EMEA Fashion & Luxury market: Private Equity and

Investors Outlook 2016

Contents

i. EMEA Fashion & Luxury: Key Takeaways & Methodology Approach

ii. EMEA Fashion & Luxury: M&A Deal Monitor 2015

iii. EMEA Fashion & Luxury: Private Equity and Investors Survey 2016

iv. About Deloitte and Its Fashion & Luxury Practice

2
EMEA Fashion & Luxury: Key Takeaways (1/3)

The "EMEA Fashion & Luxury market: Private Equity and Investors Outlook 2016 survey conducted
by Deloitte Financial Advisory analyzes the main trends that, according to the interviewed investors, are
expected to characterize the performance of this industry in 2016

In general, prospects are very good for players in the Fashion & Luxury market; as a matter of fact, also
merger & acquisition deals show signs of recovery in all areas of the luxury goods industry that have
been studied
Fashion & Luxury M&A deals in 2015

In 2015, 84 Merger & Acquisition transactions were carried out in the Fashion & Luxury industry,
accounting for 61% of global deals; the average value per deal was US$ 471 million in 2015

Personal Luxury Goods were a major investment area, representing 50% of total transactions with an
average deal value of US$ 389 million

Apparel & Accessories represented a major investment sector, accounting for 32% of total deals with
an estimated average value per deal of around US$ 300 million

In 2015, the most significant acquisition transactions were carried out in the Hotels and Cosmetics &
Fragrances sectors, with an average value per deal higher than market average

In 2015, 26 deals were finalized in the Hotels sector (30% of total deals) driven also by the strong
market growth recorded over the last few years (+12% CAGR 12-15); the Hotels sector recorded the highest
average value per deal in 2015, equaling US$ ~686M

3
EMEA Fashion & Luxury: Key Takeaways (2/3)
Fashion & Luxury M&A deals in 2015 (cont.)

The main countries that recorded the highest number of deals were the U.K. (24%), France (17%) and
Italy (15%), although with a different industry focus

20 deals were carried in the U.K., of which 40% in the Apparel & Accessories sector and 35% in the
Hotels sector
14 transactions were finalized in France, mainly in the Apparel & Accessories (50%) and Cosmetics &
Fragrances (30%) sectors
60% of the deals in Italy were carried out in the Apparel & Accessories sector, whereas over 60% of
total transactions took place in the Hotels sector in Spain
Around 30% of the acquired companies reported sales above US$ 100 million, with 20% of them (i.e.
5.4% of all target companies) exceeding US$ 1B

53.6% of deals were executed by Financial Investors, of which 87% were Private Equity investors; the
remaining 46.4% of deals were carried out by Corporate investors operating in the Fashion & Luxury industry

In 2015, the Seller was a Strategic (Corporate) Player in 70% of deals, of which 60% were closed with a
Financial Bidder (Private Equity investor)

The main investment strategies were based on Growth Capital transactions (61%), mainly carried out
by Strategic Investors (51%), followed by Buyout deals (18%), mainly carried out by Private Equity funds
(80%)

Most deals finalized in 2015 were majority transactions, except for the Watches & Jewelry sector, where
70% of the finalized deals concerned minority stakes

4
EMEA Fashion & Luxury: Key Takeaways (3/3)
Fashion & Luxury Private Equity and Investors Outlook 2016

Around 80% of survey respondents own assets in the Fashion & Luxury industry characterized by a
majority stake and an average duration below 5 years
54% of respondents forecast an increase of over 5% in the Fashion & Luxury market in 2016, driven by
the positive trends predicted in the following sectors: Cosmetics & Fragrances (on the increase according to
83% of investors, with 21% expecting a double-digit growth), Apparel & Accessories (66% of investors) and
Furniture (58% of investors).
Investors forecast a decrease of over 20% in business expectations in the Watches & Jewelry, Yacht
and Private Jet sectors
The geographies where growth is expected are the Asia-Pacific region (excluding Japan), the Middle
East and North America, whereas Europe and Japan should remain stable in 2016
Investors with assets in the F&L industry anticipate increasing expectations in the Cosmetic &
Fragrances, Cars and Yacht sectors as well as in the entire European region
In 2016, 87% of investors are expected to carry out new deals in the Fashion & Luxury industry.
Personal Luxury Goods will remain attractive thanks to higher growth performance and margins than the rest
of the industry
65% of investors anticipate acquiring a majority stake in the target organization, using mainly senior
debt to fund the transaction
The average expected IRR is between 20 and 30 percentage points; exits from large-sized organizations
(in 34% of cases) are expected to yield the highest returns (i.e. > 20%)
The highest returns are expected to be achieved by large-sized organizations; 35% of investors
projecting an IRR over 20% plan to buy organizations with sales higher than US$ 100M

5
 EMEA Fashion & Luxury: Methodological Approach
M&A deal monitor PE & Investors survey Sectors covered General remarks

Main Size of M&A deals in Analysis of the current Apparel & Accessories The EMEA Fashion &
contents 2015 classified by sector portfolio of assets Watches & Jewelry Luxury market: Private
Analisys of target operating in the Equity and Investors
Cosmetics & Fragrances
company profiles reference market Outlook 2016 report
Cars summarizes the results
Analisys of investor Analysis of the main
guidelines implemented Hotels of a survey conducted
profiles
with reference to the Furniture by Deloitte on a global
Analysis of the scale that is scheduled
characteristics of deals
existing portfolio to Private Jets
create economic value to be published in mid-
carried out in EMEA Yachts 2016
Analysis of the exit Cruises
strategies forecasted for The geographical
2016 scope considered
comprises the following
Outlook and investment
regions: Europe, the
strategies for 2016 Market segments Middle East and Africa
News and reports from Online survey based on
Sources major media providers CAWI (Computer
The survey focuses on
the Premium
focused on M&A Assisted Web segments in the sector,
activities (e.g. Thomson, Interviewing) defined on the basis of
Merger Market, etc.) Interviews with quantitative (e.g. price
Private Equity investors executives operating in point) and qualitative
press releases the PE sector (e.g. interviews with
Company press releases industry experts)
parameters
Geographical
footprint EMEA scope

Primary
data level

6
Contents

i. EMEA Fashion & Luxury: Key Takeaways & Methodology approach

ii. EMEA Fashion & Luxury: M&A deal monitor 2015

iii. EMEA Fashion & Luxury: Private Equity and Investors survey 2016

iv. About Deloitte and Its Fashion & Luxury Practice

7
 EMEA Fashion & Luxury: Highlight on M&A 2015
Overview by sector

Cosmetics & Private

EMEA Hotels
Fragrances Jets

84 deals (100%) 10 deals (11.9%) 26 deals (31.0%) 4 deals (4.8%)

Relevant deals in 2015
Apparel & Watches & Month Target Bidder Value B$
Yachts Furniture
Accessories Jewelry Constellation
April Coroin ~4,4
Hotels
27 deals (32.1%) 5 deals (6.0%) 6 deals (7.1%) 6 deals (7.1%) Brookfield Ppty
June Center Parcs ~3,7
Partners

Deal overview in the main countries June Douglas Holding CVC Capital ~3,1
Partners
January Pepe Jeans M1 Group ~1,0
United Kingdom France Italy
March The Net-A-Porter YOOX SpA ~0,8
100% 100% 100%
Others Kew Green
20% 21% Others 23% Others August Metropark Hotels ~0,6
10% Yachts
Holdings
15% Furniture
20 deals 14 deals 29% Cos&Fra 13 deals Tamburi-Zignago
35% App&Acc February Hugo Boss ~0,6
(24%) (17%) (15%) Holding
62% App&Acc
50% App&Acc
35% Hotels April Roberto Cavalli Clessidra1 ~0,4

2015 2015 2015 December Kurt Geiger Cinven Partners ~0,4

Cerberus Capital
Spain Germany Rest of EMEA March LRG Holdings ~0,3
Management
100% 100% 100%
22% Others 24% Others
43% Others Wat&Jew
22% App&Acc 14%
9 deals 7 deals 21 deals 14% Private
(11%) (8%) 29% Cos&Fra (25%) Jets
56% Hotels 48%
29% Hotels Hotels

2015 2015 2015

(1) Deal finalized through the establishment of the Varenne newco 8

 Size of the Main M&A Deals
In 2015, the Fashion & Luxury industry recorded around 84 M&A deals, of
which 50% focused on Personal Luxury Goods and 31% on the Hotels sector
Number of deals in EMEA breakdown by sector (# ; %)
84
4
6
6 Other
42
Luxury
26 (50%)
markets

10
5 Personal
42
Luxury
27 (50%)
Goods

Apparel & Watches & Cosmetics & Hotels1 Yachts Furniture Private Jets Total Fashion
Accessories Jewelry Fragrances & Luxury
Breakdown
32.1% 6.0% 11.9% 31.0% 7.1% 7.1% 4.8% 100.0%
(%)

During 2015, 84 M&A transactions focused on the larger Fashion & Luxury sector were carried out in EMEA; 50% of
these deals involved Personal Luxury Goods (42 deals) companies
With 27 deals, the Apparel & Accessories sector accounted for 32% of the M&A market in 2015
Key The other luxury sectors, including hotels, accounted for 50% of the M&A market in 2015
Findings
One third of the transactions carried out during the year refers to the Hotels sector, which was supported also by the
market growth (+11.5% CAGR 12-15)
Deals were distributed as follows in the remaining sectors: Yachts 7.1% (6 deals), Furniture 7.1% (6 deals) and
Private Jets 4.8% (4 deals)
Note: The analysis includes the main M&A deals finalized in the Fashion & Luxury industry during 2015, excluding IPOs; the analysis takes into consideration also transactions
aimed at acquiring players in the Fashion & Luxury value chain as strategic suppliers and selective retailers;
(1) The analysis does not include deals for the purchase of tangible assets (real estate)
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 9
 Average Value of Main Deals by Sector
In 2015, the average value per deal equaled US$ 471M; the most sizable deals
were finalized in the Hotels (US$ 686M) and Cosmetics & Fragrances (US$
660M) sectors
Average value per deal in 2015 breakdown by sector (M$)

686
660

Avg. F&L
471M$
Avg. PLG
389M$
296

146 Personal Luxury

Goods (PLG)
55 Other Luxury
18
markets
Hotels Cosmetics & Apparel & Watches Furniture Yachts
Fragrances Accessories & Jewelry

In 2015, the most sizable acquisition deals were finalized in the Hotels and Cosmetics & Fragrances sectors, with
an average value per deal above market average
Key
Findings The average deal value in the Apparel & Accessories sector equaled US$ 296 million - i.e. 0.6 times the average
value of the whole Fashion & Luxury industry -, also as a result of the characteristics of the fashion industry, where
players are typically smaller-sized

Note: The average deal value has been calculated excluding the transactions for which no specific condition details are available; the analysis excludes some deals which
represented outliers; the reported values are a representative sample based on the available data
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases 10
 Main M&A Deals Broken Down by Country and Sector
The main countries with the highest number of deals were the U.K. (24%),
France (17%), Italy (15%), Spain (11%) and Germany (8%); each country
shows a different industry mix
Distribution of deals across industries and countries in 2015 (# ; %)
20 14 13 9 7 5 16 Tot 84
100,0% 1 1 Breakdown
2 1 2
2 1 1
1 1 Private 4
80,0% 1 1 Jets
2
5 Furniture 6
7 1
4 Yachts 6
60,0% 2
2
Hotels 26
8
2 Cosmetics & 10
40,0% 1 1 Fragrances
8 2 1 Watches & 5
1
7 Jewelry
20,0% 1
7 Apparel &
2 1 2 Accessories 27
1
1
0,0%
0,0% 20,0% 40,0% 60,0% 80,0% 100,0%
UK France Italy Spain Germany Other
Switzerland countries

Country % 24% 17% 15% 11% 8% 6% 19%

Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 11
 Average Size of Target Companies (1/2)
Around 30% of the acquired companies reported sales above US$ 100 million,
with 20% of them (i.e.5.4% of all target companies) exceeding US$ 1B
Distribution of target companies across revenue classes (%)

100.0%
68% under US$ 100M 5.4%
5.4%
10.7%
10.7%
16.1%

33.9% 17.9%

< 25- 51- 101- 251- 501- > Total Fashion

25M$ 50M$ 100M$ 250M$ 500M$ 1.000M$ 1.000M$ & Luxury

In 2015, investments in the Fashion & Luxury industry were focused mainly on smaller-sized organizations:
68% of the target companies had a turnover below US$ 100 million
Around 30% of the acquired companies reported sales above US$ 100 million
Key Only 5.4% of the total number of deals involved organizations with sales exceeding US$ 1 billion
Findings The main giant M&A deals in EMEA were as follows:
Acquisition of Coroin (deal value ~4.4B US$) and Center Parcs (~3,7B US$) in the Hotels sector
Acquisition of the Douglas perfumery chain by the CVC Capital Partners private equity fund (deal value
~3B US$)
Acquisition of the Pepe Jeans brand (deal value ~1B US$) in the Apparel & Accessories sector

Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 12
 Average Size of Target Companies (2/2)
In 2015, the average turnover reported by the acquired companies equaled
US$ 454M, with peaks of US$ 643M in the Personal Luxury Goods market

Average turnover of the acquired companies by sector (M$)

782

Avg. PLG
US$ 643M

Avg. F&L
363 US$ 454M

236 221 Personal Luxury

Goods (PLG)
67 Other Luxury
43 34
markets

Apparel & Cosmetics & Watches Hotels Furniture Private Jets Yachts
Accessories Fragrances & Jewelry

The average turnover reported by the acquired companies equaled around US$ 454M, with peaks of US$ 643M
Key in the Personal Luxury Goods market alone
Findings Large-sized target companies were concentrated in the Apparel & Accessories (avg. US$ 782M) and Cosmetics
& Fragrances (avg. US$ 363M) sectors

Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 13
 Bidder Profile: Financial & Strategic Investors
53.6% of deals were executed by Financial Investors, of which 87% were
Private Equity investors; the remaining 46.4% of deals were carried out by
Corporate investors operating in the Fashion & Luxury industry
Financial Investors Profile (%) Strategic Investors Profile (%)
100.0% 100.0% 100.0% 100.0%
6,7% Other investors 10,3% Other industries
6,7% Real Estate
12,8% Other F&L sectors1
Strategic Strategic
46,4% 46,4% Cosmetics &
investor investor 7,7% Fragrances
10,3% Luxury Holdings
10,3% Yachts
Venture Capital/
86,7%
Private Equity
23,1% Hotels
Financial Financial
53,6% 53,6%
investor investor
Apparel &
25,6%
Accessories

Bidder type Bidder sector Bidder type Bidder sector

In 2015, the main bidder in 53.6% of the executed deals was a Financial Investor, represented by a Private
Equity fund in 86.7% of cases
Key
Findings 46.4% of transactions were carried out by Strategic Investors, of which 25.6% were corporate investors
operating in the Apparel & Accessories sector, 23.1% were investors operating in the Hotels business, and
10.3% specialized in the Yachts sector
The large luxury goods groups finalized 4 major deals (10.3%)
(1) The other F&L sectors category includes the Private Jets and Furniture sectors
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 14
 Breakdown of the M&A Market by Investor Type
In 2015, 70% of the deals were executed by a Strategic (Corporate) Player on
the Seller side, of which 60% were closed in favor of a Financial (Private
Equity) Bidder
M&A market by investor type (%)

32% 54%
Sponsor to sponsor 11 (41%)
Financial seller
27 Financial bidder
45

68%

46%
Strategic seller
57 Strategic bidder
Strategic to Strategic 23 (40%) 39

Focus next chart

In 2015, 40% of the executed deals were Strategic to Sponsor transactions (34 deals); Strategic to
Key Strategic transactions accounted for around 30% of the M&A activities in the Fashion & Luxury industry
Findings Financial Sellers accounted for 30% of the deals closed mainly in favor of Strategic Bidders (around 60%)

Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases. 15
 Main Investment Strategies of Bidders
In 2015, the finalized deals were based either on a Growth Capital or a
Buyout strategy as underlying logic and were mainly aimed at the acquisition
of a majority stake
Deal breakdown by investment
strategy (%) Deal breakdown by sector and equity stake (%)
% of sample = 100 100% 100% 100% 100% 100% 100% 100% 100%
% Financial
investor 24% 26%
4.8% 44%
Growth capital 49% 67%
10.7% 4.8% Buyout 80%
1.2% 100% 100% 100% 100%
Consolidation 11% 76% 74%
56% Minority
17.9% 60.7% Turnaround 75% 33%
Majority
Recapitalisation 100%
Merger 0% Apparel Watches Cosmetics Hotels Furniture Private Yachts Total
& & Jewelry & Jets Fashion
Accessories Fragrances & Luxury

In 2015, 60.7% of the deals carried out were based on a Growth Capital strategy as underlying logic, followed by a
Buyout strategy, which was adopted in 17.9% of all transactions and by 80% of Private Equity funds
Business Consolidation strategies were used only in 11% of all deals and were mainly adopted by Strategic
Key Investors (around 90%)
Findings
Overall, 74% of all finalized transactions resulted in the acquisition of a majority stake in the target company
Bucking the general market trend, 67% of M&A transactions in the Watches & Jewelry sector were focused on
acquiring a minority stake in the target company

Note: The reported figures reflect a representative sample based on available data
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
16
Contents

i. EMEA Fashion & Luxury: Key Takeaways & Methodology approach

ii. EMEA Fashion & Luxury: M&A deal monitor 2015

iii. EMEA Fashion & Luxury: Private Equity and Investors survey 2016

iv. About Deloitte and Its Fashion & Luxury Practice

17
Profile of Survey Respondents
 Profile of Investors Participating in the Survey (1/4)
92% of survey respondents are global Private Equity Funds, of which 51%
have assets between US$ 100 and 500 million

Profile of survey respondents (%)

Other role
100.0% 100.0%
Other 7,9% 8.3%
15,2% > 1B Investment
investors1
manager Managing
500M 16.7%
21,2% director /
1B
41.7% Partner

Private
92,1%
Equity 100M
51,5%
500M

33.3%
< 100M
12,1%
Director /
Principal
Investor type Funds net
assets

92% of the investors participating in the survey are Private Equity funds, of which 51% manage assets for a total value
between US$ 100 and 500 million and 24% have assets between US$ 500M and 1B. 15% of the funds in the survey
Key have total assets exceeding US$ 1 billion
Findings
The top managers of Private Equity funds have been involved in the survey: Managing Directors & Partners (41.7%),
Directors & Principals (33.3%) and Investment Managers (16.7%)

(1) The other investors category includes: Family offices, Luxury Holding firms, Pension funds, Sovereign Wealth funds;
Source: Deloitte survey 19
 Profile of Investors Participating in the Survey (2/4)
Around 79% of investors have at least one Fashion & Luxury asset in their
investment portfolio, but only 27% of them say their AuM level is higher than
25%
Asset portfolio focus on the F&L industry (%)

100.0%

High
26.7%
(> 25% of AuM)
At least one F&L asset
in the investment portfolio

Medium
33.3%
21.1% 78.9% (5-25% of AuM)
No F&L asset in the
investment portfolio

Low
40.0%
(< 5% of AuM)1

Portfolio focus on the F&L

industry

Around 79% of respondents in EMEA say they manage at least one Fashion & Luxury asset in their
Key findings investment portfolio
Around 27% of investors say they specialize in Fashion & Luxury

(1) AuM is the acronym for Assets Under Management.

Source: Deloitte survey 20
 Profile of Investors Participating in the Survey (3/4)
The sectors in which respondents say they have most of their F&L assets are:
Apparel & Accessories (76.7%), Furniture (53.3%), Watches & Jewelry (33.3%)
and Cosmetics & Fragrances (30%)

Breakdown by investment sector of assets managed by investors (%)

(% of respondents =79)

76.7%

53.3%

33.3%
30.0%
26.7% 26.7%

Apparel & Accessories Furniture Watches & Jewelry Cosmetics & Selective Retailing Other F&L
Fragrances sectors1
77% of respondents who maintain they have at least one Fashion & Luxury asset in their portfolio concentrate
their investments in the Apparel & Accessories sector
Key
findings Among the remaining sectors, the ones in which respondents invest the most are as follows: Furniture
(53.3%), Watches & Jewelry (33.3%) and Cosmetics & Fragrances (30%)
The analysis shows that investors are focused mainly on Personal Luxury Goods companies

(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises;
Source: Deloitte survey 21
 Profile of Investors Participating in the Survey (4/4)
Investors maintain that in 73% of cases the Fashion & Luxury assets in their
portfolio have sales below US$ 100M$, whereas 20% of them own medium-
sized assets (companies with sales between US$ 100 and 250M$)

Average turnover of Fashion & Luxury assets in investors portfolios (%)

(% of respondents =79)

73%
100.0%
3.3% 3.3%

20.0%

23.3%

26.7%
23.3%

< 25 - 51 - 101 - 251 - > Total F&L

25M$ 50M$ 100M$ 250M$ 500M$ 500 M$ investors

73% of the assets in the current portfolio of investors have a turnover below US$ 100 million
Key
20% of the considered sample invests in medium-sized companies, whereas only 3.3% has stakes in large-
findings
sized organizations

Source: Deloitte survey 22

2016 Market Outlook
 Features of the Current Fashion & Luxury Portfolio
Around 80% of respondents own assets in the Fashion & Luxury industry
characterized by a majority stake and an average duration below 5 years

Equity stake and average duration of Fashion & Luxury assets (%)

100.0%
No F&L assets in the
21.1%
investment portfolio

> 5 years
Minority

70.0% 30.0% 66.7% 33.3%

At least one F&L asset in
78.9%
the investment portfolio

Majority < 5 years

Investors with F&L

assets in their
portfolio

70% of respondents maintain they have a majority stake in the Fashion & Luxury companies present in
Key their investment portfolio; this figure is in line with data concerning the number of finalized deals resulting in
Findings the acquisition of a majority stake (74%) during 2015
In most cases (66.7%), the average duration of Fashion & Luxury assets present in the current portfolio of
investors in EMEA is below 5 years

Source: Deloitte survey 24

 2016 Fashion & Luxury Market Outlook by sector
54% of respondents forecast an increase of over 5% in the Fashion & Luxury
market in 2016. The best growth expectations are observed in the Personal
Luxury Goods and Furniture sectors.
Expected market trends in 2016 - breakdown by sector (%)
(% of respondents=95)

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
9% 6% 3% 7% 6% 3% 8% 6%
21% 20%
35% Strong
45%
43% 48% 45% 40% 48% increase
52%
57% (>10%)
62% 50% Increase
9% 42% (5-10%)
30% 48% 36% Stable
41% 33% 36%
29% 43% (0-5%)
15% 23% 27%
18% 16% 11%
Decrease
6% 3% 7% 7% 9% (<0%)

Apparel & Watches & Cosmetics Selective Cars Hotels Furniture Private Yachts Cruises Total F&L
Accessories Jewelry & Retailing Jets market
Fragrances
Positive
66% 49% 82% 52% 52% 45% 58% 35% 23% 48% 54%
sentiment

54% of all respondents forecast a growth in the Fashion & Luxury market during 2016; 11% of these
respondents predict the increase will exceed 10%
Key
According to over 50% of respondents, the Cosmetics & Fragrances, Furniture, Apparel & Accessories and
findings
Cars sectors will grow by over 5%
Some difficulties are expected in the Watches & Jewelry, Yachts, Private Jets, in which according to 43%,
27% and 23% of respondents, respectively, a negative trend will develop over the next year
Source: Deloitte Survey 25
 2016 Fashion & Luxury Market Outlook by Sector
Investors with assets in the F&L industry anticipate increasing expectations in
the Cosmetic & Fragrances, Cars and Yacht sectors
Expected market trends in 2016 - breakdown by sector (%)
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
11% 5% 8% 4% 6% 4%
15%
Investors 46% 45% 37% 22%
48%
with assets 50% 44% 44% 50%
in the 56%
Fashion & 7% 69% 52%
42%
Luxury 35%
50% 39%
industry 36% 40% 35%
26% 44%
15% 19% 21% 22% 11% 11%
7% 9% 5% 8%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
14% 14% 14% 14% 11%
Investors
25% 29%
38% 43%
not 63% 29% 29% 41%
43%
operating in 25%
57%
75%
the Fashion 13% 38%
43%
29%
& Luxury 43%
industry 14%
57%
43%
39%
38% 38% 13% 13%
29% 29%
13% 14% 14% 13% 8%

Apparel & Watches Cosmetics Selective Cars Hotels Furniture Private Yachts Cruises Total F&L
Accessories & & Retailing Jets market
Jewelry Fragrances

Positive sentiment +4 (2) +10 (25) +12 +3 (23) +8 +12 +7 +2

Strong increase (>10%) Increase (5-10%) Stable (0-5%) Decrease (<0%) 26

Source: Deloitte Survey
 2016 Fashion & Luxury Market Outlook by Geographical
Area
Asia, the Middle East and North America will be the main growth markets in
2016, driving the performance of the entire industry; the trend is expected to
remain mainly stable in Europe
Expected market trends in 2016 - breakdown by geographical area (%)
(% of respondents=95)

100% 100% 100% 100% 100% 100% 100% 100%

9% 7% 6%
26% 24% 22%
Strong
43% increase
41% 59% 48% (>10%)
58%
Increase
52% 50%
55% (5-10%)
31% Stable
49%
36% (0-5%)
12% 16% 41% Decrease
33%
21% 19% 13% (<0%)
9% 12% 11%

Europe North Latin Japan Asia Middle Rest Of Total F&L

America America East the World market

European investors forecast a positive performance of geographical areas such as Asia, the Middle East and
North America in 2016; over 70% of respondents expect that growth will exceed 5% in these areas. The best
Key
performances are expected in the Asian market and in the Middle East, where around 25% of respondents
findings
predict a double-digit growth.
The trend is expected to remain mainly stable in Europe

Source: Deloitte Survey 27

 2016 Fashion & Luxury Market Outlook by Geographical
Area
Investors with assets in the F&L industry anticipate increasing expectations in
Europe
Expected market trends in 2016 - breakdown by sector (%)

100% 100% 100% 100% 100% 100% 100% 100%

12% 10% 4%
Investors 26% 20% 25% Strong
increase
with assets 52% 38% 50% 50% (>10%)
in the 56%
42% Increase
56%
Fashion & 57% (5-10%)
Luxury 33%
35% Stable
44%
industry 21% 50%
32% 12% (0-5%)
19% 17% 12% 13% 11%
4% Decrease
(<0%)
Europe North Latin Japan Asia Middle Rest Of Total F&L
America America East the World market

100% 100% 100% 100% 100% 100% 100% 100%

13% 13% 11% Strong
Investors
25%
38% increase
50%
not 63% 41% (>10%)
operating in 63% 86%
50% 75% Increase
38%
the Fashion 25% (5-10%)
39%
& Luxury 38% 13% Stable
industry 25% 25% 25% 13% 13% 14% 8% (0-5%)
Decrease
Europe North Latin Japan Asia Middle Rest Of Total F&L (<0%)
America America East the World market

Positive sentiment +39 +6 (2) +1 +1 (21) (36) +2

Source: Deloitte Survey 28

2016 Investment Strategy
 Expected Investments in F&L in 2016 (1/2)
In 2016, 87% of investors plan to carry out new transactions in the Fashion &
Luxury industry. Personal Luxury Goods will remain the most attractive target
thanks to higher growth performance and margins than the rest of the industry
Propensity to invest in Fashion & Luxury assets in 2016 and main target sectors (%)
(% of respondents=100) 78.8%
At least one
investment in F&L
48.5%
39.4%
33.3%
18.2% 15.2%
13.2% 86.8%
No investments
Apparel & Cosmetics & Furniture Selective Watches Other F&L
in F&L
Accessories Fragrances Retailing & Jewelry sectors 1
Current
investor in 85.0% 81.8% 85% 81.8% 66.7% 80%
F&L
New investor in
F&L 15.0% 18.2% 15% 18.2% 33,3% 20%

Key findings
The respondents who plan to invest in the Fashion & Luxury industry in 2016 (87% of all
respondents) will focus on the Apparel & Accessories sector (75% of respondents)
Strong investor interest also in the Cosmetics & Fragrances sector, where around 50% of the sample
plans to finalize at least one deal
The main sectors expected to attract investments over the next year include Furniture, Selective
Retailing and Watches & Jewelry; the latter attracts a large number of investors from different
industries (other than F&L) who are attracted by the increase in sales and operating margins
characterizing this sector
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises;
Source: Deloitte survey 30
 Expected Investments in F&L in 2016 (2/2)
Propensity to invest in the various F&L sectors tends to be similar among
investors with or without assets in the F&L industry

Propensity to invest in Fashion & Luxury assets in 2016 and main target sectors (%)
(% of respondents=95)
81.5%
Investors
with assets 48.1%
in the 40.7%
33.3%
Fashion &
Luxury 14.8% 14.8%
industry

Apparel & Cosmetics & Furniture Selective Watches & Jewelry Other F&L sectors 1
Accessories Fragrances Retailing

66.7%
Investors 50.0%
not
operating in 33.3% 33.3% 33.3%
the Fashion
& Luxury
16.7%
industry

Apparel & Cosmetics & Furniture Selective Watches & Jewelry Other F&L sectors 1
Accessories Fragrances Retailing

(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises;
Source: Deloitte survey 31
 Size of Potential Investments in F&L
Investments in the Apparel & Accessories sector will target large-sized
organizations in 27% of cases, whereas deals in the other sectors will focus
mainly on mid-market companies
Average sales of potential target companies breakdown by sector (%)
(% of respondents=100)

100% 100% 100% 100% 100% 100%

8% 8% 9%
4% 8% 25%
31% 33% 9%
15%
31%
45% 500 - 1B$
38% 31%
251 - 500M$
75% 101 - 250M$
67% 38%
19% 51 - 100M$
27% 27%
25 - 50M4
19% 15% < 25M$
8% 9%
Apparel & Cosmetics & Watches & Jewelry Furniture Selective Retailing Other F&L
Accessories Fragrances Sectors 1

The survey shows an investor propensity to acquire large organizations in the Apparel & Accessories sector,
which will be the main target sector in EMEA during 2016; more specifically, 27% of respondents plan to
Key invest in companies with sales over US$ 100M
findings 70% and 85% of respondents planning to carry out M&A deals in the Cosmetics & Fragrances and Furniture
sectors, respectively, will select small to medium-sized target companies with a turnover below US$ 100M

(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises;
Source: Deloitte survey 32
 Deal Characteristics: Financing Strategy
65.7% of respondents in EMEA say they will buy a stake greater than 40%,
using mainly senior debt to fund the transaction

Equity stake to be acquired in the new asset (%) Funding sources (%)
(% of respondents=100) (% of respondents=100)

100.0% 79%

21.9%

45%
43.8%
27% 24%
18.8% 12%
15.6%

0 - 20% 21 - 40% 41 - 60% > 60% Total Senior debt Shareholders Vendors notes Mezzanine Other types 1
loan or convertible financing
bonds

65.7% of transactions will result in the acquisition of a stake of more than 40% in the target company
Key Senior debt will be the main funding source for acquisition deals in the Fashion & Luxury industry in EMEA
findings The other main funding sources mentioned by investors include also Shareholders loans (45%), Vendors notes
or convertible bonds (27%), and Mezzanine Financing (24%)

(1) The other types category includes: Junior Debt, Unitranche and Equity;
Source: Deloitte survey 33
 Return Expected From New Investments (1/2)
The IRR expected from new investments in the Fashion & Luxury industry is
between 20% and 30%; large companies are expected to be those offering the
most profitable exits (average return >20%)

Internal Return Rate expected from new F&L investments breakdown by sector (%)
(% of respondents=100)
100% 100% 100% 100% 100% 100%
> 30% 8% 13% 8% 9%
17%
40%
46%
21-30% 65% 64%
69%
67%

60%
46%
< 20% 27% 27%
19% 17%

Apparel Cosmetics & Watches Furniture Selective retailing Other F&L

& Accessories Fragrances & Jewelry sectors 1

On average, European investors expect the new investments in the Fashion & Luxury industry to have an IRR
between 21% and 30%. The best performing sector is expected to be Watches & Jewelry, for which around 20%
Key
of respondents forecast an IRR greater than 30%
findings
The highest returns are expected from large-sized organizations; as a matter of fact, around 35% of investments
with an IRR above 20% will be made in companies with sales above US$ 100M

(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises;
Source: Deloitte survey 34
 Return Expected From New Investments (2/2)
The highest returns are expected from large-sized organizations; 35% of the
investors who forecast an IRR above 20% plan to invest in companies with
sales above US$ 100M
Internal Return Rate expected from new F&L investments breakdown by target company
size (%)
(% of respondents=100)

30.3% 69.7%
100%
10.0% 8.7%
4.3%
Turnover size of target company (M$)

75% 21.7%
40-0%

50% 26.1%

500 - 1B$
30.0%
251 - 500M$
21.7%
25% 101 - 250M$
51 - 100M$
20.0% 25 - 50M$
17.4%
< 25M$
0%
< 20% > 20%
Expected IRR (%)

Source: Deloitte survey 35

Contents

i. EMEA Fashion & Luxury: Key Takeaways

ii. EMEA Fashion & Luxury: M&A deal monitor 2015

iii. EMEA Fashion & Luxury: Private Equity and Investors survey 2016

iv. About Deloitte and Its Fashion & Luxury Practice

36
Deloitte EMEA Fashion & Luxury Center of Excellence

A Network of 65 cross-functional Subject Matter Experts (SME) with competence in the Fashion & Luxury industry able to suit
diverse client needs.

Countries involved

Main Objective
Cross-border cooperation to leverage on specific local expertise to deliver high level services to Fashion & Luxury clients and
targets across Europe.

Our Top Offerings

Core business transformation & Global retail Transformation Corporate Finance Advisory
CRM & Digital Transformation Strategy & Business Planning
Marketing & Sales Strategy Operations Transaction Services
Contract Risk and Compliance Forensic
Risk Analytics Transfer prices supply chain
Internal Controls Custom duties/vat/logistic tax issues supply chain
Internal Audit Services Data privacy
Sustainability Personal planning for private family

37
Deloitte - Contacts

Deloitte Fashion & Luxury Leaders Deloitte Financial Advisory contacts

EMEA Fashion & Luxury Leader France Spain

Patrizia Arienti Claire Deguerry Roberto Martinez Roldan
parienti@deloitte.it cdeguerry@deloitte.fr rmartinezroldan@deloitte.es

Germany Switzerland
EMEA Country Leaders Karsten Hollasch Howard Da Silva
France Switzerland Khollasch@deloitte.de hdasilva@deloitte.ch
Benedicte Sabadie Karine szegedi
bsabadiefaure@deliotte.fr kszegedi@deloitte.ch Italy UK
Elio Milantoni Richard Lloyd-Owen
Germany The Netherlands emilantoni@deloitte.it rlloydowen@deloitte.co.uk
Karsten Hollasch Victor Hoong Tommaso Nastasi Mark Pacitti
Khollasch@deloitte.de vhoong@deloitte.nl tnastasi@deloitte.it Mpacitti@deloitte.co.uk

Italy Turkey
Patrizia Arienti Hakan Gol
parienti@deloitte.it hgol@deloitte.com

Spain UK
Victoria Lopez Tellez Nick Pope
vlopeztellez@deloitte.es nipope@deloitte.co.uk
Juan Jose Peso
jpeso@daemonquest.com

38
EMEA Fashion & Luxury: Glossary

Main Terms and Abbreviations

Personal Luxury Personal Luxury Goods include the following

Goods sectors: Apparel & Accessories, Cosmetics &
Fragrances and Watches & Jewelry

F&L Abbreviation for Fashion & Luxury

App&Acc Abbreviation for Apparel & Accessories

Cos&Fra Abbreviation for Cosmetics & Fragrances

Wat&Jew Abbreviation for Watches & Jewelry

PLG Acronym for Personal Luxury Goods

IRR Acronym for Internal Return Rate

PE Acronym for Private Equity

39
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