Consumer Credit Research: Consumer / Retail Credit Mid-Year Update | Slide Presentation

Research evidence excerpt

Consumer Credit Research: Consumer / Retail Credit Mid-Year Update | Slide Presentation

M O R G A N S T A N L E Y R E S E A R C H

Retail Key Trade Ideas – Recommendations to Buy

Prefer idiosyncratic value in MIK, M, and BBWI rather than Michaels (MIK) market levels and total returns

broad Retail beta. Amt. MTD YTD LTM Description Ratings Outst. Bid Price YTW (%) OAS Total Total Leverage ($mm) Return Return

Term Loan, L +500%,0%Floor due 3/7/2033 B2 / B- $1,000 $99.38 8.8% NA 5.3x 1.0% 3.8%

8.5%1st lien Notes due 3/15/2033 B2 / B- $2,000 $97.82 8.9% 443 5.3x -0.6% 0.4%

11%2nd lien Notes due 3/15/2034 Caa1 / CCC $750 $93.98 12.2% 773 5.3x -2.1% -0.5%

HY Retailers 6.7% 248 0.0% 1.2%

MIK loans offer better carry than unsecured bonds, while Macy’s Inc. (M) market levels and total returns

Macy's longer bonds offer attractive value versus

Amt. Outst. LTM MTD Total YTD Total peers. Description Ratings ($mm) Bid Price YTW (%) OAS Leverage Return Return

5.875%Sr Notes due 3/15/2030 Ba2 / BB+ $201 $99.65 6.0% 132 1.3x 0.2% 1.3%

6.125%Sr Notes due 3/15/2032 Ba2 / BB+ $425 $98.79 6.4% 183 1.3x -0.8% 0.1%

7.375%Sr Notes due 8/1/2033 Ba2 / BB+ $500 $103.03 6.5% 192 1.3x -0.5% -0.1%

6.7%Sr Notes due 7/15/2034 Ba2 / BB+ $181 $94.37 7.6% 318 1.3x -0.6% 0.7%

4.5%Sr Notes due 12/15/2034 Ba2 / BB+ $367 $86.23 6.6% 212 1.3x -0.9% -3.1%

6.375%Sr Notes due 3/15/2037 Ba2 / BB+ $193 $90.95 7.6% 299 1.3x -0.7% -0.8%

5.125%Sr Notes due 1/15/2042 Ba2 / BB+ $250 $74.93 8.0% 302 1.3x -0.3% -6.2%

4.3%Sr Notes due 2/15/2043 Ba2 / BB+ $250 $65.25 8.1% 314 1.3x -2.2% -6.8%

BBWI bonds screen attractive after underperformance, Bath & Body Works (BBWI) market levels and total

supported by a loyal customer base and strong returns

Amt. Outst. MTD Total YTD Total Bid Price YTW (%) OAS Leverage balance sheet.