Industry Profile:Industry Profile:Specialty RetailSpecialty Retail

Travis NewtonTravis Newton

Truett ShawTruett Shaw

Who? What? Why?Who? What? Why?

• Specialty Retail is a part of the retail sector that is primarily concerned with ‘niche’ segments, mainly Generation Y (7-24 y/o)

• Gen Y makes up roughly 25% of the total U.S. Population. (72.9 million)

• Gen Y-ers are categorized as trend-savvy, sophisticated, fickle, and particular-we know what we want.

• What the young kids are wearing these days…at least according to the analysts…super short mini skirts, sheer tops, vintage surf, terry cloth, velour, 80’s glam and punk,etc…

A Generation Born to SpendA Generation Born to Spend

• In 1995 teens spent an average of $66/week.

• In 2002 the number went up to $87/week

• In 2002 teen spending reached nearly $170 billion

This SeasonThis Season

• Specialty retail is cyclical so it is very important to know what is going on NOW with the industry.

• The buzz has begun to build about the Holiday season , and so far things are looking up. Holiday sales are supposed to grow 5.7% this year to $217 billion!

• The Good: • Cold weather requires a new

wardrobe

• Stores are staying on top of trends

• Increased consumer optimism and pent up demand

• The Bad:• Spending concerns, job security,

energy costs are high, have the child tax credits been spent already?

IntroductionIntroduction

• Shopping Malls

• Casual Apparel

• Teenagers/ Young Adults

• Gap, Limited

• Seasonal

• Timing

Abercrombie & Fitch CoAbercrombie & Fitch Co

• Symbol: ANF

• Price: 27.96

• Range: 17.55-33.65

• 602 Stores– Abercrombie & Fitch– abercrombie– Hollister Co.

Pacific Sunwear of California IncPacific Sunwear of California Inc

• Symbol: PSUN

• Price: 23.30

• Range: 10.00-24.22

• 799 Stores– Pacific Sunwear (619)– PacSun Outlet (73)– d.e.m.o. (107)

Hot Topic, IncHot Topic, Inc

• Symbol: HOTT

• Price: 28.61

• Range: 12.79-29.31

• 505 Stores– Hot Topic (463)– Torrid (42)

Market CapitalizationMarket Capitalization

Stock Price X Total Number of Shares Outstanding

ANF: 2.86B

PSUN: 1.78B

HOTT: 1.33B

Average VolumeAverage Volume

• Mean number of shares traded daily

• ANF: 1.92M

• PSUN: 1.82M

• HOTT: 0.91M

P/E RatioP/E Ratio

• Price per share / Earnings per share– Higher = strong growth prospects– Lower = risky firm

How much investors will pay for profit

ANF: 14.71

PSUN: 28.95

HOTT: 36.91

Earnings Per Share (EPS)Earnings Per Share (EPS)

• Net Income / Total Number of Shares Outstanding

• High correlation with cash flow and stock price

• ANF: 2.013

• PSUN: 0.793

• HOTT: 0.760

Price To Sales RatioPrice To Sales Ratio

• Stock Price / (Total Sales / Number of Shares)

• Amount each dollar of sales is worth to investors

• ANF: 1.69

• PSUN: 1.96

• HOTT: 2.85

EV / EBITDAEV / EBITDA

• Enterprise Value / Earnings Before Interest, Taxes, Depreciation, and Amortization

• Economic Value Of A Company / Operational Cash Flow

• ANF: 6.45• PSUN: 13.25• HOTT: 16.70

ConclusionConclusion

• Happy Halloween

• Go Gators!