Jung-Yung Jonathan Chang | February 16, 2015

Aropostale, Inc. Pitch (NYSE:ARP)| Equity Analysis Diagrams

Market Misunderstanding of Company Direction Unjustified Rally Provides Chance for Short Sellers
to gain 73% Upside

Short Stock Pitch and Valuation

Aropostale Pitch (NYSE:ARO)

Table of Contents
I.

INDUSTRY OVERVIEW 3

II.

COMPANY OVERVIEW 5

III.

FINANCIAL OVERVIEW.. 14

IV.

APPENDIX.. 20

Short Stock Pitch and Valuation

Aropostale Pitch (NYSE:ARO)

Industry Overview | Consumer Retail and Products

Short Stock Pitch and Valuation

Industry Overview

Aropostale Pitch (NYSE:ARO)

E-Commerce Surge Resulting in Smaller Stores and More Closing

There has been a rise in competition and a surge in online shopping which have been forcing some smaller retailers to exit the
industry. Consolidation seems to be a fairly prominent factor in the industry. With less opportunity for growth, a focus on margins
may be important. American Eagle plans to close 150 stores in the next 3 years while Abercrombie & Fitch plans to close 60 in
coming years. Aeropostale and Express have similar plans.
Short Stock Pitch and Valuation
Sources:

Bloomberg, John Buzolits & Poonam Goyal

Aropostale Pitch (NYSE:ARO)

Company Overview | Aropostale

Short Stock Pitch and Valuation

Company Overview

Aropostale Pitch (NYSE:ARO)

ARO Price Volume Performance

$9

40M

$8

35M

$7

30M

$6

25M

$5
20M
$4
15M

$3

10M

$2

5M

$1
$0
Feb-18-2014

M
May-18-2014

Aug-18-2014
Volume

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

Nov-18-2014
Share Price

Company Overview

Aropostale Pitch (NYSE:ARO)

Brands No Longer Worn

Rank
1
2
3
4
5
6
7
8
9
10

Aeropostale
Hollister
Abercrombie & Fitch
Justice/Limited Too
Gap
American Eagle
Baby Phat
Old Navy
Forever 21
6 Brand Tie

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

Spring 2013
33%
17%
10%
5%
4%
2%
2%
1%
1%
1%

Brands No Longer Worn

% Total
Rank
Fall 2013 Rank
1 Aeropostale
25%
1 Aeropostale
2 Abercrombie & Fitch
22%
2 Abercrombie & Fitch
3 Hollister
15%
3 Hollister
4 Justice/Limited Too
8%
4 Justice/Limited Too
5 Gap
5%
5 Gap
6 Forever 21
2%
6 American Eagle
7 American Eagle
2%
7 Old Navy
8 Old Navy
2%
8 Nike/Jordans
9 Roxy
2%
9 Forever 21
10 Juicy Couture
1%
10 3 Brand Tie

Spring 2014
32%
19%
16%
8%
5%
3%
1%
1%
1%
1%

Company Overview

Aropostale Pitch (NYSE:ARO)

Brands No Longer Worn

Brands No Longer Worn in Spring 2013

Gap, 4%
Justice/Li
mited Too,
5%

Forever 21,
1%

Baby
Phat
, 2%

Justice/Li
mited Too,
8%Gap,
5%

Short Stock Pitch and Valuation

Capital IQ, Company Website

Nike/Jorda
ns, 1%
Old Navy,
1%

Old Navy,
2%
Roxy,
2%

Juicy
Couture,
1%

Aeropostal
e, 25%

Aeropostal
e, 33%

Hollister,
17%

Sources:

Forever
21, 2%

6 Brand
Tie, 1%

Abercromb
ie & Fitch,
10%

Brands No Longer Worn in Spring 2014

American
Eagle, 2%

Old Navy,
1%
American

Eagle, 2%

Brands No Longer Worn in Fall 2013

Hollister,
15%

Abercromb
ie & Fitch,
22%

Gap, 5%

American
Eagle, 3%

Forever
21, 1%
3 Brand
Tie, 1%

Justice/Li
mited Too,
8%
Aeropostal
e, 32%
Hollister,
16%

Abercromb
ie & Fitch,
19%

Company Overview

Aropostale Pitch (NYSE:ARO)

Income Statement
20%

Cost Reductions Unable to Keep Up with Revenue Decline

15%
10%
5%
0%
-5%
-10%
-15%

2011

2012
Revenue Growth

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

2013
COGS Growth

2014

SG&A Growth

Company Overview

Aropostale Pitch (NYSE:ARO)

Income Statement
50%

EBIT Margins (DCF Assumptions vs. CAGR Growth)

30%
10%
(10%)
(30%)
(50%)
(70%)
(90%)
(110%)
(130%)

(150%)
2011

2012

2013

2014

EBIT Margins (Using CAGR)

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

2015

2016

2017

2018

2019

EBIT Margins (Assuming Company Revamp)

10

Company Overview

Aropostale Pitch (NYSE:ARO)

Balance Sheet
$500

$6.0

Declining Tangible Value

$450

$5.0

$400
$350

$4.0

$300
$250

$3.0

$200
$2.0

$150
$100

$1.0

$50
$0

$2011

2012

2013
Tangible Book Value

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

2014

2015

Tangible Book Value/Share

11

Company Overview

Aropostale Pitch (NYSE:ARO)

Technical Analysis Ichimoku Clouds

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

12

Company Overview

Aropostale Pitch (NYSE:ARO)

Technical Analysis Bollinger Bands

Short Stock Pitch and Valuation

Sources:

Capital IQ, Company Website

13

Aropostale Pitch (NYSE:ARO)

Financial Overview | Aropostale Inc.

Short Stock Pitch and Valuation

14

Financial Overview

Aropostale Pitch (NYSE:ARO)

($ in millions, except per share data)

Public Company Comparables

Aropostale has negative earnings and EBITDA so itself does not have many multiples except for its Revenue multiple.
Comparables analysis was used primarily for a potential exit multiple for discounted cash flow analysis. It is currently at a heavy
discount however this is validated considering no growth, no earnings, and no dividends.
Market
Capitalization

Company Name

Enterprise
Value

LTM

EV / EBITDA
FY1

FCF
Margin %

FY2

Dividend
Yield %

LTM

Price / Earnings
FY1

EV / Revenue
LTM
FY1

FY2

Larger Speciality Retailers with Mkt Cap $2B+

L Brands, Inc
The Gap, Inc.
Urban Outfitters Inc.
American Eagle Outfitters, Inc.
Chico's FAS Inc.
The Buckle, Inc.
Ascena Retail Group Inc.

$27,661
17,451
5,064
2,855
2,811
2,399
2,132

$31,899
17,877
4,821
2,575
2,620
2,191
2,199

Mean
Median
Smaller Speciality Retailers with Mkt Cap Less than $2B
Abercrombie & Fitch Co.
$1,808
ANN INC.
1,670
Guess? Inc.
1,620
The Children's Place, Inc.
1,255
Express Inc.
1,232
Francesca's Holdings Corp.
675
New York & Company Inc.
154

$1,837
1,560
1,275
1,064
1,287
652
113

Mean
Median

13.9 x
6.8 x
9.7 x
8.0 x
9.3 x
7.6 x
5.0 x

13.6 x
7.0 x
9.6 x
7.5 x
9.4 x
7.6 x
5.4 x

12.5 x
6.7 x
8.6 x
6.5 x
8.2 x
7.4 x
4.5 x

10.1%
7.1%
3.9%
2.4%
5.2%
13.1%
-2.3%

1.4%
2.1%
3.4%
1.6%
7.4%
-

2920.0%
14.6 x
23.9 x
2410.0%
27.5 x
14.7 x
14.2 x

27.7 x
14.7 x
23.3 x
23.9 x
27.9 x
14.7 x
17.9 x

24.5 x
13.6 x
19.6 x
18.5 x
22.4 x
14.3 x
13.3 x

2.8 x
1.1 x
1.5 x
0.8 x
1.0 x
1.9 x
0.5 x

2.8 x
1.1 x
1.5 x
0.8 x
1.0 x
1.9 x
0.5 x

8.6 x
8.0 x

8.6 x
7.6 x

7.8 x
7.4 x

5.6%
5.2%

21.2 x
23.9 x

21.5 x
23.3 x

18.0 x
18.5 x

1.4 x
1.1 x

1.4 x
1.1 x

4.4 x
6.4 x
4.8 x
7.0 x
5.7 x
9.1 x
3.7 x

4.4 x
6.6 x
6.1 x
6.6 x
6.3 x
9.5 x
5.7 x

4.2 x
6.0 x
5.7 x
6.2 x
5.7 x
8.3 x
3.1 x

8.7%
1.5%
4.9%
5.6%
2.1%
6.9%
1.2%

3.1%
4.7%
0.9%
-

17.7 x
20.1 x
14.0 x
21.6 x
15.5 x
18.3 x
15460.0%

16.5 x
21.4 x
18.1 x
19.5 x
19.1 x
19.6 x
NM

14.5 x
17.6 x
16.7 x
17.2 x
14.9 x
16.6 x
33.0 x

0.5 x
0.6 x
0.5 x
0.6 x
0.6 x
1.8 x
0.1 x

0.5 x
0.6 x
0.5 x
0.6 x
0.6 x
1.7 x
0.1 x

5.9 x
5.7 x

6.5 x
6.3 x

5.6 x
5.7 x

4.4%
4.9%

2.9%
3.1%

37.4 x
18.3 x

19.0 x
19.3 x

18.6 x
16.7 x

0.7 x
0.6 x

0.7 x
0.6 x

70.7 x
20.5 x
8.6 x

31.3 x
20.7 x
8.9 x

23.1 x
18.3 x
7.5 x

13.3%
11.0%
15.6%

NM
40.4 x
19.1 x

109.1 x
36.1 x
19.8 x

57.1 x
31.5 x
16.6 x

3.1 x
5.1 x
1.4 x

4.1 x
4.8 x
1.4 x

33.3 x
20.5 x

20.3 x
20.7 x

16.3 x
18.3 x

13.3%
13.3%

29.8 x
29.8 x

55.0 x
36.1 x

35.1 x
31.5 x

3.2 x
3.1 x

3.4 x
4.1 x

Luxury Apparel and Textile Retailers

Kate Spade & Company
Lululemon Athletica Inc.
Vera Bradley, Inc.

$4,308
9,369
813

$4,593
8,735
723

Mean
Median
Aropostale, Inc.

287
Overall Mean
Overall Median

Short Stock Pitch and Valuation

Sources:

Capital IQ, Equity Research Reports

314

NM

NM

NM

0.4%

NM

NM

NM

0.2 x

0.2 x

11.8 x
7.6 x

9.8 x
7.5 x

8.4 x
6.7 x

6.5%
5.6%

3.1%
2.6%

29.3 x
19.6 x

26.8 x
19.7 x

21.3 x
17.2 x

1.4 x
1.0 x

1.4 x
1.0 x

15

Financial Overview

Aropostale Pitch (NYSE:ARO)

($ in millions, except per share data)

Discounted Cash Flow Analysis

Considering the qualitative factors of the stock and the rapid declining image of the brand, it would be realistic to assume a
revenue decline of 5% or more. Considering its revenue decline of -12.4% in 2014 and then further decline throughout the year, a
safe assumption could have been a bear projection of -10%. However, to be optimistic as possible and it became assumed that the
company might be able to achieve stagnant growth. Its historical SG&A costs have been growing despite revenue growth and its
COGS have been decreasing at a slower rate than its revenue. For instance, in 2014, despite sales dropping 12.4%, COGS only
decreased 4.9% and SG&A increased 1.5%. For projections moving forward, it was assumed they could remove these cost
inefficiencies and reduce both their COGS and SG&A while having stagnant growth. This was highly optimistic as there is no
proof in their historical projections that they have dealt with cost efficiencies well. Furthermore, there was assumed to be no taxes
from accumulation of NOLs and no capital expenditure expenses to remain conservative.
2011A
Revenue:
Revenue Growth

$2,400.4
7.6%

$2,342.3
-2.4%

$2,386.2
1.9%

$2,090.9
-12.4%

2018E

2019E

$2,090.9

$2,090.9

$2,090.9

$2,090.9

$2,090.9

Conservative Projections

-2.5%

$2,038.6

$1,987.7

$1,938.0

$1,889.5

$1,842.3

Base Projections

0.0%

$2,090.9

$2,090.9

$2,090.9

$2,090.9

$2,090.9

Optimistic Projections

2.5%

$2,143.2

$2,196.8

$2,251.7

$2,308.0

$2,365.7

COGS
COGS Growth
SG&A
SG&A Growth
EBIT Margin
EBIT
EBITDA
Less: Provision for Taxes
Unlevered Net Income
Plus: D&A (excl. non-deductible GW amort.)
Less: Capital Expenditures
Less: Increase in Net Working Capital
Unlevered Free Cash Flow

Short Stock Pitch and Valuation

Sources:

Unlevered Free Cash Flow Calculation

Calendar Year Ending February 1,
2012A
2013P
2014P
2015E
2016E
2017E

Capital IQ, Equity Research Reports

CAGR
2011-2014
(4.5%)

$1,369.2
9.4%
$637.4
7.4%

$1,560.5
14.0%
$652.3
2.3%

$1,601.0
2.6%
$693.1
6.3%

$1,522.5
-4.9%
$703.2
1.5%

$1,507.2
-1.0%
$696.1
-1.0%

$1,492.2
-1.0%
$689.2
-1.0%

$1,477.2
-1.0%
$682.3
-1.0%

$1,462.5
-1.0%
$675.5
-1.0%

$1,447.8
-1.0%
$668.7
-1.0%

3.6%

16.41%
$393.9
$451.9
158.3
$235.5

5.53%
$129.6
$194.7
49.9
$79.7

3.86%
$92.1
$157.9
37.6
$54.5

-6.44%
($134.7)
($70.4)
0.0
($134.7)

-5.38%
($112.5)
($49.2)
0.0
($112.5)

-4.3%
($90.4)
($27.1)
0.0
($90.4)

-3.3%
($68.6)
($5.3)
0.0
($68.6)

-2.2%
($47.0)
$16.3
0.0
($47.0)

-1.2%
($25.7)
$37.7
0.0
($25.7)

(173.2%)
(169.9%)
(153.8%)
(100.0%)
(183.0%)

58.0
(100.8)
(39.7)
$153.0

65.1
(73.3)
(36.1)
$35.4

65.7
(72.3)
(0.2)
$47.8

64.4
(84.1)
(27.4)
($181.8)

63.3
0.0
(25.9)
($75.0)

63.3
0.0
(25.9)
($53.0)

63.3
0.0
(25.9)
($31.2)

63.3
0.0
(25.9)
($9.6)

63.3
0.0
(25.9)
$11.8

3.5%
(5.9%)
(11.7%)

3.3%

16

Financial Overview

Aropostale Pitch (NYSE:ARO)

Sensitivity Analysis
DCF Analysis: EBITDA Multiple Method

Discount
Rate
(WACC)

Discount
Rate
(WACC)

7.5%
8.0%
8.5%

Total Enterprise Value

Terminal EBITDA Multiple
6.5x
7.0x
7.5x
8.0x
$90.9
106.0
$121.2
136.4
88.8
103.7
118.7
133.6
86.7
101.5
116.2
130.9

7.5%
8.0%
8.5%

Implied Perpetuity Growth Rate

Terminal EBITDA Multiple
6.5x
7.0x
7.5x
8.0x
2.56%
2.89%
3.19%
3.45%
3.03%
3.37%
3.67%
3.93%
3.51%
3.85%
4.15%
4.41%

7.5%
8.0%
8.5%

Total Enterprise Value

Terminal Perpetuity Growth Rate
2.00%
2.50%
3.00%
3.50%
$70.0
$88.6
$111.3
$139.7
53.7
69.1
87.5
109.9
40.1
52.9
68.1
86.3

7.5%
8.0%
8.5%

Implied Terminal EBITDA Multiple

Terminal Perpetuity Growth Rate
2.00%
2.5%
3.00%
3.5%
(8.5x)
(9.4x)
(10.5x)
(11.9x)
(7.8x)
(8.6x)
(9.5x)
(10.6x)
(7.2x)
(7.9x)
(8.6x)
(9.5x)

8.5x
$151.5
148.6
145.7

8.5x
3.68%
4.16%
4.64%

Discount
Rate
(WACC)

Discount
Rate
(WACC)

7.5%
8.0%
8.5%

Total Equity Value

Terminal EBITDA Multiple
6.5x
7.0x
7.5x
8.0x
$55.8
70.9
$86.1
101.3
53.7
68.6
83.6
98.5
51.6
66.4
81.1
95.8

8.5x
$116.4
113.5
110.6

7.5%
8.0%
8.5%

Total Price Per Share

Terminal EBITDA Multiple
6.5x
7.0x
7.5x
8.0x
$0.71
0.90
$1.09
1.28
0.68
0.87
1.06
1.25
0.65
0.84
1.03
1.21

8.5x
$1.47
1.43
1.40

7.5%
8.0%
8.5%

Total Equity Value

Terminal Perpetuity Growth Rate
2.00%
2.5%
3.00%
3.5%
$34.9
53.5
$76.2
104.6
18.6
34.0
52.4
74.8
5.0
17.8
33.0
51.2

4.00%
$141.0
102.9
73.5

7.5%
8.0%
8.5%

Total Price Per Share

Terminal Perpetuity Growth Rate
2.00%
2.5%
3.00%
3.5%
$0.44
0.68
$0.96
1.32
0.24
0.43
0.66
0.95
0.06
0.23
0.42
0.65

4.00%
$1.78
1.30
0.93

DCF Analysis: Perpetuity Growth Method

Discount
Rate
(WACC)

Discount
Rate
(WACC)

4.00%
$176.1
138.0
108.6

4.00%
(13.7x)
(12.0x)
(10.6x)

Discount
Rate
(WACC)

Discount
Rate
(WACC)

(1) Assumes net debt of $35.1mm as of 5/16/08.

(2) Assumes outstanding diluted shares of 79.100 million.

Short Stock Pitch and Valuation

Sources:

Capital IQ, Equity Research Reports

17

Financial Overview

Aropostale Pitch (NYSE:ARO)

Valuation Summary
Target Price:
$0.97

Current Price:
$3.63

EBITDA Multiples Method

WACC
7.7%

Perpetuity Growth Method

WACC
7.7%

Exit Multiple
2017E EBITDA
Terminal Value

7.5 x
$37.7
$282.4

Perpetuity Growth Rate

2017E UFCF
Terminal Value

Total Enterprise Value

$120.4

Total Enterprise Value

3.00%
$11.8
$261.23
$103.4

Debt
Cash

136
100.9

Debt
Cash

136
100.9

Total Equity Value

$85.3

Total Equity Value

$68.3

Diluted Shares Outstanding

79.1

Diluted Shares Outstanding

79.1

Perpetuity Growth Method

Fair Value Per Share

Current Price
Implied Upside

$1.08
3.63
-70%

Fair Value Per Share

Current Price
Implied Upside

$0.86
3.63
-76%

Targeted Return
Current Share Price

$3.63

Target Share Price

Multiples Method
Gordon Growth Method
Price Target Weighting
Multiples Method
Gordon Growth Method

Multiples Method

$1.08
$0.86
50%
50%

Weighted Average Target Price

$0.00

$1.00

Low - Median

Short Stock Pitch and Valuation

Sources:

Capital IQ, Equity Research Reports

$2.00
Median - High

$3.00

$4.00

$0.97

Equity Downside
Dividend Yield

-73.3%
0.0%

Implied Return

-73.3%

18

Financial Overview

Aropostale Pitch (NYSE:ARO)

Recommendation:
Short Aropostale at Market Price
73.3% Conservative Implied Return

Short Stock Pitch and Valuation

Sources:

Capital IQ, Equity Research Reports

19

Aropostale Pitch (NYSE:ARO)

Appendix

Short Stock Pitch and Valuation

20

Appendix

Aropostale Pitch (NYSE:ARO)

($ in millions, except per share data)

Historical Income Statement

Income Statement
For the Fiscal Period Ending
Revenue
Other Revenue
Total Revenue
Cost Of Goods Sold
Gross Profit
Selling General & Admin Exp.
Other Operating Exp., Total
Operating Income
Interest Expense
Interest and Invest. Income
Net Interest Exp.
Other Non-Operating Inc. (Exp.)
EBT Excl. Unusual Items
Restructuring Charges
Impairment of Goodwill
Asset Writedown
Legal Settlements
Other Unusual Items
EBT Incl. Unusual Items
Income Tax Expense
Earnings from Cont. Ops.
Earnings of Discontinued Ops.
Extraord. Item & Account. Change
Net Income to Company
Minority Int. in Earnings
Net Income

Short Stock Pitch and Valuation

Sources:

Capital IQ

12 months
Jan-30-2010
2,230.1
2,230.1
1,251.2
978.9
593.3
593.3
385.7
0.1
0.1
385.8
(3.0)
382.8
153.3
229.5
229.5
229.5

12 months
Jan-29-2011
2,400.4
2,400.4
1,369.2
1,031.3
637.4
637.4
393.9
(0.1)
(0.1)
393.8
(0.7)
(6.4)
386.7
155.3
231.3
231.3
231.3

12 months
Jan-28-2012
2,342.3
2,342.3
1,560.5
781.8
652.3
652.3
129.6
(0.4)
(0.4)
129.1
(16.0)
113.1
43.6
69.5
69.5
69.5

12 months
Feb-02-2013
2,386.2
2,386.2
1,601.0
785.2
693.1
693.1
92.1
(0.5)
(0.5)
91.7
(32.6)
59.0
24.1
34.9
34.9
34.9

12 months
Feb-01-2014
2,090.9
2,090.9
1,522.5
568.4
703.2
703.2
(134.7)
(0.9)
(0.9)
(135.6)
(46.1)
(4.4)
(186.1)
(44.3)
(141.8)
(141.8)
(141.8)

LTM
12 months
Nov-01-2014
1,914.9
1,914.9
1,394.5
520.4
689.2
689.2
(168.9)
(6.0)
(6.0)
(174.9)
(39.2)
(66.6)
(4.4)
(285.1)
(21.8)
(263.2)
(263.2)
(263.2)

21

Appendix

Aropostale Pitch (NYSE:ARO)

($ in millions, except per share data)

Historical Balance Sheet

Balance Sheet
Balance Sheet as of:
ASSETS
Cash And Equivalents
Total Cash & ST Investments
Accounts Receivable
Other Receivables
Total Receivables
Inventory
Prepaid Exp.
Deferred Tax Assets, Curr.
Other Current Assets
Total Current Assets
Gross Property, Plant & Equipment
Accumulated Depreciation
Net Property, Plant & Equipment
Goodwill
Other Intangibles
Deferred Tax Assets, LT
Other Long-Term Assets
Total Assets
LIABILITIES
Accounts Payable
Accrued Exp.
Curr. Income Taxes Payable
Unearned Revenue, Current
Other Current Liabilities
Total Current Liabilities

Current Ratio
Long-Term Debt
Pension & Other Post-Retire. Benefits
Def. Tax Liability, Non-Curr.
Other Non-Current Liabilities
Total Liabilities
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Inc. and Other
Total Common Equity
Total Equity
Total Liabilities And Equity

Short Stock Pitch and Valuation

Sources:

Capital IQ

Jan-30-2010

Jan-29-2011

Jan-28-2012

Feb-02-2013

Feb-01-2014

Nov-01-2014

347.0
347.0
132.9
21.0
21.7
7.4
530.0
457.7
(206.1)
251.6
6.4
4.4
792.3

265.6
265.6
156.6
24.5
13.6
9.3
469.6
548.5
(249.3)
299.2
0.1
4.3
773.2

223.7
223.7
163.5
47.2
7.4
441.8
602.3
(314.9)
287.4
6.0
735.2

231.5
231.5
7.7
7.7
155.5
45.3
439.9
583.1
(320.3)
262.8
13.9
15.4
8.8
740.8

106.5
106.5
50.4
50.4
172.3
47.4
376.6
592.7
(357.3)
235.4
13.9
14.7
7.0
647.6

109.2
109.2
9.2
9.2
211.1
48.0
377.5
151.2
13.9
14.1
21.6
578.3

90.9
99.6
26.9
24.6
241.8
2.2 x
10.1
105.9
357.8
1.4
171.8
922.8
(654.5)
(7.0)
434.5
434.5
792.3

103.0
75.4
10.0
27.7
216.1
2.2 x
10.8
7.5
106.2
340.6
0.9
195.4
389.8
(153.0)
(0.4)
432.6
432.6
773.2

103.5
26.1
1.3
27.9
34.4
193.2
2.3 x
13.7
118.9
325.8
0.9
206.7
459.3
(256.6)
(0.8)
409.4
409.4
735.2

90.0
29.1
13.1
29.6
41.8
203.5
2.2 x
13.5
113.5
330.5
0.8
216.1
193.3
0.2
410.4
410.4
740.8

138.2
23.5
0.7
27.8
50.1
240.4
1.6 x
14.3
112.2
366.9
0.8
231.2
51.5
(1.6)
(1.2)
280.7
280.7
647.6

143.4
22.0
17.0
60.3
242.7
1.6 x
136.0
5.8
89.9
474.5
0.8
244.9
(141.4)
(3.1)
2.6
103.8
103.8
578.3

22

Appendix

Aropostale Pitch (NYSE:ARO)

($ in millions, except per share data)

Historical Cash Flow Statement

Cash Flow
For the Fiscal Period Ending
Net Income
Depreciation & Amort.
Amort. of Goodwill and Intangibles
Depreciation & Amort., Total
Other Amortization
Asset Writedown & Restructuring Costs
Stock-Based Compensation
Tax Benefit from Stock Options
Other Operating Activities
Change In Inventories
Change in Acc. Payable
Change in Inc. Taxes
Change in Other Net Operating Assets
Cash from Ops.
Capital Expenditure
Cash Acquisitions
Other Investing Activities
Cash from Investing
Total Debt Issued
Total Debt Repaid
Issuance of Common Stock
Repurchase of Common Stock
Total Dividends Paid
Special Dividend Paid
Other Financing Activities
Cash from Financing
Foreign Exchange Rate Adj.
Net Change in Cash

Short Stock Pitch and Valuation

Sources:

Capital IQ

12 months
Jan-30-2010
229.5
49.9
49.9
1.4
3.0
14.7
(1.2)
(13.2)
(5.6)
13.2
42.8
334.4
(53.9)
(53.9)
10.5
(174.3)
1.2
(162.6)
0.5
118.4

12 months
Jan-29-2011
231.3
58.0
58.0
7.1
0.7
11.5
(5.1)
14.0
(23.1)
11.9
(5.0)
(37.5)
263.7
(100.8)
(100.8)
7.0
(257.5)
5.1
(245.4)
1.0
(81.4)

12 months
Jan-28-2012
69.5
65.1
65.1
5.8
16.0
9.4
(0.5)
(1.4)
(7.1)
0.5
(14.2)
(13.9)
129.3
(73.3)
(73.3)
1.5
(100.1)
0.5
(98.2)
0.4
(41.8)

12 months
Feb-02-2013
34.9
65.6
0.1
65.7
4.4
32.6
8.1
(0.6)
(19.6)
11.3
(13.4)
(4.6)
26.1
144.8
(72.3)
(25.2)
(97.5)
0.7
(40.8)
0.6
(39.5)
0
7.8

12 months
Feb-01-2014
(141.8)
63.6
0.8
64.4
2.4
46.1
18.1
(11.9)
(17.9)
48.9
(43.7)
(2.8)
(38.4)
(84.1)
(0.4)
(84.5)
0.2
(1.6)
(1.4)
(0.8)
(125.0)

LTM
12 months
Nov-01-2014
(263.2)
55.7
0.8
56.5
2.4
97.1
17.7
(8.5)
50.6
(36.0)
34.2
2.8
(46.4)
(37.2)
0
(2.2)
(39.4)
213.1
(75.5)
0
(1.5)
(8.4)
127.8
(0.7)
41.2

23