Dow Jones Investment Banker Retail & Consumer Column Highlights

5. Key inputs in blue can be varied by the reader
Total amount of buyback (m) $1,204
Average premium paid on current price 10%
Net cash on hand; used in buyback (m) $404
Interest rate on new debt 5%
Free cash flow, FY2011 (m)* $200
Debt issued in buyback (m) $800
Average price paid per share 20.90$
Shares bought (m) 57.6
Fiscal 2010
estimated
Fiscal 2011
estimated
Fiscal 2011
estimated, with
buyback
Revenues (m)* 5,013$ 5,135$ 5,135$
COGS (m) (3,504)$ (3,574)$ (3,574)$
Gross margins* 30.1% ` 30.4% 30.4%
Operating income (m) 255$ 295$ 295$
Interest expense, net (m) -7.1 -6.6 -40
Pretax income (m) 248$ 289$ 255$
Taxes (m) (86)$ (103)$ (91)$
Net income (m) 162$ 186$ 164$
Diluted shares 156.2 156.2 98.6
EPS 1.03$ 1.17$ 1.67$
EPS accretiveness of buyback: 42%
Cash (m) 541$ 741$ 174$
Debt (m) 137$ 137$ 800$
Net debt (m) (404)$ (604)$ 626$
Effective interest rate 5% 5% 5%
Tax rate 35% 36% 36%
Gross selling space (m) 12.8 12.6 12.6
Sales/square foot 391$ 406$ 406$
Debt/free cash flow 1.0x 0.7x 5.0x
Net debt/free cash flow N/A N/A 3.9x
* Consensus - FactSet
Sources: FactSet, Dow Jones reporting
Created on November 26, 2010
As the shoe retailer rebounds, the company finds itself underleveraged. Shareholders would benefit
from a leveraged recap.
Dow Jones Investment Banker spreadsheets are provided on an “as-is” basis and are for information purposes only. Dow Jones specifically disclaims any representations or
warranties, express or implied, includin g merchantability or fitness for a particular purpose. We do not give tax or investment advice or advocate the purchase or sale of any security
or investment. You should always seek the assistance of a professional for tax and investment advice.
Foot Locker Hits Its Stride

14. Inputs in blue can be adjusted by the reader
All figures in $ millions
Fiscal 2010
sales
Fiscal 2010
operating
profit
Operating
profit
margin
Depreciation &
amortization
(DJIB
estimate)
Fiscal 2010
Ebitda (DJIB
estimate)
Ebitda
margin
Assumed
Ebitda growth
('10 -'11)
Fiscal 2011
Ebitda
Mean peer
forward
multiple
Segment
enterprise
value
North American Retail $2,818 $338 12% $95 $433 15% 5.0% $455 8.0x $3,637
North American
Foodservice
$1,873 $149 8% $70 $219 12% 5.0% $230 7.0x $1,610
International Beverage $3,221 $586 18% $105 $691 21% 6.0% $732 9.0x $6,592
International Bakery $785 $45 6% $30 $75 10% 0.0% $75 6.0x $450
Total $8,697 $1,118 $300 $1,418 16.3% 5.2% $1,492 8.2x $12,289
Cash
adjustment $3,514
Adjusted SOP
value $15,802
Current EV $13,107
Difference $2,695
Discount 17%
Equity value $19.96
15% Tax Leak $16.96
Updated: December 22, 2010 Stock price $17.50
Source: Company filings, DJIB Estimates Premium 3%
At Sara Lee's current stock price, its individual business lines are worth only slightly more separately than the company's current market value. That is not
enough to offset modest tax leakage that could be expected if the units were sold. Therefore, a tax-free spinoff of the beverage unit along with an accelerated
stock repurchase would be more shareholder friendly than a breakup.
Dow Jones Investment Banker spreadsheets are provided on an “as-is” basis and are for information purposes only. Dow Jones specifically disclaims any representations or warranties, express or implied, including merchantability or fitness
for a particular purpose. We do not give tax or investment advice or advocate the purchase or sale of any security or investment. You should always seek the assistance of a professional for tax and investment advice.
Sara Lee: Fully Valued Assuming Modest Tax Leakage
Sara Lee received $1.7 billion in
proceeds December 6 and has
additional business divestures
of $1.1 billion not yet closed.
These flows are taxed at a 15%
capital gains rate (0% tax
basis).

37. YTD ∆% Mkt Cap Remaining
The TJX Cos., Inc. Apparel 19.2% $20.6B Apr '11: $361M $1,200M
Polo Ralph Lauren Corp. Apparel 16.7% $12.4B Dec 10: $0M $719M
VF Corp. Apparel 13.2% $10.7B Mar '11: $3M 6.5M shares
The Buckle, Inc. Apparel 5.3% $1.9B Jan '11: $0M 0.6M shares
Phillips-Van Heusen Corp. Apparel 3.0% $4.4B Jan '11: $0M $0M
Gap, Inc. Apparel -15.4% $10.9B Apr '11: $548M $1,500M
Guess?, Inc. Apparel -17.3% $3.6B Jan '11: $0M $250M
Macy's, Inc. Department 11.8% $12.0B Jan '11: $0M $852M
J.C. Penny Co., Inc. Department 11.8% $7.8B Apr '11: $900M $0M
Nordstrom, Inc. Department 7.4% $10.0B Apr '11: $176M $985M
Ross Stores, Inc. Discount 25.8% $9.4B Apr '11: $112M $788M
Family Dollar Stores, Inc. Discount 9.3% $6.6B Feb '11: $150M $350M
Kohl's Corp. Discount 0.3% $15.8B Apr '11: $445M $3,055M
Target Corp. Discount -18.1% $33.9B Apr '11: $819M $1,400M
Foot Locker, Inc. Footwear 26.7% $3.8B Apr '11: $30M $170M
The Finish Line, Inc. Footwear 26.5% $1.2B Feb '11: $6M 2M shares
Wolverine World Wide, Inc. Footwear 18.9% $1.9B Mar '11: $5M $149M
Nike, Inc. Footwear -1.3% $40.0B Feb '11: $468M $3,300M
Coach, Inc. Leather 8.4% $17.6B Mar '11: $192M $1,300M
The Men's Wearhouse, Inc. Men's 31.8% $1.7B Jan '11: $46M $104M
Abercrombie & Fitch Co, Teen 29.7% $6.5B Apr '11: $26M 9.3M shares
American Eagle Outfitters, Inc. Teen -6.6% $2.7B Jan '11: $24M 14.5M shares
Limited Brands, Inc. Underwear 27.1% $12.5B Apr '11: $500M $500M
Chico's FAS, Inc. Women's 18.6% $2.5B Apr '11: $36M $145M
$4,847M $16,767M
Source: Company Filings and Press Releases
Stock
Most Recent Quarter Reported
Buybacks
Nearly $5 billion in recent share buybacks and $17 billion available under existing authorizations should open the door to more IPOs in the retail sector
Dow Jones Investment Banker spreadsheets are provided on an “as-is” basis and are for information purposes only. Dow Jones specifically disclaims any representations or warranties, express or implied, includin g merchantability
or fitness for a particular purpose. We do not give tax or investment advice or advocate the purchase or sale of any security or investment. You should always seek the assistance of a professional for tax and investment advice.
Retail Buybacks are In

44. Nestle SA deal for
Ralston Purina Co.
2001
($M LTM) EV/sales EV/Ebitda
Sales $2,766 $2,080
Ebitda $758 $604
Ebitda margin 27% 29%
Price/sales 4.2x 4.2x
EV/Ebitda 15.3x 15.3x
EV $11,631 8,747 9,265
Created June. 27, 2011
Sources: FactSet, company filings, DJIB reporting and estimates
Pet Nutrition Segment
DJIB estimate
Colgate Palmolive Co
Colgate Palmolive's pet nutrition unit has litte in common with the parent's dominant business--selling oral, personal and home
care products--and management seems to pay little attention to the pet business. Other pet food businesses have sold at rich
multiples. Using the closest comp, Colgate's business would be worth around $9 billion. Blue figures are inputs that the user
can vary.
Dow Jones Investment Banker spreadsheets are provided on an “as-is” basis and are for information purposes only. Dow Jones specifically disclaims any representations or
warranties, express or implied, includin g merchantability or fitness for a particular purpose. We do not give tax or investment advice or advocate the purchase or sale of any security
or investment. You should always seek the assistance of a professional for tax and investment advice.
Colgate: How Much Would You Pay For Pet Food?

47. $ figures in millions
($M LTM) FY 2010 FY 2011 E EV/sales EV/Ebitda EV/sales EV/Ebitda EV/sales EV/Ebitda
Sales $323 $370 $1,841 $2,008 $2,750
Ebitda $36 $45 $194 $233 $350
Ebitda margin 11% 12% 11% 12% 13%
EV/sales 1.6x 1.4x 1.5x 1.4x 1.0x
EV/Ebitda 14x 11x 14x 11x 8x
EV $517 $517 $2,803 $2,655
Current EV $1,624
63%
Implied market cap $2,048
Current market cap $1,018
Potential premium 101%
Implied share price $10.04
Created July 11, 2011
Sources: FactSet, company filings, DJIB reporting and estimates
PPR SA deal for
Volcom, Inc.
May 2, 2011
$M LTM 2012 Consensus 2015 Goal
Quiksilver, Inc.
surfing, skateboarding and snowboarding
apparel, footwear, accessories
DJIB estimate
PPR's purchase of sports wear maker Volcom sent a message about the attractiveness of U.S. action sports brands. The
next target could be Quiksilver. Blue figures are inputs that the user can vary.
Dow Jones Investment Banker spreadsheets are provided on an “as-is” basis and are for information purposes only. Dow Jones specifically disclaims any representations or
warranties, express or implied, includin g merchantability or fitness for a particular purpose. We do not give tax or investment advice or advocate the purchase or sale of any
security or investment. You should always seek the assistance of a professional for tax and investment advice.
Quiksilver: Skating Its Way To A Sale

50. ($ figures in millions, except share prices)
FY 2006 LTM 7/31/07 FY 2010 LTM 3/31/11 EV/sales EV/Ebitda EV/sales EV/Ebitda EV/sales EV/Ebitda EV/Ebitda
Sales $151 $152 $1,242 $1,258 $968 $995 $1,100 Financial Strategic
Ebitda $10 -$2 $110 $110 $35 $88 $99 $99
Ebitda margin 6% -1% 9% 9% 4% 9% 9% 9%
EV/sales 0.9x 0.9x 1.0x 1.0x 0.6x 0.6x 1.0x
EV/Ebitda 14x NM 11x 11x 17x 7x 9x 11x
EV $133 $133 $1,225 $1,225 $1,100 $842 $1,089
Current EV $603 $603
40% 81%
Implied market cap $867 $1,114
Current market cap $628 $628
Potential premium 38% 77%
Implied share price $9.11 $11.71
Created July 21, 2011
October 31, 2007 May 19, 2011 putters (11%), golf balls (18%), accessories (25%)
FY 2010 2012 Consensus 2013 Potential
SRI Sports deal for Fila Korea deal for Callaway Golf Co.
Roger Cleveland Golf Co. Acushnet Co. Drivers & fairway woods (23% of sales), irons (23%),
Signs of a spring recovery could result in a revaluation of Callaway Golf Co.
Blue figures are inputs that the user can vary.
Callaway: Valued Below Par