExecutiveSummary…………………………………………...…….…………………………….…..……………………………………………….2

StoreClosings……………………………….……………………………..…………………………………………….………………………………..8JCPenney..........................................................................................................................................8Macy’s..............................................................................................................................................8SearsandKmart...............................................................................................................................9BCBG...............................................................................................................................................10WetSeal.........................................................................................................................................10AmericanApparel...........................................................................................................................10TheLimited.....................................................................................................................................11

ManagementChanges………………..…………………………………………………….…..……………………………………..……..….…12RalphLauren...................................................................................................................................12Tiffany&Co....................................................................................................................................12Abercrombie&Fitch......................................................................................................................13Barneys...........................................................................................................................................14Givenchy.........................................................................................................................................15Coach..............................................................................................................................................15

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

StoreClosings

JCPenneyJCPenneyannouncedthatitisconsideringclosingstoresin2017.However,theexactnumbersareyettobeconfirmed,accordingtoCEOMarvinEllison.

• Reasonforstoreclosings:Aresourceallocationdecision.JCPenneywilldownsizecertainlocationsthatnolonger“meetbrandstandards.”Theannouncementisareversalfromthecompany’spaststrategyofavoidingmassstoresclosuresinordertominimizetheimpactfrome-commerce.

• Forecast:ItisestimatedJCPenneywillclosedownmorethan300,or30%ofitsstores,inthenexttwoyears,accordingtoestimatesfromCowenandCompany,afinancialserviceandresearchfirm.

• Capitaldeployment:Capitalthatisfreedfromstoreclosingswillbedeployedintoe-commerceinvestmentandmoreproductive stores.

Figure2.JCPenneyStoreCount

Source:Companydata/Cowen&Co,FungGlobalRetailTechnology

Macy’sMacy’sannouncedonJanuary4,2017,thatitwillclose68stores,or9%ofitstotalstorebase,bymid-2017.Thisroundofstoreclosingsispartofthecompany’splantoclose100storesoverthenextfewyears,announcedinAugust2016.

• Reasonforstoreclosings:Resourceallocationandcostreductionduetothecontinuingstructuralshifttoonlineshopping.AccordingtoCEOTerryLundgren,Macy’swill“closelocationsthatareunproductiveorarenolongerrobustshoppingdestinationsduetochangesinthelocalretailshoppinglandscape,aswellasmonetizinglocationswithhighlyvaluedrealestate.”

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

• Forecast:Macy’sestimatestheclosureswillgeneratesavingsof$550millionbeginningin2017,reducethisyear’ssalesby$575millionandtrim3,900offheadcount.

• Capitaldeployment:Capitalthatisfreedupfromthestoreclosureswillbefurtherinvestedinomnichannelcapabilities,customeranalyticsandmarketingstrategies.Macy’swillopennewstoresinAbuDhabiandKuwait,andexpandMacy’sBackstageandBluemercury.

SearsandKmartSearsannouncedonJanuary5,2017,thatitwillclose150stores,comprising108Kmartstoresand42SearsOutlets.TheannouncementcameonthesamedaySearsannouncedthesaleofCraftsmantoolbrandtoStanleyBlack&Decker.

• Reasonforstoreclosings:Tostemlosses:the150storessufferedanadjustedEBITDAlossofUS$60million.Thestoreclosureannouncementcameafterthecompanyreporteda12%–13%declineinsame-storesalesgrowth(SSSG)inthefirsttwomonthsof4Q16.

• Forecast:CreditratingfirmFitchRatingsforecaststhatSearsisindangerofdefaultin2017.

• Capitaldeployment:ThecompanywillfocusonmoreprofitablestoresanditsShopYourWaymembershipplatform.ManagementwillexecuteitsIntegratedRetailstrategyandtransformthecompany“fromastore-based,asset-intensivebusinessmodelintoamembership-focused,asset-lightbusinessmodel.

Figure3.SearsandKmartStoreCount

Source:BusinessInsider1.Note:Storecountfor2010-16asofendOctober.1InsideSears'deathspiral:HowaniconicAmericanbrandhasbeendriventotheedgeofbankruptcy,BusinessInsider,8/1/17

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

BCBGBCBGwaslookingtoclosestoresandrestructure,asthecompanycopeswithaheavydebtburdenandanindustryshifttoonlineshopping,accordingtoBloombergnewsreportedonJanuary18,2017.

• Reasonforstoreclosings:Thepotentialplanforstoreclosuresislikelyduetofinancialdistress.BCBGispreparingforapossiblebankruptcyfilingasitfacedchallengesincludingacashcrunchanddebtpressure,accordingtoMinneapolisStarTribune.ThecompanyhashiredAlixPartnersLPtohelprestructureitsdebtload.Theretailerhasalsobeenadaptingtotheshifttoonlineshoppingbyclosingstoresandbuildingitsonlineplatform.

• Forecast:ThecompanyisreportedbyStarTribunetocloseabout120storesglobally,mostlyintheUS.However,noofficialannouncementhasbeenmadeforstoreclosureplans.Thebrandoperatesmorethan570boutiquesworldwide,includingmorethan175intheUS.

• CapitalDeployment:Thecapitalfreedwilllikelybeusedtoeasethecompany’sdebtburdenandinvestinupgradesforitsonlineplatform.

WetSealWetSealannouncedinearlyJanuary2017,thatitwillbeclosingallits171stores.TheretaileralsofiledforbankruptcyinearlyFebruary.

• Reasonforstoreclosings:Decliningtraffic,changingcustomerpreferenceandincreasingpopularityofonlineshoppingarethemajorreasonsleadingtoWetSeal’sbankruptcyproceeding.

• Bankruptcy:Twoliquidatorshavebeenappointedtooverseetheliquidationprocess.Anattempttoacquirefreshcapitalorabuyerhasfailed,asreportedbytheWallStreetJournal.WetSealhadpreviouslyfiledforbankruptcyin2015,andsubsequentlywasboughtbyprivate-equityfirmVersaCapitalManagementLLCfor$7.5millionincashatthetime.

• Financialcondition:WetSealreportedlistedassetsof$10–50millionandliabilitiesof$50–100million.

AmericanApparelAmericanApparelhasbeenundergoingbankruptcyproceedings.Ithasagreedtosellitsintellectualpropertyandotherassets,whichexcludethe110stores,toGildanActivewearIncfor$88millionunderabankruptcyauction.

• Reasonforstore closings:AmericanApparel’sbankruptcy declarationisprimarilyduetodecliningsalesandthebrand’s failuretorepositionitselfinthefaceofchangingconsumertastes. Thebrand’shypersexualizedimagehaslostitsappealwith consumers.AmericanApparelpreviouslyfiledforbankruptcyin October2015.Itsufferedfromthehigh-interestdebtaccumulated duringthetenureofDovCharney,theformerCEOuntil2015.

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

• Bankruptcysale:AmericanApparelhasagreedtoselling$88millionofintellectualpropertyandotherassets,excludingits110stores,toGildanActivewearInc.Someofthestoreswillremainopenforanotherthreemonthsundera100-daylicensewithGildan.Itisunclearwhatwillhappentothestoresoncethelicenseexpires.GildandoesnothaveanyintentiontoacquireAmericanApparel’sstores.

TheLimitedTheLimitedannouncedinthefirstweekofJanuary2017,thatitwasintheprocessofclosing250stores.ItsubsequentlyfiledforbankruptcyonJanuary17,2017,andhasagreedtoastalkinghorsebidforitsintellectualpropertyandsomeotherassets.

• Reasonforstoreclosings:Slowingmalltraffic,decliningpopularityofthebrand’sofferingsandtheriseofe-commercesaleshavecontributedtoitsbankruptcy.TheLimitedexperiencedthedepartureoftwoCEOsintwomonths—DianeEllisleftinOctober2016andherreplacementalsoleftinDecember2016.

• Bankruptcysale:Anaffiliateofprivate-equityfirmSycamorePartnershasannounceda$25.75millionstalkinghorsebidforthecompany’sintellectualproperty,whichincludesitstrademarks,websiteaddressandsocialmediaaccounts.

• Long-termplanning:TheLimitediscurrentlyevaluatingstrategicalternativesforitse-commercebusinessandintellectualproperty,inadditiontoconsideringasaletoapotentialbuyer.

Figure4.USApparelRetailSales—PerformancebyChannel,2006–2016CAGR

Source:Euromonitor

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

ManagementChanges

RalphLaurenRalphLaurenannouncedonFebruary2,2017,thatStefanLarsson,PresidentandCEO,willleavethecompanyeffectivefromMay1,2017.

• Reasonfordeparture:OutgoingCEOLarssonhad“differentviewsonhowtoevolvethecreativeandconsumer-facingpartsofthebusiness”withRalphLauren,thecompany’sExecutiveChairmanandChiefCreativeOfficer.

• Replacementplan:RalphLaurenhascommencedasearchforanewCEO.Intheinterim,CFOJaneNeilsenwillleadthecompany.

• ProfileofoutgoingCEO:LarssonhasservedasthePresidentandCEOofRalphLaurensinceNovember2015andreportedtoExecutiveChairmanRalphLauren.Duringhistenure,hecutjobs,closedstores,improvedtheonlineexperienceandstreamlinedthesupplychain.PriortojoiningRalphLauren,Larsson’sbackgroundwasinbudgetapparel:heservedastheGlobalPresidentofOldNavyandH&M.

• Strategicchangesaccompanyingthemanagementchange:None.ThenewCEOisexpectedtoexecutetheWayForwardPlan,announcedinJune2016,todrivefuturegrowththroughrefocusingthebrand,evolvingtheproductandmarketing.ThenewCEOwillneedtoreversethechallengesofdiscounting,overrelianceondepartmentstoresandanagingcustomerbase,whichthebrandhasfacedinrecentyears.

Figure5.USApparel—Same-StoreSalesGrowth,2011–15

Source:Euromonitor

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

Tiffany&Co.Tiffany&Co.announcedonFebruary5,2017thatCEOFredericCumenalwouldstepdown,effectiveimmediately.ThecompanyreplaceddesigndirectorFrancescaAmfitheatrofwithReedKrakoffasChiefArtisticDirectorinJanuary,effectiveFebruary2017,andreplacedRalphNicolettiwithMarkErcegasCFOinOctober2016.

• Reasonfordeparture:Theboardisdisappointedbyrecentfinancialresultsandweakholidaysales.

• Replacementplan:TiffanyhascommencedasearchforanewCEO.ChairmanandpreviousCEOMichaelKowalskiwillserveasinterimCEO.

• ProfileofoutgoingCEO:OutgoingCEOCumenalassumedthepositionofCEOinApril2015andheldseniorroleswhenheoversawthecompany’sglobalexpansionanddevelopmentofnewcollections.PriortojoiningTiffanyin2011,CumenalheldseniorleadershippositionsatLVMHGroup,includingasPresidentandCEOofMoet&Chandon.

• Strategicchangesaccompanyingthemanagementchange:None.Thecompanyiscommittedtoitscorebusinessstrategies,whichincludeenhancingcustomerexperienceandmarketingeffectiveness,increasingtherateofnewproductofferingandoptimizingthestorenetworkandcosts.Managementalsoaffirmeditsguidanceforfiscalyear2016.TiffanyfacedchallengesonthebackofastrongUSdollarandadeclineintourismspendingacrossallregions.

Abercrombie&FitchAbercrombie&FitchannouncedonJanuary30,2017,theappointmentofWillA.SmithasChiefMarketingOfficer.OnFebruary1,thecompanymadeanotherannouncementthatthecurrentPresidentandChiefMerchandisingOfficer,FranHorowitz,hadbeenpromotedtoCEO.JoanneCrevoiserat,ExecutiveVicePresidentandCFO,wasalsopromotedtoCOOwhilecontinuinginhercurrentroles.Allappointmentsareeffectiveimmediately.

• Reasonsforappointments:Smith’sintroductionaimstostrengthenAbercrombie’sconnectionwiththecustomerandenhancethepowerandclarityofthebrandidentities.

ThepromotionofHorowitzendsatwo-yearperiodwhenthecompanywasrunbyanOfficeoftheChairman—whichincludedHorowitzandExecutiveChairmanArthurMartinez—whichwasestablishedafterthedepartureofthenCEOChristosAngelides.

• Profileofnewmanagement:SmithhasservedinseniormarketingrolesatCaleresInc.(formerlyknownasBrownShoeCompany)forthepastnineyears,assumingthepositionofChiefMarketingOfficerforFamousFootwear/BrownGroupRetailin2013.Duringhistenure,thecompanyachievedrapide-commercetrafficgains.Heledtheparentcompany’scorporaterebrandinginitiativeandrevitalizedacustomer-loyaltyprogramthatnowdeliversnearly

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

three-quartersoftheorganization’stotalannualrevenue.PriortojoiningtheFamousFootwear/BrownGroupRetail,SmithworkedforiconiccompaniessuchasKraft,AtlanticRecordsandLizClaiborne,invariousbrandandmarketingroles.

Horowitz,hasservedasPresidentandChiefMerchandisingOfficerofAbercrombie&FitchCo.,wheresheshowedstrongleadershipintheturnaroundofHollister.PriortojoiningAbercrombiein2014,HorowitzheldvariouspositionsatAnnTaylor,Loft,Express,Bloomingdale’s,BergdorfGoodman,BonwitTellerandSaksFifthAvenue.

Crevoiserat,hasbeenExecutiveVicePresidentandCFOofAbercrombie&FitchsinceMay2014,andamemberoftheOfficeoftheChairmansinceOctober2015.PriortojoiningAbercrombie,sheservedinanumberofseniormanagementrolesatKohl’sInc.,includingExecutiveVPofFinanceandExecutiveVPofMerchandisePlanningandAllocation,andheldseniorfinancepositionswithWal-MartStoresandMayDepartmentStores.

• Strategicchangesaccompanyingthemanagementchange:None.Thecompanyisdedicatedtoprovideacompelling,customer-focusedshoppingexperience.WhiletheseappointmentsreflectastructuralmanagementchangethatresultsinthedissolutionoftheOfficeoftheChairman,whichhadbeenleadingthecompanysincethedepartureoflong-timeCEOMikeJeffriesinDecember2014,theydonotaffectthecompany’scorestrategies.Alongwiththemanagementappointments,theretaileralsoannouncedthatitwouldbecutting150jobsatitscompanyheadquartersaspartofcost-reductioninitiatives.

BarneysOnFebruary2,BarneysnamedDaniellaVitaleasitsnewCEO,replacingherpredecessorMarkLee,whowilltakeonanewroleasExecutiveChairman.

• Reasonforappointment:ThesuccessionplanforVitaletobecomeCEOin2017wasformallysetoutin2012.

• Profileofnewmanagement:AformerheadofGucci,MarkLeejoinedBarneysasCEOin2010.LeerecruitedVitale,hislongtimeGuccicolleague,whenhejoinedBarneys.VitalewaselevatedtothetopjobfromherpositionasCOOoverseeingallofwomen’smerchandising,businessdevelopment,digitalstrategyandstoreoperations.ShepreviouslyworkedatGucci,GiorgioArmaniandFerragamoUSA.

• Strategicchangesaccompanyingthemanagementchange:None.Themanagementturnoverisanaturalandexpectedprocess.LeenamedVitaleashis“heirapparent”,andhadbeenmentoringheroverthepastsixyears.Thecontrollingholderofthecompany,hedge-fundmogulRichardPerry,alsoexpressedstrongconfidenceinVitale’scapacityinday-to-daymanagement.LeewillcontinuetosupportPerryattheboardlevel.

15

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

GivenchyGivenchy,ownedbyLVMHMoëtHennessyLouisVuitton,announcedonFebruary2,2017,thatCreativeDirectorRiccardoTisciwouldbeleavingafter12yearswiththebrand.

• Reasonfordeparture:Tisci’svoluntaryresignationtofocusonhis“personalinterestsandpassions”waseffectiveJanuary31,2017.ThereareunconfirmedspeculationsthathewilljoinVersace.

• Replacementplan:Givenchystatedthatasuccessorwillbeannouncedsoon.

• ProfileofoutgoingCreativeDirector:AccordingtotheNewYorkTimes,TiscitransformedGivenchyintooneofLVMH’smostsuccessfulbrands.Herevivedthebrandandwasanearlyadopterofsocialmedia.SinceTiscijoinedGivenchyin2005,thenumberofemployeesmorethantripledandstoresincreasedfrom7to72.

• Strategicchangesaccompanyingthemanagementchange:Tobeconfirmed.

CoachCoachannouncedonJanuary4,2017,thatithadappointedKevinWillsasitsCFO,effectivenolaterthanMarch2017.

• Reasonforhiring:WillswashiredtoreplacepreviousCFOJaneNielsen,whodepartedCoachforRalphLaureninAugust2016.WillswilltakeoverfrominterimCFOAndreaResnick

• ProfileofincomingCFO:Willshasalmost30yearsofexperienceinretailandfinance.HejoinsCoachfromAlixPartnersLLP,aglobalbusinessadvisoryfirm,whereheservedasManagingDirectorandCFOsinceMarch2014,andspecializedincorporateturnaround,capitalrestructuringandM&As.PriortoAlixPartners,Willsservedfor16yearsinvariousseniorleadershippositionsatSaksFifthAvenue.

• Strategicchangesaccompanyingthemanagementchange:Tobeconfirmed.Coach’sundertakingssinceCEOVictorLuistookoverin2014include:1)attemptingtoelevatebrandperception;2)appealingtomorefashion-engagedconsumers;3)launchingabroaderhigh-endcollection;and4)seekingacquisitionstobroadentheportfolio.Thecompanysawprofitgrowthforfiscalyear2016,areversalfromthedecliningsalesandstoresclosuresofthepastthreeyears.

16

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

February10,2017

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEsmePauAnalyst

MatthewLeeResearchAssistant

ZaneYangResearchAssistant

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