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Apparel Industry Review and Business Analysis | AEO Strategy SWOT 2014

Comprehensive analysis of the apparel industry focusing on AEO's strategic position, financial performance, market comparisons, and recommended actions.

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Apparel Industry Review and Business Analysis | AEO Strategy SWOT 2014

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  1. Presented By Jiaqi (Tommy) Jiang Ming Li Yen-Ju (Annie) Lin Lu Han Yanan (Phoebe) Tan

  2. Agenda

  3. Company Review

  4. Business model & Strategy 2014 AEO 10-K

  5. SWOT Analysis 2014 AEO 10-K

  6. Macroeconomic Review http://www.bea.gov/national/pdf/nipaguid.pdf

  7. Industry Review Seasonal cyclical

  8. Industry Review Seasonal adjustment of inventory sales ratio http://www.economagic.com/em-cgi/data.exe/cenret/ninv25#USRat_SASource:

  9. Industry Review Cont’d Source: http://www.emarketer.com/newsroom/index.php/apparel-drives-retail-ecommerce-sales-growth/

  10. Porter’s Five Forces • Competitive rivalry—High Threat of substitutes-Low Porter’s Five Forces • Bargaining power of suppliers– Low Threat of new entrants—High Bargaining power of customers– Low

  11. Financial Analysis 2010-2014 AEO 10-K

  12. DuPont Analysis 2010-2014 AEO 10-K

  13. Technical Analysis Yahoo Finance http://finance.yahoo.com/echarts?s=AEO+Interactive#{"showSma":true,"smaColors":"#cc0000,#009999","smaPeriods":"20,200","smaWidths":"2,2","smaGhosting":"0,0","allowChartStacking":true}

  14. Comparable Analysis Comparable Companies Similarities • Apparel Retailers based in US • Similar product lines and target • Major competitors Differences • Gap has much bigger size • A&F and Express have smaller sizes • URBN has more product lines such as electronics • Express has formal apparel Source: Company information from Yahoo Finance

  15. Market Performance Yahoo Finance http://finance.yahoo.com/echarts?s=AEO+Interactive#{"allowChartStacking":true}

  16. Comparable Analysis Gross Profit Margin Net Profit Margin Sales/Ft^2 Inventory Turnover Source: LTM Data of ANF, GPS, URBN, EXPR and AEO from Capital IQ

  17. Comparable Analysis Output Implied Price: $12.89 Downward Potential: 14.24% Source: Company information from Yahoo Finance

  18. Revenue Projection Gross Sales Gross Square Feet Sales Per Square Foot Average Square Feet Per Stores Estimated Stores Numbers Past Sales Per Square Foot Short-term Growth Rate

  19. Assumption • Quarter Data • Store Numbers • Short-term and Long-term Growth Rate • New Stores Sales Are Included

  20. WACC

  21. Discounted Cash Flow

  22. Recommendation • Sell – 1000shares

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