Aeropostale

Strategy Capstone Report

Zeeshan Halim

STRATEGY 5900

Table of Contents
Technology Trends...........................................................................................................................4
E-Commerce................................................................................................................................4
Fast Fashion.................................................................................................................................4
Use of Customer Metadata..........................................................................................................5
Economic Trends.............................................................................................................................5
Income.........................................................................................................................................6
Economic Forecasts.....................................................................................................................6
Socio-Cultural Trends......................................................................................................................8
Demographics..............................................................................................................................8
Lifestyle Trends...........................................................................................................................9
Political and Legal Trends...............................................................................................................9
Rising labor wages in the US.......................................................................................................9
The North American Free Trade Agreement (NAFTA).............................................................10
Sustainability Trends.....................................................................................................................10
The growing concern over sweatshops......................................................................................10
Environmental Concerns............................................................................................................11
Strategic group map.......................................................................................................................13
Porters Five Forces Analysis........................................................................................................14
Rivalry or Direct competitors....................................................................................................14
Threat of New Entrants..............................................................................................................15
Threat of Substitutes..................................................................................................................16
Power of Suppliers.....................................................................................................................16
Power of Buyers........................................................................................................................17
Five Forces Summary................................................................................................................17
Driving Forces...........................................................................................................................18
Summary of Industry Analysis..................................................................................................19
Value chain and Internal Analysis..................................................................................................20
Primary activities.......................................................................................................................20
Marketing and Advertising........................................................................................................24
Supporting activities..................................................................................................................26
Overall Internal Analysis...........................................................................................................28
Market Capitalization....................................................................................................................30
Financial Performance...................................................................................................................31

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Stock Prices...............................................................................................................................31
Beta Score..................................................................................................................................31
Altman Z score..........................................................................................................................32
Current Corporate Strategies.........................................................................................................32
Issues with corporate strategies.....................................................................................................33
Recommendations..........................................................................................................................34
Business Functional Strategies......................................................................................................35
Business unit strategies..............................................................................................................35
References......................................................................................................................................36
Appendices....................................................................................................................................39

Macro Environment
Technology Trends
E-Commerce

In the United States, Aeropostales largest market, online sales are

growing at a faster rate than the retail sector as a whole. In 2014, ecommerce sales in the retail sector grew by a total of 15.4%, while total
retail sales only grew by 3.8%. From 2012 to 2014, online retail sales
increased from 5.2% of total sales to 6.5% of total sales (Marketline, 2015).
E-commerce is a growing trend that offers an opportunity for
Aeropostale to reach a broader customer base and increase its market
presence. Aeropostale began its e-commerce business in 2005. Its online
orders grew by 19% in 2013 and 13% in the first quarter of 2014 (Marketline,
2015). Online sales provide greater profit margins for the company because
merchandise travels directly from distribution centres to the consumer,
without incurring the extra costs of brick and mortar stores, thereby reducing
capital investments, labour, and administration costs
Fast Fashion

In the last ten years, many firms, such as Gap, H&M and Zara, have
been following the principles of Fast Fashion to get designs from the catwalk
into stores and to consumers as fast as possible (Marketline, 2015). Clothing
is increasingly being seen as disposable and companies can increase their
sales by continually offering new items.

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This trend has been seized as an opportunity by many of Aeropostales
competitors, but not without incurring some risk to their long term
profitability. Fast Fashion strategies require short production and distribution
lead times, which can sacrifice quality. Customers may then be unsatisfied
with their purchases and the company will lose the brand reputation they
spend their advertising budgets promoting.
Use of Customer Metadata

Data mining is increasingly being used to gather detailed information

about consumers. This data is then used to help a company understand their
consumers and better direct their efforts to meeting their needs. Singh
explains that as customers interact with product databases online, patterns
emerge that reveal their preferences (2014). But he also cautions that
collecting data is easy, it is sorting the large volume of it for meaningful
information that is more difficult (Singh, 2014).
While designing an effective information gathering system is an
investment, data mining would be an opportunity for Aeropostale to improve
its knowledge of the customer, which would reap financial returns in the long
run. In an industry where trends change often and quickly, it is very
important that Aeropostale stays in touch with consumer preferences.

Economic Trends
Aeropostale primarily operates in the US, Canada and Puerto Rico,
though its e-commerce business is worldwide. Aeropostale has eight license

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agreements in 16 countries that operate 95 Aeropostale stores in the Middle
East, Asia, Europe and Latin America (Marketline, 2015).

Income

As shown in Figure 1: GDP per Capita, the six regions that Aeropostale
operates in have disparate levels of GDP per Capita. All show an increasing
trend, but Egypt and Mexico are at much lower levels compared to the
Western and Asian Regions. The EU countries show GDP that are almost
identical, while Canada and the United States are even higher. This trend is
repeated when examining each countrys household disposable income, as
shown in Figure 2: Household Disposable Income; however, the rate that
disposable incomes are growing show a different trend. As shown in Figure 3:
Household Disposable Income Growth Rate, Mexicos disposable income is
increasing, while Canada and the United States are showing a slight
decrease. Japan is showing an even steeper decline in disposable income. No
income information was available for the Middle East.
These trends indicate that Western countries have more disposable
income at present, they may have less in the future. Countries like Mexico
are on their way to catching up with more developed countries. This presents
an opportunity for Aeropostale to build a presence in these emerging
countries as their purchasing power increases.
Economic Forecasts

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Global
The IMF predicts overall economic growth of 3.3% in 2015, and 3.8% in
2016 (IMF, 2015). They cite favorable financial conditions, lower fuel prices,
and better labour market conditions as drivers for increased growth in
advanced economies, even though North America has experienced weak
growth most recently. Europe is said to be on the road to recovery, with the
exception of Greece. Japan is expected to have modest growth, as
consumption has been low. Growth in emerging market economies is
expected to slow down due to low commodity prices, more stringent external
financial conditions, structural failings, and political issues (IMF, 2015).
The global womenswear market grew by 2.3% in 2014 to reach a value
of $650.7 billion.
(Marketline, 2015). Overall global economic growth provides an opportunity
for Aeropostale to improve its earnings. It is especially important that growth
is seen in North America as this region accounts for the bulk of revenues.
Canada
Shown in Table 1 below, BMO Nesbitt Burns predicts that consumer
spending growth is on the decline, even as the real GDP growth appears to
have hit a high (BMO Nesbitt Burns, 2015). In contrast, RBC Economics has
predicted consumer spending to reach 3% growth in 2015 and then decline
to 2.7% in 2016 (RBC Economics, 2015).
Table 1: Canadian Economic Outlook
2014
Real GDP Growth
2.4%
Consumer Spending
2.7%

2015
1.2%
2.0%

2016
2.1%
1.8%

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Growth
Real Disposable Income
1.5%
Growth
(BMO Nesbitt Burns, 2015)

2.4%

1.8%

There is no agreement as to the direction consumer spending will take. A

decline in Canadian spending poses a threat to Aeropostales profitability,
though Canada is a less important market than the United States.
United States
Shown in Table 2 below, the US Congressional Budget Office predicts
that if current laws remain in place, real GDP will grow by 2% in 2015, then
3.1% in 2016 (Congressional Budget Office, 2015). This growth will be driven
by increased consumer spending, as well as business and residential
investment. The unemployment rate is expected to fall, increasing
competition for firms to find labour, and wages are expected to increase.
Table 2: Economic Outlook for 2015 to 2019
2015
2016 2017
Real GDP Growth

2.0%

3.1%

2.7%

2018 201
9
2.2% 2.2
%

(Congressional Budget Office, 2015)

Growth in GDP and consumer spending provides an opportunity for
Areopostale to increase earnings. Rising wages can be a threat because it
means that the firm has to pay more for its service workers, but these
workers also make up some of their target market. If the workers make more
money, they have more disposable income to spend on goods and this is an
opportunity for Aeropostale to increase their revenues.

Socio-Cultural Trends
Demographics

In the countries Aeropostale operates, there are some similarities.

Proportions of females and males are roughly equal, especially among the
younger age groups that make up Aeropostales target market. Where the
regions differ is in the age structure of the people (see Figure 4: Age
Structure of Populations). Areas like Egypt and Mexico have a younger
population so there is larger proportion of the population in the 0-14 and 1524 age range. These countries also have a higher population growth rate,
meaning they will continue to have a younger population in the years to
come. These areas offer an opportunity for Aeropostale to capture new
audiences, as their target market are 4 to 17 years old.
Figure 5: Population Growth Rate (see appendix) shows that Egypt and
Mexico have the fastest growing population rate, whereas Europe and Japan
are actually showing negative growth. Canada and the United States have
less than half the growth of Egypt and Mexico and the European Union has a
population of 742,452,000, with an estimated population growth rate of
-0.17% (CIA, 2015). This means that while Aeropostales Western markets are
getting smaller, emerging markets offer an opportunity to reach a growing
population.
Lifestyle Trends

Vlogging is a popular trend among tweens and teens in North America.

YouTube is a platform for people to present their own home videos on any

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topic and is one of the most visited sites on the internet (Wikipedia, 2015).
Aeropostale has capitalized on the popularity of some Vloggers by recruiting
them as brand ambassadors.

Political and Legal Trends

Rising labor wages in the US

Marketline has reported an increase in labour costs in recent years

(2015). While the federal minimum wage has remained at $7.25 since 2010
(see Table 3 below), 29 states have declared a minimum wage higher than
the national standard due to a higher cost of living.
Table 3: Federal Minimum Wage
1998
2008
2009
$5.15
$5.85
$6.55
(Marketline, 2015)

2010
$7.25

2015
$7.25

Aeropostale employs 29,337 people, of whom 25,406 are part-time.

Most of these employees likely make minimum wage or close to it. Rising
labour costs will likely pose a threat to the companys profitability; however,
Aeropostale also targets this population with their products. An increase in
minimum wage workers income means that they will have more disposable
income with to purchase Aeropostale clothes.
The North American Free Trade Agreement (NAFTA)

NAFTA came into effect in 1994 with the goal of creating a free trade
zone between the United States, Canada and Mexico (Floudas & Rojas,
2004). The North American market is estimated to be worth $6 trillion

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annually. It works by removing duties and restrictions on trade between the
countries. This agreement provides an opportunity for Aeropostale to take
advantage of low trade costs in the North American market, especially for
the underexplored Mexican market.

Sustainability Trends
The growing concern over sweatshops

Cases of sweatshops have been discovered for many North American

apparel companies, which have severely tarnished their reputations.
Aeropostale has not directly accused of using sweatshops, but has been
called out for not having a firm policy against child labour (International
Labor Rights Forum, 2011). Aeropostale has been asked to provide its
strategies for ensuring it sources its products ethically, but the firm has been
reluctant to make public statements. Some companies, such as Gap Inc.,
have developed codes of conducts or ceased relationships with suppliers
over use of child and forced labour. Others have faced much public criticism
for continued violations. These issues pose a great threat to Aeropostale, as
they have few suppliers (Marketline, 2015), which means they are vulnerable
is their suppliers become suspect, or if factories get shut down due to strikes
(Cortez, 2014). Accusations of sweatshop use also create a negative brand
image which will reduce their profitability.

Environmental Concerns

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The trend towards fast fashion has increased the view that clothes are
disposable. This perpetuates a cycle of consumption that ends with more
clothing in landfills. In current business models the environmental and social
costs of products are not sufficiently factored into total costs ( International
Apparel Federation, 2015). Previously used materials are cheap at the cost of
the environment, and this makes the introduction of new, environmentally
less damaging materials artificially more expensive. Simon Fernandes
pointed out that the industry is reluctant to invest in supply chain
improvements because of the perceived difficulty of seeing a return on
investment, but he has found that in practice the opposite is true
( International Apparel Federation, 2015). Aeropostale is not vertically
integrated, so they have less control over the practices of their suppliers.
While it may be profitable in the short term to follow fast fashion trends and
use questionable suppliers and materials, using these practices is likely to
threaten their long term profitability. Customers are learning more about
where their clothes come from, and are increasingly demanding that
companies adhere to better practices in sourcing their products.

Industry Analysis
Aeropostale, Inc. is a company within the apparel retail industry
(Aropostale, Inc., 2015). The companys main business is the merchandising
of clothes that target the young members of the society aged between four
and seventeen years. The company operates in two distinct segments. The
Aeropostale stores target those aged between fourteen and seventeen, while

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P.S from Aeropostale targets those aged between four and twelve years
(Aropostale, Inc., 2015). In 2012, Aeropostale expanded its reach to the
online market, targeting older women. Aeropostale operates more than
seven hundred stores in the US and Canada, while its licensed partners
operate more than two hundred additional stores in other regions, including
the Middle East, Latin America, and Europe (Aropostale, Inc., 2015).
Aeropostale was formally a branch division of Macys, which is one of
Americas largest departmental stores. As a company that celebrated its
twenty-seventh birthday in 2014, Aeropostale has developed and expanded.
Growth is driven by external factors within the retail industry. It is estimated
that the apparel industry will grow by at least 6% over the next year ending
2015. In the year 2014, the industry generated more than 331 trillion dollars
in revenue. In 2013 and 2012, revenues were estimated to amount to about
$318 billion and $300 billion respectively (US Bureau of Labor Statistics,
2013). The retail side of the apparel industry is estimated to have a return on
equity of about 20.3%, compared to the services return of 40%. Return on
investment is estimated to be 13%, while the return on assets is -191%
(Yahoo! Inc., 2015). The number of large firms stands at more than one
hundred and thirty (Yahoo! Inc., 2015). The industry is highly fragmented
with more than eight firms having less than 35% of the market (Trefis Team,
2015). The retail side of the apparel industry employs close to half a million
people in the United States alone (US Bureau of Labor Statistics, 2013). It is
noted that the retail industry contributes to the US economy more than the

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automobile industry. In addition, more than half of all garments worn in the
US are manufactured in other countries, most notably in China and Indonesia
(American Apparel and Footware Association, 2014).

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Strategic group map

The apparel retail industry can be divided into two. One class of
companies within the industry are those that do not have a definitive target
market. It is likely that these companies offer other products besides clothes
and accessories. More often than not, these undistinguished companies are
large, employing thousands and even millions of people. Undistinguished
retailers also have thousands of stores and cover a much larger geographical
area than the second class. Due to their size, undistinguished retailers have
a significant share of the market. The reason could be that they offer
products for the mass market. As a result of their large market share and
wide operations, undistinguished apparel retailers make significant profits at
the expense of their smaller rivals.
On the other hand, there are the specialized retailers. These
companies target a particular market that is defined by age or income.
Specialized retailers do not sell anything else but clothes and accessories. In
some cases, these specialist retailers stock merchandise for the target
market only.
NAICs codes for companies in the apparel retail industry are between
448110 and 448310 (NAICS Association, 2015). These codes cover all types
of clothing from men and women to children and infants. They also cover
companies that sell shoes and other clothing accessories. The Strategic

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Group Map below shows that Aeropostale, in the specialized retailer
category, holds 1% of the market share.

Table 5: Strategic Group Map of the Apparel Industry

Marke
t
share

Annual revenues

Aeropostale

1%

Abercrombie &
Fitch

1%

3,744.00

American Eagle
Outfitters

1%

3,160.00

Target Corporation

5%

72,618.00

Wal-Mart Stores,
Inc.

8%

485,651.00

1,838.00

Specialized
retailers

Undistinguis
hed retailers

Porters Five Forces Analysis

Rivalry or Direct competitors

Aeropostales main rivals have made either an equal amount of

investment in their business lines or far outstrip Aeropostale in this aspect.
For example, Aeropostales largest rival is Walmart that has more than six
thousand stores in the US alone (Wal-Mart Stores, Inc., 2015). Walmart has
8% of the apparel retail industry in the US (Trefis Team, 2015). The industrys
second largest company, Target Corporation, has close to one thousand
stores in the US alone (Target Corporation, 2015). While these two
companies are not direct competitors to Aeropostale, they offer clothing
similar to that offered at any Aeropostale store. However, a major difference

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between Aeropostale and its two main rivals is that the former is more
focused on meeting the needs of a particular market segment. Therefore, its
more direct rivals can be found in Abercrombie & Fitch and American Eagle
Outfitters. Abercrombie & Fitch have almost four hundred stores in the US
while American Eagle Outfitters has one thousand stores. Aeropostale and its
two close rivals have made almost the same amount of investment in assets.
In the year ended 2014, Aeropostale reported an asset base of $512 million,
while Abercrombie & Fitch and American Eagle Outfitters had an asset base
of $2.5 billion and $2.0 billion, respectively over the same period
(Abercrombie & Fitch, 2015; American Eagle Outfitters, 20115). Aeropostales
rivals also employed more people and offered a wider range of products. This
is not to mention that each rival has developed an extensive supply chain
that makes the cost of exit increase significant. According to Porter,
companies that have made significant investments in their operations are
less willing to leave (2008). Therefore, rivalry in an industry such as the
apparel retail industry is expected to be extremely stiff. Based on these
facts, the threat of rivalry from direct competitors, receives a high rating of 8
out of 10.
Threat of New Entrants

Barriers to entry are a significant factor in assessing the possibility of

rivalry between current and new companies. Where entry barriers are low,
rivalry is high. High entry barriers create room for just but a few companies
that have no incentive to compete against each other (Porter, 2008). As

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previously stated, companies in the apparel retail industry have made
significant investments in their asset and store base. While these assets
have been built over several decades, they indicate that entry into the
industry is a capital intensive venture. However, new technologies are
changing the way the customer shops and retail stores operate. In the
modern context, it is possible for a small firm to offer just about the same
variety of products that can be found in the largest of physical stores. In
addition, smaller companies are developing ways of making their operations
more efficient than those of their larger rivals. The result is that there is
intense competition that is based on price. The effect of reducing entry
barriers can be seen in other countries where larger companies, sometimes
controlling as much as 30% of the market are reporting losses solely due to
the entry of smaller and more nimble rivals. Therefore, it is plausible to rank
the threat of new entrants as 7 out of 10, especially for Aeropostales ecommerce segment.
Threat of Substitutes

The apparel retail industry offers the market a product that has no
plausible substitute as people in western societies seldom make their own
clothes in todays times. Customers must buy clothes with the only factor
being the price and desired brand. When the customer considers the latter
factors, then the threat of substitution increases dramatically. This due to the
fact that switching costs are non-existent, as customers can move from
buying from a high end store such as Aeropostale to a lower end retailer such

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Walmart. The decision could be based on the perception that the product will
offer the same utility when stripped of brand and price. Yet, some customers
will prefer to buy from the same store owing to preference of quality over
price and brand. This serves to minimally reduce the threat of substitution.
Therefore, the threat of substitution among apparel retail stores is high at 8
out of 10.
Power of Suppliers

There is little difference between clothes sold at Aeropostale and its

closest rivals. Indeed, the clothes sold by any of these retailers are likely to
have been manufactured by the same supplier (Huchstedt, 2015). Owing to
these industry features, each store chain enters into long term contracts with
the preferred supplier, often limiting the possibility of price hikes. Even when
there are disagreements between the store and its suppliers, there are ample
alternatives that can be used without leading to a significant increase in
supply chain costs. It is also to be considered that these suppliers are willing
to engage with the store chain companies due to the significant profits that
are to be made by selling clothes in the western worlds large apparel
market. An additional factor is that is that is challenging for the supplier to
move upwards in the value chain and start their own stores in the US. The
prohibitive cost of such ambitions serve to reduce the power of suppliers
significantly. However, suppliers can join forces against the US apparel
industry or have their governments impose punitive measures that

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guarantee more returns for the suppliers and lower profits for the store
chain. Therefore, the power of suppliers is low at 3 out of 10.
Power of Buyers

Clothes are commodities that afford the customer significant power

against the retail stores. These products have little or no differentiation,
regardless of where they are bought. For example, a shoe made by Nike is
exactly the same regardless of where it is bought. The low differentiation in
products makes it easy and less costly for customers to switch from one
retailer to the next. However, there are barriers to buyer bargaining power.
One, it is almost impossible for the buyer to begin making clothes in their
houses or cottage industries. Therefore, they cannot integrate backwards in
the value chain. In addition, customers are highly fragmented. Indeed, if one
was to consider the six thousand companies that make up the apparel retail
industry, then the market is made up of the entire population in the US. It is
not possible for these customers to band together against retail companies
and demand better prices. Therefore, the power of buyers is moderate at 5
out of 10.
Five Forces Summary

Based on the analysis provided above, the highest threat to the

apparel retail industry comes from rivalry between existing companies.
Direct rivalry shares the pole position with the threat of substitutes. The third
highest threat is from the threat of new entrants, while the fourth threat is

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from the power of buyers. The lowest threat is in the bargaining power of
suppliers.
Driving Forces

The retail apparel industry is under pressure from changes in

technology (Brynjolfsson, Hu, & Rahman, 2013). Changes in technology have
served to lower the barriers of entry significantly. For example, it is now
possible for a small start-up to reach millions of customers without having to
open even one store. Companies that have grown in this way include
Amazon.com, which is valued many times more than large brick and mortar
stores such as Costco and Target (Brynjolfsson, Hu, & Rahman, 2013). There
are thousands of other similar stores operating in the US alone. Without
having to pay the costs of constructing and operating store locations and by
using modern technology to enhance operational efficiency, online retailers
have forced brick and mortar companies to reconsider their mode of
operation. For instance, nearly all brick and mortar stores run some form of
online retailing front.
While having a direct impact on the barriers of entry, technology also
increases the bargaining power of consumers. Under the old setting, the
customer was completely reliant on the broadcast media to inform him/her of
price reductions across different stores. The process was time consuming
and forced customers to shop from just a few different outlets. However, the
modern setting allows for the creation of price comparison websites
(Brynjolfsson, Hu, & Rahman, 2013). Moving from one store to the next is

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minutes away. Therefore, customers can shop for better bargains regardless
of location. Therefore, customers can bargain for lower prices while
companies fight based on which one offers the lowest price. Based on these
factors, developments in technology in the retail industry are argued to be
revolutionary.
Summary of Industry Analysis

The apparel retail industry is currently an unattractive market. It is

common for companies in the industry to make losses in consecutive years.
For example, Aeropostale has had a net loss margin of 13% between the
year 2013 and 2012. In the last three years ending 2015, Aeropostale only
made a profit in 2012 when their margin was just 1.4%. The return on
investment stands at -13%, while the return on equity is extremely low at
-119%. The only reprieve for the industry is that it is expected to grow at
about 6% in the near future. Low profitability occurs against a backdrop of
the fact that clothes are an essential human need. However, stiff competition
within the industry is to blame for low returns. The US government estimates
that there are more than one hundred and sixty companies that sell clothes
and their accessories in 2014. The large number of companies creates room
for intense price rivalry, thus lower profits. In addition, the industry is
exposed to other companies from outside the US. These foreign companies
offer lower prices, reducing profitability even further.
The future of the retail industry does not look bright. Developments in
the use of technology have shifted power from the companies to customers.

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Technology enhances the ability of a customer to compare prices while
enhancing price rivalry among existing companies. Based on these facts, it
can be expected that the attractiveness of the apparel retailing industry will
continue to decline in the future.

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Value chain and Internal Analysis

A value chain is a series of activities or processes which aims at
creating and adding value to a product at every step during the production
process. The business activities are divided into primary activities and
secondary activities. The primary activities are directly related to the
creation of a good or service while the support activities help in enhancing
the efficiency and work to obtain a competitive advantage among peers.
Primary activities

Inbound logistics
During fiscal 2014, Aeropostale sourced approximately 81% of their
merchandise from their top five merchandise vendors. Most of their vendors
maintain sourcing offices in the United States, with the majority of their
production factories located in Asia and Central America. In an effort to
minimize currency risk, all payments to their vendors and sourcing suppliers
are made in U.S. dollars. They engage a third party independent contractor
to visit the production facilities that supply them with their products. This
independent contractor performs audits at each factory and as a result,
assesses the compliance of the facility with, among other things, local and
United States labor laws and regulations as well as fair trade and business
practices.
Like most retailers, Aeropostale outsources its manufacturing
operations to countries where labor costs are cheaper. The retailer is highly

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dependent on a small number of vendors for its inventory. A change in
strategy of any of these vendors or a delay in supply can adversely affect the
retailer. In order to reduce the lead time, retailers such as Abercrombie &
Fitch started sourcing their merchandise form within the U.S. and Central
America.
The average days sales of inventory (DSI) of Aeropostale is 34.34 over
the past 4 years which is lower than Abercrombie, Ascena retail and
American eagle (see table 5 below). This calculation also shows the liquidity
of inventory. Shorter DSI means the company can convert its inventory into
cash sooner. In other words, the inventory is extremely liquid and more liquid
inventory means the company's cash flows will be better.
Table 5: Average Day Sales Inventory (DSI)
Aeropostale
Abercrombie
American eagle
Ascena retail

2015
36.78
126.43
48.92
89.17

2014
34.51
113.32
51.96
93.72

2013
32.4
107.38
62.21
94.86

2012
33.69
106.4
61.06
111.22

Operations
As of January 31, 2015, Aeropostale operated 860 stores, consisting of
773 Aropostale stores in all 50 states of USA and Puerto Rico and 61
Aropostale stores in Canada. They also operated 26 P.S. from Aropostale
stores in 12 states, primarily in off-mall locations.
American eagle has company operated stores in the United States,
Canada, Mexico, Hong Kong and China. American Eagle Outfitters and its

26
subsidiary aerie merchandise is also available at international store locations
managed by third party operators. As of February 1, 2014, American eagle
operated 944 American Eagle Outfitters stores and 122 aerie stand-alone
stores.
Abercrombie, at the end of Fiscal 2014, operated 969 stores. In the US,
it operated 799 stores and internationally it operated 170 stores.
Ascena retail group operates through its subsidiaries (Lane Bryant,
maurices, Dressbarn and Catherines brands; and for tween girls, under the
Justice brand) ecommerce operations and approximately 3,900 stores
throughout the United States and Canada.
Declining mall traffic, a highly promotional and competitive teen retail
environment and a shift in customer demand away from logo-based product
have contributed to their unfavorable financial performance. Aeropostale has
incurred declining comparable sales and net losses from operations in fiscal
2014 and 2013. This has led to cash outflows from operations of $55.7
million in fiscal 2014 and $38.4 million in fiscal 2013.
Aeropostale was one of the strongest performers during the
recessionary environment of 2008-2009 as it offered basic products at
relatively low prices. However, as the economy started to improve, U.S.
buyers switched to other fashion-forward retailers and Aeropostale remained
focused on its logo business: basic t-shirts, jeans and hoodies bearing the
Aeropostale logo. As a result, the retailer's revenue per square feet has been
on a downslide since 2010. Due to the lack of fashionable merchandise,

27
Aeropostale's revenue per square foot declined to $568 in 2011 and $548 in
2012. Although the company tried to boost its fashion offerings in 2013 with
certain preppy products, customers responded negatively to the drastic
design changes and high prices. The company had to usher heavy
markdowns to clear its inventory, which weighed heavily on its sales. With
low store traffic and a steep decline in average unit retail, Aeropostale's
revenue per square foot fell to $462 in 2013 and $438 in 2014. However,
average sales per square foot of Aeropostale over the past four years is
highest compared to its direct competitors (see Table 6 below), which
indicates that management has been more successfully marketing and
displaying the stores products to achieve sales.
Table 6: Sales per Square Foot (in Million USD)
2014
2013
Aeropostale
438
462
Abercrombie
381
417
American eagle
444
489
Ascena retail
225
224

2012
548
485
438
167

2011
568
463
422
154

Aeropostales inventory turnover ratio has been decreasing for the past
years. In 2011, inventory turnover ratio was 10.83, which increased to 11.27
in 2012 but gradually decreased in 2013 and 2014 to 10.58 and 9.92
respectively (see Table 7 below). A low turnover implies poor sales and,
therefore, excess inventory. A high ratio implies either strong sales or
ineffective buying. Aeropostales inventory turnover ratio over the past four
years has been the highest compared to its direct competitors like
Abercrombie, American eagle and Ascena retail group

28
Table 7: Inventory Turnover Ratio
2014
Aeropostale
9.92
Abercrombie
2.89
American eagle
7.46
Ascena retail
4.09

2013
10.58
3.22
7.03
3.89

2012
11.27
3.4
5.87
3.85

2011
10.83
3.43
5.98
3.28

The comparable store sales metric gauges the amount of revenue a

retail location generated in the most recent accounting period, relative to the
amount of revenue it generated in a similar period in the past. Aeropostale
had the highest comparable sales decline over the past four years compared
to its direct competitors Abercrombie, American eagle and Ascena retail
group. In fiscal year 2014, Aeropostales comparable sales decline was 11 %
which is much higher than its direct competitors (See Table 8 below). This
shows that Aeropostale is really struggling with its revenue and growth
margin. The sales are declining constantly for past several years and the
management has not been able to stem the decline.
Table 8: Comparable Sales Change
2014
Aeropostale
-11%
Abercrombie
-8%
American eagle
-6%
Ascena retail
-3%

2013
-15%
-11%
9%
2%

2012
-2%
-1%
4%
5%

2011
-1%
-5%
-1%
6%

Marketing and Advertising

Aeropostale believes their stores, their e-commerce websites, and

social media channels are the primary means to communicate their message
and provide their brand experience. Their marketing efforts are focused on
online and in-store communications, promotions and internal as well as

29
external advertising. Aeropostale expands, tesst and modifies their
marketing efforts based on focus groups, surveys and consumer feedback.
Aeropostale markets in-store with large images in the store-front windows
and at the checkout area. In addition, they display promotional messages
and images alongside product displays and on other touch points.
Pricing is the key component of Aeropostales success. Their
merchandise, which they believe is of comparable quality to that of their
primary competitors, is generally priced lower than their competitors
merchandise. In addition, their business is highly promotional. They conduct
promotions in their stores throughout the year, generally lasting anywhere
from two to four weeks in length.
Aeropostale stores EBITDA margin declined massively in 2011 due to
an increase in cotton prices and high markdowns. In 2012, better cotton
prices did not help the retailer as it offered heavy discounts to attract store
traffic. This trend continued in 2013 due to low brand loyalty and an overall
weakness in the U.S. retail industry. Aeropostale's EBITDA margins fell to
6.9% in 2013 and another promotion rich year got the company to 2.1% in
2014.
Market share of Aeropostale has been decreasing over the past five
years. In 2015, the market share of Aeropostale is less than 1%. Although
market shares of all the direct competitors are decreasing over the past
years, Aeropostales market share is least among the direct competitors like

30
American eagle, Abercrombie and Fitch and Ascena retail (see Figure 6:
Retailers Market Share in Appendix).
Aeropostales revenue has been decreasing over the past four years at
a compounded annual growth rate of -5.87 %. Aeropostales revenue decline
rate is the worst compared to its direct competitors (see Figure 7: Revenue in
Appendix). Although the revenue growth rate of all the other direct
competitors except Ascena has been declining, rates are lower than
Aeropostales. Only Ascenas annual revenue growth rate has been positive
over past four years. Absolute revenue of Aeropostale in 2014 (1839 million
USD) is also the lowest compared to its direct competitors like Abercrombie,
Ascena and American eagle (see Table 9 below).
Table 9: Revenue (in Million
Aeroposta
le
2014
1839
2013
2091
2012
2386
2011
2342

USD)
Abercrombie
3744
4117
4511
4158

American
eagle
3283
3306
3476
3160

Ascena
4803
4791
4715
3353

Aeropostales absolute marketing expenses has been the lowest

among its direct competitors over past four years (see Figure 8 in Appendix).
The marketing to sales percentage has also been the lowest for Aeropostale
over past four years. Aeropostale has been spending only 1% of its revenue
over marketing where as Ascena has been spending about 4 to 5% of its
revenue over marketing (see Table 10 below).
Table 10: Marketing to Sales %

31
Aeropostal
e
1%
1%
1%

2014
2013
2012

Abercrombi
e
2%
2%
1%

American
eagle
3%
3%
2%

Ascena
4%
3%
5%

Outbound logistics
To support Aeropostales stores in the United States and Puerto Rico,
they maintain two distribution centers to process merchandise and
warehouse inventory. They lease a 315,000 square foot distribution center
facility in South River, New Jersey. They also lease a second distribution
facility in Ontario, California with 360,000 square feet of space. The staffing
and management of these distribution facilities is outsourced to a third party
provider that operates each distribution facility and processes their
merchandise. There have been no work stoppages or disruptions since the
inception of their relationship with this third party provider in 1991, and they
believe that the third party provider has a good relationship with its
employees.
Supporting activities

Infrastructure
Aeropostale locates their stores primarily in shopping malls, outlet
centers and, to a much lesser degree, lifestyle and off-mall shopping centers,
all located in geographic areas with the highest possible concentrations of
target customers. Aropostale stores average approximately 3,800 square
feet each and their P.S. from Aropostale stores average approximately 3,700

32
square feet each. Aropostale stores, along with our P.S. from Aropostale
stores, are organized by region and further broken down into districts. A
regional manager manages each of our 10 regions and each region
encompasses approximately eight to 10 districts. Each district is managed by
a district manager and encompasses an average of eight stores. Their
corporate headquarters directs the merchandise assortments, merchandise
pricing, store layout, inventory management and in-store visuals for all of
their stores.
Human Resources
As of January 31, 2015, Aeropostale employed 3,236 full-time and
17,771 part-time employees. They employed 767 of their employees at their
corporate offices and in their distribution centers and 20,240 at their store
locations. The number of part-time employees fluctuates depending on their
seasonal needs. None of their employees are represented by a labor union
and their relationship with their employees are said to be good.
Technology
Aeropostales management information systems provide a full range of
retail, financial and merchandising applications. They utilize industry specific
software systems to provide various functions related to point-of-sale,
inventory management, logistics and sourcing, planning and replenishment,
and financial reporting. They continue to invest in technology to support and
enhance their business processes.

33

Overall Internal Analysis

The most important value chain activity for the company is operations,
inbound logistics and marketing. Overall Aeropostales operation has been
very good: Inventory turnover ratio, days inventory and sales per square foot
have been better than Abercrombie, American eagle and Ascena. This shows
that one of the biggest strengths of Aeropostale is its operational efficiency.
Although this advantage is neither rare nor non-imitable; other companies
could easily surpass Aerpostale in its operational efficiency. Inbound logistics
of the company has also been very good as days inventory is very low
compared to its direct competitors. This strength is also neither rare nor nonimitable as other companies can surpass Aeropostales days inventory in the
future with better supplier relationship and effective inventory management.
Aeropostales marketing strategy is efficient but marketing to sales
percentage is very low compared to its direct competitors. The company
could be spending a larger percentage of their costs on marketing and
advertisement to be competitive in the market place. The companys biggest
strength is pricing. Aeropostales product prices are lower than its
competitors product prices. This gives the company advantage over its
direct competitors but this can also be disadvantageous for the company as
its products could be perceived as cheap and of inferior quality. Especially
when the revenues are falling and COGS has been increasing for the

34
company, selling products at a low price might not be an effective strategy.
This strength is neither rare nor non-imitable as other companies like
Abercrombie and American eagle can drop their prices too and bring their
prices to be at par with that of Aeropostales.
The major challenge for the company is its very high cost of goods sold
to sales margin. Aeropostales COGS to sales percentage has been nearly
80% over the past four years (see Figure 9: COGS to Sales Ratio in
Appendix). Compared to Aeropostale, Abercrombies COGS margin has been
nearly 38%, American eagles COGS margin has been nearly 64% and
Ascenas COGS margin has been nearly 44% over the past four years.
Due to this very high COGS margin, Aeropostales EBIT margin has
been the lowest compared to its direct competitors. Aeropostales EBIT
margin has been negative in 2014 and 2013 whereas for Abercrombie and
American eagle it has been positive (see Figure 10: EBIT Margin in Appendix).
Over the past four years, Aeropostale has been struggling to generate
substantial earnings before interest and taxes. EBIT is very important for any
company to grow and sustain in the market place. A negative EBIT is a huge
concern for shareholders and management alike. A constant negative EBIT
can lead Aeropostale to bankruptcy as it will not be able to pay for its debts.
Moreover, Aeropostale mainly offers basic products such as logo
printed t-shirts and hoodies, and jeans at affordable price points. The retailer
is not known for offering fashionable and trendy products. One of the main

35
reasons why Aeropostale succeeded during the recession was because it
effectively fulfilled buyers' need for cheap clothing. However, this did not
work well for its brand image. Over the years, U.S. buyers developed a
perception that Aeropostale is a "cheap basic" brand. This has severely
impacted the company's results post-recession with consumers shifting their
preference to fashionable products.
At present, the U.S. teen apparel market isn't at its best due to low
consumer spending and high unemployment rate, as teenagers either
depend on their parents for money or they earn themselves. While adults are
preferring to save money instead of making impulse purchases,
unemployment rate in the teenage segment remains high in the range of
21%-24%. Due to this, a number of retailers such as American Eagle
Outfitters and Abercrombie & Fitch have struggled with their growth.
Aeropostale currently is moderately unattractive due to negative EBIT,
negative net profit and negative ROE.

Corporate Level Analysis

Market Capitalization
Aeropostales market capitalization is significantly lower than any of its
competitors (see Figures 12 and 13: Market Capitalization in Appendix). Over
the past six fiscal years, Aeropostales market capitalization has reduced to
6% of what it was in January 2010. This significant decrease is primarily

36
attributed to the decrease in share price by approximately 90%. The number
of outstanding shares has remained fairly steady over the past couple of
years. American Eagle Outfitters has achieved stable market capitalization
by having their stock price only fluctuating by a dollar with the exception of
in 2012 when it increased by nearly $5 to be trading around $20.
Abercrombie & Fitch realized a significant increase at the beginning of the
decade followed by decreases in the past two years. These changes are
attributed to changes in the stock price, and an aggressive share repurchase
program. Ascena has approximately 10500 times the market capitalization of
Aeropostale. This is largely in part to the number of outstanding shares.
While Aeropostale, American Eagle, and Abercrombie all have less than
200,000 outstanding shares, Ascena has over 163 million shares
outstanding. With this much of a difference it is not useful to include Ascena
in comparison. Furthermore Ascena also has a wider range of brand
segments in the retail industry.

Financial Performance
Stock Prices

With the exception of Abercrombie & Fitch, the clothing retail

companies stock prices followed general market trends in 2010 and 2011
(see figure 14: Stock Prices in Appendix). In 2012 however, Aeropostale
began to underperform in relation to its competitors and the overall stock
market. Since then Aeropostales stock price has only continued to decline to
now being worth only a fraction of what it was at the beginning the the 2010

37
fiscal year. Competitors are all within 20% of where they were in early 2010.
For the past three months, analysts have not been recommending the
purchase of Aeropostale with the analysis being that the stock is
underperforming. As a result, it is not surprising to see that their stock price
is as low as it is. In comparison, both American Eagle and Ascena are
outperforming analysts expectations, however the analysts are not
recommending investors purchase the stocks. In the past three months
Aeropostales stock price has gone from being valued at over $1.50 to as low
as $0.47. The New York Stock Exchange has since given a compliance
notification because all stocks listed on the exchange must have a share
price of at least $1 to remain listed (Team, 2015) In order to comply,
Aeropostale may have to perform a reverse stock split in order to increase
the stock price and remain listed on the stock exchange. Being delisted
would have significant negative implications relating to their ability to raise
capital.
Beta Score

The beta of a stock assesses its volatility and risk in comparison to the
market as a whole. In comparison to competitor and the industry,
Aeropostale has a beta that is more than twice that of the next highest beta
(see Figure 15: Beta Scores in Appendix). With its beta just under 3,
Aeropostale is almost 200 times riskier than the market as a whole. A riskier
stock requires a higher rate of return, however Aeropostale has the lowest

38
stock price and is not generating any earnings for investors nor is it declaring
dividends.
Altman Z score

The Altman Z score is an indicator used to predict bankruptcy where

the higher the score the less likely it is for the company to declare
bankruptcy. A score below 1.8 indicates a very high chance that the company
will go bankrupt, and a score between 1.8 and 3 is a warning that the
company is not in the best position and action is needed to avoid
bankruptcy.i Among Aeropostales competitors, the company went from
having the highest score in 2010 to the lowest score at the end of the 2014
fiscal year and is currently at a score below 3 (see Figure 16: Altman Z
Scores in Appendix). This trend follows a similar pattern to their decreasing
stock price, which, should it continue Aeropostale will be at a definite risk of
bankruptcy.

Current Corporate Strategies

Aeropostales core business is located at the end of its value chain.
Aeropostale is a retail company that interacts directly with consumers.
Aeropostale owns three businesses: Aeropostale, P.S. from Aeropostale, and
GoJane.com. Each of these businesses targets a slightly different consumer
segment, however all three are considered fashion retailers. In addition to
owning these three businesses, Aeropostale also has control over its brand
merchandise from design through to sale of merchandise. Aeropostale

39
operates brick and mortar stores and online retailing but due to a decline in
store sales, Aeropostale has placed more emphasis on e-commerce and
closed 122 Aeropostale stores in 2014 to generate revenue.

Issues with corporate strategies

Aeropostales corporate strategies appear to be reactionary to
problems that arise and are not proactive in anticipating market changes
before they happen. Furthermore, the changes provide short-term solutions
instead of creating long-term opportunities. In the acquisition on GoJane.com
in 2012 Aeropostale was hoping to be able to use the synergies of this online
retailer to expand into its other business lines, however Aeropostale
continued to place emphasis on its retail stores in malls. Aeropostale should
have reacted at the first sign of any change in consumer shopping habits,
not only in how consumers shop but also in what they buy. Fashion trends
have changed significantly in the past 5 years and consumers no longer
desire branded varsity style clothing, their competitors American Eagle and
Abercombie & Fitch have adapted to this change in consumer preferences by
offering more fashion forward clothing. Even when Aeropostale partnered
with popular teen icon Bethany Mota, the strategy was short term in nature.
Working with a celebrity is only beneficial as long as they remain relevant in
the media; in particular with teen and Internet icons- in a year or two there
will be someone else who is more popular.

40
The biggest problem with Aeropostales strategy is that it is not
generating shareholder wealth. The share price has been on the decline for
the past five years and Aeropostale is at risk of being delisted from the New
York Stock Exchange which would make it very difficult to raise capital given
debt levels. Furthermore, debt covenants may become an area of concern
should Aeropostale become delisted.ii

Recommendations
Aeropostael should begin by employing a reverse stock split to
increase the price of shares on the stock market. This is a temporary shortterm solution to avoid being delisted that would have significant long-term
implications regarding the ability to finance future growth through equity.
Following this, Aeropostale should consider changing their top leadership. It
is evident that current leadership has not been able to bring the company to
financial success when other companies in the industry have been able to
adapt to market challenges. The new leadership must make a decision on
whether to focus on retail operations or online operations since the current
focus is somewhat unclear. Based on market trends, the company should
focus its strategy to online retailing. Online retailing is a growing trend and
provides the capabilities to more easily expand internationally and reduces
the expensive costs of leasing and operating stores in malls. This may enable
to take advantage of the opportunity of emerging markets with low risk and
capital outlay. Shopping trends are shifting to being able to buy anything
from the comfort of ones home. However there are challenges that are

41
associated with this strategy, especially when the target market for both
Aeropostale and P.S. from Aeropostale are teenagers and children
respectively. In order to make purchases online these individuals will need
access to credit cards and other methods to make payments online that are
typically reserved to individuals over the age of 18. This will be less of a
challenge for P.S. from Aeropostale because parents are the ones to make
clothing purchases for that age group regardless. However, for the teenagers
who Aeropostale stores target, online retailing will require innovative ways
for these individuals to make the purchases with their own money. This
challenge could present an opportunity for Aeropostale to work with financial
institutions and companies such as PayPal to create a mutually beneficial
online payment system for the younger age groups.

Business Functional Strategies

Business unit strategies

All of Aeropostales businesses strive for a cost focus strategy. The

products they offer are fairly generic and can easily be replicated by
competitors. However they are very conscious about who is their target
market. Their target customers are price conscious and have low brand
loyalty. Aeropostale and P.S from Aeropostale stores differentiate themselves
through the shopping experience for both parents and child instead of
product uniqueness. Aeropostale is drifting from their strategic focus in not
tailoring the placement aspect of their marketing mix. By not focusing on
either online retail or in-store retail the company is neglecting the need to

42
focus on their target market. In order to be successful with a focus strategy
the company must gain a competitive advantage through product innovation
or marketing. Aeropostale has not been able to achieve a competitive
advantage because they have not adapted and changed their strategic
approach when the needs of their consumers also changed. Competitors
have been able to replicate the successful aspects of their business and
those features are no longer unique.

References
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43
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46

Appendices

Figure 1: GDP per Capita

Figure 2: Household Disposable Income

47

Household disposable income Net Annual growth rate (%) 2009 2014

Figure 3:Household Disposable Income Growth Rate:

(OECD, 2015)

Figure 4: Age Structure of Populations

(CIA, 2015)

48

Figure 5: Population Growth Rate

(CIA, 2015)

Figure 6: Retailers Market Share

49

Revenue
Aeropostale

Abercrombie

American eagle

Ascena

6000
5000
4000
USD(mil)

3000
2000
1000
0

2015

2014

2013

2012

years

Figure 7:Revenue

Marketing expense
Aeropostale

Abercrombie

American eagle

Ascena

200
150
USD(MIL)

100
50
0

2014

2013

years

Figure 8: Marketing Expense

2012

50

COGS to sales( %)
Aeropostale

Abercrombie

American eagle

Ascena

100
80
60
percentage

40
20
0

2015

2014

2013

2012

years

Figure 9: COGS to Sales Ratio

EBIT margin

percentage

15
10
5
0
-5
-10
-15

Aeropostale

Abercrombie

American eagle

years
2015
Figure 10:EBIT Margin

Aeropostale Financials

2014

2013

2012

Ascena

51
Financials

Revenue USD Mil

Gross Margin %
Operating Income USD Mil
Operating Margin %
Net Income USD Mil
Earnings Per Share USD
Shares Mil
Book Value Per Share USD
Operating Cash Flow USD Mil
Cap Spending USD Mil
Free Cash Flow USD Mil
Free Cash Flow Per Share USD
Working Capital USD Mil
Key Ratios -> Profitability
Margins % of Sales
Revenue
COGS
Gross Margin
SG&A
Other
Operating Margin
Net Interest Income & Other
EBT Margin
Profitability
Net Margin %
Asset Turnover (Average)
Return on Assets %
Financial Leverage (Average)
Return on Equity %
Return on Invested Capital %
Key Ratios -> Cash Flow
Cash Flow Ratios
Cap Ex as a % of Sales

201501
1,839
18.3
-213
-11.6
-206
-2.62
79
1.31
-56
-24
-80
-1.06
150

201401
2,091
17.1
-185
-8.9
-142
-1.81
78
4.42
-38
-84
-122
-1.14
136

201301
2,386
24.7
60
2.5
35
0.43
80
5.22
145
-72
73
1.41
236

201201
2,342
26
114
4.8
70
0.85
82
5.07
129
-73
56
0.68
249

201501
100
81.7
18.3
27.66
2.23
-11.59
-0.48
-12.07

201401
100
82.91
17.09
25.95

201301
100
75.3
24.7
22.2

201201
100
74.03
25.97
21.13

-8.86
-0.04
-8.9

2.49
-0.02
2.47

4.85
-0.02
4.83

2015- 201401
01
-11.23
-6.78
3.17
3.01
-35.6 -20.43
5.47
2.31
- -41.05
110.3
3
-60.89 -41.05

201301
1.46
3.23
4.73
1.81
8.52

201201
2.97
3.11
9.22
1.8
16.51

8.52

13.27

201501
1.3

201301
3.03

201201
3.13

201401
4.02

52
Free Cash Flow/Sales %
Free Cash Flow/Net Income
Key Ratios -> Financial Health
Balance Sheet Items (in %)
Cash & Short-Term Investments
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Net PP&E
Intangibles
Other Long-Term Assets
Total Assets
Accounts Payable
Accrued Liabilities
Other Short-Term Liabilities
Total Current Liabilities
Long-Term Debt
Other Long-Term Liabilities
Total Liabilities
Total Stockholders' Equity
Total Liabilities & Equity
Liquidity/Financial Health
Current Ratio
Quick Ratio
Financial Leverage
Key Ratios -> Efficiency Ratios
Efficiency
Days Sales Outstanding
Days Inventory
Payables Period
Inventory Turnover
Fixed Assets Turnover
Asset Turnover
Figure 11: Aeropostale Financials

Source: Aeropostale Annual report 2014

-4.33
0.39

-5.86
0.86

3.04
2.08

2.39
0.81

201501
29.63
3.57
25.47
9.52
68.19
25.4
4.44
1.97
100
17.24
9.2
12.38
38.82
27.05
15.86
81.73
18.27
100

201401
16.45
7.78
26.61
7.32
58.15
36.35
4.41
1.09
100
21.35
7.92
7.74
37.11

201301
31.25

201201
30.43

20.98
7.15
59.38
35.47
3.96
1.19
100
12.15
7.63
5.93
27.47

22.24
7.42
60.09
39.09

19.55
56.66
43.34
100

17.14
44.61
55.39
100

18.03
44.31
55.69
100

201501
1.76
0.86
5.47

201401
1.57
0.65
2.31

201301
2.16
1.14
1.81

201201
2.29
1.16
1.8

201501

201401

201301

201201

36.78
27.52
9.92
10.06
3.17

34.51
24.03
10.58
8.39
3.01

32.4
19.65
11.27
8.67
3.23

0.82
100
14.07
7.35
4.68
26.28

33.69
21.73
10.83
7.99
3.11

53

Market Capitalization
$4,500,000.00
$4,000,000.00
$3,500,000.00
$3,000,000.00
$2,500,000.00

Aeropostale

$2,000,000.00

American Eagle

$1,500,000.00

A&F

$1,000,000.00
$500,000.00
$2009

2010

2011

Figure 12: Market Capitalization

Market Capitalization Comparison

Figure 13: Market Capitalization Comparison

2012

2013

2014

54
Stock Price

Figure 14: Stock Price

Figure 15: Beta Score

55

Figure 16: Altman Z Scores

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