1. 1 RFID in the Intimates Category: A Perfect Fit January 11, 2006 Reproduction by any method or unauthorized circulation is prohibited without prior approval from KSA

2. 2 Today’s Objectives What is RFID? Why the excitement about RFID? How will this impact Intimates? Who is using RFID? Which applications have high impact? 2

3. 3 What is RFID? 3 Tags Readers Serialized Product Codes

4. 4 Why the buzz? Verify contents without opening the carton Rapid inventory counts ensure proper assortments on sales floor Cleaner merchandise presentation Higher sell through rates Cross-selling opportunities Loss prevention 4

5. 5 Why use RFID with Intimates? SEVERAL VARIATIONS HIGH TRIAL-TO- PURCHASE RATIO DIFFICULT TO LOCATE HIGH SHRINK SHORT WINDOW TO 1 ST MARKDOWN ATTRACTIVENESS FOR ITEM LEVEL RFID HL DESIGNER JEANS BASIC JEANS MENS SUITS WOMENS SWEATERS SOCKS INTIMATES VERY HIGH HIGH MODERATE LOW 5

6. 6 How might you be impacted? 6 Discounter Department Store Specialty Pallet Level Tagging Case Level Tagging Item Level Tagging RFID Migration Path by Retail Format

7. 7 7 Every garment in 6 apparel departments across 53 stores – Men: suits, jackets, pants – Women: intimates, suits & jackets, skirts & pants Tags integrated into existing barcode label M&S supplying labels to suppliers for application at source Tags not being read at POS Labels advise consumers “intelligent label for stock control use” M&S piloting a shirt program across the supply chain to improve item availability Program Details Inventory counts can be completed in less than 15% of current time Associates have grown accustomed to using the RFID hardware Consumer response has been very positive with no privacy backlash Most consumers opt to remove tags at home rather than wait for cashier to remove at POS Findings to Date “[We have] had a very good reaction from customers. They hardly notice the tags but have mentioned improvements in product availability.” “Our suppliers do not have to invest in any RFID hardware at all. They just have to attach the label to the garment as usual; it is just that we will give them a more sophisticated label.” Case Study 1: Marks & Spencer

8. 8 8 Every garment in upscale Santa Fe mall store 3 month pilot Items bound for Santa Fe store get diverted and tagged at DC Tags integrated into price labels Reading tags at DC at point of departure and upon arrival at store Full inventory taken daily Automatic reading of tags and decrementing of inventory at POS terminal Program Details In-stock levels have risen to 99% from 80% Expedited receiving of incoming shipments Daily inventory counts (~30 minutes) instead of lengthy monthly manual count Reading 300+ garments per minute Absolutely no adverse consumer response to item level RFID Store associates quickly learned how to use RFID Findings to Date “We have been pretty aggressive. We’re excited and encouraged by some of the early results we are seeing.” “There is substantial value in accurate inventory.” “We expect substantial return at the item level. We’ll get very little return from case and pallet tagging.” David Bergen, CIO Case Study 2: Levi’s

9. 9 Your RFID checklist RFID Strategy  Pilot Design & Preparation  Hardware Selection  Software Selection  Physical Layer Testing  Project Management  Supplier Management  Communication Program  9

10. MARSHALL KAY (404) 253-0344 mskay@kurtsalmon.com