Reinhard E. Döpfer Chairman of the European Fashion and Textile Export Council (EFTEC) Lingerie Market Report Russia Spring 2014 Presentation at 4 th RUSSIAN LINGERIE MARKET FORUM in the Framework of 13th RUSSIAN FASHION RETAIL FORUM (RFRF) on the Occasion of CPM BODY & BEACH February 26, 2014, 10:30 – 13:00 hrs. - Updated in April

Table of Content: 1.General reflections on the status of the Russian Intimate Apparel Market 2.Development of Intimate Apparel exports from the member states of EU-27 to Russia 2.1.Benchmark EU-15 exports against EU-Eastern member states’ exports from 2008 until 2013, projection for Benchmark of the 10 main intimate apparel suppliers, comparison of 2013 against Benchmark of the 6 main product categories exports, comparison of 2013 against Share of main product categories of Intimate Apparel against total EU-27 Intimate Apparel Exports to Russia, Comparison of year 2013 to the crisis year Key indicators for the Russian Intimate Apparel Market 2014 p 3.1.Projection on the shares of retail market value 2014 p per price segment 3.2. Projection on the share of main retail channels against total retail market value of € million 2 Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________

1.General reflections on the status of the Russian Intimate Apparel Market Russian consumers of today have a rather need-oriented purchasing behavior for intimate apparel and have developed a very rational price-quality consciousness, which guides their buying decision to the lower-medium to medium-priced underwear. Fashion context, function and fit are secondary attributes which stand in contrast to the hype around body culture, fitness-training and wellness treatments. The Retail Structure for intimate apparel is split between open markets for mass consumption merchandise, domestic and international mono-brand chains offering “affordable” lingerie, a few, but important, multi-brand chains selling “better-to-premium” intimate apparel and privately owned multi-brand shops and boutiques operating in the medium- to upper-medium price segments. Department stores carrying large brand-oriented sections or concessions of women’s lingerie and men’s outerwear, as found in the West, are lacking in Russia. Instead, catalog distance retail and online retail are playing a consistently growing role in the commercialization of intimate apparel. 3 Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________

Import Distributors carrying multi-brand portfolios of intimate apparel still play a dominant role in wholesale, serving over independent shops, often through a network of regional wholesalers. This archaic system of distribution, which costs multiple re-sell margins, is not really breaking up in any way because foreign brands still depend on these distributorships. Direct Purchasing of intimate apparel from foreign brands is complicated and cost-excessive for independents due to numerous problems: prepayments to the supplier, shipping and logistics plus customs clearing at own risk, mandatory EAC certifications including hygiene certification for underwear. Deficits at P.O.S. include weak ERP knowledge, HRP and CRM skills, visual merchandizing, brand-building awareness as well as training of sales personnel and event marketing. 4 Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________

5 2. Development of European Intimate Apparel* Exports to Russia , 2014 p 2.1.Comparison of EU-15 versus EU Eastern Member States Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ *Intimate Apparel includes: day- and night underwear for women, men, children; bras, shapewear, corsetry; home- and loungewear; underskirts, pantyhose (tights) and swimwear for both genders Million Euro

6 Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ 2.2.EU-27 Intimate Apparel Exports to Russia by 10 Main Supplier Countries, Comparison of 2013 against 2010 Million Euro Source: EFTEC

Product Categories Brassieres, Shapewear, Corsetry Pantyhose (Tights) Circular knitted singlets & undervests for women & girls (tops) Circular knitted slips & underpants for women & girls (bottoms) Swimwear for women & girls Slips, briefs, underpants including boxer shorts for men & boys Million € EU-27 Intimate Apparel Exports to Russia by 6 Main Product Categories, Comparison of 2013 against 2010, in million € Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ + 60,5% - 56,0% + 54,4% + 83,0% + 45,0% + 91,0% Source: EFTEC

) € 343,5 Million € 408,2 Million (+ 19%) Source/ Copyright: EFTEC, average nominal annual growth over four years, since 2009 = 4,75% Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ 2.4. Shares of main product categories of Intimate Apparel against total EU-27 Intimate Apparel Exports to Russia, comparison of year 2013 to crisis year 2009

RUB 400 Source: EFTEC 9 Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ 3. Key Indicators for the Russian Intimate Apparel Market 3.1.Projection on the shares of retail market value per price segment 2014 p Luxury Upper Medium Medium Low priced Mass Market Segment (Share in Value!!!) (Share in Volume is over 50%) RUB 400 RUB 800 RUB 900 RUB RUB RUB China, Vietnam, Turkey Ukraine, China, Turkey, Serbia, Romania, Russian Production Retail Market Value per Segment / Market Share in % / Average Retail Price Points / Main Supplier Countries € mn in Total + 3% Italy Italy, France Italy, Germany, France, Austria, Spain, UK Italy, Germany, France Baltic Republics, Belarus, Hungary, Russian Production, Poland, Turkey, Hong Kong € 1.771,5 mn. (40%) ↔ € 1.461,5 mn. (33%) ↗ € 753 mn. (17%) ↘ € 443 mn. (10%) ↘ Luxury & Premium

10 *⁾ Increase of independent multi-brand Intimate apparel shops results from many regional wholesalers changing their business model to retail. Lingerie Market Report Spring th RLMF, February 26, 2014 _________________________________________________________________________________________________________ 3. Key Indicators for the Russian Intimate Apparel Market 3.2.Projection on the shares of main retail channels against the total retail market value of € million Source: EFTEC