How Lucky Brand optimized
allocation and store fulfillment
with advanced analytics

What if you could predict the future?
© 2019 Celect, Inc. All Rights Reserved.3
Los Angeles, CA
• Customer: Susan
• Will Buy: Black Purse
• On: February 2, 2019
• At: Los Angeles Store

Now it is just a logistics issue
© 2019 Celect, Inc. All Rights Reserved.4
STORE A STORE B STORE C STORE D STORE E STORE F

DEMAND
PREDICTION
OPTIMIZATION
Plan Buy Allocate Fulfill Markdown
The Impact throughout the Product Lifecycle
© 2019 Celect, Inc. All Rights Reserved.5

© 2019 Celect, Inc. All Rights Reserved.6

+
Celect
Michael Relich – COO
January 2019

Company and
Customer Overview

LUCKY BRAND TIMELINE
1990 1999 2010
2014
o Lucky Brand
founded in
Los Angeles
by Gene
Montesano
& Barry
Perlman
o Acquired by
Liz Claiborne
o Sold primarily
through
“mom &
pop”
specialty
stores and
The Buckle
o 12 free
standing
stores
o Sales of
$387 million
o New team
joined
Lucky
Brand
o Gene M.
and Barry
P. exit
o Adjusted
EBITDA of
($8) million
Learning:
o Customer
o Culture
o People
o Product
o Real Estate
o Brand
2015
Validation:
o Employee
Engagement
o Assortment
Expansion
o Real Estate
o Marketing
o Financial
Performance
o TSA/Leapfrog
Pre Acquisition Post Acquisition
2016
Execution:
o Operational
Efficiencies
o Inventory
Management
o Capital
Optimization
o Real Estate
o E-Commerce
Growth
o Licensing Plan
o Marketing Plan
2017
Brand Transformation:
o GTM Calendar
o Clustering
o Good/Better/Best
o Channel/Assortment
Optimization
o Omni-channel
o Direct Mail
o Big Data
2018
Business Model
Transformation:
o Customer
Centricity
-Lucky Rewards
-Lucky Direct
-CLV
o International
Expansion
-Canada
o Planning &
Allocation
Optimization

LUCKY BRAND HIGHLIGHTS
• Strong brand power with heritage appeal
and differentiated brand opportunities
• Attractive and loyal customer base
• Balanced multi-channel distribution,
including best-in-class wholesale partners
and licensees
• Accomplished leadership team

LUCKY BRAND BUSINESS OVERVIEW
 Apparel lifestyle brand founded in
1990:
• Complete apparel offering, rooted
in denim (40% of sales)
 Multi-channel distribution network:
Full Price
Specialty
159 Stores
Outlet 92 Stores
Wholesale 1,050+ Doors
Specialty
Accounts
375+ Doors
LuckyBrand.com
2017 NET SALES BY CHANNEL
2017 GLOBAL NET SALES
*Represents management’s estimates of retail selling price
of goods sold through wholesale and licensing goods
Channel Net Sales Retail Sales Equivalent *
Specialty $173mm $173mm
Outlet $119mm $119mm
E-Comm $73mm $73mm
Wholesale $241mm $482mm
Licensing $10mm $337mm
TOTAL $615mm $1,184mm
Specialty,
28%
Outlet,
19%
Ecom,
12%
Wholesale,
39%
Licensing,
2%

STRONG BRAND AWARENESS IN EXCESS OF CURRENT SCALE
Lucky’s brand awareness compares to that of multi-billion dollar brands and is significantly stronger than
other premium denim brands, demonstrating our unique lifestyle brand positioning beyond denim
99% 98% 97% 97% 95% 87% 77%
56% 48%
33% 24% 20% 15%
GAP LEVIS GUESS BANANA
REPUBLIC
A&F J.CREW LUCKY
BRAND
TRUE
RELIGION
7 FOR ALL
MANKIND
FREE
PEOPLE
J.BRAND JOE'S
JEANS
AG JEANS
WOMEN'S BRAND AWARENESS - AIDED
37% 37% 19% 11% 12% 5% 8% 3% 3% 2% 0% 1% 0%
67% 33% 10% 25% 3% 10% 0% 7% 5%
*$5.9B $3.9B $2.7B $2.2B $2.1B $2.4B $0.5B
*Fiscal 2012/2013 gross annual sales
UNAIDED
UNAIDED
SALES
*$6.9B
98% 96% 94% 92%
82%
58% 56% 48%
38%
LEVIS GAPBANANA REPUBLICPOLO J.CREWLUCKY BRANDTOMMY BAHAMATRUE RELIGION7 FOR ALL MANKIND
MEN'S BRAND AWARENESS - AIDED

THE LUCKY BRAND CUSTOMER
Lucky Brand enjoys a stable and loyal customer base, appealing to fashion-
conscious, free spirited individuals who are young at heart. Our customers are
generally middle-aged, upper-middle class to affluent, established and family
oriented. Our customer is not an individual but a family.
– 79% are 35 and older
– 57% have income
over $80,000
– 66% have children
(70% of which are
over 6 yrs old)
– 68% are Female and
32% are Male
– 61% are Married
– 79% are employed
– 77% are college
educated, including
24% with graduate
degrees
Today’s Customer HH INCOME
15%
15%
13%
15%
16%
26%
$125K+
$100-<$125K
$80-<$100K
$60-<$80K
$40-<$60K
<$40K
4% 2%
3% 3%
5% 8%
10% 8%
8% 9%
7% 9%
63% 61%
Store
visitors
Database
Employed FT
Employed PT
Self employed
Student
Stay-at-home
parent
Retired
Other
EMPLOYMENT
57%

$67 , Men's
Apparel
$96 , Women's
Apparel
$81 , Men's
Denim
$85 , Women's
Denim
$40 ,
Accessories &
Other (1)
WHOLESALE SHIPMENTS ($ in millions)
BALANCED BUSINESS MIX – PRODUCT CATEGORIES
Lucky Brand is rooted in denim but has expanded beyond these roots to offer a
broad and diversified lifestyle product collection across men’s, women’s and
accessories
– A vibrant and growing licensed business supplements the product portfolio, including
licensed categories of footwear, handbags, and kids
Women’s 58%
Men’s 42%
Denim 45%
Apparel 44%
Accessories & Other(1) 11%
Represents gross shipments
DIRECT-TO-CONSUMER NET SALES ($ in millions)
1. Accessories & Other includes Kids and Plus.
2. Data 2017 full year sales
18%
26%
22%
23%
11%
$20 , Men's
Apparel
$130 ,
Women's
Apparel
$61 , Men's
Denim
$20 ,
Accessories &
Other (1)
$35 , Women's
Denim
13% 8%
49%23%
7%
Denim 36%
Apparel 56%
Accessories 7%
Women’s 70%
Men’s 30%

ECOMMERCE SALES 2014 - 2022
Billions, % change and % of total retail sales
2014 2016 20172015 2018 2019 2020 2021 2022
$298B
$396B
$457B
$342B
$524B
$600B
$684B
$787B
$891B
6.4% 8.2% 9.2%7.3% 10.2% 11.3% 12.5% 13.7% 15.1%
14.4% 15.7% 15.2%15.0% 14.8% 14.4% 14.0% 13.9% 13.3%
Brick & Mortar
84.9%
Ttl Retail
Sales!!!

LUCKY BRAND SYSTEM LANDSCAPE
Do we want to focus in on
anything specific here?

STORE EXPERIENCE

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

THE POINT, EL SEGUNDO, CA

STRATEGIC PRIORITIES

RETAIL INDUSTRY STRATEGIC FOCUS
•International
•Ecommerce
•Wholesale
•Licensing
•Full Price vs Outlet
•Omni
Capabilities
•Wholesale Drop
Ship
•Vendor Direct
•Focused
Assortments
•Brand
Partnerships/Co-
Creation
•Product
Development Speed
•Retention – Loyalty
& Credit Cards
•Acquisition
•Personalization
•Localization
•Store Experience
CUSTOMER PRODUCT
DISTRIBUTIONTECHNOLOGY

1. Clearly define and communicate Lucky Brand’s vision and positioning
2. Elevate product aesthetic, improve product flow and implement assortment
optimization strategy by channel
3. Grow Direct to Consumer, Wholesale and Licensing businesses profitably
4. Improve profitability by channel, store, customer and product category
5. Optimize inventory management and promotional strategy to deliver better
margins, increased service levels and improved inventory turnover
6. Streamline operations and reduce cost structure, including sourcing,
distribution and overhead platform
7. Optimize the Company’s capital structure and position Lucky Brand for growth
LONG RANGE PLAN
Key Strategic Objectives

INVENTORY MANAGEMENT

INVENTORY MANAGEMENT CHALLENGES TO SOLVE
 All planning tools are excel
• Labor intensive and room for errors
• Automated system driven by analytics
 Facilitate end – to- end planning, utilizing one system (approach)
• Pre-Season targets –> Style Planning -> allocation -> fulfillment
 Reduce the total amount of inventory carrying costs, especially in e-
Commerce and Canada
 Dynamic denim replenishment (50% of the business) driven by demand
forecasting
 Utilize attributes to influence depth and assortment allocation by store
 Store specific optimized assortments
Planning and Allocation

BIG DATA

WHY CELECT?
 New generation technology driven by advance analytics and machine
learning
 Celect allocation new approach
• Shuffling the deck by looking at everything available in the DC and matching it to
store need to provide optimized store specific assortments
• Concept of over-recommending stores – Celect recommending more stores or
different stores than the original intent
• Allocation decision is being made real-time and is product-specific
• Store tiers assigned at style level, not department
 Enhanced store ecom fulfillment
• Water-fall based decisions – to an algorithm
• Multiple factors, including WOS & customer proximity

CELECT IMPLEMENTATION – 3 MODULES
1. Plan & Buy
 Target inventory investment to optimize product categories (by channel) with
largest potential for ROI. Go live with Fall 19 season plans
 Buy appropriate style quantities to decrease markdowns and improve inventory
turns with the goal of creating store specific optimized assortments. Go live with
Fall 19 season plans
2. Allocate
 Allocate and replenish styles to the appropriate stores to maximize sales and
margins. Implemented 8/14 for Fall3 18 allocations
3. Fulfill
 Optimize store fulfillment for ecommerce orders to select stores with the highest
probability of markdown, while also minimizing stockouts in stores with a high
propensity to sell. Implemented 5/1. On track to achieve or beat Celect’s $2.4M
- $2.7M first year sales increase projection
Updated to condense a bit
and reflect recent Celect
positioning.

IMPLEMENTATION CADENCE
 Module implementation order
reversed to immediately realize ROI
• Fulfillment May 1st, 2018
• Allocation August 15th, 2018
• Plan/Buy – November 2018 for
Fall 2019 Buying Cycle

IMPLEMENTATION CHALLENGES
 Timeline – more thorough discovery prior to landing the timeline by
module
 Fulfillment was on-time without much support needed
 Integration with a 3rd party OMS
 Integration with JDA Allocation
 Integration of master data from Netsuite and JDA into Celect
• JDA is the system of record for most store groups
• Netsuite for all product information
• GBB Stores
 Lack of reporting to monitor success
 Translating Retail language and terminology into engineering speak

IMPLEMENTATION BENEFITS/ROI
 Fulfillment prioritizing slower turning stores vs prior
to implementation
• On-track to hit initial YR1 ROI of $2.7m in sales upside
 Stores providing extremely positive feedback
regarding replenishment
• Optimized size replenishment in denim
• “Every replenishment carton counts! Previously, we
would ‘sort’ through the replenishment to find what
we really needed and get that to the floor first! Now
all styles matter!”
 The first season (fall3) that was allocated via
Celect just hit end of lifecyle
• ROI TBD

IMPLEMENTATION LESSONS LEARNED
 Implementation team structured with a business lead from P&A, and an IT lead
• Key learning – identify one owner from the business who has IT knowledge
 The integration is 100% dependent on how easily data flows between systems
 Completely surprised by the adoption success with allocation
• The team loves the tool! No pushback around adoption – on-board from day 1!
• It’s making them smarter and working faster!
 The plan tool utilizes cost available as the metric to toggle, and all of the output
is in regular price
• We needed to update our planning tools to utilize Celect recommendations
 The department recommendations in plan are in line to what our teams
planned
• The opportunity Celect identified was in style buy quantity and channel placement

NEXT STEPS
 Working through enhancements
• Replenishment by size for fashion goods
• Use of Celect as basics management
tool, and optimizing the pre-pack
percent as well as the initial commit %
 Finalizing reporting ROI metrics
 Upgrading to version 2 of plan and buy
 Reduce some of the constraints in the
system (e.g. store groups) and
potentially test a channel with fewer
constraints for Spring

OVERALL THOUGHTS
 The Celect team is open to feedback
and committed to evolving their tool
• Very simple changes were made to the
UI that are huge timesavers for the
allocation team
 Very customer service focused and
committed to client’s success
• Quick calls for trouble shooting,
validating data
• Celect is incorporating our feedback into
the new version of plan and buy

THANK YOU!
Lucky Brand
Look good, feel good, do good
Inspiring everyone to lead a Lucky life

Thank you!
WANT TO SEE YOUR ROI?
👉 www.celect.com/roi
40 © 2019 Celect, Inc. All Rights Reserved.