Stock market performance of retailers by Sutherland Global Services

Stock Market Performance of Key Retailers in the US August 2013

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Macroeconomic Drivers of Retail Industry • Declining unemployment rate, along with low borrowing costs, in the US is bolstering confidence of consumers 7.6% Jun 2013

7.6% May 2013

7.5% Apr 2013

7.6% Mar 2013

7.7% Feb 2013

7.9% Jan 2013

7.8% Dec 2012

7.8% Nov 2012

7.9% Oct 2012

7.8% Sep 2012

8.1% Aug 2012

8.2% Jul 2012

8.2% Jun 2012

8.2% May 2012

8.1% Apr 2012

8.2% Mar 2012

8.3% Feb 2012

8.3% Jan 2012

8.5% Dec 2011

8.6% Nov 2011

9.0% Oct 2011

9.1% Sep 2011

9.1% Aug 2011

9.1% Jul 2011

Jun 2011

9.2%

Unemployment Rate in the US (%)

82.1

74.3

69.0

61.9

68.0

58.4

66.7

71.5

73.1

68.4

65.4 Jul 2012

61.3

62.7 Jun 2012

68.7 Apr 2012

64.4

69.5 Mar 2012

May 2012

71.6

61.5 Jan 2012

Feb 2012

64.8 Dec 2011

55.2

Jun 2013

May 2013

Apr 2013

Mar 2013

Feb 2013

Jan 2013

Dec 2012

Nov 2012

Oct 2012

Sep 2012

Aug 2012

Nov 2011

40.9

46.4 Sep 2011

Oct 2011

45.2

59.2 Jul 2011

Aug 2011

57.6 Jun 2011

Consumer Confidence Index in the US

• Consumers are willing to make large purchases such as homes, vehicles and appliances • Despite increase in taxes and the Federal spending cut, the job market has shown resilience, which is a good sign for the economy

• In June 2013, consumer confidence was at its peak postrecession, but it was well below the pre-recession peak of 111.7, which it reached in July 2007 “If you ask someone how things are right now, they’re all saying it’s better to an extent they haven’t in quite some time. The labor situation is improving and consumers have more intentions to buy major things like homes and autos. To me, that’s good news.” - Neil Dutta, Head of US Economics, Renaissance Macro Research LLC

Source: US Bureau of Labor Statistics; The Conference Board; Trading Economies; Secondary Research; Sutherland Analysis

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Monthly Retail Sales in the US (Non Seasonally Adjusted) • Each month of 2013 has posted positive year-on-year (Y-o-Y) retail sales growth, indicating improvement in consumers’ spending 287.7

309.8 May 2013

Mar 2013

Apr 2013

297.1

264.6 Feb 2013

Jan 2013

270.4

351.9 Dec 2012

302.1 Nov 2012

273.1

283.9 Oct 2012

Aug 2012

Sep 2012

292.3

279.4 Jul 2012

284.1 Jun 2012

295.4 May 2012

Apr 2012

277.6

290.1 Mar 2012

264.0 Feb 2012

Jan 2012

256.9

343.7 Dec 2011

288.7 Nov 2011

273.1 Oct 2011

Sep 2011

266.6

278.8 Aug 2011

270.8 Jul 2011

Jun 2011

274.5

Monthly Retail Sales in the US (USD Bn)

7.7% May 2013

-3.2% Apr 2013

-2.1% Feb 2013

Mar 2013

-23.2% Dec 2012

Nov 2012

Jan 2013

16.5%

6.4%

4.0% Oct 2012

-6.6% Sep 2012

Aug 2012

Jul 2012

-3.8% Jun 2012

May 2013

-1.7%

4.9% 3.6% Apr 2013

2.4% Mar 2013

Feb 2013

Jan 2013

0.2%

2.4% Dec 2012

Nov 2012

4.6%

Sales Growth (M-o-M %)

5.2%

4.7%

4.0% Oct 2012

Sep 2012

Aug 2012

2.5%

3.2% Jul 2012

Jun 2012

3.5%

4.9%

Sales Growth (Y-o-Y %)

12.3%

Monthly Retail Sales Growth in the US (%)

“The consumer seems to be faring very well. The labor market is getting better. People realize that the employment situation has improved so they feel better and are probably willing to go out and spend money.” - Brian Jones, Senior US Economist, Societe Generale

• One of the biggest trends in the US retail is small. Over the past few years, many big-box retailers have started rolling out smaller store formats or subleasing excess space to local businesses to improve efficiency “Consumer spending has been relatively decent and looks like it’s going to remain on track. …households divert money from heating bills to other purchases.” - John Ryding, Chief Economist, RDQ Economics

Source: US Census Bureau; Secondary Research; Sutherland Analysis

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Performance of Key Retailers on Bourses

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General Merchandise Stores • During 2012, the S&P 500 Retailing index has outperformed the S&P 500 index, indicating strong performance of the retail sector

Rebased to 100

150 140 130

• As seen from the exhibit on the left, movement of the most general merchandise stocks have been in-line with the indexes

120 110 100

• However, troubles at Sears have also got reflected in its stock market performance

90 80 70

S&P-500

S&P-500 Retailing

Wal-Mart Stores, Inc.

Target Corp

Sears Holdings Corp

Macy's, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Costco Wholesale Corp

Market Returns S&P-500 S&P-500 Retailing Wal-Mart Stores, Inc. Costco Wholesale Corp Target Corp Sears Holdings Corp Macy's, Inc.

1-Year 25.5% 36.7% 8.4% 25.1% 20.8% -7.6% 39.6%

6-Month 14.1% 22.6% 12.5% 16.7% 18.7% -4.4% 27.3%

3-Month 7.4% 12.6% -1.5% 10.1% 4.8% -6.6% 11.3%

1-Month 6.5% 8.6% 5.9% 8.7% 6.1% 1.4% 4.4%

• On November 16, 2012, stock price of Sears sank c.19% following announcement of weaker earnings for the third quarter of the year • The stock, which was seeing slight uplift, sank again by c.14% on May 24, 2013 when the company announced that its losses have widened in Q1 2013 as compared to Q1 2012. Since then, the stock seems to be having the downward trend

Note: Last Traded Day = July 22, 2013; 1-Year = July 23, 2012; 6-Month = January 21, 2013; 3-Month = April 23, 2013; 1-Month = June 21, 2013; Rebased to 100 = July 01, 2012 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Clothing and Clothing Accessories Stores • Shares of Gap, Inc. got a boost of c.13% on August 2, 2012 when it posted Q2 2012 results, which were better than Q2 2011

Rebased to 100

170 160 150

• On June 6, 2013, the stock price touched USD42.09, its highest level since April 2000

140 130

• The company’s same-store sales have also performed better than the analysts’ expectations, providing further boost to the stock price

120 110 100 90

S&P-500

S&P-500 Retailing

The Gap, Inc.

Limited Brands, Inc.

Ross Stores, Inc.

Foot Locker, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Nordstrom, Inc.

• The stock of Ross Stores, which seems to be struggling since October 2012, gained upward momentum in April 2013 when the company announced that its Q1 2013 profit will top the estimates

Market Returns S&P-500 S&P-500 Retailing The Gap, Inc. Nordstrom, Inc. Limited Brands, Inc. Ross Stores, Inc. Foot Locker, Inc.

1-Year 25.5% 36.7% 54.5% 19.1% 15.8% 0.9% 12.1%

6-Month 14.1% 22.6% 36.7% 11.8% 12.8% 15.9% 9.1%

3-Month 7.4% 12.6% 22.6% 12.5% 9.6% 5.9% 12.5%

1-Month 6.5% 8.6% 9.1% 6.6% 2.7% 5.8% 4.6%

“Things are still challenging, but they (consumers) are starting to feel a little bit better.” - Glenn Murphy, Chairman and CEO, The Gap, Inc.

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Food Services and Drinking Places • Shares in Wendy’s Co are currently trading at the level highest in the last five years after announcing sale of its restaurants to franchisees and higher-thanexpected quarterly profit

Rebased to 100

150 140 130 120

“The restaurants the company is selling off also tend to be locations with lower operating margins in the Western states. Selling them will allow the company to collect rent and royalties as well as work with about 100 new franchisees on rebranding efforts.”

110 100 90

- Steve Hare, CFO, Wendy’s Co

S&P-500 Starbucks Corp The Wendy's Co

S&P-500 Retailing Yum! Brands, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Jul-12

Aug-12

McDonald's Corp Darden Restaurants, Inc.

Market Returns S&P-500 S&P-500 Retailing McDonald's Corp Starbucks Corp Yum! Brands, Inc. Darden Restaurants, Inc. The Wendy's Co

1-Year 25.5% 36.7% 9.7% 36.4% 13.2% -1.4% 48.1%

6-Month 14.1% 22.6% 5.8% 25.9% 9.7% 8.5% 31.0%

3-Month 7.4% 12.6% -2.2% 16.2% 11.4% -1.3% 22.1%

1-Month 6.5% 8.6% 0.4% 6.7% 3.6% -1.8% 16.9%

• On November 30, 2012, shares of Yum!Brands plunged by c.10% after it projected decline in samestore sales in China in the fourth quarter of the year. The company, however, was confident of midsingle digit growth in the long run • Darden Restaurants’ shares had a similar plunge of c.10% on December 4, 2012 when the company announced a cautious outlook for its sales and earnings forecast for the year

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Electronics and Appliance Stores • Most stocks (apart from RadioShack) of this sub-segment of the US retail have outperformed the market in 2012

Rebased to 100

240 220 200

• Shares of Gamestop are on a growth trajectory since May 23, 2013 after the company announced better-than-expected result for Q4 2013

180 160 140 120

• The company also raised the lower end of its full-year earnings forecast, which added to the upward trend

100 80 60 Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Jul-12

Aug-12

S&P-500

S&P-500 Retailing

Best Buy Co, Inc.

RadioShack Corp

hhgregg, Inc.

GameStop Corp

Market Returns S&P-500 S&P-500 Retailing Best Buy RadioShack Corp Hhgregg, Inc. GameStop Corp

1-Year 25.5% 36.7% 57.4% -20.6% 139.9% 166.5%

6-Month 14.1% 22.6% 97.6% 31.4% 98.3% 84.8%

3-Month 7.4% 12.6% 21.8% -7.6% 9.9% 29.6%

1-Month 6.5% 8.6% 9.8% -7.6% -6.5% 5.5%

• Shares of RadioShack tumbled c.30% on July 25, 2012 after the company announced unexpected loss in its Q2 2012 “RadioShack’s financial performance went from bad to worse. We think the stock will be ‘dead money’ at best until current trends begin to show some sign of stabilizing.” - Anthony Chukumba, Analyst, BB&T Capital Markets

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Furniture and Home Furnishings Stores • Shares of Furniture Brands International have been trading amid volatility

Rebased to 100

200

• From the highs of USD11.55 as on September 21, 2012, the shares closed c.70% lower at USD3.39 on July 22, 2013

150

100

• On July 15, 2013, the company announced that it has received de-listing warning from the New York Stock Exchange as it has fallen below the exchange's continued listing standards

S&P-500

S&P-500 Retailing

Bed Bath & Beyond

La-Z-Boy, Inc.

Furniture Brands Int'l

Mohawk Ind, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Williams-Sonoma

- Bradley Thomas, Analyst, Keybanc Capital Markets, Inc.

Market Returns S&P-500 S&P-500 Retailing Bed Bath & Beyond, Inc. Williams-Sonoma, Inc. La-Z-Boy, Inc. Furniture Brands International, Inc. Mohawk Industries, Inc.

“About six months after moving, homeowners buy furnishings to fill their residences. Housing turnover is one of the most important criteria affecting furniture sales, so it makes sense these purchases move together.”

1-Year 25.5% 36.7% 23.6% -2.5% 77.8% -57.9% 62.4%

6-Month 14.1% 22.6% 38.3% 5.9% 38.8% -54.7% 20.2%

3-Month 7.4% 12.6% 14.7% -1.5% 18.8% -52.5% 0.7%

1-Month 6.5% 8.6% 9.5% 8.2% 13.6% -16.7% 6.3%

“An empty house creates the most immediate demand for such purchases. The market for single-family homes appears to have bottomed and has been rebounding since mid-2011.” - Mike Englund, Chief Economist, Action Economics

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Building Material and Garden Equipment • Stocks of this sub-segment of the US retail have shown strength in the market on the back of improvement seen in the US housing market

Rebased to 100

180 160

• New construction and resale are revenue drivers for this subsegment and both retail and housing markets seem to be gaining due to lower interest rates currently prevalent in the US

140 120

100 80

S&P-500 Lowe's Companies, Inc. Masco Corp

S&P-500 Retailing Sherwin-Williams Co

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Jul-12

Aug-12

The Home Depot, Inc. Builders Firstsource, Inc.

Market Returns S&P-500 S&P-500 Retailing The Home Depot, Inc. Lowe's Companies, Inc. Sherwin-Williams Co Builders Firstsource, Inc. Masco Corp

1-Year 25.5% 36.7% 57.0% 73.4% 30.8% 53.4% 50.0%

6-Month 14.1% 22.6% 22.2% 20.8% 4.6% 10.8% 17.6%

3-Month 7.4% 12.6% 9.0% 17.5% -5.5% 21.3% 4.4%

1-Month 6.5% 8.6% 8.4% 13.0% -0.9% 4.3% 9.7%

“The general case for homeimprovement stores includes the rising number of home buyers and sellers who tend to engage in renovation and home improvement projects, in addition to purchasers of new homes, who also tend to add home décor, window treatments, and furnishings.” - Genia Turnanova, Editor, Leeb Income Performance

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Food and Beverage Stores • On July 12, 2012, shares of Supervalue tumbled c.49% as shareholders react to the company’s decision to suspend dividend payments and explore the possible sale of all or parts of the company

Rebased to 100

175 150

125

• In March 2013, Supervalu completed the sale of 900 stores to an investor group led by Cerberus Capital Management, which boosted investors’ confidence in the company

100

75 50

S&P-500

S&P-500 Retailing

The Kroger Co

Casey's General Stores

Supervalu, Inc.

Whole Foods Market

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Safeway, Inc.

Market Returns S&P-500 S&P-500 Retailing The Kroger Co. Safeway, Inc. Casey's General Stores, Inc. Supervalu, Inc. Whole Foods Market, Inc.

1-Year 25.5% 36.7% 83.6% 69.7% 20.8% 244.8% 33.6%

6-Month 14.1% 22.6% 44.2% 38.9% 26.1% 113.4% 23.6%

3-Month 7.4% 12.6% 12.6% -6.7% 18.4% 42.2% 26.1%

1-Month 6.5% 8.6% 15.6% 13.5% 17.9% 27.2% 9.4%

• In July 2013, The Kroger Co. announced the acquisition of Harris Teeter Supermarkets (a chain of 200 higher-end grocery stores) for c.USD2.5 Bn • As per rumors in the market, The Kroger Co. may be bidding for the acquisition of The Great Atlantic & Pacific Tea Company

• Back in June 2007, Kroger acquired 20 Farmer Jack stores from The Great Atlantic & Pacific Tea Company

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Health and Personal Care Stores • On April 11, 2013, stocks of Rite Aid Corp jumped c.18.5% after the company posted its first fullyear profit in the last six years, beating analysts’ estimates

Rebased to 100

250

200

“The chain seeks to be a neighborhood destination for health and wellness. About 17% of the chain’s 4,623 locations have been turned into wellness centers with expanded pharmacy services and health-focused products.”

150

100

- John Standley, CEO, Rite Aid Corp

S&P-500

S&P-500 Retailing

CVS Caremark

Shoppers Drug Mart

Rite Aid Corp

Omnicare, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Walgreen Co

Market Returns S&P-500 S&P-500 Retailing CVS Caremark Corp Walgreen Co Shoppers Drug Mart Corp Rite Aid Corp Omnicare, Inc.

1-Year 25.5% 36.7% 38.0% 51.1% 42.3% 150.4% 64.5%

6-Month 14.1% 22.6% 18.6% 30.7% 44.2% 86.3% 30.7%

3-Month 7.4% 12.6% 6.5% 3.3% 35.1% 19.7% 20.2%

1-Month 6.5% 8.6% 7.4% 5.2% 28.5% 4.2% 6.0%

• Shares of Walgreen Co experienced some turbulence in June 2013, which saw decline in its upward trend, as the company reported weaker-than-expected Q3 2013 earnings • However, to boost investors’ sentiments, the company announced a 14.5% higher quarterly dividend of 31.5 cents per share on July 10, 2013, which provided an uplift to the share price

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Sporting Goods, Hobby, Book, and Music Stores • Shares of Big 5 Sporting Goods are on an uphill trend since May 1, 2013 as the company posted earnings per share (EPS) of USD0.34, much higher than the estimates of USD0.20

Rebased to 100

350 300

250

• The ongoing debate in the US on gun control has led consumers to bulk purchase firearms and ammunitions, which has boosted the company’s top-line

200

150 100

S&P-500

S&P-500 Retailing

Barnes & Noble

Cabela's, Inc.

Big 5 Sporting Goods

Indigo Books & Music

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Dick's Sporting Goods

Market Returns S&P-500 S&P-500 Retailing Barnes & Noble, Inc. Dick's Sporting Goods, Inc. Cabela's, Inc. Big 5 Sporting Goods Corp Indigo Books & Music, Inc.

1-Year 25.5% 36.7% 22.1% 11.5% 69.7% 220.6% 35.4%

6-Month 14.1% 22.6% 41.8% 7.0% 31.1% 70.9% 1.2%

3-Month 7.4% 12.6% 3.6% 9.4% 20.2% 63.6% -4.6%

1-Month 6.5% 8.6% -2.2% 2.9% 0.3% 25.9% 3.6%

• Analysts are speculating a possible split-up of Barnes and Noble after its CEO, William Lynch, suddenly resigned in July 2013, making shareholders uncomfortable • They are further estimating that spin-off of some the businesses (retail chain, college bookstore, and NOOK media business) of Barnes & Noble may lift its share price

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Non-Store Retailers • On July 31, 2012, shares of Café Press plunged almost 41% after the company gave poor guidance for the remaining year. It has since been trading lower with no signs of recovery

Rebased to 100

200 175 150

• United Online began trading exdividend on May 10, 2013. The company has announced the same cash dividend payment of USD0.1 per share for the 19th straight quarter

125 100 75 50

S&P-500

S&P-500 Retailing

Amazon.com, Inc.

United Online, Inc.

Liberty Interactive

CafePress, Inc.

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

eBay, Inc.

Market Returns S&P-500 S&P-500 Retailing Amazon.com, Inc. eBay, Inc. United Online, Inc. Liberty Interactive Corp CafePress. Inc.

1-Year 25.5% 36.7% 34.3% 18.2% 96.8% 49.2% -50.7%

6-Month 14.1% 22.6% 11.5% -3.5% 26.1% 16.0% 19.9%

3-Month 7.4% 12.6% 12.9% -0.3% 23.4% 19.3% 17.0%

1-Month 6.5% 8.6% 11.0% 2.3% 6.2% 10.1% 11.1%

• Shares of eBay were down c.6.7% on July 18, 2013 after it reported the Q2 2013 earnings, which missed the analysts’ estimates “We think eBay has taken all the necessary measures, beginning with the fixed price format, moving on to wooing big sellers and customers, and then improving the technology and navigation of its properties and investing in better fulfillment services.” - Zacks Equity Research

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Miscellaneous Store Retailers • On February 19, 2013, stock prices of Office Depot and OfficeMax climbed after Office Depot “accidently” published acquisition of OfficeMax in its quarterly earnings report without announcing the acquisition

Rebased to 100

275 250 225 200 175

• However, on February 20, 2013, when it formally announced the acquisition, the stocks declined amid unusual uncertainty related to the combined entity’s name, headquarters and CEO

150 125 100 75 Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Jul-12

Aug-12

S&P-500

S&P-500 Retailing

Staples, Inc.

Office Depot, Inc.

PetSmart, Inc.

OfficeMax, Inc.

Market Returns S&P-500 S&P-500 Retailing Staples, Inc. Office Depot, Inc. PetSmart, Inc. OfficeMax, Inc.

1-Year 25.5% 36.7% 33.1% 132.1% 6.5% 161.4%

6-Month 14.1% 22.6% 27.7% -5.2% 4.3% 5.3%

3-Month 7.4% 12.6% 33.9% 14.8% 6.7% 1.7%

1-Month 6.5% 8.6% 6.5% 10.8% 6.0% 12.1%

"I have seldom seen a situation where they can't decide on the name, the CEO or the corporate headquarters. Normally that's what you work out before you announce a deal.“ - Tom Stemberg, Managing General Partner, Highland Consumer Fund and Founder, Staples

• In July 2013, PetSmart introduced new products and announced partnerships with Martha Stewart, Bret Michaels and Disney, which has provided some boost to the stock price

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