Taking Stock With Teens Results Presentation

Taking Stock With Teens
Results Presentation

Spring
S i 2010

Analyst Disclosures Klinefelter, Tamminga, Gikas, Munster, Olson, Miller Regan, Walkley

1. I or a household member have a financial interest in the securities of the following companies: none

2. I or a household member is an officer, director, or advisory board member of the following companies: none

3. I have received compensation within the past 12 months from the following companies : none

4. Piper Jaffray or its affiliates beneficially own 1% or more of any class of common equities of the following: none

5. The following companies have been investment banking clients of Piper Jaffray during the past 12 months: (Klinefelter) GIII, RUE; (Gikas) SCSS, SENEA;
(Munster) ACOM, LOGM; (Olson) ROVI; (Walkley) DRWI

6. Piper Jaffray expects to have the following companies as investment banking clients within the next 3 months: (Klinefelter) GIII, RUE; (Gikas) SCSS;
(Olson) ROVI; (Walkley) DRWI

7. Other material conflicts of interest for Klinefelter, Tamminga, Gikas, Kaiser, Miller-Regan or Piper Jaffray regarding companies in my universe for which I
am (we are) aware include: (Klinefelter) GIII, RUE: underwriting; (Gikas) SCSS, SENEA: underwriting; (Munster); ACOM, LOGM: underwriting;
(Olson) ROVI; (Walkley) DRWI: underwriting

8.
8 Piper Jaffray received non-investment banking securities-related compensation from the following companies during the past 12 months: (Gikas) SNDA;
non investment securities related
(Munster) DRIV, VCLK; (Walkley) COGO, QCOM

9. Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis:
(Klinefelter) CROX, CTRN, DECK GIII, HOTT, ICON, PSUN, ROST, VLCM, WTSLA, ZUMZ, (Tamminga) ANN, BBBY, CACH, CWTR, FACE, FOSL,
IPAR, KIRK, ULTA, URBN, (Munster) AAPL, ACOM, AMZN, BIDU, DRIV, EBAY, FMCN, GOOG, GSIC, IACI, KONG, LOGM, MCHX, PRTS, SINA,
SOHU, VCLK, WWWW, YHOO;(Gikas) ATVID, CLUB, CYOU, ERTS, GMCR, HAIN, JAKK, NTES, PEET, PWRD, SCSS, SENEA, SNDA, THQI,
( )
TTWO; (Miller Regan) BAGL, BJRI, BWLD, CAKE, CPKI, MSSR, PFCB, PNRA, RRGB, RUTH, SBUX, SONC; (Olson) AAPL, ADBE, ADSK, AKAM,
AVID, CSTR, CTRP, DTSI, EXPE, LLNW, NFLX, PCLN, PMTC, RNWK, ROVI, SFLY; (Walkley) ALVR, ANEN, CELL, COGO, DRWI, ERIC, GRRF,
NVTL, PALM, PWAV, QCOM, RIMM, SMSI, SPRD, SWIR

10. Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sell the securities of these
companies on a principal basis: Klinefelter) ANF, ARO, AEO, GCO, GES, GPS, JCG, JCP, KSS, PVH, RL, RUE, TGT, UA, VFC, WRC, ZQK [Tamminga]
ANN, CBK, CHS COH, EL, JWN, LTD, NWY, TLB,
ANN CBK CHS, COH EL JWN LTD NWY TLB WSM; [Gikas] BGS DLM GA GME HAS LF LTM MAT TPX ZZ; [Olson] DLB, OWW STV; [Miller
BGS, DLM, GA, GME, HAS, LF, LTM, MAT, TPX, DLB OWW,
Regan] BKC, CMG, DRI, EAT, MRT; (Walkley) CTV, MOT, NOK

2

Speaking Order
Jeff Klinefelter
•• Survey Detail
•• Spending Highlights
•• Apparel Brands & Teen Retailers Foot ear
Retailers, Footwear

Neely Tamminga
•• Parent Survey Detail
•• Beauty/Personal Care
y

Tony Gikas
•• Video Games

Mike Olson (Andrew Murphy & Nick Gallus)
•• Digital Media, Music
•• Internet/e-commerce

Nicole Miller Regan
•• Restaurants

Mike Walkley
• Wireless Technologies

3

Consumer Sector Investment Risks

Risks include, but are not limited to:

•• Reliance on k top management
l key
•• Changing consumer preferences
•• Changes in input costs and raw materials
•• Markdown risks
•• Product flow and inventory disruptions
•• Competition
•• Lack of pricing power
•• Deleveraging of fixed expenses
•• Potential Auction Rate Securities exposure
•• Foreign exchange rate risk
•• General macroeconomic uncertainty

Source: Piper Jaffray & Co.
4

Survey Detail
Surveyed teens and parents nationally to measure:
Brand Preferences Spending Trends Shopping Characteristics

THREE UNIQUE SURVEYS:

1) National School Survey
•• Classroom visit & electronic surveys of 900 teens; average age 16.6 years
•• Average HH Income $79K represents top 30% of U.S. household units

2) National Online Survey
•• On-line feedback from nearly 5,100 students; average age 16.7 years
•• Average HH Income $49K aligns more closely with U.S. median ($42K)

3) Parent Survey
•• Mail-in feedback; parent response rate of 8%; average age 46 years
•• Approx. 66% of respondents with average HH Income >$100k

5

Survey Detail

NATIONAL SCHOOL SURVEY Spring 2010 Fall 2009 Spring 2009 Fall 2008 Spring 2008 Fall 2007 Spring 2007 Fall 2006 Spring 2006
Students Surveyed - Legacy 900 1,200 600 850 670 980 600 1,000 700
Gender Breakdow n - Female to Male 48%-52% 44%-56% 46% - 54% 47% - 53% 51% - 49% 49% - 51% 58% - 42% 51% - 49% 55% - 45%
Average Age 16.6 16.3 16.3 16.2 16.4 16.6 16.6 16.4 16.6
Percentage Of Students Part-Time Employed 39% 38% 35% 44% 45% 45% 43% 50% 46%
Average Total Hours Worked Per Week 18.3 18.5 19.0 18.4 18.9 20.6 19.0 20.0 16.5
Average Household Income $79,000 $75,000 $73,000 $76,000 $77,200 $71,000 $73,000 $74,000 $72,000

NATIONAL ONLINE SURVEY Spring 2010 Fall 2009 Spring 2009 Fall 2008 Spring 2008 Fall 2007 Spring 2007 Fall 2006 Spring 2006
Students Surveyed - DECA 5,100 10,000 7,500 6,800 4,500 3,300 1,200 3,000 1,200
Gender Breakdow n - Female to Male 53%-47% 52%-48% 52%-48% 51% - 49% 52% - 48% 54% - 46% 49% - 51% 54% - 46% 53% - 47%
Average Age 16.7 16.2 16.7 16.4 17.1 16.6 16.8 16.3 16.9
Percentage Of Students Part-Time Employed 43% 39% 45% 51% 50% 51% 51% 52% 56%
Average Total Hours Worked Per Week 19.6
19 6 19.5
19 5 19.8
19 8 21.1
21 1 21.0
21 0 21.8
21 8 21.8
21 8 22.1
22 1 19.8
19 8
Average Household Income $49,200 $51,900 $51,600 $50,400 $56,700 $46,000 $51,000 $42,000 $44,000

PARENT SURVEY Spring 2010 Fall 2009 Spring 2009 Fall 2008 Spring 2008 Fall 2007 Spring 2007 Fall 2006 Spring 2006
Response Rate 8% 17% 9% 14% 11% 22% 10% 10% 33%
Average Age 46 years 47 years 47 years 46 years 47 years 46 years 46 years 46 years 46 years
% HH Income > $100 000
$100,000 66% 56% 57% 47% 51% 55% 60% 50% 69%


6

Spending Highlights
Key Takeaways

Our Spring 2010 Taking Stock with Teens survey results continue to reflect the early stages of a
discretionary recovery and fashion replenishment cycle, although ““value”” remains a key theme in
budgeting and store and brand selection for young consumers at all levels of household income.

•• Teens spend $29B/year on fashion; National School Survey $7B-$8B, Online Survey $12B-$13B
•• Spending expectations on apparel point to ““more”” vs. ““less””; fashion at 39% of budget
•• Apparel trending ahead of footwear; indicative of a new fashion cycle
pp g y
•• Teens spending less on electronics, music & movies; convergence of technologies at play
•• Budgets still tight; parent contribution increasing to partially offset employment declines
•• Specialty channel still preferred at 29% but ceding share; Internet & discount growing
•• Fast Fashion preferred for females (33% share); West Coast Brands for males (21% share)

7

Fashion Spending –– National School Survey

Fashion Spending Spring-10 Seq Chg Y/Y Chg Fall-09 Seq Chg Y/Y Chg Spring-09 Y/Y Chg Fall-08 Y/Y Chg Spring-08 Y/Y Chg
Apparel $608 -19% -2% $749 21% 4% $620 -22% $721 1% $795 -21%
Shoes $209 -5% -21% $221 -16% 2% $263 4% $217 2% $254 -6%
Accessories $116 3% -14% $113 -16% -9% $135 0% $125 0% $134 -24%
Total - All $932 -14% -8% $1,083
, 6% 2% $1,018
, -14% $1,062
, 1% $1,183
, -19%

Apparel $895 -22% -2% $1,154 27% 7% $911 -19% $1,074 7% $1,129 -13%
Shoes $243 -4% -27% $254 -24% -1% $333 9% $256 1% $305 -3%
Accessories $181 5% -19% $173 -22% -10% $223 8% $193 3% $206 -12%
Total - Fem ale $1,319 -17% -10% $1,581 8% 4% $1,467 -11% $1,524 6% $1,640 -11%

Apparel $327
$ -17% -12% $392
$ 6% 1% $370
$ -8% $389
$ -8% $404
$ -18%
Shoes $176 -8% -13% $192 -5% 7% $202 4% $180 6% $195 2%
Accessories $52 -14% -12% $60 2% 0% $59 17% $60 0% $50 -34%
Total - Male $555 -14% -12% $644 2% 2% $631 -3% $629 -3% $651 $762

8

Channel Preference –– National School Survey

SHOPPING CHANNEL PREFERENCE
40%
Spring-10 Fall-09 Spring-09 Fall-08
35%

30%

25%

20%

15%

10%

5%

0%
partment

Discount
Specialty

Majo Chain

Outlet

Internet
Ma order
ail
or

D
Dep
S

9

Spending By Category –– National School Survey

SPENDING BY PRODUCT CATEGORY
Spring-10 Fall-09 Spring-09
25%
Fashion Categories = 39%
20%

15%

10%

5%

0%


10

Apparel Brands & Teen Retailers
Brand Preferences –– National School Survey

•• Action Sports Brands at #1, 13% mindshare (v. 12% Spring ’’09, 14% Fall 09)
09, Fall’’09)
•• Forever 21- #2 up from #4 Spring ‘‘09 (+430bps), flat to Fall’’09
•• Hollister drops from #3 to #5; (100bps seq) and (500bps) Y/Y
•• Nike gains sequentially to No. 3 (9%) vs. No. 4 (8%) in Fall’’09 and No. 3 (6%) in Spring’’09
g q y ( ) ( ) ( ) p g
•• AEO steady at #4 with 7% share; Aero gains to #6 from #8 in Fall ’’09 and No. 7 in Spring’’09
•• Abercrombie falls to #7 with 3% share; down from #6 in Fall ‘‘09

•• Females prefer Forever 21 by wide margin w/ 20% share, 13ppts ahead of Hollister #2
•• Charlotte Russe, Aeropostale gain among females, Hollister cedes add’’l share

•• Males prefer Action Sports Brands Nike American Eagle Hollister
Nike, Eagle,
•• Pacific Sunwear tops West Coast Brands list with 34% share; strong fashion perception rank
•• Volcom top boardsport brand with 22% category share; Quiksilver #2, Vans #3
•• Nike at 47% & Under Armour at 25% continue to dominate athletic brand category

11

Apparel Brands & Teen Retailers –– National School Survey

TOP CLOTHING BRAND PREFERENCES - NATIONAL SCHOOL SURVEY - ALL STUDENTS

Rank Spring 2010 % Total Fall 2009 % Total Spring 2009 % Total
1 Action Sports Brands 13% Action Sports Brands 14% Action Sports Brands 12%
2 Forever 21 10% Forever 21 10% Hollister 12%
3 Nike 9% Hollister 8% Nike 6%
4 American Eagle 7% Nike 8% Forever 21 5%
5 Hollister 7% American Eagle 8% American Eagle 5%

TOP CLOTHING BRAND PREFERENCES - NATIONAL SCHOOL SURVEY - FEMALE

1 Forever 21 20% Forever 21 19% Hollister 14%
2 Hollister 7% Hollister 8% Forever 21 10%
3 American Eagle 6% American Eagle 7% Action Sports Brands 7%
4 Charlotte Russe 5% Action Sports Brands 7% American Eagle 5%
5 Aeropostale 5% Urban Outfitters 6% Nordstrom 5%

TOP CLOTHING BRAND PREFERENCES - NATIONAL SCHOOL SURVEY - MALE

2 Nike 17% Nike 15% Nike 11%
3 American Eagle 10% American Eagle 8% Hollister 9%
4 Hollister 7% Hollister 8% American Eagle 5%
5 Ralph Lauren Polo 3% Ralph Lauren Polo 4% Abercrombie & Fitch 4%

Source: Piper Jaffray & Co
Co.

12

Apparel Brands & Teen Retailers –– National Online Survey
Brand Preferences –– National Online Survey

•• American Eagle returns to #1 with 10% share; Nike #2; Action Sports Brands #3
•• Forever 21 stays at #5, however, share declines 200bps
•• Aeropostale remains at #6 with 5% share; cedes 1ppt from Fall ’’09
•• Forever 21 #1 with juniors up 400bps from last spring and 500bps from last fall

•• American Eagle still solid w/ #2 ranking for girls, gains100bps of share to 11%
•• Hollister maintains #3 rank with juniors; Aeropostale moves one rank higher to #4

•• Nike top ranked for males at 16% share; Action Sports Brands #2 (13%)
•• American Eagle Ranked #3 for males; Hollister slips to No. 5 from No. 4
•• Within Action Sports Brands males pick PacSun (27%), Hurley (9%), and LRG (7%)
•• Nike remains #1 preferred athletic brand with 47% share; UA solid #2 with 19% share

13

Apparel Brands & Teen Retailers –– National Online Survey
TOP CLOTHING BRAND PREFERENCES - NATIONAL ONLINE SURVEY - ALL STUDENTS

1 American Eagle 11% Action Sports Brands 10% American Eagle 10%
2 Nike
Nik 8% American Eagle
A i E l 10% Action S t B d
A ti Sports Brands 10%
3 Action Sports Brands 8% Nike 8% Hollister 7%
4 Hollister 7% Hollister 8% Nike 7%
5 Forever 21 6% Forever 21 7% Forever 21 5%

TOP CLOTHING BRAND PREFERENCES - NATIONAL ONLINE SURVEY - FEMALE

1 Forever 21 12% Forever 21 13% American Eagle 11%
2 American Eagle 11% American Eagle 10% Forever 21 9%
3 Hollister 8% Hollister 8% Hollister 9%
4 Aeropostale 5% Action Sports Brands 7% Action Sports Brands 7%
5 Buckle 5% Aeropostale 7% Aeropostale 6%

TOP CLOTHING BRAND PREFERENCES - NATIONAL ONLINE SURVEY - MALE

1 Nike 16% Nike 15% Nike 14%
3 American Eagle 10% American Eagle 10% American Eagle 10%
4 Ralph Lauren Polo 7% Hollister 7% Hollister 6%
5 Hollister 6% Ralph Lauren Polo 5% Ralph Lauren Polo 5%


14

Footwear Brands & Retailers
School Survey
•• Nike tops charts for nineteenth survey; 42% share
•• Vans at #2, gains 3ppts share to 10%
•• Steve madden falls from No. 3 to No. 5, UGG Australia and Converse move higher
•• Low-profile sneakers remain popular; Puma, Adidas, and DC among top ten
•• Males favor Nike, Vans, Adidas, Puma, and DC; Nike captures more than 50% share
•• Females favor Nike, U
, UGG Australia, V , Converse, and Steve Madden
, Vans, ,
•• Foot Locker and ALDO cited as favorite retailers; Journeys falls out of top ten

Online Survey
•• Nike tops total vote with 43% share vs 423% Fall’’09 and 40% Spring’’09; No. 1 male & female
vs. No
•• Vans, Converse, Puma, and UGG Australia round out top five; Vans & UGG move higher
•• Journeys ranks No. 7 as most preferred retailer; Foot Locker next in line
•• Girls favor Nike, Converse, UGG Australia, Vans, and Journeys; Payless, DSW, & Foot Locker in top 10
•• Males pick Nike (63%), Vans, Adidas, DC, and Converse; collectively account for 79% mind share
•• Journeys and Foot Locker preferred specialty retailers across genders

15

Footwear Brands & Retailers –– National School Survey

TOP FOOTWEAR BRAND PREFERENCES - NATIONAL SCHOOL SURVEY - ALL STUDENTS

Spring 2010 Fall 2009 Spring 2009 Fall 2008
Rank Brand % Total Rank Brand % Total Rank Brand % Total Rank Brand % Total
1 Nike 42% 1 Nike 35% 1 Nike 33% 1 Nike 28%
2 Vans 10% 2 Vans 7% 2 UGG Australia 7% 2 Vans 6%
3 UGG Australia
A t li 5% 3 St
Steve Madden
M dd 5% 3 VVans 7% 3 St
Steve M dd
Madden 6%
4 Converse 5% 4 UGG Australia 5% 4 Puma 5% 4 Converse 5%
5 Steve Madden 3% 5 Converse 4% 5 Steve Madden 4% 5 Adidas 4%
6 Puma 3% 6 Puma 3% 6 Foot Locker 4% 6 Puma 4%
7 Adidas 2% 7 Adidas 3% 7 Converse 4% 7 Rainbow 3%
8 Foot Locker 2% 8 Payless 2% 8 Adidas 3% 8 UGG Australia 3%
DC 2% 9 DC 2% Journeys 3% 9 Journeys 2%
10 ALDO 1% Journeys 2% 10 Payless Shoes 2% 10 Payless Shoes 2%

p y

16

Footwear Brands & Retailers –– National Online Survey

TOP FOOTWEAR BRAND PREFERENCES - NATIONAL ONLINE SURVEY - ALL STUDENTS

Spring 2010 Fall 2009 Spring 2009 Fall 2008
Rank Brand % Total Rank Brand % Total Rank Brand % Total Rank Brand % Total
1 Nike 43% 1 Nike 43% 1 Nike 40% 1 Nike 42%
2 Vans
V 5% 2 Converse
C 6% 2 Vans
V 5% 2 Vans
V 5%
3 Converse 5% 3 Vans 5% 3 Converse 4% 3 Adidas 4%
4 Puma 3% 4 Adidas 3% 4 Adidas 3% 4 Converse 3%
UGG Australia 3% 5 Puma 3% 5 DC 2% 5 Puma 3%
6 Adidas 2% 6 Journeys 2% 6 UGG Australia 2% 6 Journeys 2%
7 Journeys 2% 7 DC 2% 7 Puma 2% 7 Foot Locker 2%
8 DC 2% 8 Payless 2% 8 Journeys 2% 8 DC 2%
9 Foot Locker 2% 9 Sperry Top Sider 2% Payless 2% 9 Payless 2%
10 Sperry Top Sider 2% 10 Foot Locker 1% 10 Sperry Top Sider 2% 10 Old Navy 2%


17

Parent Survey
Key Takeaways

Polled approximately 100 parents; 66% reporting HH Income > $100K

Parents spending for teen up 31% from Spring’’09 and up 5% from Fall‘‘09
Parents spending for self up 62% from Spring’’09 and flat from Fall’’09

Parents indicate preference for department stores followed by discount and specialty.
•• Department stores increased from 26% in Fall ‘‘09 to 32% in Spring ‘‘10

Shopping frequency increases on a monthly and remains flat on a weekly basis.
•• Believe retailers have opportunity to convert on increased interest in time spent in
malls given improving traffic trends.

Parents prefer Nordstrom (22%) when shopping for themselves, followed by Macy’’s (13%).

Parents select Action Sports Brands (14%), followed by Nordstrom (11%), and Wal-mart (7%)
when shopping for their teen.

18

Parent Survey

PARENT SPENDING ON APPAREL FOR SELF

$1,800

$1,571 $1,526 $1,592
$1,600
$1,484
$1,455
$1,398
$1,400
$1,306
$1,249
$1,224 $1,203
$1,157 $ ,
$1,194
$1,200
$1 200
$1,115

$974 $968 $952
$1,000
$896
$826
$800

$600

$400

$
$200

$0
Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

Source: Piper Jaf f ray & Co.
p y

19

Parent Survey
PARENT SPENDING ON TEEN APPAREL

$1,600
$1,487
$1,413
$
$1,391
$1,400 $1,379

$1,230
$1,201
$1,200 $1,141
$1,142
$1,089 $1,085
$1,075
$1,048
$1,015
$1 015 $995
$1,000
$935 $915
$883

$800

$643
$600

$400

$200

$0
Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

Source: Piper Jaff ray & Co.

20

Beauty & Personal Care

Gen Y (Teen Girls) Snapshot:
•• Beauty spending a mixed bag: affluent teens down 9% while more middle-income teens
y g g
spending up 4% y/y——complete reversal from six months ago
•• Cover Girl No. 1 favorite brand among both National School Survey and National Online
Survey respondents; MAC, No. 2 among the more affluent teens
•• Preferred fragrance brand: Victoria s Secret (in-line with past three surveys); gained 5 pts
Victoria’’s (in line
•• She prefers to purchase skin care and cosmetics in discount stores and drug stores
•• Foundation makeup remains the most loyal cosmetics category

Baby Boomers (Female Parents) Snapshot:
•• Affluent parents spending is up 48% y/y in beauty
•• Skin care remains top of mind and top priority in her ““beauty wallet””; spending +73%
•• L'Oreal No 1 among our Parent Survey respondents; gained 5pts
L Oreal, No.
•• Preferred fragrance brand: Chanel followed by Bath & Body Works & Victoria’’s Secret with
20% share
•• Discount channel is preferred in skin care; department stores, cosmetics. Department stores
gaining share over drug stores for No. 2 position as channel for skin care
o er dr g No

21


Favorite Cosmetics Brand For Teen Girls –– National School Survey

Spring 2010 Fall 2009
Rank Favorite Cosm etics Brand % Total Rank Favorite Cosm etics Brand % Total
1 Cover Girl 20% 1 MAC 23%
2 MAC 19% 2 Cover Girl 14%
3 Maybelline 13% 3 Bare Escentuals 9%
4 Bare Escentuals 8% Maybelline 9%
5 Clinique 6% 5 Clinique 6%
6 Sep o a
Sephora 4%
% 6 Sep o a
Sephora 5%
7 Chanel 3% 7 Revlon 4%
Lancome 3% 8 Mary-Kay 3%
9 Mary-Kay 3% 9 Chanel 2%
Neutrogena 3% L'Oreal 2%
Neutrogena 2%
Rank
R k Favorite Cosm etics Brand
F it C ti B d %T t l R k F
Total Rank Favorite Cosm etics Brand
it C ti B d %T t l
Total
1 MAC 19% 1 MAC 23%
2 Cover Girl 18% 2 Cover Girl 15%
3 Maybelline 13% 3 Maybelline 11%
4 Clinique 8% 4 Clinique 8%
5 Bare Escentuals 7% 5 Bare Escentuals 7%
6 L'Oreal 4% 6 L'Oreal 4%
Sephora 4% 7 Sephora 3%
8 Mary-Kay 3% 8 Neutrogena 3%
Urban Decay 3% 9 Urban Decay 3%
10 Lancome 2% 10 Bobbi Brow n 2%
Neutrogena 2%

22


Favorite Cosmetics Brand For Teen Girls ––Online Survey
2 Maybelline 13% 2 MAC 14%
3 MAC 13% 3 Maybelline 13%
4 Bare Escentuals 7% 4 Mary-Kay 6%
5 Clinique 6% 5 Bare Escentuals 6%
6 Mary-Kay 6% 6 Clinique 5%
7 Avon 4% 7 L Oreal
L'Oreal 4%
8 L'Oreal 3% 8 Sephora 3%
9 Sephora 3% 9 Revlon 3%
10 Revlon 2% 10 Avon 3%
2 MAC 15% 2 MAC 14%
3 Maybelline 13% 3 Maybelline 12%
4 Bare Escentuals 7% 4 Clinique 7%
5 Mary-Kay 7% 5 Bare Escentuals 6%
6 Clinique 6% 6 Mary-Kay 5%
7 Avon 4% 7 L'Oreal 3%
8 L'Oreal 3% 8 Avon 3%
9 Revlon 2% 9 Revlon 3%
10 Sephora 2% 10 Sephora 2%

23


Favorite Cosmetics Brand For Parents

1 L'Oreal 15% 1 L'Oreal 10%
2 Lancome 12% 2 Clinique 9%
3 Clinique 8% Lancome 9%
Estee Lauder 8% MAC 9%
5 Bare Escentuals 7% 5 Mary Kay 7%
Cover Girl 7% 6 Bare Escentuals 7%
7 Chanel 5% 7 Cover Girl 5%
MAC 5% 8 Neutrogena 5%
Maybelline 5% 9 Maybelline 4%
10 3 brands tied for 10th 3% Revlon 4%
1 Bare Escentuals 20% 1 Maybelline 15%
2 L'Oreal 15% 2 Clinique 12%
3 Clinique 10% 3 Cover Girl 11%
4 Bobbi Brow n 7% 4 Mary Kay 7%
Lancome 7% 5 Estee Lauder 7%
Maybelline 7% L'Oreal 7%
7 Chanel 5% 7 MAC 6%
Mary-Kay 5% 8 Bare Escentuals 5%
Trish McEvoy 5% Lancome 5%
10 8 brands tied for 8th 2% 10 Almay 4%

24

Video Games
Key Takeaways:
The current cycle is clearly maturing; non-traditional gaming experiences showing promise
We estimate teens represent approximately 35% of video game players
Video game spending represents 8% of teen budgets
77% own a next-generation console; only 3% intend to buy a console in the future
Despite declining interest in the current cycle, teens remain receptive to new game experiences
p g y , p g p
New Findings:

•• 53% of teens are willing to pay for downloadable content on their console
•• 28% would download full games if possible; 46% of games would be downloaded
•• 24% are willing to pay for streaming games; 61% would pay $20/month
•• 25% of teens play games through social websites such as Facebook;
•• 38% would pay for cell phone games, 35% will buy fewer PSP/DS games
games

We do not expect a new generation of consoles during next 3-5 years:
•• Digital opportunities are growing quickly but will take time to scale; will not offset console declines NT

25

Digital Media
Key Takeaway
iTunes market share among teens remains high at 93% (flat y/y).

•• iPhone’’s popularity is rising
•• 31% of teens plan on buying an iPhone in the next 6 months (vs. 16% one year ago)
•• In the last year, market share among teens has risen from 8% to 14%
y , g

•• Apple saturating portable media player market
•• iPod has 92% market share (up slightly y/y)
•• 31% of teens intend to buy an MP3 player in the next 12 months (up y/y)

•• 34% listen to music on a cell phone (mobile music is a key opportunity)
•• iTunes share remains high (92%)
•• RealNetworks maintaining share (35%)


26

Online Movie Rentals
Key Takeaway
Netflix (NFLX) and Coinstar’’s (CSTR) Redbox kiosks are benefiting from the closing of movie
rental retail stores (Blockbuster).
( )

•• Netflix: DVD by Mail and Digital streaming
•• DVD-By-Mail: 28% of teens currently use DVD-by-Mail (up from 25% y/y)
–– 36% expect to use DVD-by-Mail in 2 years.
•• Downloads: 33% currently download movie rentals (up from 17% y/y)
–– 50% expect to download movie rentals in 2 years.

•• Redbox: Kiosks are taking share from retail stores (Blockbuster) closing
•• Kiosks: 14% currently use kiosks (up from 11% y/y).
•• Retail Stores: 72% of teens currently rent movies at retail stores, but just 57% expect to rent at retail stores
in 2 years.


27

Restaurants
Key Takeaways
•• Spending: Value-Centric Brands With Premium Attributes Most Preferred
•• Teen survey revealed that restaurant teen spend decreased down ~9% from beginning of recession began (Fall 2007)
indicating negative mix shift due to discounting
•• Conversely, online survey indicates that teen spend was slightly better than the last survey (Fall 2009), but lower than the
majority of prior surveys, illustrating the consumers’’ continued value-centric mindset when selecting a dining option
•• Sources of Influence:
•• Value continues to rank higher in recent surveys as consumers adjust to the current macroeconomic conditions
•• Taste
T t continues t rank hi h t and nutrition ranks lowest
ti to k highest d t iti k l t
•• Parents: Slightly Improved Outlook
•• Parents weekly spend at restaurants decreased significantly from prior survey, reflecting the extreme discounting prevalent
throughout the industry over the last few months
•• First time in the last three surveys, majority of parents perceived that they spent the same on dining out (instead of less)
reflecting a slightly better consumer outlook
•• Market Share:
•• Recommend QSR and premium-convenience segments over casual dining space which is supported by the survey results as
the majority of preferred brands fall within the QSR and premium convenience segments
Stocks That Benefit From Survey Results
•• Starbucks- #1 preferred brand on school and online surveys; transitioning to a portfolio company versus a single-branded growth
story prior
•• Chipotle- #2 preferred brand on school survey; brand equity continues to build lists as its geographic footprint expands
•• Darden
Darden- Olive Garden #2 preferred brand on both school and online surveys: continues to offer a compelling value proposition
leading to increased market share in casual-dining segment

28

Wireless Technology
Key Takeaways
Increasing Mix Of Smartphones , Aggressive Handset Pricing, Motorola Gaining Share

•• Increasing Mix Of Smartphones
•• 70% of survey respondents indicating their next purchase would be a smartphone.
•• Positive for Qualcomm –– compelling investment in competitive handset market.
•• Increased Emphasis On Pricing
•• Survey respondents now rate ‘‘price’’ as the #2 most important factor in their
p
purchase decision versus #3 in 2009.
• Consistent with aggressive smartphone pricing trends by carriers over last12 months
with compelling smartphones selling at sub $100 price points.
•• Motorola Gaining Share
• Apple, Blackberry & LG remain top 3 brands and this is consistent with ‘‘09 results.
• However, Motorola gained share versus 2009 and ranked #4 in 2010 versus #5 in
2009 –– Driven by popularity of Droid at Verizon (#1 seller since launch in Dec ‘‘09).

29

Analyst Certification—Jeff Klinefelter, Neely Tamminga, Mike Walkley, Mike Olson, Gene Munster, Nicole Miller Regan, Tony Gikas
The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Affiliate Disclosures: This report has been prepared by Piper Jaffray & Co. and/or its affiliates Piper Jaffray Ltd., and Piper Jaffray Asia Securities
Limited, all of which are subsidiaries of Piper Jaffray Companies (collectively Piper Jaffray). Piper Jaffray & Co. is regulated by FINRA, NYSE and the
United States Securities and Exchange Commission, and its headquarters is located at 800 Nicollet Mall, Minneapolis, MN 55402. Piper Jaffray Ltd. is
registered in England, no. 3846990, and its headquarters is located at One South Place, London, EC2M 2RB. Piper Jaffray Ltd. is authorised and
regulated by the UK Financial Services Authority (“FSA”), entered on the FSA's register, no. 191657 and is a member of the London Stock Exchange.
Piper Jaffray Asia Securities Limited is a licensed corporation regulated by the Securities and Futures Commission of Hong Kong (“SFC”), entered on
the SFC’s register, no. ABO154, and is an exchange participant of The Stock Exchange of Hong Kong Limited. Its headquarters is located at 39/F
Tower 1 Lippo Centre, 89 Queensway, Hong Kong. Disclosures in this section and in the Other Important Information section referencing Piper Jaffray
include all affiliated entities unless otherwise specified
specified.

Piper Jaffray research analysts receive compensation that is based, in part, on the firm's overall revenues, which include investment banking revenues.

Ratings and Other Definitions

Stock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 months. At times
analysts may specify a different investment horizon or may include additional investment time horizons for specific stocks. Stock performance is
measured relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at
www.piperjaffray.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no active
analyst opinion or analyst coverage, but the opinion or coverage is expected to resume. Research reports and ratings should not be relied upon as
individual investment advice. As always, an investor’s decision to buy or sell a security must depend on individual circumstances, including existing
holdings, time horizons and risk tolerance.

Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst.
Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.
Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

An industry outlook represents the analyst’s view of the industry represented by the stocks in the analyst’s coverage group. A Favorable industry
outlook generally means that the analyst expects the fundamentals and/or valuations of the industry to improve over the investment time horizon. A
Neutral industry outlook generally means that the analyst does not expect the fundamentals and/or valuations of the industry to either improve or
deteriorate meaningfully from its current state. An Unfavorable industry outlook generally means that the analyst expects the fundamentals and/or
valuations of the industry to deteriorate meaningfully over the investment time horizon.

The Alpha List consists of Overweight-rated stocks that have been selected by analysts from among their best ideas within their universe of covered
stocks, with an eye toward above-average returns over the next three to six months.

Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst
Certification, found at the following site: http://www.piperjaffray.com/researchdisclosures.

Other Important Information

The material regarding the subject company is based on data obtained from sources deemed to be reliable; it is not guaranteed as to accuracy and
does not purport to be complete. This report is solely for informational purposes and is not intended to be used as the primary basis of investment
decisions. Piper Jaffray has not assessed the suitability of the subject company for any person. Because of individual client requirements, it is not, and
it should not be construed as, advice designed to meet the particular investment needs of any investor. This report is not an offer or the solicitation of
an offer to sell or buy any security. Unless otherwise noted, the price of a security mentioned in this report is the market closing price as of the end of
the prior business day. Piper Jaffray does not maintain a predetermined schedule for publication of research and will not necessarily update this report.
Piper Jaffray policy generally prohibits research analysts from sending draft research reports to subject companies; however, it should be presumed
that the analyst(s) who authored this report has had discussions with the subject company to ensure factual accuracy prior to publication, and has had
assistance from the company in conducting diligence, including visits to company sites and meetings with company management and other
representatives.

This report is published in accordance with a conflicts management policy, which is available at http://www.piperjaffray.com/researchdisclosures.

Notice to customers: This material is not directed to, or intended for distribution to or use by, any person or entity if Piper Jaffray is prohibited or
restricted by any legislation or regulation in any jurisdiction from making it available to such person or entity. Customers in the any of the jurisdictions
where Piper Jaffray and its affiliates do business who wish to effect a transaction in the securities discussed in this report should contact their local
Piper Jaffray sales representative. Europe: This material is for the use of intended recipients only and only for distribution to professional and
institutional investors, i.e. persons who are authorized persons or exempted persons within the meaning of the Financial Services and Markets Act
2000 of the United Kingdom, or persons who have been categorized by Piper Jaffray Ltd. as professional clients under the rules of the Financial
Services Authority. Asia: This report is distributed in Hong Kong by Piper Jaffray Asia Securities Limited, which is regulated by the Hong Kong SFC.
This report is intended only for distribution to professional investors as defined in the Hong Kong Securities and Futures Ordinance and is for the use of
intended recipients only. United States: This report is distributed in the United States by Piper Jaffray & Co., member SIPC, FINRA and NYSE, Inc.,
which accepts responsibility for its contents. The securities described in this report may not have been registered under the U.S. Securities Act of 1933
and, in such case, may not be offered or sold in the United States or to U.S. persons unless they have been so registered, or an exemption from the
registration requirements is available.

This report is produced for the use of Piper Jaffray customers and may not be reproduced, re-distributed or passed to any other person or
published in whole or in part for any purpose without the written consent of Piper Jaffray. Additional information is available upon request.

© 2010 Piper Jaffray. All rights reserved.

Taking Stock With Teens Results Presentation

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (8)

Similaire à Taking Stock With Teens Results Presentation

Similaire à Taking Stock With Teens Results Presentation (20)

Plus de Andrei Marinescu

Plus de Andrei Marinescu (9)

Taking Stock With Teens Results Presentation