Industry Observations June 30, Retail Industry

Transcription

1 Industry Observations June 30, 2018 Retail Industry

2 Select Retail Public Company Industry Data (USD in millions, except per share data) Market Data Operating Data Forward Estimates Company Name Ticker Price at 06/30/18 % of 52 Week High Equity Value Enterprise Value Debt / Total Capital Total Assets CY 2017 Estimate CY 2017 Estimate Department Stores Dillard's, Inc. DDS $ % $2, $2, % $3, $6, $ $6, $ J. C. Penney Company, Inc. JCP $ % $ $4, % $8, $12, $ $12, $ Kohl's Corporation KSS $ % $12, $14, % $12, $19, $2, $19, $2, Macy's, Inc. M $ % $11, $15, % $19, $25, $2, $24, $2, Nordstrom, Inc. JWN $ % $8, $10, % $8, $15, $1, $15, $1, Ross Stores, Inc. ROST $ % $31, $31, % $6, $14, $2, $14, $2, The TJX Companies, Inc. TJX $ % $59, $58, % $14, $36, $4, $38, $4, General Merchandising Big Lots, Inc. BIG $ % $1, $1, % $1, $5, $ $5, $ Dollar General Corporation DG $ % $26, $28, % $12, $23, $2, $25, $2, Dollar Tree, Inc. DLTR $ % $20, $24, % $15, $22, $2, $22, $2, Macy's, Inc. FDO $ % $11, $15, % $19, $25, $2, $24, $2, Five Below, Inc. FIVE $ % $11, $5, % $ $1, $ $1, $ Target Corporation TGT $ % $40, $53, % $38, $72, $6, $73, $6, Tuesday Morning Corporation TUES $ % $ $ % $ $ $3.84 $1, $15.98 Notes: (latest twelve months); Enterprise Value (market capitalization less total cash and short-term investments plus short-term borrowings and total long-term debt); (earnings before interest, taxes, depreciation and amortization) Source: Capital IQ The material contained in this publication is meant to provide general information regarding valuation topics. This publication does not constitute investment advice with respect to the securities of any company discussed herein, is not intended to provide information upon which to base an investment decision, and should not be construed as such. Professional advice should be obtained before taking any action based on the information contained herein. Publicly available information utilized in this publication has been obtained from sources deemed to be reliable. Houlihan does not guarantee the accuracy or completeness of the information provided within this publication. The material presented reflects information known to the authors at the time this publication was written and this information is subject to change. Houlihan Capital 2

3 Select Retail Public Company Industry Data (USD in millions, except per share data) Market Data Operating Data Forward Estimates Company Name Ticker Price at 06/30/18 % of 52 Week High Equity Value Enterprise Value Debt / Total Capital Total Assets CY 2017 Estimate CY 2017 Estimate Clothing and Apparel Abercrombie & Fitch Co. ANF $ % $1, $1, % $2, $3, $ $3, $ American Eagle Outfitters, Inc. AEO $ % $4, $3, % $1, $3, $ $3, $ Ansell Limited ANN $ % $2, $2, % $2, $1, $ $1, $ Ascena Retail Group, Inc. ASNA $ % $ $2, % $3, $6, $ $6, $ Destination XL Group, Inc. DXLG $ % $ $ % $ $ $19.71 $ $23.27 DSW Inc. DSW $ % $2, $1, % $1, $2, $ $2, $ Express, Inc. EXPR $ % $ $ % $1, $2, $ $2, $ Foot Locker, Inc. FL $ % $6, $5, % $3, $7, $ $7, $ The Gap, Inc. GPS $ % $12, $11, % $7, $16, $1, $16, $1, Guess?, Inc. GES $ % $1, $1, % $1, $2, $ $2, $ L Brands, Inc. LTD $ % $8, $13, % $7, $12, $2, $13, $1, Tilly's, Inc. TLYS $ % $ $ % $ $ $50.01 $ $55.67 Urban Outfitters, Inc. URBN $ % $4, $4, % $2, $3, $ $3, $ Zumiez Inc. ZUMZ $ % $ $ % $ $ $82.48 $ $82.65 Notes: (latest twelve months); Enterprise Value (market capitalization less total cash and short-term investments plus short-term borrowings and total long-term debt); (earnings before interest, taxes, depreciation and amortization) Source: Capital IQ Houlihan Capital 3

4 Select Retail Public Company Valuation Metrics (USD in millions, except per share data) Company Name Ticker On Assets On Equity Operating Statistics On Capital Growth Growth Margin TEV/ Trading Multiples TEV/ TEV/ CY 2018 TEV/ CY 2018 Department Stores Dillard's, Inc. DDS 4.3% 14.0% 6.9% 2.0% -10.1% 7.7% 0.5x 0.5x 6.4x 6.0x J. C. Penney Company, Inc. JCP 2.2% -0.6% 3.3% -1.0% -4.8% 7.0% 0.4x 0.4x 5.7x 5.6x Kohl's Corporation KSS 7.0% 16.8% 9.7% 2.4% 4.8% 12.7% 0.8x 0.8x 6.3x 6.2x Macy's, Inc. M 5.2% 31.5% 8.9% -1.9% 1.4% 10.4% 0.6x 0.6x 6.1x 5.7x Nordstrom, Inc. JWN 7.3% 52.8% 16.1% 5.5% -5.7% 10.2% 0.7x 0.7x 6.5x 6.7x Ross Stores, Inc. ROST 22.6% 49.4% 39.0% 10.2% 12.8% 16.7% 2.2x 2.1x 12.9x 13.1x The TJX Companies, Inc. TJX 19.2% 56.8% 35.9% 10.0% 7.1% 13.2% 1.6x 1.5x 12.1x 11.9x Mean 9.7% 31.5% 17.1% 3.9% 0.8% 11.1% 1.0x 0.9x 8.0x 7.9x Median 7.0% 31.5% 9.7% 2.4% 1.4% 10.4% 0.7x 0.7x 6.4x 6.2x General Merchandising Big Lots, Inc. BIG 10.1% 25.3% 20.5% 1.2% -1.7% 7.1% 0.3x 0.3x 4.8x 4.7x Dollar General Corporation DG 10.5% 27.6% 14.4% 7.4% -0.1% 10.2% 1.2x 1.1x 11.8x 11.0x Dollar Tree, Inc. DLTR 8.1% 25.8% 10.6% 7.6% 15.7% 11.8% 1.1x 1.1x 9.3x 9.8x Macy's, Inc. FDO 5.2% 31.5% 8.9% -1.9% 1.4% 10.4% 0.6x 0.6x 6.1x 5.7x Five Below, Inc. FIVE 16.4% 28.2% 25.7% 28.9% 42.3% 15.2% 3.8x 3.5x 25.2x 24.0x Target Corporation TGT 7.0% 26.8% 11.0% 4.2% -5.6% 9.4% 0.7x 0.7x 7.8x 8.2x Tuesday Morning Corporation TUES -4.6% -14.3% -7.3% 3.5% N/A -0.4% 0.2x 0.2x -44.9x 10.1x Mean 7.5% 21.5% 12.0% 7.3% 8.7% 9.1% 1.1x 1.1x 2.9x 10.5x Median 8.1% 26.8% 11.0% 4.2% 0.7% 10.2% 0.7x 0.7x 7.8x 9.8x Notes: (latest twelve months); NTM (next twelve months); (earnings before interest, taxes, depreciation and amortization); TEV (total enterprise value) Source: Capital IQ Houlihan Capital 4

5 Select Retail Public Company Valuation Metrics (USD in millions, except per share data) Company Name Ticker On Assets On Equity Operating Statistics On Capital Growth Growth Margin TEV/ Trading Multiples TEV/ TEV/ CY 2018 TEV/ CY 2018 Clothing and Apparel Abercrombie & Fitch Co. ANF 3.6% 2.5% 5.2% 7.9% 75.2% 8.9% 0.4x 0.4x 4.3x 4.7x American Eagle Outfitters, Inc. AEO 12.7% 18.8% 18.3% 6.5% 1.9% 13.1% 1.0x 0.9x 7.5x 7.2x Ascena Retail Group, Inc. ASNA 1.9% -11.1% 2.9% -4.9% -15.8% 7.6% 0.3x 1.4x 4.6x 8.6x Ansell Limited ANN 4.4% 9.9% 5.4% 16.3% -12.9% 13.9% 1.9x 0.3x 13.9x 4.5x Destination XL Group, Inc. DXLG -2.6% -21.2% -4.6% 5.3% -23.4% 4.2% 0.4x 0.4x 8.8x 7.5x DSW Inc. DSW 7.7% 7.2% 11.7% 3.6% 1.6% 9.1% 0.6x 0.7x 7.0x 7.3x Express, Inc. EXPR 3.1% 3.6% 5.1% -1.0% -11.3% 6.8% 0.3x 0.3x 3.9x 4.1x Foot Locker, Inc. FL 12.0% 10.0% 16.7% 0.3% -18.3% 11.9% 0.7x 0.7x 5.7x 5.7x The Gap, Inc. GPS 11.6% 28.7% 20.2% 4.4% -5.7% 12.1% 0.8x 0.7x 6.4x 5.9x Guess?, Inc. GES 4.0% -0.4% 6.4% 10.7% 27.5% 6.7% 0.6x 0.6x 9.6x 8.7x L Brands, Inc. LTD 13.4% NM 21.5% 3.4% -7.3% 17.6% 1.2x 1.1x 6.7x 7.0x Tilly's, Inc. TLYS 6.3% 9.7% 10.0% 1.7% 4.4% 8.6% 0.6x 0.6x 6.8x 5.9x Urban Outfitters, Inc. URBN 9.6% 10.3% 14.2% 4.7% -3.5% 11.5% 1.2x 1.1x 10.2x 8.8x Zumiez Inc. ZUMZ 7.3% 8.7% 10.4% 12.8% 23.7% 8.7% 0.6x 0.4x 6.4x 5.2x Mean 6.8% 5.9% 10.2% 5.1% 2.6% 10.0% 0.7x 0.7x 7.3x 6.5x Median 6.8% 8.7% 10.2% 4.5% -4.6% 9.0% 0.6x 0.6x 6.7x 6.4x Notes: (latest twelve months); NTM (next twelve months); (earnings before interest, taxes, depreciation and amortization); TEV (total enterprise value) Source: Capital IQ Houlihan Capital 5

6 Retail Public Company Equity Performance 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% % % Department Stores Clothing and Apparel S&P 500 General Merchandising Dow Jones Industrial Average Note: The indices are derived from the equity performance of the previously listed companies. Source: Capital IQ Houlihan Capital 6

7 Recent M&A Activity in the Retail Industry June 30, 2017 to June 30, 2018 (USD in millions) Close Date Target Acquirer Target Company Primary Industry Implied Enterprise Value 6/22/2018 Relish Labs LLC The Kroger Co. Specialty Stores $ /18/2018 The Finish Line, Inc. JD Sports Fashion plc Apparel Retail $ /16/2018 Nissan of Bradenton Garber Automotive Group Automotive Retail $9.05 6/29/2018 Assets of Sigel's Beverages, L.P. Twin Liquors L.P. Distributors $1.42 6/29/2018 HALO Branded Solutions, Inc. TPG Growth Distributors NA 6/28/ Convenience Stores of Fresh Start Convenience Stores Yesway Automotive Retail NA 6/27/2018 Ellsworth Builders Supply, Inc. Hammond Lumber Company Home Improvement Retail NA 6/25/ New Stores In Kentucky, Indiana, And Illinois MadVapes LLC Specialty Stores NA 6/25/2018 DeFoor Acoustical, Inc. L&W Supply Corporation Distributors NA 6/25/2018 Three Franchises Of Shortline Automotive Group Schomp Automotive Group Automotive Retail NA 6/20/2018 EdgiLife Media, Inc. Awesome Office, Inc. Internet and Direct Marketing NA 6/20/2018 Assets of The USA Savings Club, LLC Xalles Holdings Inc. Internet and Direct Marketing NA 6/20/2018 Forget-Me-Not-Florist N/A Specialty Stores NA 6/19/2018 DV8 Offroad Drake Automotive Group, Inc. Internet and Direct Marketing NA 6/18/2018 Wilsonville Toyota and Subaru Alpha Auto Group Automotive Retail NA 6/15/2018 Circle Bolt & Nut Company Inc. Optimas OE Solutions Holding LLC Distributors NA 6/14/2018 Endurance House International LLC PLAYTRI Franchising LLC Specialty Stores NA 6/14/2018 trade associates group, ltd. C & F Enterprises Inc. Distributors NA 6/13/2018 One Stop Food Stores, Inc GPM Investments, LLC Automotive Retail NA 6/12/2018 All Assets of Central Coast Garden and Farm Supply GrowGeneration Corp. Home Improvement Retail NA 6/8/2018 Broad River Retail N/A Home Furnishing Retail NA 6/7/2018 Two Locations of Cahall Brothers, Inc. JD Equipment, Inc. Automotive Retail NA 6/4/2018 Auto-Rain Supply, Inc. SiteOne Landscape Supply, Inc. Distributors NA 6/4/2018 Heartland Mobility, LLC Superior Van & Mobility LLC Automotive Retail NA 6/4/2018 R & K Building Supplies, Inc. US LBM Holdings, Inc. Distributors NA 6/4/2018 Flip Flop Shops Inc. Bearpaw Holdings, LLC Apparel Retail NA 6/1/2018 Commercial Tire Retread Plant in Bowling Green, Ohio TravelCenters of America LLC Automotive Retail NA 5/25/2018 Nalley Toyota Union City Asbury Automotive Group, Inc. Automotive Retail NA 5/25/2018 Cobb County Kia Jim Ellis Atlanta, Inc. Automotive Retail NA 5/25/2018 Wireless Advantage Communications, Inc. The Cellular Connection, LLC Computer and Electronics Retail NA 5/22/2018 Rairdon's Honda of Marysville Rairdon Auto Group Automotive Retail NA 5/21/2018 Assets of GCSC Enterprises, Inc. The Cary Company Distributors NA 5/21/2018 Six DeKalb Tire Stores and Five Hill Tire Centers Stores Mavis Tire Supply Corporation Automotive Retail NA 5/17/2018 Pacifier, Inc. N/A Department Stores NA 5/15/2018 Clever Training LLC The Running Specialty Group, LLC Specialty Stores NA 5/15/2018 Joy for All Ageless Innovation LLC Internet and Direct Marketing NA 5/14/2018 Best Way Cleaning Supplies Inc. Excel Supplies Distributors NA 5/13/2018 Assets of Free Service Tire Company, Inc. Monro, Inc. Automotive Retail NA 5/9/2018 B&D Automotive, Inc Triple D Corporation Distributors NA 5/13/2018 Seven John Deere Construction and Forestry stores of McCoy Group, Inc. Automotive Retail NA 5/9/2018 Centric Group, LLC TKC HOLDINGS, Inc. Distributors NA 5/4/2018 Domaine Global LLC (nka:verax emarketplace LLC) Verax Research Services, Inc. Internet and Direct Marketing NA 5/4/2018 Bert Wolfe Audi Astorg Auto Of Charleston, Inc. Automotive Retail NA 5/3/2018 Modani Holdings, LLC Maisons du Monde S.A. Home Furnishing Retail NA 5/3/2018 Lone Star Ford, Inc. Doggett Auto Group Automotive Retail NA 5/3/2018 Flooring Solutions, Inc. Lynx Equity Limited Distributors NA 5/2/2018 Sound Com Corporation AMETEK, Inc. Distributors NA 5/2/2018 STORY Macy's, Inc. Specialty Stores NA 5/1/2018 Ann Arbor INFINITI Fox Motor Group, LLC Automotive Retail NA 5/1/2018 Assets of Razorgator LLC TickPick LLC. Internet and Direct Marketing NA 5/1/2018 PetEdge, Inc. Boss Pet Products, Inc. Distributors NA 5/1/2018 Top Ten Toys, Inc. Snapdoodle Toys LLC Specialty Stores NA 4/30/2018 Malkin's Flooring, Inc. Nonn's Flooring, Inc. Home Improvement Retail NA 4/30/ Retail Fuel Outlets of 7-Eleven, Inc. Sunoco LP Automotive Retail NA 4/27/2018 World Of Mirth, LLC N/A Specialty Stores NA 4/25/2018 InstaCandy Inc Alpine Subscriptions LLC Internet and Direct Marketing NA Source: Capital IQ Houlihan Capital 7

8 S&P Capital IQ - Sector Last 3 Month Equity Performance 20.0% Change in Market Cap by S&P Capital IQ Sector 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 3/31/2018 4/30/2018 5/31/2018 6/30/2018 Energy Materials Industrials Consumer Discretionary Healthcare Financials Information Technology Telecommunication Services Utilities Consumer Staples Note: The indices are derived from the equity performance of the S&P Capital IQ Sectors. Source: Capital IQ Houlihan Capital 8

9 M&A Deal Flow Statistics by S&P Capital IQ Sector 16,000 M&A Deal Count - Number of Transactions 14,000 12,000 10,000 8,000 6,000 7,735 7,544 8,953 7,561 8,024 8,265 8,970 7,120 6,788 6,011 6,954 6,702 5,967 5,258 6,410 5,471 5,064 4,000 2,000 4,989 5,391 5,700 5,147 5,062 5,134 5,244 4,543 4,297 4,033 4,197 4,316 3,697 3,347 3,788 3,667 3,335 0 $1,000 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q M&A Deals - USA & Canada M&A Deals - Rest of the World M&A Deal Count - Total Transaction Value ($ Billions) $900 $800 $700 $600 $500 $400 $372.8 $381.4 $462.7 $430.2 $512.6 $406.6 $440.3 $419.0 $268.0 $295.1 $445.7 $364.7 $336.2 $292.0 $335.7 $272.3 $353.3 $300 $200 $100 $251.0 $289.7 $450.7 $402.3 $385.2 $499.4 $408.0 $403.0 $375.6 $293.7 $363.7 $363.7 $338.9 $414.0 $346.2 $292.1 $442.5 $0 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Transaction Value - USA & Canada Transaction Value - Rest of World Houlihan Capital 9

10 M&A Deal Flow Statistics by S&P Capital IQ Sector Percentage Dollars Invested by Sector 2Q18 10% 2% 13% 12% 5% 9% 13% 19% 4% 4% 4% 5% Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Real Estate Telecommunications Services Utilities Not Listed Houlihan Capital 10

11 About Us Houlihan Capital is a leading, solutions-driven valuation, financial advisory and boutique investment banking firm. We pride ourselves on being thought leaders in an ever-changing landscape. Houlihan Capital is SOC-compliant, a FINRA and SIPC member and committed to the highest levels of professional ethics and standards. Valuation & Financial Advisory We provide an array of services that include enterprise valuations, portfolio valuation, valuation of carried interest, transaction opinions, tax and financial reporting compliance, purchase price allocations, and a wide variety of consulting services through our Financial Advisory Group. Investment Banking Through our Investment Banking Group, we offer sell side/buy side advisory and capital raises. Through our Special Situations desk, we provide services that fit outside the archetypal verticals, including liquidity solutions, transactional advisory, and secondary market advisory and trading. Litigation Support Our team provides support for a wide variety of situations including commercial and shareholder disputes, derivatives and structured finance litigation, and fraudulent conveyance. For additional information about our industry expertise and services, visit: Andrew Smith asmith@houlihancapital.com Paul Clark pclark@houlihancapital.com Michael Norton mnorton@houlihancapital.com Monica Blocker mblocker@houlihancapital.com