1

Goldman Sachs Presentation toAmerican Eagle Outfitters

Grant Kendall-Bell, Baxter Black, Ashley Fleming, Robel MinassieCorporate Advisory

October 07, 2015

2

Acquisition of Talon International, Inc. Plan of Action

Company Overview Alternatives Financial

Analysis Recommendation

3

Company Overview

Where we are: 5-year Performance

1 Yahoo Finance - Business Finance, Stock Market, Quotes, News

Overview Alternatives FinancialAnalysis Recommendation

Company Overview

AEO Forecast

4

Overview Alternatives FinancialAnalysis Recommendation

Industry Overview

2 "Statista - The Statistics Portal." Statista. N.p., n.d. Web. 04 Oct. 2015. 5

Overview Alternatives FinancialAnalysis Recommendation

6

Peer Group

3 "Statista - The Statistics Portal." Statista. N.p., n.d. Web. 04 Oct. 2015.

Overview Alternatives FinancialAnalysis Recommendation

Annotated Stock Chart

4 Data from Bloomberg L.P 7

Overview Alternatives FinancialAnalysis Recommendation

Overview of Alternatives

5 Data from Financo 8

Overview Alternatives FinancialAnalysis Recommendation

I. Maintain status quo• Board has requested action

to increase share price• Issues with sustaining

growth• Plateau of ratios

• ROCE• ROE• Cash Realization

II. Sell all or part of the company• Sold 77 kids division August 3, 2012• Aerie brand downsizing to more

profitable format• Reduction in size by one third

while retaining 90% of revenue• Opportunity for international

growth • Increasing EPS

Overview of Alternatives

6 Data from Financo 9

Overview Alternatives FinancialAnalysis Recommendation

III. Repurchasing stock• Estimations show a decrease in share

price• Lack of reliability

• Revising dividend policy to raise yield would be more favorable to investors long term

IV. Acquisition of another company• Acquire majority stake of 85% in

Talon International Inc.• Advantages:

• Pure cash – friendly takeover• Bring supply chain in house• Leverage in competitor supply

chains• Diversification of revenue

generating assets• Synergy valuation of $49.06m

Financial Analysis

7 Yahoo Finance - Business Finance, Stock Market, Quotes, News 10

Overview Alternatives FinancialAnalysis Recommendation

Share Price Comparison

11

Financial Analysis Overview Alternatives Financial

Analysis Recommendation

Cash Flow PVYear 1 1.55 1.41Year 2 1.63 1.35Year 3 1.71 1.28Year 4 1.79 1.23Year 5 1.88 1.17

Firm Value 7.82 WACC=10%Synergy Value 49.06 G=3%

(All figures in $Millions)

Recommendation

12

Overview Alternatives FinancialAnalysis Recommendation

Next steps1. Pay $5-20 Million2. All Cash3. 85% stake4. Friendly Bid

Operating and Financial Synergy1.Combination of functional

strength2.Tax Benefits3.Reduction of Beta4.Diversification5.Economies of scale6.Optimize supply chain

efficiency

Goldman Sachs Presentation toAmerican Eagle Outfitters

Grant Kendall-Bell, Baxter Black, Ashley Fleming, Robel MinassieCorporate Advisory

October 07, 2015 13

Appendix Aerie Brand Contribution

Yahoo Finance - Business Finance, Stock Market, Quotes, News 14

Appendix Synergy Evaluation

15

Appendix Aerie Brand Contribution

Yahoo Finance - Business Finance, Stock Market, Quotes, News 16

AUR has driven recent comp improvement

We estimate units sold continue to decline year-over-

year

17

• WithWin acquired a minority stake in CITECH Co Ltd. Transaction announced on 04/25/2012 and completed on 06/08/2012 (friendly takeover) – $15.79M (All cash deal for 47.86% ownership)

• ShopInvest NV acquired SCF SA. Transaction announced on 07/07/2006 and was completed on 09/05/2006 (friendly takeover) – $15.48M (All Cash for 84.6% ownership) – Premium of 3.57%

• Invest Saigon KK acquired a minority stake in Banners Co Ltd. Transaction announced on 10/05/2007 and completed on 10/29/2007 (friendly takeover) - $0.29M (friendly takeover for 31%)

• Private investor acquired a minority stake in SI Resources co Ltd. $12.57M (All cash for 18.28% ownership) Premium paid 32.31%

• Yi Jin Industrial Co Ltd acquired a minority stake in Kwang Ming Silk Mill Co Ltd. Transaction was announced on 08/29/2013 and completed on 10/17/2013 - $12.02M (All cash deal for 40.26%) Friendly bid – premium of 50% paid

• Jiangyin Deyuan Wollen Textile Co Ltd. Sold Jiangsu Sunshine Co Ltd. To Jiangsu Sunshine Co ltd.- $11.88M (51% ownership)

• Groupo Tavex SA acquired Santista Textil SA. $13.92M (friendly bid, All cash for 92% ownership) Premium of 2.29% paid

• Keplam KK acquired a minority stake in Econach Holdings Co Ltd. Transaction announced on 09/07/2006 and completed on 09/29/2006 (friendly bid) - $1.16M for 8% ownership

Appendix Comparable deals

Nature of Comp. deals1. Between $1-

$15Million2. Takes about 40 days

to complete the deal3. Ownership 8-92%4. All cash deal 5. Friendly bids