KEY CONCLUSIONS

Equity Research EMEA

Apparel
23 July 2015

South African Apparel Retail

INDUSTRY OVERVIEW/ANALYSIS

Figure 1: H&Mlikely to be a meaningful threat; Mr Price

IDEAS ENGINE SERIES
The changing competitive landscape
competitive: Combined men's and women's basket comparison,
Drivers of change Apr-Jun '15, H&M estimated entry point=100
The South African apparel retail market has undergone significant change over the past 200 183
five years, and we view most of these changes as structural rather than cyclical. Credit 180 168

provided by retailers does not appear to be a meaningful driver of overall apparel sales, 160
140
141
122
and reduced credit from retailers has been replaced by other credit providers. This 120
117
106 105 104 100
provides consumers with more choice and the ability to take advantage of lower price 100 83
The Ideas Engine points from fast/value fashion, which remains underpenetrated in South Africa. New
80
60
55 52 47 45
series showcases entrants are likely to continue to take share from higher-priced domestic players, with 40
34

20
Credit Suisse’s unique H&M posing a meaningful threat, in our view. 0

H&M estimate
Zara

Truworths

Foschini / Markham

Cotton On

Exact!

Jet
Edgars

Identity

Pep
Woolworths

Ackermans

Legit

Mr Price
Daniel Hechter
insights and investment Introducing the Credit Suisse Apparel Price Monitor
ideas. We introduce the Credit Suisse Apparel Price Monitor to help assess the relative price
positioning of companies within the industry, track changes in pricing and monitor the
price points of new entrants. Our pricing analysis leaves us with significant concerns over Source: Retailpricewatch.co.za, Credit Suisse research
the sustainability of Truworths' currently world-leading margins as well as the potential
Figure 2: Truworths' margins in line with TFG's at similar
Please contact your competitive threat from H&M's entry into the South African market later this year.
price points
Sales person to Key stock calls At Foschini

access the In our view, Truworths is most exposed to the structural challenges facing the industry, Year to Jun 2014 R'm
Retail Turnover
Reported
10 458
prices
8 715
% change
-16.7
supplemental and we downgrade our rating to Underperform from Neutral (new TP R65 from R78). Gross profit 5 841 4 098 -29.8
Mr Price (Outperform, new TP R283 from R272) provides the best exposure to global Gross margin (%) 55.9 47.0
analysis behind this trends in fast/value fashion and lower consumer reliance on credit provided by retailers.
EBITDA 3 273 1 530 -53.3
Operating costs -2 568 -2 568 0.0
report. The Foschini Group's (Neutral, new TP R150 from R165) and Woolworths' (Neutral, new Retail profit 3 089 1 346 -56.4
Trade receivable interest income 828 690 -16.7
TP R94 from R86) more diversified income streams and lower price points suggest to us Debtors cost -916 -763 -16.7
that they are less at risk than Truworths. Trading profit 3 236 1 508 -53.4
Trading margin (%) 30.9 17.3
This note replaces the version published earlier in which the company Financial Net profit 2 406 1 167 -51.5
Fully diluted EPS (cents) 568 275 -51.5
Summaries on pages 6 to 9 showed only historic data. These have now been replaced to
include our forecasts. Source: Company data, Credit Suisse research
RESEARCH ANALYSTS
Pieter Vorster Rishay Dhanraj
44 20 7883 2607 27 11 012 80 63
pieter.vorster@credit-suisse.com rishay.dhanraj@credit-suisse.com
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-U.S ANALYSTS. US Disclosure:
Credit Suisse 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 decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION®

Client-Driven Solutions, Insights, and Access
Key charts Figure 5: Fast/value fashion growing globally, underpenetrated in South Africa
30
Superior growth should continue at Mr Price; we expect Truworths'
Figure 3:
growth to be modest owing to margin pressure
25
Turnover growth CY15 CY16 CY17 CY18
Mr Price 14.4% 15.0% 15.0% 14.9%
TFG 24.5% 15.1% 10.9% 11.1% 20

% market share
Truworths 9.5% 9.8% 8.8% 8.6%
Woolworths 31.6% 9.1% 9.2% 8.8%
15
Gross margin (%)
Mr Price 42.9% 43.5% 43.5% 43.5%
TFG (South Africa) 47.3% 47.1% 46.8% 46.6% 10
Truwroths 54.5% 53.5% 52.2% 50.7%
Woolworths 38.4% 38.4% 38.4% 38.3%
EBIT growth 5
Mr Price 20.7% 19.1% 18.9% 18.8%
TFG 17.7% 13.4% 11.2% 9.6% 0
Truworths 5.7% 6.7% 4.7% 3.7% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Woolworths 30.6% 15.7% 14.6% 12.3%
EBIT margin France Germany Italy South Africa
Mr Price 18.5% 19.1% 19.8% 20.5%
TFG 16.5% 16.3% 16.3% 16.1% Spain Sweden United Kingdom
Truworths 29.2% 28.3% 27.3% 26.1%
Woolworths 10.4% 11.0% 11.6% 11.9% Source: Euromonitor
EPS growth
Mr Price 17.8% 17.1% 18.1% 18.0%
TFG 13.6% 12.5% 12.2% 10.6%
Truworths 6.4% 7.6% 5.7% 4.4% Figure 6: Other, non-bank, credit providers have filled the gap left by credit
Woolworths 7.7% 15.0% 18.3% 15.3%
retailers, giving consumers the ability to take advantage of lower prices
Source: Credit Suisse estimates elsewhere
12%

Figure 4: Edcon's weakness appears to have shielded other retailers from

10%
structural trends
% market share 2008 2009 2010 2011 2012 2013 2014 Trend
8%
Edcon 22.3 22.4 21.2 20.9 19.8 18.6 17.7
Edgars 12.5 12.5 12.0 11.8 11.3 10.5 10.0
Discount 9.8 9.9 9.2 9.1 8.4 8.1 7.7 6%
Pepkor 13.9 13.5 13.9 14.3 14.6 14.6 14.5
Mr. Price 6.1 6.8 7.0 7.1 7.2 7.5 8.0
4%
Mr. Price 5.0 5.6 6.0 6.1 6.1 6.5 7.0
Milady's 1.2 1.1 1.1 1.1 1.1 1.1 1.0
Truworths 6.9 7.6 7.8 8.1 8.2 8.1 7.9 2%
Woolworths 8.6 8.5 8.5 8.5 8.7 8.6 8.6
TFG 6.0 6.2 6.5 7.0 7.2 7.2 7.3 0%
Sub-total 63.8 65.0 64.9 65.9 65.8 64.6 64.0
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
Other 36.2 35.0 35.1 34.1 34.2 35.4 36.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Retailers Other credit providers
Source: Company data, Euromonitor, Stats SA, Credit Suisse estimates

Source: NCR

IDEAS ENGINE 2
South African Apparel Retail
Investment summary
The South African apparel retail market has undergone significant change over the past five
years and we view most of these changes as structural rather than cyclical. We have
analysed the drivers of these changes and look at how these factors might play out over the
next three-to-five years.
In this report we also introduce the Credit Suisse Apparel Price Monitor to help us assess the
relative price positioning of companies within the industry, track changes in pricing and
monitor the price points of new entrants. Our pricing analysis leaves us with significant
concerns over the sustainability of Truworths' currently world-leading margins as well as the
potential competitive threat from H&M's entry into the South African market later this year.
We highlight four major drivers of change in the market:
− Weak credit sales growth – our analysis shows that although its origin may be cyclical,
its effect is likely lasting and structural.
− Strong cash sales growth – on the face of it, the flipside of weak credit sales growth,
but continued growth in fast/value fashion has a strong global trend underpin and in South
Africa this is likely to be further supported by what we view as structural change in the
credit retail sales market.
− The rising presence of multinational players – we see continued growth in market
share from foreign entrants, which is likely to accelerate significantly with the entry of
H&M in October 2015; this trend will also add downward pressure on margins, particularly
of the credit retailers.
− Edcon as a source of market share – in our view the consistent market share declines
of market leader Edcon have softened the near-term structural negative effects of the
traditional domestic players. The recently announced subordinated debt renegotiation
provides the group with a near-term buffer, while further restructuring could position it
better, potentially making it a more effective competitor.
Weak credit sales – a structural change in the way consumers fund their spending
Whilst the state of the consumer credit market may be an important revenue driver for those
retailers whose sales are predominantly on credit, it does not appear to have a meaningful
impact on the overall level of Apparel and Footwear sales in South Africa. Furthermore,
consumers now have access to a larger variety of credit sources and have become less reliant
on store credit, in our view. This has enabled traditional store credit customers to access still
aspirational, but substantially lower-priced, retailers such as Mr Price. We believe that consumer
behaviour has changed and that, even when credit conditions ease, we are unlikely to see the
same uptick in credit sales as one might have expected based on previous cycles.
Cash sales – the new credit sales, supported by global trends in fast/value fashion
Although Mr Price's strong performance over the past five years could be attributed to a
combination of weak sales at competitor Edcon and its value for money offering resonating with
a consumer under pressure on multiple fronts, including restricted availability of credit, we
believe the development is structural and in line with global trends which has seen significant
growth in the fast/value fashion segment of the market.
IDEAS ENGINE
South African Apparel Retail
Multinationals – a rising threat to domestic players
In 2011, both Cotton On and Inditex entered the South African market and H&M is set to open
its first store in the country in October 2015. In addition, Edcon has introduced Topshop into
its Edgars stores in 2012 and opened its first standalone Topshop store in 2013.
We expect Cotton On to continue to grow from its current base of 118 stores and view H&M as
a major risk to the likes of Truworths and Foschini and, to some extent, Edgars and
Woolworths, given its likely price points, whereas we expect Zara's relatively high price points to
keep it a relatively small, albeit growing participant.
Both Inditex and H&M have shown that they can operate successfully in southern hemisphere
markets and we believe their success in Australia is of particular relevance in South Africa.
H&M stands out, capturing c.1.7% of the Australian market after only one year. We are not
forecasting the same rate of market share capture in South Africa given differences in the
geographic distribution of retail sales, but nonetheless view it as a meaningful threat to
domestic players, particularly with respect to pricing and margins.
Assuming H&M positions its price points in South Africa relative to Zara in line with where it is
in the UK, we think this would place it at the low end of fashion retailers in South Africa, with
Woolworths' and Edgars' price points at a premium to H&M of 4% and 6%, respectively,
Cotton On at a 17% premium, Foschini at 22% and Truworths 41% more expensive. Mr Price
would be at a 55% discount to H&M, which is not dissimilar to the relative price positioning of
Primark to H&M in the UK.
Our key stock calls
In our view, Truworths is most exposed to the structural challenges facing the industry, and we
downgrade our rating to Underperform from Neutral (new TP R65 from R78). Mr Price
(Outperform, new TP R283 from R272) provides the best exposure to global trends in
fast/value fashion, in our view, as well as lower consumer reliance on credit provided by
retailers. TFG's (Neutral, new TP R150 from R165) and Woolworths' (Neutral, new TP R94
from R86) more diversified income streams and lower price points suggest to us that they are
less at risk than Truworths.
Truworths International – Downgrade to Underperform, reducing target price by 15%
We downgrade our rating on Truworths to Underperform from Neutral and reduce our DCF-
based target price by 15% to R65 (from R78), indicating potential downside of 26%. We cut
our FY16-18 fully diluted adjusted EPS estimates by 5-16%, leaving us 11% below
I/B/E/S consensus in FY18.
Truworths currently generates the highest operating margin in our global apparel coverage
universe. Our analysis shows that, relative to its closest domestic peer, TFG, this is largely a
function of higher and, in our view, unsustainable price points.
3
 While Truworths' CY16E PE multiple appears to offer value, we show that on a pro forma
basis, at TFG's price points, it would generate operating margins in line with TFG and EPS
some 50% below current levels.
With some 70% of group sales on credit, Truworths has by far the highest exposure to the
changing credit market dynamics outlined in this report. Not only does it potentially restrict
sales growth, but as alternative sources of consumer credit provide credit customers with the
ability to make cash purchases and more choice, the high price premiums charged by
Truworths look increasingly unsustainable.
We believe Truworths also faces the largest threat from international competition. Although
its average price points are currently below those of Zara, it is likely to lose higher-end
customers to it. Cotton On's average pricing is c.17% lower than Truworths', with an
offering that appears to be resonating well with the under 25-year-old, mid-to-high LSM
segment. We view H&M as a key risk for Truworths.
Excluding acquisitions, we expect revenue growth to remain below 9% p.a. with like-for-like
growth at 4% p.a. (1.3% in FY15) over the next five reporting years and forecast gross
margins to decline from 55.9% in FY14 to 50.0% in FY19 owing to pricing pressure. This
margin would still be higher than the 47.3% achieved by TFG in FY15E and the 46.5% we
forecast for TFG in FY19.
At the EPS level, we forecast growth of only 5.5% per annum over the next five years, with
improved bad debts more than offset by gross margin and other cost pressures.
Although Truworths' recent trading statement surprised positively, we believe the implied
margin reductions may signal a change in the company's long-standing philosophy of not
sacrificing margin for growth and we expect this trend to accelerate under new management.
In its trading statement covering the period to 28 June 2015, Truworths announced that it
expects growth in HEPS of 2-4%, in line with our estimate of 3.8%, but ahead of consensus
growth of 1.9%. However, its revenue growth of 8.2% exceeded our estimate of 6.7%.
Excluding the recently acquired Naartjie and Earthchild brands, growth amounted to 7.2%.
Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to
value Truworths using the discounted cash flow (DCF) methodology. We forecast explicit
cash flows for five years, after which the growth rate free cash flow return in invested capital
is faded to the final year growth rate and WACC respectively over the competitive advantage
period (CAP). Our DCF fair value is adjusted by the WACC to determine our 12-month
target price of R65. For Truworths, we use a 13.25% WACC, 10-year CAP and a final year
growth rate of 6%. Our target price change largely reflects our lower earnings estimates (our
FY19 earnings estimates are 23% below our previous forecast).
Mr Price Group Limited – Retain Outperform, raise target price
We retain our recently upgraded rating at Outperform (Mr Price Group Limited - Upgrade
to Outperform) and increase our DCF-based target price to R283 from R272.
Mr Price has shown strong growth in market share over the past five years, rising from 5.6%
in 2009 to 7.0% in 2014. In our view, this growth has resulted from a combination of global
trends favouring fast/value fashion, supported by structural change in the South African retail
credit market and attractive price points that are currently only about one third of Truworths'.
IDEAS ENGINE
South African Apparel Retail
Our analysis shows that the South African fast/value segment remains underpenetrated and
we expect Mr Price, the leading player in this segment, to continue to gain share.
With Mr Price's average basket currently at 27% of Zara, 38% of Cotton On and 45% of
where we estimate H&M will likely enter the market, we do not view increased participation
by multinational players as a meaningful threat to Mr Price's growth prospects in the apparel
segment.
With its full-year results, Mr Price has announced that it intends to enter the Australian
market with two trial stores and indicated that it would have pricing relative to Cotton On
similar to its position in South Africa, i.e. some 60% below. We have not factored in any
contribution from Australia, but estimate that it can contribute between 5% and 10% of
group earnings over the next 3-5 years.
Over the next five years, we expect Mr Price to deliver diluted EPS growth of 17.6% p.a.,
which is the highest in our coverage universe by some margin.
Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to
value Mr Price using the discounted cash flow (DCF) methodology. We forecast explicit cash
flows for five years, after which the growth rate free cash flow return in invested capital is
faded to the final year growth rate and WACC respective over the competitive advantage
period (CAP). Our DCF fair value is adjusted by the WACC to determine our 12-month
target price of R283. For Mr Price, we use a 12.02% WACC, 23-year CAP and a final year
growth rate of 7.5%. Our target price increase reflects a one-year increase in our CAP
assumption owing to our increased confidence in the sustainability of Mr Price's growth and
returns, partly offset by an increase in the number of shares issued under the group's share
incentive schemes.
The Foschini Group – Retain Neutral, reduce estimates and target price
We reduce our DCF-based target price by 9% from R165 to R150 and retain our Neutral
rating and cut our FY16-18 diluted HEPS estimates 2-7%, leaving us 7% below consensus
in FY18.
TFG's credit fashion apparel businesses, Foschini and Markham, face the same competitive
pressures as Truworths, except that TFG's average basket is priced 13-17% below that of
Truworths'. These two divisions made up 42% of TFG's FY14 revenue, with this likely to fall
to below 35% in FY16 when the Phase Eight acquisition is included for a full year.
For the South African Clothing division (56% of FY16E group turnover), we forecast growth
of 10% p.a. over the next five years, with LFL growth of 5% in FY16, rising to 6% in
subsequent years. This is ahead of the 4% we forecast for Truworths partly because we
expect less price pressure at TFG's fashion apparel businesses given lower price points, and
partly because we expect higher growth from its sports businesses that make up around
30% of divisional revenue.
From FY16-20 we expect group gross margins in South Africa to decline by some 100bps,
which implies a reduction at Foschini and Markham of around 250bps, which is less than half
the decline we are forecasting at Truworths owing to its lower relative price points.
At the EPS level, we forecast growth of 12% p.a. over the next five years, which is more
than double the rate we expect at Truworths.
4
 Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to
value TFG using the discounted cash flow (DCF) methodology. We forecast explicit cash
flows for five years, after which the growth rate free cash flow return in invested capital is
faded to the final year growth rate and WACC respective over the competitive advantage
period (CAP). Our DCF fair value is adjusted by the WACC to determine our 12-month
target price of R150. For TFG, we use a 12.1% WACC, 11-year CAP and a final year
growth rate of 6.% Our target price reduction is largely a function of our lower earnings
estimates.

Woolworths Holdings Limited – Retain Neutral, raise target price

We retain our Neutral rating on Woolworths and raise our DCF-based target price to R94
from R86.
Although Woolworths' South African apparel business is not immune to the threat of
international competition and fast/value fashion trends, it operates at lower price points than
the credit retailers.
Furthermore, Clothing and General Merchandise accounts for only 20% of FY16E group
revenue and 34% of operating profit. We are cautious on this division and forecast turnover
growth of around 9% p.a. over the next five years, modestly above Truworths'. We are not
forecasting margin declines, but believe the group's FY17 margin target of 19% for this
division is at risk – we forecast 18.25%.
Offsetting this is continued good, albeit slowing growth in Food—at 13.5% in FY15E to slow
moderately to 13.1% by FY17E and restructuring benefits from David Jones in Australia.
Over the next five years we expect EPS growth of 14.5% p.a., which is second only to
Mr Price in our South African Apparel retail universe.
Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to
value Woolworths using the discounted cash flow (DCF) methodology. We forecast explicit
cash flows for five years, after which the growth rate free cash flow return in invested capital
is faded to the final year growth rate and WACC respectively over the competitive advantage
period (CAP). Our DCF fair value is adjusted by the WACC to determine our 12-month target
price of R94. For Woolworths, we use a 12.25% WACC, 15-year CAP and a final year
growth rate of 5%. Our target price increase reflects an increase in invested capital used for
our terminal value to incorporate the David Jones acquisition, partly offset by a lower CAP
assumption.

IDEAS ENGINE 5
South African Apparel Retail
Mr Price Group Limited (MPCJ.J)
Price (20-Jul-15,R) 257.3
Market Cap (Rmn) 65151.8
Previous Value Current Value
Rating OUTPERFORM
Target Price (R) 272.00 283.00
EPS FY1E (R) 10.25 10.10
EPS FY2E (R) 11.90 11.84
EPS FY3E (R) 13.88 14.01
Source: Credit Suisse Estimates, IBES
Income Statement 2015FYA 2016FYE 2017FYE 2018FYE Per Share 2015FYA 2016FYE 2017FYE 2018FYE
Sales Revenue 17,286 19,822 22,810 26,228 No. of shares (wtd avg.) (mn) 266 271 274 277
EBITDA 3,284 3,958 4,683 5,583 EPS (CS Adj.) (R) 8.65 10.10 11.84 14.01
Depr. & Amort. -208 -251 -285 -348 DPS (R) 5.80 6.77 7.94 9.39
EBIT 3,076 3,707 4,398 5,235 Dividend yield (%) 2.28 2.66 3.11 3.69
Net interest income (exp) 87 100 120 170 Dividend Payout (%) 67.04 67.04 67.04 67.04
Other adj. 8 0 0 0 Earnings 2015FYA 2016FYE 2017FYE 2018FYE
Profit before tax 3,171 3,807 4,518 5,405 Sales Growth (%) 13.52 14.67 15.07 14.98
Income tax -880 -1,066 -1,265 -1,513 EBIT Growth (%) 21.25 20.51 18.64 19.05
Profit after tax 2,291 2,741 3,253 3,892 Net Income Growth (%) 21.77 19.22 18.54 19.57
Minorities 8 -0 -4 -7 EPS growth (%) 20.96 16.73 17.21 18.37
Associates & Other 0 0 0 0 EBITDA Margin (%) 19.00 19.97 20.53 21.29
Net profit (CS) 2,299 2,741 3,249 3,885 EBIT Margin (%) 17.79 18.70 19.28 19.96
Other NPAT adjustments -6 0 0 0 Pretax Profit Margin (%) 18.34 19.20 19.81 20.61
Net profit (Reported) 2,293 2,741 3,249 3,885 Net Income Margin (%) 13.30 13.83 14.24 14.81
Cash Flow 2015FYA 2016FYE 2017FYE 2018FYE Valuation 2015FYA 2016FYE 2017FYE 2018FYE
EBIT 3,076 3,707 4,398 5,235 EV/Sales (x) 3.6 3.1 2.6 2.2
Net Interest 442 100 120 170 EV/EBITDA (x) 18.8 15.5 12.9 10.5
Cash taxes paid -795 -878 -1,066 -1,265 EV/EBIT (x) 20.1 16.6 13.7 11.2
Change in Working capital -422 -99 -241 -276 P/E (x) 29.4 25.2 21.5 18.2
Other cash and non-cash items -53 251 284 345 Price to book (x) 10.2 8.8 7.5 6.4
Cash flow from Operations 2,248 3,081 3,494 4,209 Asset Turnover 2.2 2.1 2.0 1.9
CAPEX -310 -1,201 -319 -341 Returns 2015FYA 2016FYE 2017FYE 2018FYE
Free cashflow to the firm 1,938 1,880 3,175 3,868 Return on equity stated (%) 39.9 40.0 40.0 40.2
Cash flow from Investments -392 -1,300 -433 -472 ROIC (%) 98.4 83.0 92.9 106.0
Cashflow from financing activities -1,344 -1,574 -1,858 -2,200 Interest burden (X) 1.0 1.0 1.0 1.0
Changes in Net Cash/Debt 512 207 1,203 1,537 Tax rate (%) 27.8 28.0 28.0 28.0
Net debt at start -2,252 -2,764 -2,971 -4,174 Financial leverage 0.0 0.0 0.0 0.0
Change in Net debt -512 -207 -1,203 -1,537 Gearing 2015FYA 2016FYE 2017FYE 2018FYE
Net debt at end -2,764 -2,971 -4,174 -5,711 Net debt/equity (%) -55.0 -48.0 -55.1 -61.6
Balance Sheet 2015FYA 2016FYE 2017FYE 2018FYE Net Debt to EBITDA (x) -0.8 -0.8 -0.9 -1.0
Total Current Assets 6,503 7,240 9,068 11,320 Interest coverage ratio (X) -35.4 -37.1 -36.6 -30.8
Total Fixed Assets 838 1,819 1,889 1,923 Source: Company data, Credit Suisse Estimates
Total liabilities 2,846 3,465 4,048 4,736
Shareholder equity 5,030 6,197 7,587 9,272
Minority interests -9 -9 -7 -4
Total liabilities and equity 7,867 9,653 11,629 14,004
Net debt -2,764 -2,971 -4,174 -5,711

IDEAS ENGINE 6
South African Apparel Retail
The Foschini Group (TFGJ.J)
Price (20-Jul-15,R) 155.0
Market Cap (Rmn) 32705.8
Previous Value Current Value
Rating NEUTRAL
Target Price (R) 165.00 150.00
EPS FY1E (R) 10.44 10.26
EPS FY2E (R) 12.01 11.47
EPS FY3E (R) 13.84 12.89
Source: Credit Suisse Estimates, IBES
Income Statement 2015FYA 2016FYE 2017FYE 2018FYE Per Share 2015FYA 2016FYE 2017FYE 2018FYE
Sales Revenue 16,086 20,616 22,850 25,349 No. of shares (wtd avg.) (mn) 206 210 213 213
EBITDA 2,913 3,993 4,448 4,950 EPS (CS Adj.) (R) 8.95 10.26 11.47 12.89
Depr. & Amort. -428 -650 -727 -815 DPS (R) 5.88 6.78 7.58 8.51
EBIT 2,786 3,343 3,721 4,135 Dividend yield (%) 3.87 4.46 4.99 5.61
Net interest income (exp) -198 -300 -267 -252 Dividend Payout (%) 65.71 66.04 66.04 66.04
Other adj. 302 0 0 0 Earnings 2015FYA 2016FYE 2017FYE 2018FYE
Profit before tax 2,890 3,043 3,454 3,883 Sales Growth (%) 13.61 28.16 10.83 10.94
Income tax -754 -855 -971 -1,091 EBIT Growth (%) 10.62 19.98 11.30 11.12
Profit after tax 2,137 2,188 2,484 2,792 Net Income Growth (%) 9.57 16.97 13.43 12.33
Minorities -0 -31 -37 -44 EPS growth (%) 10.31 14.67 11.81 12.33
Associates & Other -292 0 0 0 EBITDA Margin (%) 18.11 19.37 19.47 19.53
Net profit (CS) 1,844 2,157 2,446 2,748 EBIT Margin (%) 17.32 16.22 16.29 16.31
Other NPAT adjustments 24 0 0 0 Pretax Profit Margin (%) 17.97 14.76 15.12 15.32
Net profit (Reported) 1,867 2,157 2,446 2,748 Net Income Margin (%) 11.46 10.46 10.71 10.84
Cash Flow 2015FYA 2016FYE 2017FYE 2018FYE Valuation 2015FYA 2016FYE 2017FYE 2018FYE
EBIT 2,786 3,343 3,721 4,135 EV/Sales (x) 2.4 1.8 1.6 1.4
Net Interest -228 -320 -290 -280 EV/EBITDA (x) 13.1 9.3 8.3 7.4
Cash taxes paid -766 -749 -855 -971 EV/EBIT (x) 13.7 11.1 9.9 8.8
Change in Working capital -998 -560 -521 -560 P/E (x) 17.0 14.8 13.2 11.8
Other cash and non-cash items 300 654 731 821 Price to book (x) 3.8 3.3 3.1 2.9
Cash flow from Operations 1,095 2,368 2,786 3,146 Asset Turnover 0.9 1.1 1.1 1.2
CAPEX -670 -660 -663 -760 Returns 2015FYA 2016FYE 2017FYE 2018FYE
Free cashflow to the firm 425 1,709 2,123 2,386 Return on equity stated (%) 24.3 24.2 24.5 25.7
Cash flow from Investments -1,780 -660 -663 -760 ROIC (%) 13.0 16.2 17.6 19.1
Cashflow from financing activities -2,898 -609 -1,809 -2,018 Interest burden (X) 1.0 0.9 0.9 0.9
Changes in Net Cash/Debt -3,583 1,100 314 367 Tax rate (%) 32.8 28.1 28.1 28.1
Net debt at start 2,659 6,242 5,142 4,828 Financial leverage 0.9 0.6 0.6 0.5
Change in Net debt 3,583 -1,100 -314 -367 Gearing 2015FYA 2016FYE 2017FYE 2018FYE
Net debt at end 6,242 5,142 4,828 4,461 Net debt/equity (%) 76.7 53.0 46.6 40.2
Balance Sheet 2015FYA 2016FYE 2017FYE 2018FYE Net Debt to EBITDA (x) 2.1 1.3 1.1 0.9
Total Current Assets 11,608 12,488 13,521 14,629 Interest coverage ratio (X) 14.1 11.1 13.9 16.4
Total Fixed Assets 2,197 2,331 2,409 2,516 Source: Company data, Credit Suisse Estimates
Total liabilities 10,400 9,726 10,039 10,340
Shareholder equity 8,131 9,679 10,316 11,046
Minority interests 3 18 37 59
Total liabilities and equity 18,533 19,423 20,392 21,445
Net debt 6,242 5,142 4,828 4,461

IDEAS ENGINE 7
South African Apparel Retail
Truworths International Limited (TRUJ.J)
Price (20-Jul-15,R) 88.2
Market Cap (Rmn) 37866.7
Previous Value Current Value
Rating NEUTRAL UNDERPERFORM
Target Price (R) 78.00 65.00
EPS FY1E (R) 5.91 5.90
EPS FY2E (R) 6.76 6.41
EPS FY3E (R) 7.63 6.83
Source: Credit Suisse Estimates, IBES
Income Statement 2014FYA 2015FYE 2016FYE 2017FYE Per Share 2014FYA 2015FYE 2016FYE 2017FYE
Sales Revenue 10,458 11,314 12,526 13,642 No. of shares (wtd avg.) (mn) 424 420 420 420
EBITDA 3,424 3,566 3,868 4,103 EPS (CS Adj.) (R) 5.68 5.90 6.41 6.83
Depr. & Amort. -203 -241 -277 -316 DPS (R) 3.85 4.00 4.35 4.63
EBIT 3,240 3,344 3,610 3,807 Dividend yield (%) 4.39 4.56 4.95 5.28
Net interest income (exp) 89 110 147 195 Dividend Payout (%) 67.75 67.75 67.75 67.75
Other adj. 36 0 0 0 Earnings 2014FYA 2015FYE 2016FYE 2017FYE
Profit before tax 3,365 3,454 3,757 4,002 Sales Growth (%) 7.10 8.18 10.72 8.91
Income tax -952 -978 -1,064 -1,134 EBIT Growth (%) -0.98 3.21 7.95 5.45
Profit after tax 2,413 2,475 2,693 2,868 Net Income Growth (%) 0.04 2.76 8.77 6.52
Minorities -0 -0 -0 -0 EPS growth (%) 1.36 3.77 8.77 6.52
Associates & Other -4 0 0 0 EBITDA Margin (%) 32.74 31.52 30.88 30.08
Net profit (CS) 2,409 2,475 2,693 2,868 EBIT Margin (%) 30.98 29.56 28.82 27.90
Other NPAT adjustments -3 0 0 0 Pretax Profit Margin (%) 32.18 30.53 29.99 29.33
Net profit (Reported) 2,406 2,475 2,693 2,868 Net Income Margin (%) 23.03 21.88 21.50 21.02
Cash Flow 2014FYA 2015FYE 2016FYE 2017FYE Valuation 2014FYA 2015FYE 2016FYE 2017FYE
EBIT 3,240 3,344 3,610 3,807 EV/Sales (x) 3.4 3.2 2.8 2.5
Net Interest 917 1,104 1,235 1,326 EV/EBITDA (x) 10.5 10.0 9.0 8.3
Cash taxes paid -984 -951 -978 -1,064 EV/EBIT (x) 11.1 10.7 9.7 8.9
Change in Working capital -105 -264 -170 -180 P/E (x) 15.4 14.9 13.7 12.8
Other cash and non-cash items -527 -772 -830 -834 Price to book (x) 5.0 4.5 4.0 3.6
Cash flow from Operations 2,541 2,461 2,867 3,054 Asset Turnover 1.3 1.2 1.2 1.2
CAPEX -275 -430 -376 -409 Returns 2014FYA 2015FYE 2016FYE 2017FYE
Free cashflow to the firm 2,266 2,031 2,491 2,645 Return on equity stated (%) 31.0 32.0 31.1 29.6
Cash flow from Investments -287 -445 -393 -428 ROIC (%) 45.9 43.5 45.1 45.7
Cashflow from financing activities -1,991 -1,616 -1,677 -1,824 Interest burden (X) 1.0 1.0 1.0 1.1
Changes in Net Cash/Debt 263 400 797 803 Tax rate (%) 28.4 28.3 28.3 28.3
Net debt at start -1,325 -1,588 -1,988 -2,785 Financial leverage 0.0 0.0 0.0 0.0
Change in Net debt -263 -400 -797 -803 Gearing 2014FYA 2015FYE 2016FYE 2017FYE
Net debt at end -1,588 -1,988 -2,785 -3,587 Net debt/equity (%) -23.9 -26.5 -32.7 -37.5
Balance Sheet 2014FYA 2015FYE 2016FYE 2017FYE Net Debt to EBITDA (x) -0.5 -0.6 -0.7 -0.9
Total Current Assets 6,716 7,472 8,571 9,674 Interest coverage ratio (X) -36.4 -30.4 -24.6 -19.5
Total Fixed Assets 934 1,151 1,279 1,403 Source: Company data, Credit Suisse Estimates
Total liabilities 1,434 1,554 1,771 1,962
Shareholder equity 6,642 7,501 8,517 9,561
Minority interests 0 0 0 0
Total liabilities and equity 8,076 9,056 10,288 11,522
Net debt -1,588 -1,988 -2,785 -3,587

IDEAS ENGINE 8
South African Apparel Retail
Woolworths Holdings Limited (WHLJ.J)
Price (20-Jul-15,R) 98.6
Market Cap (Rmn) 100234.5
Previous Value Current Value
Rating NEUTRAL
Target Price (R) 86.00 94.00
EPS FY1E (R) 3.96 3.96
EPS FY2E (R) 4.76 4.66
EPS FY3E (R) 5.70 5.58
Source: Credit Suisse Estimates, IBES
Income Statement 2014FYA 2015FYE 2016FYE 2017FYE Per Share 2014FYA 2015FYE 2016FYE 2017FYE
Sales Revenue 39,707 61,521 66,758 73,200 No. of shares (wtd avg.) (mn) 801 903 961 961
EBITDA 5,117 7,741 8,924 10,256 EPS (CS Adj.) (R) 3.77 3.96 4.66 5.58
Depr. & Amort. -872 -1,559 -1,772 -1,977 DPS (R) 2.72 2.86 3.36 4.03
EBIT 4,245 6,183 7,152 8,279 Dividend yield (%) 2.80 2.94 3.46 4.15
Net interest income (exp) -24 -1,210 -1,090 -990 Dividend Payout (%) 72.11 72.11 72.11 72.11
Other adj. 185 204 224 246 Earnings 2014FYA 2015FYE 2016FYE 2017FYE
Profit before tax 4,406 5,177 6,286 7,535 Sales Growth (%) 12.72 54.94 8.51 9.65
Income tax -1,114 -1,450 -1,810 -2,170 EBIT Growth (%) 19.61 45.64 15.68 15.75
Profit after tax 3,292 3,727 4,476 5,365 Net Income Growth (%) 16.44 18.54 25.10 19.86
Minorities -102 -0 -0 -0 EPS growth (%) 21.20 5.14 17.61 19.86
Associates & Other -172 -149 0 0 EBITDA Margin (%) 12.89 12.58 13.37 14.01
Net profit (CS) 3,018 3,578 4,476 5,365 EBIT Margin (%) 10.69 10.05 10.71 11.31
Other NPAT adjustments -233 -512 0 0 Pretax Profit Margin (%) 11.10 8.41 9.42 10.29
Net profit (Reported) 2,785 3,066 4,476 5,365 Net Income Margin (%) 7.60 5.82 6.70 7.33
Cash Flow 2014FYA 2015FYE 2016FYE 2017FYE Valuation 2014FYA 2015FYE 2016FYE 2017FYE
EBIT 4,245 6,183 7,152 8,279 EV/Sales (x) 2.5 1.8 1.7 1.5
Net Interest -2 -1,220 -1,100 -1,000 EV/EBITDA (x) 19.1 14.6 12.6 10.8
Cash taxes paid -1,047 -1,114 -1,450 -1,810 EV/EBIT (x) 23.0 18.3 15.7 13.3
Change in Working capital -407 13 102 126 P/E (x) 25.8 24.5 20.8 17.4
Other cash and non-cash items 1,287 1,016 1,782 1,987 Price to book (x) 9.7 5.3 5.1 4.6
Cash flow from Operations 4,076 4,878 6,487 7,582 Asset Turnover 1.8 1.4 1.5 1.6
CAPEX -1,314 -2,615 -2,670 -2,562 Returns 2014FYA 2015FYE 2016FYE 2017FYE
Free cashflow to the firm 2,762 2,263 3,817 5,020 Return on equity stated (%) 37.2 25.4 26.2 28.2
Cash flow from Investments -1,710 -26,162 -2,670 -2,562 ROIC (%) 50.9 14.4 16.9 19.3
Cashflow from financing activities -1,936 5,966 -2,744 -3,228 Interest burden (X) 1.0 0.8 0.9 0.9
Changes in Net Cash/Debt 130 -15,426 1,072 1,792 Tax rate (%) 27.1 31.4 28.8 28.8
Net debt at start -750 -880 14,546 13,474 Financial leverage 1.1 0.9 0.8 0.6
Change in Net debt -130 15,426 -1,072 -1,792 Gearing 2014FYA 2015FYE 2016FYE 2017FYE
Net debt at end -880 14,546 13,474 11,682 Net debt/equity (%) -12.7 96.9 80.5 61.9
Balance Sheet 2014FYA 2015FYE 2016FYE 2017FYE Net Debt to EBITDA (x) -0.2 1.9 1.5 1.1
Total Current Assets 14,077 8,095 8,683 9,406 Interest coverage ratio (X) 176.9 5.1 6.6 8.4
Total Fixed Assets 3,404 14,665 15,563 16,147 Source: Company data, Credit Suisse Estimates
Total liabilities 15,317 27,909 27,888 27,304
Shareholder equity 6,629 14,906 16,637 18,774
Minority interests 323 107 107 107
Total liabilities and equity 22,269 42,922 44,632 46,186
Net debt -880 14,546 13,474 11,682

IDEAS ENGINE 9
South African Apparel Retail
Figure 7: Global apparel retail valuation comparison
PE EV/NOPAT EV/EBITDA FCF Yield Dividend Yield
Target Upside /
Share price CY2015E CY2016E CY2015E CY2016E CY2015E CY2016E CY2015E CY2016E CY2015E CY2016E
Rating Ticker CCY price (Downside)
South Africa
Mr Price Group Limited OUTPERFORM MPCJ.J ZAR 260.7 283.0 9% 26.8x 22.9x 24.8x 20.73x 16.7x 14.0x 2.9% 4.3% 2.5% 2.9%
The Foschini Group NEUTRAL TFGJ.J ZAR 156.2 150.0 -4% 15.7x 14.0x 16.9x 14.71x 10.3x 8.8x 4.2% 6.1% 4.2% 4.7%
Truworths International Limited UNDERPERFORM TRUJ.J ZAR 89.7 65.0 -28% 14.5x 13.5x 14.7x 13.57x 9.9x 9.0x 5.9% 6.7% 4.7% 5.0%
Woolworths Holdings Limited NEUTRAL WHLJ.J ZAR 99.3 94.0 -5% 23.0x 19.4x 23.1x 20.9x 12.9x 12.0x 3.0% 4.4% 3.1% 3.7%
Average 20.0x 17.4x 19.9x 17.5x 12.4x 11.0x 4.0% 5.4% 3.6% 4.1%

Latam
Marisa S.A. UNDERPERFORM AMAR3 BRL 9.1 17.0 88% 8.3x 5.6x 8.4x 6.00x 4.0x 3.5x 10.0% 9.0% 2.1% 3.0%
Arezzo Industria e Comercio SA NEUTRAL ARZZ3 BRL 22.2 33.0 49% 13.5x 11.1x 12.8x 10.9x 8.5x 7.2x -4.5% -5.6% 3.7% 4.3%
CIA Hering S.A. NEUTRAL HGTX3 BRL 11.9 25.0 110% 6.0x 5.2x 5.9x 5.0x 3.8x 3.2x 13.9% 13.3% 11.8% 13.4%
Restoque Comércio e Confecções de NEUTRAL LLIS3 BRL 5.6 7.0 25% 25.7x 19.1x 26.4x 24.6x 11.4x 9.9x 5.7% 6.2% 0.6% 1.0%
Lojas Renner S.A. OUTPERFORM LREN3 BRL 111.6 100.0 -10% 24.9x 20.6x 24.2x 20.2x 12.7x 10.7x 3.8% 6.3% 1.3% 2.0%
GRUPO SANBORNS, S.A.B. DE CV OUTPERFORM GSNBRB1.MX MXN 25.6 31.0 21% 18.7x 16.5x 15.5x 14.1x 9.6x 8.7x 4.0% 5.8% 4.1% 4.1%
El Puerto de Liverpool, S.A.B. de C.V. OUTPERFORM LIVEPOLC1.MX MXN 193.0 175.0 -9% 30.1x 25.5x 30.0x 25.9x 18.3x 15.9x 0.8% 0.7% 0.2% 0.5%
S.A.C.I. FALABELLA NEUTRAL FALAB CLP 4400.0 4500.0 2% 20.1x 18.1x 20.1x 18.1x 12.2x 10.9x 1.1% 1.8% 1.3% 1.5%
Average 18.4x 15.2x 17.9x 15.6x 10.1x 8.8x 4.4% 4.7% 3.1% 3.7%

Europe
Hennes & Mauritz NEUTRAL HMb.ST SEK 339.4 360.0 6% 26.0x 24.0x 22.4x 20.7x 14.1x 13.0x 3.4% 3.5% 3.1% 3.4%
Inditex UNDERPERFORM ITX.MC EUR 31.0 20.0 -35% 34.6x 31.4x 33.6x 30.2x 20.1x 18.1x 3.1% 3.4% 1.5% 1.6%
Marks & Spencer UNDERPERFORM MKS.L GBp 531.5 500.0 -6% 15.5x 15.2x 18.8x 18.3x 7.7x 7.6x 7.5% 7.7% 3.5% 3.5%
Next NEUTRAL NXT.L GBp 7665.0 7450.0 -3% 18.0x 17.3x 18.2x 17.5x 12.7x 12.2x 5.6% 5.9% 2.0% 2.1%
OVS Spa NEUTRAL OVS.MI EUR 6.0 5.0 -16% 22.1x 19.6x 18.2x 17.5x 10.3x 9.6x 2.4% 5.8% 0.9% 1.5%
XXL ASA NEUTRAL XXLA.OL NOK 89.8 81.0 -10% 26.2x 20.3x 18.2x 17.5x 17.9x 14.2x 2.1% 3.3% 2.5% 3.0%
Average 23.7x 21.3x 21.6x 20.3x 13.8x 12.5x 4.0% 5.0% 2.2% 2.5%

US
Francesca's Not Covered FRAN.OQ USD 12.4 14.8x 13.0x 1.4x 1.5x 6.6x 5.8x
Ralph Lauren OUTPERFORM RL.N USD 130.3 146.0 12% 18.1x 17.1x 16.1x 15.8x 8.4x 8.2x 4.6% 4.8% 1.5% 1.7%
The Gap, Inc. UNDERPERFORM GPS.N USD 36.9 35.0 -5% 13.3x 12.5x 13.7x 13.1x 6.5x 6.2x 12.5% 12.3% 2.5% 2.5%
Abercrombie & Fitch Co. UNDERPERFORM ANF.N USD 21.0 15.0 -28% 24.2x 25.0x 18.4x 18.5x 3.8x 3.9x 17.9% 7.1% 4.7% 5.2%
Amer Eagle Out Not Covered AEO.N USD 18.0 19.2x 17.1x 1.3x 1.4x 7.0x 6.5x
Phillips-Van Heusen OUTPERFORM PVH.N USD 114.3 131.0 15% 16.4x 15.4x 18.6x 17.3x 11.4x 10.7x 5.9% 6.2% 0.2% 0.3%
Average 17.6x 16.7x 11.6x 11.3x 7.3x 6.9x 10.2% 7.6% 2.2% 2.4%

Asia
Fast Retailing NEUTRAL 9983.T JPY 58790.0 45000.0 -23% 43.3x 42.2x 40.9x 37.2x 23.3x 22.1x 2.0% 1.8% 0.8% 0.8%

Source: Company data, Credit Suisse estimates, IBES estimates for Not Covered stocks, Priced as at 21 July 2014

IDEAS ENGINE 10
South African Apparel Retail
Figure 8: Global apparel growth and margin comparison
Sales growth EBITDA growth EBIT growth EPS growth EBIT margin
Last
FY1e FY2e FY3e 3yr CAGR FY1e FY2e FY3e 3yr CAGR FY1e FY2e FY3e 3yr CAGR FY1e FY2e FY3e 3yr CAGR FY1e FY2e FY3e
Actual

South Africa
Mr Price Group Limited 14.7% 15.1% 15.0% 14.9% 20.5% 18.3% 19.2% 19.4% 20.5% 18.6% 19.0% 19.4% 16.7% 17.2% 18.4% 17.4% 17.8% 18.7% 19.3% 20.0%
The Foschini Group 28.2% 10.8% 10.9% 16.4% 37.1% 11.4% 11.3% 19.3% 20.0% 11.3% 11.1% 14.1% 14.7% 11.8% 12.3% 12.9% 17.3% 16.2% 16.3% 16.3%
Truworths International Limited 8.2% 10.7% 8.9% 9.3% 4.1% 8.5% 6.1% 6.2% 3.2% 8.0% 5.5% 5.5% 3.8% 8.8% 6.5% 6.3% 31.0% 29.6% 28.8% 27.9%
Woolworths Holdings Limited 54.9% 8.5% 9.6% 22.6% 51.3% 15.3% 14.9% 26.1% 45.6% 15.7% 15.8% 24.9% 5.1% 17.6% 19.9% 14.0% 10.7% 10.0% 10.7% 11.3%

Latam
Marisa S.A. 9.1% 8.4% 8.4% 8.7% 31.7% 16.1% 11.1% 19.3% 42.7% 22.0% 35.7% 33.2% 61.3% 47.6% 48.6% 52.4% 6.7% 8.7% 9.8% 12.3%
Arezzo Industria e Comercio SA 11.3% 9.6% 9.8% 10.2% 15.7% 14.7% 16.1% 15.5% 17.7% 14.0% 15.6% 15.7% 15.0% 15.0% 21.5% 17.1% 15.4% 16.2% 16.9% 17.8%
Restoque Comércio e Confecções de
Roupas S.A. 12.1% 8.1% 8.1% 9.4% 12.2% 10.8% 12.0% 11.7% 17.8% 14.3% 16.5% 16.2% 317.6% 59.7% 29.6% 105.2% 10.8% 11.3% 12.0% 12.9%
Lojas Renner S.A. 13.5% 13.5% 10.8% 12.6% 14.6% 19.0% 18.2% 17.3% 12.7% 18.6% 24.0% 18.3% 21.1% 20.7% 30.2% 23.9% 15.4% 15.3% 16.0% 17.9%
GRUPO SANBORNS, S.A.B. DE CV 7.9% 9.0% 9.1% 8.7% 11.2% 12.7% 12.7% 12.2% 8.7% 13.0% 13.0% 11.6% 9.6% 12.9% 13.7% 12.0% 10.7% 10.8% 11.2% 11.6%
El Puerto de Liverpool, S.A.B. de C.V. 10.9% 12.5% 12.5% 12.0% 10.6% 16.7% 14.4% 13.9% 10.8% 17.7% 15.0% 14.4% 11.0% 17.8% 15.6% 14.8% 13.7% 13.7% 14.3% 14.6%
S.A.C.I. FALABELLA 9.3% 9.4% 9.3% 9.3% 9.0% 11.4% 11.0% 10.5% 9.9% 11.6% 11.3% 11.0% 14.7% 11.0% 11.7% 12.4% 10.7% 10.8% 11.0% 11.2%

Europe
Hennes & Mauritz 20.5% 11.3% 9.7% 13.7% 9.8% 7.9% 15.1% 10.9% 7.4% 7.7% 16.0% 10.3% 7.5% 7.7% 16.0% 10.3% 16.9% 15.1% 14.6% 15.4%
Inditex 12.7% 8.7% 8.2% 9.9% 13.5% 9.5% 8.8% 10.6% 14.2% 10.0% 9.5% 11.2% 13.3% 10.0% 9.5% 10.9% 17.7% 17.9% 18.1% 18.3%
Marks & Spencer 2.9% 3.0% 1.7% 2.5% 5.5% 0.6% 1.9% 2.6% 5.5% 1.1% 3.2% 3.3% 5.9% 0.2% 5.0% 3.7% 7.4% 7.6% 7.4% 7.6%
Next 6.2% 4.1% 3.7% 4.7% 4.5% 3.7% 3.0% 3.7% 4.8% 3.9% 3.1% 3.9% 2.1% 4.1% 3.3% 3.2% 20.3% 20.0% 20.0% 19.9%
OVS Spa 6.3% 7.2% 7.1% 6.9% 6.4% 3.5% 19.8% 9.7% 8.6% 3.7% 29.2% 13.3% 220.3% 6.4% 29.5% 64.0% 7.7% 7.8% 7.6% 9.2%
XXL ASA 25.9% 18.6% 18.0% 20.8% 17.0% 26.9% 22.2% 22.0% 17.0% 27.8% 22.8% 22.4% 52.3% 28.9% 22.9% 34.1% 10.7% 9.9% 10.7% 11.1%

US
Francesca's * 10.9% 11.4% 11.7% 11.3% -18.1% 4.6% 10.2% -1.9% -24.5% 1.7% 13.1% -4.6% -21.0% 1.6% 14.9% -2.6% 22.4% 15.2% 13.9% 14.1%
Ralph Lauren 0.4% 4.5% 5.8% 3.6% -9.3% 7.3% 9.2% 2.0% -14.3% 8.0% 10.7% 0.8% -11.1% 11.4% 13.6% 4.0% 13.6% 11.6% 12.0% 12.5%
The Gap, Inc. -0.4% 3.9% 5.6% 3.0% -3.4% 5.6% 5.6% 2.5% -6.0% 6.1% 5.7% 1.8% 1.1% 6.8% 6.4% 4.7% 12.4% 11.7% 12.0% 12.0%
Abercrombie & Fitch Co. -0.5% -0.5% -0.5% -0.5% -2.6% -2.7% -2.7% -2.6% -4.7% -5.0% -5.0% -4.9% -5.2% -5.5% -5.6% -5.5% 4.2% 4.0% 3.8% 3.6%
Amer Eagle Out * -0.7% 5.4% 1.9% 2.2% -1.6% 30.1% 8.3% 11.5% -11.4% 47.7% 12.0% 13.6% -14.9% 53.7% 9.5% 12.7% 7.1% 6.3% 8.8% 9.7%
Phillips-Van Heusen -3.5% 3.4% 4.4% 1.3% -5.2% 4.1% 6.8% 1.8% -6.7% 4.9% 8.3% 2.0% -4.9% 7.7% 12.2% 4.7% 11.2% 10.8% 11.0% 11.4%

Asia
Fast Retailing 19.7% 15.0% 9.9% 14.8% 51.3% 3.6% 4.4% 17.9% 60.3% 3.3% 4.2% 19.9% 85.5% 0.1% 7.9% 26.1% 9.4% 12.6% 11.3% 10.8%

Source: Company data, Credit Suisse estimates, IBES estimates for Not Covered stocks indicated with *

IDEAS ENGINE 11
South African Apparel Retail
Companies Mentioned (Price as of 20-Jul-2015)
Abercrombie & Fitch Co. (ANF.N, $21.54)
Amer Eagle Out (AEO.N, $18.01)
American Apparel (APP.A, $0.3)
Arezzo Industria e Comercio SA (ARZZ3.SA, R$22.55)
Associated British Foods (ABF.L, 3202.0p)
CIA Hering S.A. (HGTX3.SA, R$12.2)
El Puerto de Liverpool, S.A.B. de C.V. (LIVEPOLC1.MX, MXN193.02)
Etam Develop (TAM.PA, €53.0)
Fast Retailing (9983.T, ¥57,220)
Francesca's (FRAN.OQ, $12.52)
GRUPO SANBORNS, S.A.B. DE CV (GSNBRB1.MX, MXN25.03)
Hennes & Mauritz (HMb.ST, Skr341.8)
Inditex (ITX.MC, €31.14)
Lojas Renner S.A. (LREN3.SA, R$112.4)
Marisa S.A. (AMAR3.SA, R$9.02)
Marks & Spencer (MKS.L, 534.0p)
Mr Price Group Limited (MPCJ.J, R257.33, OUTPERFORM, TP R283.0)
Next (NXT.L, 7640.0p)
OVS Spa (OVS.MI, €5.91)
Phillips-Van Heusen (PVH.N, $114.43)
Ralph Lauren (RL.N, $130.51)
Restoque Comércio e Confecções de Roupas S.A. (LLIS3.SA, R$5.75)
S.A.C.I. FALABELLA (FAL.SN, CLP$4400.0)
The Foschini Group (TFGJ.J, R155.0, NEUTRAL, TP R150.0)
The Gap, Inc. (GPS.N, $37.61)
Tom Tailor Hldg (TTIGn.DE, €9.679)
Truworths International Limited (TRUJ.J, R88.2, UNDERPERFORM, TP R65.0)
Woolworths Holdings Limited (WHLJ.J, R98.6, NEUTRAL, TP R94.0)
XXL ASA (XXLA.OL, Nkr90.25)

Disclosure Appendix
Important Global Disclosures
The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the
subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Mr Price Group Limited (MPCJ.J)

MPCJ.J Closing Price Target Price

Date (R) (R) Rating
13-Aug-12 129.29 116.00 N
04-Dec-12 132.80 136.00
20-Feb-13 121.00 NR
28-Aug-13 119.98 129.00 N*
29-Nov-13 155.00 147.50
02-Jun-14 169.20 165.00
19-Nov-14 238.84 235.00
23-Feb-15 265.00 259.00
11-Jun-15 244.50 272.00 O
* Asterisk signifies initiation or assumption of coverage. N EU T RA L
N O T RA T ED
O U T PERFO RM

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3-Year Price and Rating History for The Foschini Group (TFGJ.J)

TFGJ.J Closing Price Target Price

Date (R) (R) Rating
13-Aug-12 139.90 154.00 O
04-Dec-12 132.60 158.00
20-Feb-13 114.60 NR
28-Aug-13 95.31 88.50 U*
29-Nov-13 101.50 90.50
03-Jun-14 108.10 105.00 N
12-Nov-14 132.00 145.00 O
23-Feb-15 171.00 162.00 N
01-Jun-15 157.00 165.00
* Asterisk signifies initiation or assumption of coverage. O U T PERFO RM
N O T RA T ED
U N D ERPERFO RM
N EU T RA L

3-Year Price and Rating History for Truworths International Limited (TRUJ.J)

TRUJ.J Closing Price Target Price

Date (R) (R) Rating
13-Aug-12 104.00 102.00 N
04-Dec-12 97.99 109.00
20-Feb-13 99.80 NR
28-Aug-13 80.00 96.50 O*
29-Nov-13 81.01 92.50
25-Feb-14 69.95 84.00
12-Nov-14 68.86 73.00 N
23-Feb-15 94.35 78.00
* Asterisk signifies initiation or assumption of coverage.
N EU T RA L
N O T RA T ED
O U T PERFO RM

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3-Year Price and Rating History for Woolworths Holdings Limited (WHLJ.J)

WHLJ.J Closing Price Target Price

Date (R) (R) Rating
01-Aug-12 50.94 57.13 O
03-Sep-12 57.79 63.79
04-Dec-12 67.60 69.03 N
20-Feb-13 63.02 NR
28-Aug-13 56.98 72.36 O*
28-Nov-13 70.42 NR
02-Dec-13 70.16 83.31 O*
20-Feb-14 59.03 76.17
18-Jul-14 78.08 80.00 N
03-Sep-14 76.58 81.00 O U T PERFO RM
16-Feb-15 92.25 85.00 N EU T RA L
N O T RA T ED
23-Feb-15 94.00 86.00
* Asterisk signifies initiation or assumption of coverage.
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment
banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.
Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with
Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return
relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector , with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive
investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country o r regional benchmark; prior to 2nd October 2012 U.S. and Canadian
ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiv eness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand s tocks, the
expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform wh ere an ETR less than or equal to 5%. A Neutral may be assigned
where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap
with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's
engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or
valuation:
Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.
*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

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Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)
Outperform/Buy* 48% (25% banking clients)
Neutral/Hold* 36% (44% banking clients)
Underperform/Sell* 13% (38% banking clients)
Restricted 3%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same,
as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy o r sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions
stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection
with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for Mr Price Group Limited (MPCJ.J)

Method: Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to value it using the discounted cash flow (DCF) methodology. We forecast explicit cash flows for five years, after
which the growth rate free cash flow return in invested capital is faded to the final year growth rate and WACC respectively over the competitive advantage period (CAP). Our DCF fair value is adjusted by the
WACC to determine our 12-month target price of R283. For Mr Price, we use a 12.02% WACC, 23-year CAP and a final year growth rate of 7.5%.

Risk: Risks to our target price include: (i) Cotton price volatility in (ii) Competition from foreign entrants with similar value proposition; (iii) Brand perception; (iv) Chinese supply chain pressures; and (v) Rand exchange
rate weakness / volatility.

Price Target: (12 months) for The Foschini Group (TFGJ.J)

Method: Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to value it using the discounted cash flow (DCF) methodology. We forecast explicit cash flows for five years, after
which the growth rate free cash flow return in invested capital is faded to the final year growth rate and WACC respectively over the competitive advantage period (CAP). Our DCF fair value is adjusted by the
WACC to determine our 12-month target price of R150. For TFG, we use a 12.1% WACC, 11-year CAP and a final year growth rate of 6%.

Risk: Risks to our target price include: (i) bad debts (ii) exposure to credit sales (iii) Competition from foreign entrants (iv) imported inflation on the back of currency fluctuations (v) fashion trends

Price Target: (12 months) for Truworths International Limited (TRUJ.J)

Method: Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to value it using the discounted cash flow (DCF) methodology. We forecast explicit cash flows for five years, after
which the growth rate free cash flow return in invested capital is faded to the final year growth rate and WACC respectively over the competitive advantage period (CAP). Our DCF fair value is adjusted by the
WACC to determine our 12-month target price of R65. For Truworths, we use a 13.25% WACC, 10-year CAP and a final year growth rate of 6%.

Risk: Risks to our target price include: (i) bad debts (ii) high exposure to credit sales (iii) competition from foreign entrants (iv) imported inflation on the back of currency fluctuations (v) new management strategy (vi)
excess cash on balance sheet (vii) fashion trends

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Price Target: (12 months) for Woolworths Holdings Limited (WHLJ.J)
Method: Owing to the stable cash flow growth of the retail industry, we believe it is appropriate to value it using the discounted cash flow (DCF) methodology. We forecast explicit cash flows for five years, after
which the growth rate free cash flow return in invested capital is faded to the final year growth rate and WACC respectively over the competitive advantage period (CAP). Our DCF fair value is adjusted by the
WACC to determine our 12-month target price of R94. For Woolworths, we use a 12.25% WACC, 15-year CAP and a final year growth rate of 5%.

Risk: Risks include (i) execution risk in Australia, (ii) significant currency movements, (iii) poor fashion calls, (iv) increased competition from foreign entrants, (v) weak macro economic environment.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (ABF.L, GSNBRB1.MX, LIVEPOLC1.MX) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the subject company (ABF.L) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (ABF.L) within the past 12 months
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ABF.L, 9983.T, ANF.N, GPS.N, GSNBRB1.MX, MKS.L, FAL.SN) within the next 3 months.
As of the date of this report, Credit Suisse makes a market in the following subject companies (ANF.N, GPS.N, PVH.N, RL.N).
As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (OVS.MI).

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.
The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (MPCJ.J, TFGJ.J, TRUJ.J, WHLJ.J, HMb.ST, ITX.MC, ABF.L, 9983.T, AMAR3.SA, ANF.N, ARZZ3.SA,
GPS.N, GSNBRB1.MX, HGTX3.SA, LIVEPOLC1.MX, LLIS3.SA, LREN3.SA, MKS.L, NXT.L, OVS.MI, PVH.N, RL.N, FAL.SN) within the past 12 months
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Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment
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Credit Suisse Securities (Europe) Limited (Credit Suisse) acts as broker to (ABF.L).
The following disclosed European company/ies have estimates that comply with IFRS: (HMb.ST, ITX.MC, ABF.L, MKS.L, NXT.L).
Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (GSNBRB1.MX, PVH.N) within the past 3 years.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
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Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Credit Suisse Securities Johannesburg (PTY) Ltd ................................................................................................. Pieter Vorster ; Rishay Dhanraj

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Important Credit Suisse HOLT Disclosures
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