consumer & retail equity capital market review · 2014. 1. 21. · market review overview of...

Consumer & RetailEquity Capital Market ReviewOverview of Market Activity in the Consumer and Retail Industry

Quarterly UpdateQ4 2013

William Blair’s investment banking group combines signi icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and inancing solutions to our global base of corporate clients. We serve both publicly traded

and privately held companies, executing mergers and acquisitions, growth inancing, special situations and restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and ive continents, and was an underwriter on over 20% of all U.S. initial public offerings.

About William Blair Investment Banking

William Blair & Company

Consumer & Retail Equity Capital Market Review William Blair Consumer & Retail Equity Offerings

$500,000,000

Initial Public Offering

On File

$25,006,008

Confidentially Marketed Follow-on Offering

November 2013

$230,000,000


November 2013

$290,950,000


November 2013

$120,750,000


October 2013

$775,500,000

Follow-on Offering

September 2013

$147,857,145


August 2013

$644,000,000

Follow-on Offering

July 2013

$469,775,000

Follow-on Offering

May 2013

$498,749,250

Follow-on Offering

May 2013

$41,040,625

Follow-on Offering

May 2013

$204,067,500


April 2013

$246,047,100

Follow-on Offering

March 2013

$140,000,000

Follow-on Offering

March 2013

$240,033,072

Follow-on Offering

November 2012

$142,535,568


November 2012

$162,255,167

Follow-on Offering

October 2012

$202,330,590


August 2012

$143,261,558

Follow-on Offering

August 2012

$123,214,275


July 2012

$676,200,000

Follow-on Offering

May 2012

$142,600,000


May 2012

$388,743,210


April 2012

$895,620,000

Follow-on Offering

March 2012

$109,250,000


March 2012

$654,925,000

Follow-on Offering

March 2012

$613,231,201

Follow-on Offering

November 2011

$121,388,872


November 2011

$805,000,000


November 2011

$569,250,000

Follow-on Offering

October 2011


Consumer & Retail Equity Capital Market Review Table of Contents

Table of Contents U.S. Equity Capital Markets Update ................................................................................................................................................................................................. 1 Economic Highlights ......................................................................................................................................................................................................................... 1 Market Sentiment............................................................................................................................................................................................................................... 2 New Issue Market Overview .............................................................................................................................................................................................................. 5 Overall IPO Market Overview ....................................................................................................................................................................................................... 5 Overall Follow-on Market Overview .......................................................................................................................................................................................... 8 Consumer & Retail Sector .................................................................................................................................................................................................................. 13 Relative Performance by Consumer & Retail Sector ......................................................................................................................................................... 13 Consumer & Retail Market Movers ........................................................................................................................................................................................... 14 New Issue Activity ........................................................................................................................................................................................................................... 15 IPO Market Update .......................................................................................................................................................................................................................... 16 IPO Backlog ......................................................................................................................................................................................................................................... 18 Follow-on Market Update ............................................................................................................................................................................................................. 19 Investment Banking Team ................................................................................................................................................................................................................ 21 Equity Research Team ........................................................................................................................................................................................................................ 22 Disclosures ............................................................................................................................................................................................................................................... 23

U.S. Equity Capital Markets Update


Consumer & Retail Equity Capital Market Review 1 U.S. Equity Capital Markets Update

U.S. Equity Capital Markets Update

Economic Highlights

• U.S. equities ended the final quarter of 2013 with record gains—the biggest in more than a decade—as investors’ confidence was restored amid signs of a calmer economic climate. – The DJIA rose 9.6% since the beginning of October, to 16,576.66, and closed its best year since 1995 with a 27% gain. – The S&P 500 gained 9.9% in the final quarter, to 1,848.36, closing 2013 up 30%, which marked the index’s best performance since 1997. – The Nasdaq rallied 10.7% in the fourth quarter, to 4,176.59, posting the highest annual gain of the major indices at a startling 38%. – The Russell 2000 advanced 8.4% in the year’s final three months, to 1,163.64, bringing yearly gains to 37%. • Crude oil prices closed 2013 at $98.42 a barrel, up 7% over the prior year, on hopes for stronger demand given signs of a U.S. economic recovery. • Gold prices continued to retreat in the fourth quarter, to $1,202.30, bringing annual losses to 28% as investors sought greater gains in equities. This marked the largest annual decline since 1981 and ended a 12-year bull run for the precious metal. • The CBOE Market Volatility Index (or “VIX”) closed the quarter at 13.72, dropping 17% from October to December. For the year, the index closed below its historical mean of 20.20 on all but two days of 2013 and averaged approximately 14.2 a day, marking the lowest reading since 2006.

Market Indicators

Historical

U.S. GDP 3Q13 2Q13 1Q12 4Q12 Rates 12/31/13 12/31/12 High Low Monthly Economic Indicator 9/30/13 10/31/13 11/30/13 GDP (Q/Q) 4.1% 2.5% 1.1% 0.1% U.S. Treasury 2yr 0.4% 0.3% 9.9% 0.2% Unemployment Rate 7.2% 7.3% 7.0% U.S. Treasury 5yr 1.7% 0.7% 9.7% 0.5% Consumer Confidence Index 80.2 72.4 72.0 Historical U.S. Treasury 10yr 1.8% 3.0% 1.8% 15.8% ISM Mfg. Index 51.5 56.2 56.4 Commodities 12/31/13 12/31/12 High Low U.S. Treasury 30yr 4.0% 3.0% 10.3% 2.5% Capacity Utilization 78.3% 78.2% 79.0% Crude Oil $98.42 $91.82 $145.29 $10.42 FED Funds 0.3% 0.3% 20.0% 0.3% Housing Starts 873.0K 889.0K 1091.0K Natural Gas $4.19 $3.37 $15.38 $1.05 3mo LIBOR 0.2% 0.3% 10.6% 0.2% New Home Sales 403.0K 474.0K 464.0K Gold $1,202.30 $1,675.80 $1,891.90 $252.80 TED Spread 0.1% 0.0% 17.1% (0.0%) Existing Home Sales 5.3M 5.1M 4.9M CPI (%m/m) 0.2% (0.1%) 0.0% PPI (%m/m) (0.1%) (0.2%) (0.1%) Historical Retail Sales excl. Auto (%m/m) 1.1% 0.4% 0.3% Currencies 12/31/13 12/31/12 High Low U. of Michigan Confidence Index 5.2M 5.3M 5.6M EUR in USD 1.38 1.32 1.60 0.83 Change Non-Farm Payrolls (m/m) 175.0K 200.0K 203.0K USD in JPY 105.11 86.47 362.62 75.76 Durable Goods Orders (%m/m) 4.2% (0.7%) 3.5% GBP in USD 1.66 1.63 2.86 1.04 Industrial Production (%m/m) 0.5% 0.1% 1.1% Sources: Bloomberg, FactSet Research Systems, and William Blair & Company, L.L.C. Equity Capital Markets analysis


Consumer & Retail Equity Capital Market Review U.S. Equity Capital Markets Update 2

Market Sentiment

Indexed Performance

% Change P/E Index Current 4Q13 2013 52 Week Since '09 Low Hist. High Current Hist. High Hist. Low DOW 16,576.66 9.6% 26.5% 26.5% 153.2% 16,576.66 15.9x 26.8x 7.6x S&P 500 1,848.36 9.9% 29.6% 29.6% 173.2% 1,848.36 17.4x 22.2x 7.0x NASDAQ 4,176.59 10.7% 38.3% 38.3% 229.2% 5,048.62 R2000 1,163.64 8.4% 37.0% 37.0% 239.0% 1,163.64 Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis Volatility and Performance

Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis

Dow Jones Industrial Average S&P 500 NASDAQ Composite Russell 2000

80%90%100%110%120%130%140%

01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13

(+37.0%)(+38.3%)

(+26.5%)(+29.6%)

CBOE Volatility Index % Companies Hitting 52-Week Highs

0%5%10%15%20%25%30%35%40%

05

10152025

01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13

VIX10/24/08 - 79.1LTM High - 20.512/31/13 - 13.7


Consumer & Retail Equity Capital Market Review 3 U.S. Equity Capital Markets Update

Market Sentiment (cont.) • In the third quarter, 52% of S&P 500 companies met or exceeded revenue expectations, in line with the second quarter at 53% and an improvement over the first quarter at 47%. • The S&P 500 P/E ratio, which reflects the performance expectations of the stock market, closed the quarter at 17.4 times, which is above the long-term average of 16.4 times. • As the year came to a close, assets in money market funds totaled $2.7 trillion. • 2013 marked a big reversal in sentiment, as investors pumped money into stock mutual funds.

S&P 500 Top-Line Results

Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysisS&P 500 P/E Ratio

Sources: Bloomberg and William Blair & Company, L.L.C. Equity Capital Markets analysis

% Met or Exceeded Sales Expectations

57% 63% 65% 71% 61% 56% 67%43% 42%

65% 47% 53% 52%

0%20%40%60%80%

100%

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

S&P 500 P/E Ratio (17.4) High (29.5) Low (7.3) Average (16.4)

05101520253035

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013


Consumer & Retail Equity Capital Market Review U.S. Equity Capital Markets Update 4

Money Market Assets(1)

(1) Money market asset volume as of the end of each respective year; current value reflective through November 2013Sources: Investment Company Institute, FactSet Research Systems, and William Blair & Company, L.L.C. Equity Capital Markets analysis Equity Flows to Stock Mutual Funds(1)

(1) Values reflective of total net inflows (outflows) for each respective year; current values reflective through November 2013 Sources: Investment Company Institute, FactSet Research Systems, and William Blair & Company, L.L.C. Equity Capital Markets analysis

$0.5 $0.5 $0.5 $0.6 $0.6 $0.8 $0.9 $1.1 $1.4 $1.6 $1.8 $2.3 $2.3 $2.1 $1.9 $2.0 $2.4 $3.1 $3.8 $3.3 $2.8 $2.7 $2.7 $2.7

$0.0$1.0$2.0$3.0$4.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

($ in trillions)

Long-Only Mutual Funds ETFs

$12.8 $39.4 $78.9 $129.8 $118.9 $128.0 $218.0 $230.7 $163.1 $199.8 $351.8 $62.9 $13.8 $167.4 $230.4 $185.6 $227.7 $228.0

($80.2)

$61.4 $51.5 ($56.8)($20.3)

$305.5

($400.0)($200.0)

$0.0$200.0$400.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

($ in billions)

New Issue Market Overview


Consumer & Retail Equity Capital Market Review 5 New Issue Market Overview

New Issue Market Overview

Overall IPO Market Overview

Recent IPOs >$50m

($ in millions) Pricing Performance

Pricing Date Issuer Name Deal Value Market Value at Pricing

% Secondary Share File/Offer Offer/Current 12/17/13 AMC Entertainment Holdings Inc. $378.9 $1,710.9 0.0% In Range 14.2% 12/12/13 Cheniere Energy Partners LP Holdings LLC 720.0 4,573.6 0.0% In Range (6.3%) 12/12/13 Fidelity & Guaranty Life 190.6 964.8 0.0% In Range 11.4% 12/12/13 Nimble Storage Inc. 193.2 1,475.9 0.0% Above 115.7% 12/11/13 ARAMARK Holdings Corp. 833.8 4,596.7 22.8% In Range 31.1% 12/11/13 Hilton Worldwide Holdings Inc. 2,705.7 19,692.3 45.5% In Range 11.3% 12/11/13 Kindred Biosciences Inc. 60.4 105.3 0.0% In Range 59.6% 12/11/13 TetraLogic Pharmaceuticals Corp. 50.1 140.0 0.0% Below 36.0% 12/10/13 Autohome Inc. 152.9 1,767.4 0.0% Above 115.2% 12/02/13 Xencor Inc. 80.5 161.8 0.0% Below 66.2% 11/21/13 500.com Ltd. 86.5 376.1 0.0% Above 172.1% 11/21/13 Oxford Immunotec Global plc 74.0 196.4 0.0% Below 61.5% 11/21/13 Sungy Mobile Ltd. 90.3 364.4 0.0% In Range 83.0% 11/21/13 Vince Holding Corp. 230.0 725.3 0.0% Above 53.4% 11/20/13 Navigator Holdings Ltd. 262.2 1,051.2 24.8% In Range 41.8% 11/14/13 Relypsa Inc. 86.7 315.8 0.0% Below 127.3% 11/14/13 Zulily Inc. 291.0 2,685.4 44.5% Above 88.3% 11/13/13 Houghton Mifflin Harcourt Co. 251.9 1,679.5 100.0% Below 41.3% 11/13/13 Tandem Diabetes Care Inc. 138.0 320.7 0.0% In Range 71.8% 11/12/13 Chegg Inc. 187.5 1,079.0 4.0% Above (31.9%) Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis. Current return as of December 31, 2013.

Quarterly IPO Pricings by Year

Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis

Q1 Q2 Q3 Q4490

734526

348524 424

85 73 73 199 183 181 19326 54 139 95 105 175

0150300450600750

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Consumer & Retail Equity Capital Market Review New Issue Market Overview 6

Pricing Performance Versus Filing Range

Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis Average Secondary Share Component by Deal Value(1)

Total Offerings 54 171 167 116 60 568 Total Offerings w/ Secondary Shares 6(11%) 62(36%) 93(56%) 62(53%) 32(53%) 255(45%) (1) Data represents IPOs priced 2009 through December 31, 2013. Deal value in millions. Average secondary share percentages derived from IPOs having secondary components greater than zero only Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis

% Below Range % In Range % Above Range

43% 33% 33% 30% 33% 27% 29% 21% 25% 32% 20%40%33% 42% 55% 56% 40% 57% 42% 33% 45% 60%

57% 60% 33% 25% 15% 11% 33% 14% 37% 42% 23% 20%

0%20%40%60%80%

100%

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

13.5% 29.8% 34.7% 41.0%66.6%

38.5%0%

25%50%75%

100%

< $50 $50 - $100 $100 - $200 $200 - $500 > $500 All IPOs



2013 IPOs by Primary Sector Current IPO Backlog by Primary Sector

Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis IPO Backlog(1)

Pricings 15 7 3 9 6 5 15 4 2 7 5 9 12 20 18 15 13 20 24 22 10Filings 7 8 7 8 12 7 5 5 7 5 12 9 18 19 24 13 27 26 27 14 21Withdrawn 7 9 9 6 7 4 2 9 6 3 1 3 5 5 1 6 4 2 3 3 1(1) Backlog defined as IPOs initially filed or revised within the last 180 days; values are as of month end for each respective month Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis

7% 12%12%

31%25%

13% Business ServicesConsumerFinancialHealthcareTechnologyIndustrial

16%10%

6%32%

19%16% Business ServicesConsumerFinancialHealthcareTechnologyIndustrial

61 49 44 45 43 43 34 25 26 22 27 27 32 34 39 39 49 58 6037 44

010203040506070

04/12 05/12 06/12 07/12 08/12 09/12 10/12 11/12 12/12 01/13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13

Number of Deals



Overall Follow-on Market Overview

Select Recent Follow-ons >$50m

($ in millions) Price Change Pricing Date Issuer

Deal Value

Market Value

% Secondary Shares

Deal Value as % of Market Value

Shares Offered as % of Public Float

Deal Value as a Multiple of ADTV

File / Offer

Discount to Last Trade

Offer/ 1 Day

Shelf Take Down (Y/N) Sector Deal Subtype 12/20/13 Facebook Inc. $3,853.5 $138,528.0 61.4% 2.8% 4% 70.1x (0.9%) (0.1%) 4.9% Y Computers & Electronics Accelerated Bookbuild 12/18/13 MarkWest Energy Partners LP 317.0 10,882.9 5.0% 2.9% 3% 5.0x (3.0%) (3.0%) (0.7%) Y Utility & Energy Bought Deal

12/17/13 Global Eagle Entertainment Inc. 190.1 851.1 0.0% 22.3% 39% 13.1x (7.0%) (7.0%) 0.1% Y Telecommunications Confidentially Marketed 12/13/13 Darling International Inc. 874.0 2,364.3 0.0% 37.0% 40% 45.6x (12.4%) (5.0%) 1.5% Y Transportation Fully Marketed 12/13/13 XOMA Corp. 57.4 526.8 0.0% 10.9% 12% 10.8x (7.2%) (7.2%) 0.4% Y Healthcare Confidentially Marketed 12/12/13 AES Corp. 618.7 10,281.3 100.0% 6.0% 6% 44.4x (6.1%) (2.9%) 1.7% Y Utility & Energy Accelerated Bookbuild 12/12/13 Macquarie Infrastructure Co. LLC 128.3 2,818.4 0.0% 4.6% 5% 2.4x (2.6%) (0.3%) 1.2% Y Transportation Accelerated Bookbuild 12/11/13 American Midstream Partners LP 53.9 207.2 0.0% 26.0% 63% 2.4x (6.3%) 0.0% (2.1%) Y Utility & Energy Accelerated Bookbuild 12/11/13 Constellium NV 190.0 2,251.1 100.0% 8.4% 11% 9.0x (7.3%) (6.0%) 6.4% N Metal & Steel Fully Marketed 12/11/13 HomeAway Inc. 256.1 3,255.5 91.4% 7.9% 12% 6.6x (7.3%) (2.5%) 1.2% Y Computers & Electronics Accelerated Bookbuild 12/11/13 Pinnacle Foods Inc. 523.0 3,189.6 100.0% 16.4% 36% 19.3x (4.3%) (1.7%) (0.8%) N Food & Beverage Fully Marketed 12/11/13 RetailMeNot Inc. 187.4 1,361.6 68.1% 13.8% 40% 7.0x (14.6%) (3.5%) 1.2% N Computers & Electronics Fully Marketed 12/11/13 Scorpio Bulkers Inc. 351.0 1,033.0 0.0% 34.0% 37% NA 0.6% (4.3%) (2.6%) N Transportation Fully Marketed 12/11/13 SeaWorld Entertainment Inc. 540.0 2,760.9 100.0% 19.6% 35% 18.1x (5.7%) (0.3%) (2.0%) N Leisure & Recreation Fully Marketed 12/11/13 Taminco Corp. 200.0 1,383.8 100.0% 14.5% 15% 9.7x (5.8%) (4.0%) (3.5%) N Chemicals Fully Marketed 12/10/13 Allison Transmission Holdings Inc. 325.0 4,999.0 100.0% 6.5% 15% 11.8x (5.1%) (5.1%) (0.1%) Y Auto/Truck Bought Deal 12/10/13 EVERTEC Inc. 238.8 1,659.4 100.0% 14.4% 17% 10.5x (5.7%) (2.4%) 10.4% N Professional Services Bought Deal Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysisNote: Deal value as a multiple of ADTV is the ADTV as of the Pricing Date



Recent Follow-on Volume

Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis2013 Follow-ons Priced by Primary Sector

Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis

Fully Marketed Volume Accelerated Bookbuild Volume Bought Volume Number of Deals$207

$141 $109$148 $161

$40 $35 $36 $500100200300400500600700

$0$50$100$150$200$250

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

Number of Deals($ in billions)

2.6% 6.7%8.3%

25.4%20.7%

36.3%Business ServicesConsumerFinancialHealthcareTechnologyIndustrial



Follow-ons by Deal Subtype

Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysisPercentage of Follow-ons as a Result of Shelf Takedown


84% 74% 70% 66% 63% 67% 65% 62% 33% 25% 30% 30%4% 8% 19% 20% 17% 12% 12% 18% 51% 63% 57% 57%13% 17% 12% 14% 20% 21% 23% 20% 16% 12% 13% 13%Fully Marketed Accelerated Bookbuild Bought Deal

84% 74% 70% 66% 63% 67% 65% 62% 33% 25% 30% 30% 23% 29%

4% 8% 19% 20% 17% 12% 12% 18% 51% 63% 57% 58% 61% 52%13% 17% 12% 14% 20% 21% 23% 20% 16% 12% 13% 13% 16% 19%482 338 328 390 488 421 406 388 203 564 505 399 471 658

0%25%50%75%100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Number of Deals

% Shelf Takedown % Non Shelf Takedown

18% 44% 51% 60% 61% 58% 63% 62% 78% 88% 82% 81% 85% 75%82% 56% 49% 40% 39% 42% 37% 38% 22% 12% 18% 19% 15% 25%482 338 328 390 488 421 406 388 203 564 505 399 471 658

0%25%50%75%100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Number of Deals



Offering Size as a Percentage of Market Value

Sources: FactSet Research Systems, Dealogic, and William Blair & Company, L.L.C. Equity Capital Markets analysisOffering Size Versus Liquidity

Sources: FactSet Research Systems, Dealogic, and William Blair & Company, L.L.C. Equity Capital Markets analysis

13.3% 16.4% 16.0% 13.9% 13.5% 13.9%

0.0%5.0%10.0%15.0%20.0%25.0%

2008 2009 2010 2011 2012 2013

Shares Offered/Public Float Deal Value/ADTV $17.0% 21.6% 22.5% 20.7% 21.8% 21.3%

9.5x 14.7x 18.7x 24.5x 23.7x 22.6x

0.0x5.0x10.0x15.0x20.0x25.0x30.0x35.0x

0.0%5.0%10.0%15.0%20.0%25.0%

2008 2009 2010 2011 2012 2013



Average Secondary Share Component by Deal Value(1)

Total Offerings 205 91 123 159 80 658 Total Offerings w/ Secondary Shares 26(13%) 23(25%) 59(48%) 90(57%) 55(69%) 253(38%) (1) Data represents follow-ons priced over the last 12 months (through December 31, 2013). Deal values in millions. Average secondary share percentages derived from follow-ons having secondary components greater than zero only Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis Pricing Dynamics

Sources: FactSet Research Systems, Dealogic, and William Blair & Company, L.L.C. Equity Capital Markets analysisAftermarket Performance


88.0% 95.3% 81.1% 92.5% 96.7% 90.5%

0%25%50%75%

100%

< $50 $50 - $100 $100 - $200 $200 - $500 > $500 All FOs

Last Trade Before Filing/Offer Last Trade Before Offer/Offer

(8.6%) (9.4%)(6.9%) (6.3%) (5.2%) (5.4%)(3.4%) (4.9%) (4.4%) (3.7%) (3.7%) (3.5%)

(10%)(8%)(5%)(3%)

0%

2008 2009 2010 2011 2012 2013

Offer/3 Months Offer/6 Months

(7.5%)14.2% 8.3%

(2.2%)2.8% 7.6%

(29.4%)

19.5% 9.6%(7.0%)

6.3% 11.5%

(50%)(40%)(30%)(20%)(10%)0%10%20%

2008 2009 2010 2011 2012 2013

Consumer & Retail Sector


Consumer & Retail Equity Capital Market Review 13 Consumer & Retail Sector

Consumer & Retail Sector

Relative Performance by Consumer & Retail Sector

Median 2013 Total Returns Median Forward P/E Multiples

Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis Sources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis

51.1%43.8%

40.7%35.3%

27.3%23.3%

38.3%29.6%

26.5%

RestaurantsHardlines

Consumer ProductsBroad Assortment

Food & BeverageSoftlines

NasdaqS&P500

Dow Jones

21.5x18.6x18.3x18.2x

16.7x15.6x

20.1x15.6x

14.7x

RestaurantsHardlines

Food & BeverageConsumer Products

Broad AssortmentSoftlines

NasdaqS&P500

Dow Jones


Consumer & Retail Equity Capital Market Review Consumer & Retail Sector 14

Consumer & Retail Market Movers

U.S. Consumer & Retail Market Movers—Percent Change Fourth Quarter 2013

Positive Price Performance

Company Ticker Price % Change 4Q13 % of 52 Week High Sector The Men's Wearhouse, Inc. MW $51.08 50.0% 96.9% Specialty RetailJAKKS Pacific, Inc. JAKK $6.72 49.3% 49.2% Leisure Equipment & ProductsLaZBoy Incorporated LZB $31.00 36.5% 99.8% Household DurablesOuterwall Inc. OUTR $67.27 34.5% 93.3% Specialty RetailExpedia, Inc. EXPE $69.66 34.5% 99.9% Internet & Catalog RetailBuffalo Wild Wings, Inc. BWLD $147.20 32.4% 96.5% Hotels Restaurants & LeisureMarineMax, Inc. HZO $16.08 31.8% 94.9% Specialty RetailInterval Leisure Group, Inc. IILG $30.91 30.8% 96.2% Hotels Restaurants & LeisurePapa John's International, Inc. PZZA $45.40 29.9% 97.7% Hotels Restaurants & LeisureMonster Beverage Corporation MNST $67.77 29.7% 99.2% Beverages Deckers Outdoor Corporation DECK $84.46 28.1% 96.2% Textiles Apparel & Luxury GoodsFifth & Pacific Companies, Inc. FNP $32.07 27.6% 93.2% Textiles Apparel & Luxury GoodsHaverty Furniture Companies, Inc. HVT $31.30 27.6% 98.8% Specialty RetailThe Andersons, Inc. ANDE $89.17 27.6% 95.5% Food & Staples RetailingJarden Corporation JAH $61.35 26.8% 99.9% Household DurablesNegative Price Performance Blyth, Inc. BTH $10.88 (21.3%) 54.5% Household DurablesPerry Ellis International, Inc. PERY $15.79 (16.2%) 71.2% Textiles Apparel & Luxury GoodsSelect Comfort Corporation SCSS $21.09 (13.4%) 72.9% Specialty RetailRentACenter, Inc. RCII $33.34 (12.5%) 81.7% Specialty RetailDean Foods Company DF $17.19 (10.9%) 40.8% Food ProductsFamily Dollar Stores, Inc. FDO $64.97 (9.8%) 86.3% Multiline RetailLife Time Fitness, Inc. LTM $47.00 (8.7%) 82.5% Hotels Restaurants & LeisureFox Factory FOXF $17.62 (8.6%) 84.9% Leisure Equipment & ProductsiRobot Corporation IRBT $34.77 (7.6%) 84.6% Household DurablesRuby Tuesday, Inc. RT $6.93 (7.6%) 70.0% Hotels Restaurants & LeisureThe Marcus Corporation MCS $13.44 (7.5%) 89.6% Hotels Restaurants & LeisureZumiez Inc. ZUMZ $26.00 (5.6%) 77.6% Specialty RetailCarter's, Inc. CRI $71.79 (5.4%) 92.3% Textiles Apparel & Luxury GoodsLithia Motors, Inc. LAD $69.42 (4.9%) 92.6% Specialty RetailPetSmart, Inc. PETM $72.75 (4.6%) 94.1% Specialty RetailSources: FactSet Research Systems and William Blair & Company, L.L.C. Equity Capital Markets analysis



New Issue Activity

Equity Offerings by Segment

Sources: FactSet Research Systems, Dealogic, and William Blair & Company, L.L.C. Equity Capital Markets analysisIPOs and Follow-ons


Retail Dining Consumer Products Food and Beverage Other

10 17 18 28 221 4 6 8 188 11 5

516 9 5 5 1112 10 10 2

847 51 44 4364

010203040506070

2009 2010 2011 2012 2013

Follow-ons IPOs

39 34 32 28 448 17 12 15

2047 51 44 4364

010203040506070

2009 2010 2011 2012 2013



IPO Market Update

Select U.S. Consumer & Retail IPOs

Initial File/Offer % Change Offer/ Pricing Date Issuer

Shares/ADS Offered (mm)

Offer Price

Deal Value (mm)

Market Value (mm)

Deal Value as % Market Value % Price vs. Range Share count 1 Day

Current (12/31/13) Subsector

11/21/13 Vince Holding Corp. 11.5 $20.00 $230.0 $725.3 31.7% 11.1% Above As Filed 43.3% 53.4% Textile

11/14/13 Zulily Inc. 13.2 $22.00 $291.0 $2,685.4 10.8% 29.4% Above As Filed 71.4% 88.3% Retail

10/31/13 Container Store Group Inc. 14.4 $18.00 $258.8 $874.5 29.6% 20.0% Above As Filed 101.1% 158.9% Consumer Products 10/3/13 Potbelly Corp. 8.6 $14.00 $120.8 $391.9 30.8% 40.0% Above As Filed 119.8% 73.4% Dining &

Lodging 10/1/13 Burlington Stores Inc. 15.3 $17.00 $260.7 $1,217.8 21.4% 13.3% Above As Filed 47.1% 88.2% Retail 9/19/13 ClubCorp Holdings Inc. 20.7 $14.00 $289.8 $892.8 32.5% (17.6%) Below As Filed 3.6% 26.7% Leisure & Recreation 8/7/13 Fox Factory Holding Corp. 9.9 $15.00 $147.9 $544.8 27.1% 7.1% In Range As Filed 24.1% 17.5% Auto/Truck

7/31/13 Sprouts Farmers Markets Inc. 21.3 $18.00 $383.0 $2,585.9 14.8% 20.0% Above As Filed 122.8% 113.5% Retail 6/27/13 Noodles & Co. 6.2 $18.00 $110.9 $514.7 21.5% 28.6% Above As Filed 104.2% 99.6% Dining & Lodging 6/12/13 Coty Inc. 65.1 $17.50 $1,140.0 $6,699.5 17.0% 0.0% In Range As Filed (0.8%) (12.9%) Consumer Products 6/5/13 LightInTheBox Holding Co Ltd. 9.5 $9.50 $90.7 $465.1 19.5% 0.0% In Range As Filed 22.2% (14.8%) Retail 4/18/13 SeaWorld Entertainment Inc. 29.9 $27.00 $807.3 $2,503.9 32.2% 5.9% In Range Upsized 24.2% 6.6% Leisure & Recreation 4/16/13 Fairway Group Holdings

Corp. 15.7 $13.00 $204.1 $536.7 38.0% 18.2% Above As Filed 33.5% 39.7% Retail

3/27/13 Pinnacle Foods Inc. 33.4 $20.00 $667.0 $2,256.4 29.6% 5.3% In Range As Filed 11.1% 37.3% Food & Beverage Note: Bold rows represent William Blair deals Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis



Consumer & Retail Pricing Performance Versus Range

Note: Empty months are reflective of zero Consumer & Retail IPOs pricedSources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis Recently Withdrawn Consumer & Retail IPOs

($ in millions) Withdrawn/ Postponed Date Initial Filing Date Reason Issuer Amount Filed 09/12/13 06/24/13 Due to acquisition by Ares Management and Canada Pension Plan Investment Board. Neiman Marcus Inc. $100.0 03/29/13 05/28/10 Market Conditions Toys R Us Inc. 800.0Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis

% Below Range % In Range % Above Range

100%100%50% 67% 100%50% 33%

100% 100% 100%0%20%40%60%80%100%

Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13



IPO Backlog

Consumer & Retail IPO Backlog as Percentage of Total(1)

(1) Backlog defined as IPOs initially filed or revised within the last 180 days; values are as of quarter end for each respective quarter Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis Consumer & Retail IPO Backlog by Subsector(1)

(1) Backlog defined as IPOs initially filed or revised within the last 180 daysSources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis

Total IPO Backlog % Consumer & Retail

0%5%10%15%20%25%

050

100150

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

33% 33%33%

RetailDining & LodgingConsumer ProductsFood and BeverageOther



Follow-on Market Update

Recently Priced U.S. Consumer & Retail Follow-ons

Pricing Performance - % Change % Shares Offered Last Trade Before

Pricing Date Issuer

Shares/ADS Offered (mm) Offer Price

Deal Value (mm) Primary Secondary

Filing/ Offer

Offer/ Offer

Offer/ 12/31/13 Subsector Deal Subtype 12/13/13 RiceBran Technologies 1.7 $5.24 $9.0 100.0% 0.0% (54.4%) (4.7%) (4.8%) Food & Beverage Fully Marketed12/11/13 Pinnacle Foods Inc. 19.6 $26.75 $523.0 0.0% 100.0% (4.3%) (1.7%) 2.7% Food & Beverage Fully Marketed12/11/13 SeaWorld Entertainment Inc. 18.0 $30.00 $540.0 0.0% 100.0% (5.7%) (0.3%) (4.1%) Leisure & Recreation Fully Marketed

12/10/13 TravelCenters of America LLC 7.5 $9.25 $69.1 100.0% 0.0% (9.8%) (0.5%) 5.3% Retail Accelerated Bookbuild 12/5/13 Noodles & Co. 4.5 $39.50 $177.8 2.4% 97.6% (6.6%) (1.6%) (9.1%) Dining & Lodging Fully Marketed12/4/13 Del Frisco's Restaurant Group Inc. 6.2 $19.50 $120.8 0.0% 100.0% (8.5%) (0.9%) 20.9% Dining & Lodging Accelerated Bookbuild 11/25/13 Sprouts Farmers Markets Inc. 19.6 $37.00 $723.4 0.0% 100.0% (20.6%) (1.4%) 3.9% Retail Fully Marketed11/20/13 Spark Networks Inc. 4.1 $6.00 $24.3 0.0% 100.0% (11.0%) (11.0%) 2.7% Online

Personals Services

Accelerated Bookbuild

11/14/13 Fiesta Restaurant Group, Inc. 3.1 $46.00 $142.8 100.0% 0.0% 7.2% (2.3%) 13.6% Dining & Lodging Accelerated Bookbuild 11/13/13 Annie's Inc. 2.5 $48.08 $122.0 0.0% 100.0% (2.7%) (2.7%) (10.5%) Food & Beverage Bought Deal11/13/13 Einstein Noah Restaurant Group Inc. 2.5 $17.25 $43.1 0.0% 100.0% (3.5%) (3.5%) (15.9%) Dining & Lodging Bought Deal9/26/13 JC Penney Co Inc. 84.0 $9.65 $810.6 100.0% 0.0% (7.4%) (7.4%) (5.2%) Retail Bought Deal9/19/13 Chefs' Warehouse Inc. 5.2 $21.00 $108.7 84.4% 15.6% (7.3%) (2.6%) 38.9% Food & Beverage Fully Marketed9/18/13 Five Below Inc. 7.1 $47.00 $333.7 0.0% 100.0% (3.1%) (3.1%) (8.1%) Retail Bought Deal9/13/13 EveryWare Global Inc. 1.9 $11.50 $22.3 0.0% 100.0% (10.5%) (1.2%) (28.0%) Consumer Products Accelerated Bookbuild Note: Bold rows represent William Blair deals Sources: Dealogic and William Blair & Company, L.L.C. Equity Capital Markets analysis LTM Consumer & Retail Follow-ons Priced by Subsector


39%30%7%

25% RetailDining & LodgingConsumer ProductsFood and BeverageOther



Recent Consumer & Retail Shelf Filings(1)

($ in millions) Pricing Performance

Filing Date Issuer Shelf Value Market Value

Shelf Value as % of Market Value Shelf Day 1+ Shelf Day 5+ 12/13/13 Roundy's Inc. $243.4 $436.3 55.8% (3.9%) 1.6%11/22/13 Del Frisco's Restaurant Group Inc. 132.3 517.6 25.6% (2.4%) (3.6%)11/13/13 Delta Apparel Inc. 100.0 230.0 43.5% (0.8%) (7.6%)10/04/13 Gaiam Inc. 25.1 120.8 20.8% 1.0% 1.1%10/02/13 Zale Corp. 166.4 516.0 32.2% (6.1%) (0.6%)09/18/13 Manchester United Ltd. 791.7 2,802.8 28.2% 3.0% 3.9%07/16/13 Annie's Inc. 113.6 749.0 15.2% (0.3%) (4.7%)06/21/13 hhgregg Inc. 300.0 512.3 58.6% (6.8%) (2.7%)05/31/13 Rocky Brands Inc. 75.0 115.6 64.9% (5.2%) (8.6%)03/29/13 Einstein Noah Restaurant Group Inc. 157.7 256.6 61.4% (2.5%) (2.1%)03/26/13 Arcos Dorados Holdings Inc. 29.8 2,811.9 1.1% 1.0% (7.5%)03/18/13 Chefs' Warehouse Inc. 300.0 389.5 77.0% (1.1%) 0.8%02/26/13 MarineMax Inc. 200.0 304.2 65.7% 0.5% 4.8%01/25/13 Lakes Entertainment Inc. 50.0 86.2 58.0% 1.1% (4.7%)01/18/13 Zep Inc. 100.0 326.1 30.7% 1.8% (2.9%)01/07/13 Lululemon Athletica Inc. 2,449.8 10,372.3 23.6% (0.1%) (0.1%)11/13/12 Carrols Restaurant Group Inc. 26.8 145.8 18.4% (2.7%) (5.6%)(1) Includes SEC registered equity and universal shelf filings greater than $20 million and for companies with market capitalization greater than $25 million. Market adjusted change net of S&P 500 return Sources: FactSet Research Systems, Dealogic, and William Blair & Company, L.L.C. Equity Capital Markets analysis


Consumer & Retail Equity Capital Market Review 21 Investment Banking Team

Investment Banking Team

Consumer & Retail Investment Banking (U.S.)

Jim Bertram Managing Director, Group Head [email protected] +1 312 364 5426

Tim Carroll Managing Director [email protected] +1 312 364 8532

Adam Filkin Managing Director [email protected] +1 312 364 8077

Paul Hindsley Managing Director [email protected] +1 312 364 8576

Michael Siska Managing Director [email protected] +1 312 364 5393

Brent Smith Managing Director [email protected] +1 312 364 5392

Consumer & Retail Investment Banking (Europe)

Alexander Matthes Managing Director – Frankfurt [email protected] +49 69 509527 612

Beth Pickens Director – London [email protected] +44 20 7868 4479

Equity Capital Markets Investment Banking

Brett Paschke Managing Director, Group Head [email protected] +1 312 364 8657

Lindsay Carlson Vice President [email protected] +1 312 364 8298


Consumer & Retail Equity Capital Market Review Equity Research Team 22

Equity Research Team

Sharon Zackfia, CFA, Partner Group Head–Consumer +1 312 364 5386 Apparel and Accessories, Leisure, Restaurants BJ’s Restaurants, Inc. (BJRI) Bloomin’ Brands, Inc. (BLMN) CarMax, Inc. (KMX) Carnival Corporation (CCL) The Cheesecake Factory Incorporated (CAKE) Chipotle Mexican Grill, Inc. (CMG) Dunkin’ Brands Group, Inc. (DNKN)

Harley-Davidson, Inc. (HOG)Life Time Fitness, Inc. (LTM) lululemon athletica inc. (LULU) Panera Bread Company (PNRA) Potbelly Corporation (PBPB) Royal Caribbean Cruises Ltd. (RCL) Sonic Corp. (SONC)

Starbucks Corporation (SBUX)Tilly’s, Inc. (TLYS) Tumi Holdings, Inc. (TUMI) Under Armour, Inc. (UA) Urban Outfitters, Inc. (URBN) Zumiez Inc. (ZUMZ)

Jon Andersen, CFA, Partner +1 312 364 8697 Consumer Products Annie’s, Inc. (BNNY) AptarGroup, Inc. (ATR) Boulder Brands, Inc. (BDBD) Church & Dwight Co., Inc. (CHD) Colgate-Palmolive Company (CL) Fox Factory Holding Corporation (FOXF) Green Mountain Coffee Roasters, Inc. (GMCR)

J&J Snack Foods Corp. (JJSF)The J.M. Smucker Company (SJM) Jarden Corporation (JAH) Kellogg Company (K) Mead Johnson Nutrition Company (MJN) Perrigo Company (PRGO) Prestige Brands Holdings, Inc. (PBH)

The Procter & Gamble Company (PG)The Scotts Miracle-Gro Company (SMG) SodaStream International Ltd. (SODA) Tempur-Pedic International Inc. (TPX) TreeHouse Foods, Inc. (THS)

Daniel Hofkin +1 312 364 8965 Hardlines, Specialty Retail Bed Bath & Beyond Inc. (BBBY) Luxottica Group S.p.A. (LUX) O’Reilly Automotive, Inc. (ORLY) PetSmart, Inc. (PETM)

Regis Corporation (RGS)Restoration Hardware Holdings, Inc. (RH) Ross Stores, Inc. (ROST) Steiner Leisure Limited (STNR) The TJX Companies, Inc. (TJX)Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Williams-Sonoma, Inc. (WSM)

Mark Miller, CFA, Partner +1 312 364 8498 Broad Assortment and Hardlines, E-commerce, Health and Beauty Amazon.com, Inc. (AMZN) Blue Nile, Inc. (NILE) Cabela’s Incorporated (CAB) Costco Wholesale Corporation (COST) CVS Caremark Corporation (CVS) Dick’s Sporting Goods, Inc. (DKS) Fairway Group Holdings Corp. (FWM)

The Fresh Market, Inc. (TFM)GNC Holdings Inc. (GNC) Mattress Firm Holding Corp. (MFRM) MercadoLibre, Inc. (MELI) Natural Grocers by Vitamin Cottage, Inc. (NGVC)Target Corporation (TGT) Tractor Supply Company (TSCO)

Vitamin Shoppe, Inc. (VSI) Walgreen Co. (WAG) Wal-Mart Stores, Inc. (WMT) Whole Foods Market, Inc. (WFM) zulily, inc. (ZU)

Amy Noblin +1 415 248 2874 Apparel and Accessories Abercrombie & Fitch Co. (ANF) Coach, Inc. (COH) DSW Inc. (DSW) Francesca’s Holdings Corporation (FRAN)

Michael Kors Holdings Limited (KORS)Nordstrom, Inc. (JWN) Tiffany & Co. (TIF) Tumi Holdings, Inc. (TUMI) Vera Bradley, Inc. (VRA) Vince Holding Corp. (VNCE)


William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Services Authority ("FSA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States. This material has been approved for distribution in the United Kingdom by William Blair International Limited, and is directed only at, professional clients and eligible counterparties (as defined in COBS 3.5 and 3.6 of the FSA Handbook). This advertisement is not intended to be investment advice. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com January 21, 2014 Consumer & Retail Equity Capital Market Review 23 Disclosures

Disclosures

International

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Specialty FinanceIndustry InsightsA review of M&A activity and public market valuation in the consumer and commercial specialty finance sectors

June 2013

William Blair’s investment banking group combines significant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and financing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth financing, special situations and restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. In 2012, the investment banking group completed 76 merger-and-acquisition transactions worth more than $13.8 billion in value, involving parties in 21 countries and five continents, and was an underwriter on over 20% of all U.S. initial public offerings.

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