PPage 40age 40 DCF and valuation pIndustry oaramevervieterws Accessories remain the biggest category, and it is the fastest Global luxury goods Title for section G Global luxury goods market H growing X Welcome to the third edition of EY’s annual Sales of industry players are expected to grow at a healthy rate, led by double-digit annual growth rate for Financial Factbook for the luxury and cosmetics L’Occitane and Natura from FY11A to FY14E. X sector. The Factbook combines financial Increased demand through innovative products will cater to underserved emerging markets. data, insight from EY’s global team of sector X Introduction of eco-friendly, sustainable and naturally derived beauty products and cosmetics will stimulate specialists and opinions of external experts. demand in established geographies. Global personal luxury goods market by Growth rates of global personal luxury 1 1 Accessories: outperformer product type (2014E) goods market by product type 1 Titles for charts Others* • Since 2012, accessories have become the largest category within luxury goods and 4% have grown the fastest lately, with a CAGR of 11% from 2010 through 2014. Beauty Accessories 20% 29% Accessories 11% • In 2014, the historical pattern held true, as accessories grew 4% — more than any Apparel 5% other personal luxury goods category and more than the market overall. Hard luxury 9% • The online channel is developed well in the accessories segment and constitutes Beauty 4% 41% of total sales. Others* 15% • Soft accessories have been the top-performing luxury category in both the short Hard luxury 0% 5% 10% 15% 20% and the long term. 22% Apparel CAGR 10-14E 25% Luxury leather goods and shoes, 2011-14E2 Titles for charts Soft accessories driving the growth 40 36 37 2 35 34 30 29 • As accessible status symbols, shoes benefit from strong tailwinds and have been n 25 growing faster than the overall leather-goods category for the last three years. o i l l 20 i b 14 Shoe specialists are outpacing lifestyle brands, especially in the men’s segment. € 15 12 13 11 • However, price as a contribution to growth has reached an unsustainable level, and 10 5 implies the brands have been overpricing, particularly in the leather/accessories 0 category, which is expected to limit the growth in the near future. 2011 2012 2013 2014E Luxury leather goods Luxury shoes • The increase in competition is also expected to put some price pressures in the Source: Data based on consensus of several brokers’ reports for each leather/accessories segment. Sources: Altagamma/Bain and other selected research company. Notes: 1) Worldwide Luxury Markets Monitor, 2015 Spring Update, May 2015, Altagamma/Bain N otes:M2a) Lrkuext curay Gpitoaolizdas Wtioon irls bdwaidse Med oan a orket Snetu-mdy Fonath all-Wvienrtaegr 2e a0s o14f D, Aeltcaegmambemr 2a/0B1a2in. The 201*2 gOthreorws ith cnclourdre “espAornts dds te lo ta thae sblael”e, ts gexrotiwle fth rurantie bturee etwtece. n FY11A and FY12A/E. The luxury and cosmetics financial factbook 2015