Specialty Retail

EQUITY RESEARCH
INITIATION OF COVERAGE
June 23, 2010
A Fresh Look at Specialty

CONSUMER & BUSINESS SERVICES/SPECIALTY
RETAILING Retail; Changing Ratings
Momentum Out, Price/Value Equation In
SUMMARY
Following a steep rally in the Specialty Retail Sector which began last July and
continued through May, the group has recently taken a breather. Given that much of
the past year's excitement was a function of abating doomsday fears rather than
improving fundamentals, we look upon the recent pullback as understandable. We
believe this pullback sets up for the next and potentially more sustainable change in
the softlines recovery, wherein select chains with the strongest fundamentally
driven price value equation replace broadbased momentum.
KEY POINTS
■ Fundamental shift in consumer behavior. We believe that there has been a

distinct change in shopping habits and attitudes toward spend. Although savings
accounts and retirement funds have begun to slowly expand and unemployment
has stabilized, the pain of the housing and credit crisis is still fresh and job
creation is slow. In addition, the various stimuli that supported recent retail sales
growth such as cash for clunkers, appliance rebates, and the first-time home
buyers tax-credit have expired. When examining a composite of these factors,
we arrive at our still cautious stance on the consumer.
■ Broadbased euphoria is over. Now what? Within the specialty retail universe
we anticipate that consumers will continue to make purchases based on a
high/low strategy whereby perceived value, regardless of actual price point,
wins. Accordingly, those retailers offering differentiated product in the
marketplace and those with low opening price points on more commodity-driven
items should excel on a relative basis.
■ Rating changes. We are raising our rating on Aeropostale (ARO) to Outperform

from Underperform; our ratings on J Crew (JCG), Pacific Sunwear (PSUN), and
Zumiez (ZUMZ) to Outperform from Perform; and our ratings on Ross Stores
(ROST) and The TJX Co's (TJX) to Perform from Underperform. We are
lowering our rating on American Eagle Outfitters (AEO) to Perform from
Outperform.
■ Herein we create a framework that investors can use to examine "hot

issues" currently impacting the Specialty Retail Sector, including:
geographic exposure to the Gulf Coast and Europe; manufacturing risk related
to China and rising cotton prices; historical weather trends; the economy (state
fiscal distress, health insurance, unemployment, foreclosure); and
company-specific operating metrics with a focus on comps, sales, inventories
Pamela Quintiliano and margins.
212 667-7945
Pamela.Quintiliano@opco.com
Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As
a result, investors should be aware that the firm may have a conflict of interest that could affect the
objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision. See "Important Disclosures and Certifications" section at the end of this report for
important disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks
to Price Target" sections at the end of this report, where applicable.
Oppenheimer & Co Inc. 300 Madison Avenue 4th Floor New York, NY 10017 Tel: 800-221-5588 Fax: 212-667-8229
CONSUMER & BUSINESS SERVICES
Table of Contents
Fine-Tuning Our View on the Consumer-A Fresh Look at Specialty Retail 3
Momentum Out, Price/Value Equation In 3
Industry Drivers 5
Geographic Exposure 7
Gulf States 7
Europe 8
Manufacturing 10
Reallocation of Dollar Spend 12
Weather 13
The Economy 16
Fiscal Distress Rankings by State 16
Health Insurance Coverage 18
Unemployment 19
Consumer Sentiment 24
Total Consumer Credit 24
Foreclosures 25
Company-Specific Operating Metrics 26
Quarterly Comps, Sales And Inventory Trends 26
Monthly Comps: When Do Same Store Sales Comparisons Get More Difficult? 31
Gross & Operating Margin Analysis 32
Store Count And Square Footage Growth Opportunity 33
Direct To-Consumer 35
Share Repurchases 35
Softlines Retail: The Players 36
American Eagle Outfitters, Inc. (AEO) 36
Abercrombie & Fitch Co. (ANF) 36
Aeropostale, Inc. (ARO) 36
Citi Trends (CTRN) 36
Gap Inc. (GPS) 36
Gymboree Corp. (GYMB) 37
J. Crew Group, Inc. (JCG) 37
Lululemon Athletica, Inc. (LULU) 37
Ross Stores Inc. (ROST) 37
The TJX Companies, Inc. (TJX) 38
Under Amour, Inc. (UA) 38
Urban Outfitters Inc. (URBN) 38
Zumiez, Inc. (ZUMZ) 38
APPENDIX 1 41
2
Fine-Tuning Our View on the

Consumer—A Fresh Look at Specialty
Retail; Momentum Out, Price/Value
Equation In
Following a steep rally in the Specialty Retail Sector which began last July and continued
through May, the group has recently taken a breather. Given that much of the past year’s
excitement was a function of abating doomsday fears rather than improving fundamentals,
we look upon the recent pullback as understandable. We believe this pullback sets up for
the next and potentially more sustainable change in the softlines recovery, wherein select
chains with the strongest fundamentally driven price value equation replace broadbased
momentum.
Investment Considerations
While economic data seem to indicate stabilizing trends, we are not yet inclined to
describe the consumer as fully recovered. Instead we believe that there has been a
fundamental shift in the way people shop and attitudes toward spend. Although savings
accounts and retirement funds have begun to slowly expand, and unemployment numbers
have steadied, the recent pain of the housing and credit crisis is still fresh and job creation
is slow. In addition, the various economic stimuli that supported recent retail sales growth
such as cash for clunkers, appliance rebates and the first-time home buyers tax-credit
have expired. When examining a composite of these factors we arrive at our cautious
stance on the consumer.
Consumers spending more, but acting increasingly selective. Arguably consumers

were too shell-shocked to shop in late 2008 and early 2009. However, the American
population could not stay away from the malls/lifestyle centers (or online shopping) for too
long! We believe this return was both psychological and demand driven. The end result, in
our view, is a more savvy customer that makes educated spending decisions with an
ongoing trend away from conspicuous consumption in favor of classic aspirational and/or
commodity value products. The bottom line: People are willing to pay for differentiated
quality product with longevity, but search for bargains on readily available disposable
goods.
Low-hanging fruit gone, limited levers left to pull. In response to the weakened
consumer, by early/mid 2009 retailers had begun to employ a variety of levers to survive
the slowdown including drastically reducing both inventories and capital expenditures. We
believe this gave the market a signal that the group was once again investable even with
revenues and macro indicators still deteriorating. Now the days of easy fixes are over.
Going forward we look most favorably on those chains with unique initiatives to drive top
line and margins.
Challenges lie ahead even for the best-positioned chains, which could result in
ongoing share price volatility and depressed multiples. There are a new set of
challenges beyond the macro environment, including geographic exposure to China and
the Gulf region, rising manufacturing costs and reduced margin opportunity. Yet we think
fear of missing another rally and compelling valuations provide a natural support for the
group.
3
Our new ratings are as follows:
• Outperform ratings. We are raising our rating on Aeropostale (ARO) to

Outperform from Underperform and our ratings on J Crew (JCG), Pacific
Sunwear (PSUN), and Zumiez (ZUMZ) to Outperform from Perform. In addition,
we are maintaining our Outperform ratings on Abercrombie & Fitch (ANF),
Gymboree (GYMB) and Urban Outfitters (URBN).
• Perform ratings. We are raising our ratings on Ross Stores (ROST) and The
TJX Co’s (TJX) to Perform from Underperform and reiterating our Perform ratings
on Cititrends (CTRN), American Eagle Outfitters (AEO), Gap (GPS), Lululemon
(LULU) and Under Armour (UA).
Exhibit 1. Rating Changes/Price Targets
Companies with Updates: Summary

1 2-18-Month Annual Earnings per Share
Price Target Rating Ye ar One Year Two
Company Ticker Prior Curr Prior Curr FYE Year Prior Current Prior Current
Abercrombie & Fitch A NF 46 40 NC O Jan 201 0 1.78E 1.82E NA 2.64E
American Eagle Outfitters AEO Non e None O P Jan 201 0 1.10E 1.04E NA 1.24E
Aero postale ARO Non e 35 U P Jan 201 0 2.48E 2.84E NA 2.95E
CitiTrend s CTRN Non e None NC P Jan 201 0 1.55E 1.84E NA 2.17E
Gap., Inc. GPS Non e None NC P Jan 201 0 1.70E 1.84E 1.81E 2.01E
Gymboree GYMB 58 52 NC O Jan 201 0 3.90E 3.86E 4.30E 4.34E
J Crew JCG Non e 50 P O Jan 201 0 2.12E 2.47E NA 2.78E
Lululemon Athletics LULU Non e None NC P Jan 201 0 0.86E 1.16E NA 1.45E
Pacific Sunwea r PSUN Non e 4 P O Jan 201 0 (0.52)E (0.70)E (0.26)E (0.30)E
Ross Store s ROST Non e None U P Jan 201 0 3.82E 4.25E 4.30E 4.70E
TJX Companies TJX Non e None U P Jan 201 1 3.1 3.35E 3.45E 3.74E
Under Armour UA Non e None NC P Dec 201 0 1.01E 1.11E 1.18E 1.28E
Urban Outfitters URBN NC 41 NC O Jan 201 0 1.64E 1.68E 1.90E 2.01E
Zu miez ZUMZ Non e 21 P O Jan 201 0 0.50E 0.53E NA 0.76E
Source: Company Reports and Oppenheimer & Co. Inc. Note: All figures in U.S. dollars unless otherwise noted.
NC No change. O, Outperform; P, Perform; U, Underperform.
4
Teens Surf/Skate Discounters Kids Multi-Channel Active
AEO ANF ARO PSUN ZUMZ CTRN ROST TJX GYMB GPS JCG URBN LULU UA
GEOGRAPHY
Gulf Exposure
15%-20% Store Base X X X X X
20%-30% Store Base
30%-40% Store Base X X
Europe Exposure
Stores X X X
Sales X X X X X
MANUFACTURING
China (largest exposure) X X X X
Cotton X X X X X
HISTORICAL WEATHER TRENDS

Store Base Exposure by Region (+15% Exposure)
Temperature
NE (Cool June, July, Sept, Oct Compares) X X X X X X X X X X
SE (Cool July and Dec; Warm June and Nov) X X X X X X X
West (Cool June, Oct, Dec; Warm Sept) X X X X X X X
South (Cool Oct and Dec; Warm June and Nov) X X
Central (Cool July, Aug, Dec; Warm June and Nov) X X X
Precipitation
NE (Wet July, Oct, Dec; Dry Sept and Nov Compares) X X X X X X X X X X
SE (Wet Sept- Dec; Dry June and July) X X X X X X X
West (Wet June and Oct; Dry Sept. and Nov) X X X X X X X
South (Wet July, Sept, Oct and Dec; Dry Nov) X X X X X X X
Central (Wet July, Oct, Dec; Dry Nov) X X X
ECONOMY
Fiscal Distress Rankings by State X X X X X X
Health Insurance Coverage X X X X X
Unemployment
Highest Levels (+20% Store Base) X X X X X X X
Exposure High Foreclosure States X X X
COMPANY SPECIFIC OPERATING METRICS

Quarterly Comp, Sales and Inventory Trends
YoY Inventory Gains (1Q10) X X X X
Inventories Growing Faster Than Sales X X X X
Monthly Comps
Easiest Comps 1-Yr Basis X X X X X
Easiest Comps 2-Yr Basis X X X X X
Most Difficult Comps 1-Yr Basis X X X X X
Most Difficult Comps 2-Yr Basis X X X X X
Margin Analysis
Gross Margin (close to or at peak) X X X X
Operating Margin (close to or at peak) X X X X
Store Count and SF Growth (+5% Growth Est. for '10) X X X X X X X
Direct-to-Consumer (+10% CY09 Sales) X X X
Share Repurchase X X X X X X X
GYMB does not break out stores by state

UA product is primarily sold in third-party retail outlets
Source: Company reports and Oppenheimer & Co. Inc.

5
Industry Drivers
Beyond stock-specific fundamentals there are a variety of industry-specific drivers that are
currently influencing stock performance. We separate these into various groups including:
• Geography
• Manufacturing
• Historical Weather Trends
• Economy
• Company-specific Operating Metrics
Following please find our in-depth analysis of these drivers as well as whether each has
the potential to positively or negatively impact the names in our universe.
6
Geographic Exposure
Gulf States
Given the economic reliance on seafood sales in LA and its neighboring gulf states
(estimated by the National Marine Fisheries Service to be $660M in 2008), combined with
high levels of tourism, we thought it would be prudent to analyze which companies had the
greatest store exposure in the Gulf region.
• CTRN and ROST have the highest exposure to the Gulf with 38% and 30%
of their store bases, respectively. As both are discounters, assortments
already reflect an economically constrained customer. While we do not expect
the core customer to evaporate, we do believe that the high exposure in these
sensitive regions which rely heavily on the fishing and tourism industries could
have a negative near-term impact on results.
• LULU has the lowest exposure at 8% followed by GYMB at 11% and URBN
at 12%.
Exhibit 2. Gulf State Exposure

TX LA MS AL FL Total Doors % in Gulf States
AEO 72 14 8 18 50 1,077 15%
ARO 72 15 8 16 54 962 17
ANF 98 15 5 13 73 1,100 19
CTRN 42 32 22 26 39 420 38
GPS 191 38 17 37 150 3,085 14
GYMB 50 5 5 4 43 987 11
JCG 19 2 2 4 22 327 15
LULU 6 0 0 0 3 114 8
PSUN 69 11 5 8 68 883 18
ROST 153 11 5 17 125 1,021 30
TJX 124 19 8 24 174 2,766 13
UA 2 0 0 0 5 35 20
URBN 18 3 1 2 17 335 12
ZUMZ 36 0 0 0 16 381 14
Sour ce: Company reports

Excl udes UA as product i s primar ily sol d i n third- party retail outlets
While there are obviously other major industries within the region we are focusing
on fishing and tourism as we believe that these are the most highly impacted by the
recent disaster and thus most directly correlated to discretionary spend.
• Commercial fishing industry. Although the region supplies roughly 20%-30% of

all US origin seafood, over 90% of seafood consumption in the US is from foreign
waters. While the Gulf is known for shrimp and oysters, shrimp account for under
roughly 10% of the total consumed domestically. Oysters from the region,
however, account for roughly two-thirds and wholesale prices have already
begun to rise. The other major oyster-producing area is the Northeast. Given the
niche nature of the market, we do not anticipate any meaningful impact from the
potential rise in Northeast oyster sales.
• Tourism. The important summer season has gotten off to a slow start given
concerns regarding the safety of beaches. While various states are in talks with
BP regarding compensation for lost income, we believe the process could be a
lengthy one and as such do not expect a resolution in the near term. Thankfully
the summer season is historically a lighter time of the year for retailers; however,
7
we are concerned that the ripple effect may be felt for the important back-to-
school and holiday seasons.
Unemployment and poverty. It is also important to note that as of April, three of the five
Gulf states had unemployment rates that were above the national average of 9.9% (AL
11.0%, FL 12.0%, MS 11.5%) and four have a higher level of poverty than the national
average of 18.3% (AL 19.8%, LA 23.6%, MS 27.1% and TX 21.8%).
Exhibit 3. Tourism in Gulf States
2008 Tourism Tourism as %

Earnings ($B) Gross State Product
AL $9.6 5.6%
FL 65.2 8.8
LA 9.4 4.2
MS 6.0 6.5
TX 23.8 1.9
Exhibit 4. Unemployment in Gulf States
Unemployment % Population Below

Apr-10 Poverty Line (2008)
US Total 9.9% 18.3%
AL 11.0 19.8
FL 12.0 17.7
LA 6.7 23.6
MS 11.5 27.1
TX 8.3 21.8
Source: Bureau of Labor Statistics and US Department of Health & Human Services
Europe
Given the events of the last several months, companies that were previously applauded
for their current and future European exposure have come under intense scrutiny.
Thankfully, although Europe has been cited by many retailers as one of the primary areas
of future growth, few have yet to enter the region in any meaningful way with the majority
having no traditional bricks-and-mortar stores at all.
• TJX, URBN and GPS have the highest level of European exposure, with
10.3%, 6% and 5.9%, respectively. Given URBN’s and GPS’s premium brand
positioning in the European marketplace we believe they are more at risk to a
potential slowdown than TK Maxx, which follows a similar business model abroad
as domestically.
• Given that URBN is early in its European growth cycle and has thus far had
a strong response to its differentiated product, and that recent results at
GPS European arm have been favorable, we are keeping an eye on stores
in the region but do not view exposure as a severe negative headwind.
8
Exhibit 5. European Store Base

# Stores in Europ e T otal Stores % of To tal Sto re Ba se
AEO 0 1,077 0. 0%
ANF 15 1,100 1. 4
ARO 0 962 0. 0
CTRN 0 420 0. 0
GPS 183 3,085 5. 9
GYMB 0 987 0. 0
JCG 0 327 0. 0
L ULU 0 114 0. 0
PSUN 0 883 0. 0
ROST 0 1,021 0. 0
T JX 286 2,766 10. 3
UA 0 35 0. 0
URBN 20 335 6. 0
ZUMZ 0 381 0. 0
Source: Company reports
• Consistent with its store base exposure TJX also has the highest amount
of sales in the region at 11.2%.
o Value wins, no matter what the market. Although the European

consumer obviously has different drivers than the domestic customer,
we do believe that a focus on perceived value is universal and as such,
expect TJX’s strong positioning to work in its favor. As a reminder, TJX
is forecasting 13-17% EPS growth overall for this year.
o Stronger dollar and weakened international competitors allow TJX

better real estate and merchandise opportunities. TJX has buyers in
Europe that are competing with European-based discount chains for
product. As the dollar strengthens against the euro and pound, and the
European economy is pressured, we believe TJX will be able to
capitalize on potential opportunities in the marketplace both for product
and real estate.
• Of the remaining companies in our universe, only ANF, GPS, UA and URBN
have any European sales exposure and all hover between 5% and 6% of
total sales. Given UA has no stores in the region, its investment compared to the
others is low.
o ANF’s premium brand positioning could be a potential near-term

negative. While the strength of the European business as well as the
potential for significant growth have been key drivers for long-term
investors, and we have confidence in the long-term viability of the brand
on an international basis, we believe that its premium positioning across
both the Abercrombie and Hollister brands may be a potential near-term
negative.
o However, we view ANF’s slowdown of aggressive growth plans

positive on a longer-term basis. We had recently grown concerned
about ANF’s aggressive international growth strategy and applaud
management’s decision (announced on its 5/18 1Q conference call) to
slow store growth. This slowdown impacts both Abercrombie, which is
now scheduled to open 3 flagships in 2010 and have 15 by 2012, and
Hollister which expects to open 25 stores on a base of 9.
9
o When the dust settles, ANF should be in a superior position to take

advantage of prime real estate opportunities. As native retailers
potentially slow square footage growth and/or close underperforming
locations, we believe that ANF’s strong balance sheet and desirable
brand positioning should enable it to negotiate better locations and/or
lease terms.
• Best of both worlds, international growth at a more tempered pace enables

ANF to reduce risk as it enters new regions.
Exhibit 6. European Sales ($, millions)

T icker Sales i n Euro pe (CY '09) To tal Sa l es (CY ' 09) % Euro pean Sales (CY '09)
AEO $0 $2,991 0. 0%
ANF 165 2,929 5. 6
ARO 0 2,230 0. 0
CTRN 0 552 0. 0
GPS 743 14,197 5. 2
GYMB 0 1,014 0. 0
JCG 0 1,578 0. 0
L ULU 0 453 0. 0
PSUN 0 1,027 0. 0
ROST 0 7,184 0. 0
T JX 2275 20,288 11. 2
UA** 48 856 5. 7
URBN 112 1,938 5. 8
ZUMZ 0 408 0. 0

* ANF does not break out Europe sales. Es timate is based on Oppenheimer & Co. analysis
** UA's sales figure represents all foreign c ountri es
Manufacturing
China
Anticipate accelerated exodus out of China to lower cost countries. While there has
been an ongoing focus over the last several years to shift production to lower-cost
countries and regions (including Vietnam, India, and Indonesia), we believe that rising
minimum wages, increased government regulation, the potential for the Yuan to
appreciate and a declining supply of young workers will result in acceleration of movement
out of China, this thesis is supported by conversations with management teams of
companies in our coverage universe—all of whom are exploing alternatives.
Although we think it is safe to assume that the majority of production takes place in
China, not all of the companies in our universe break out specific regional
exposure. Of those that do, the names in our universe that have the largest exposure to
China are LULU (75%), JCG (74% China, Hong Kong and Macau combined), GYMB
(36%) and GPS (31%). Of the remaining companies (with the exception of ARO suchi
sources 28% and has very strong key vendor relationships), all source primarily in Asia
but give no further clarity on particular countries. Of those who have a mixture of private
label and third-party branded assortments, PSUN has the largest assortment at 48%,
followed by URBN at 50% (targeted) and ZUMZ at roughly 15%. The discounters (CTRN,
TJX and ROST) have limited to no private label exposure.
10
While the rise in production costs is clearly a negative, the impact varies depending
not only on current exposure but also on the complexity of the garments produced, nature
of existing relationships and whether they source product on their own or through a third
party. All of these factors impact the ability to quickly shift production to other countries
and regions.
Cotton Prices
Following 12 months of YoY declines, cotton prices began to inch up in October

(+7.3%) and have continued to skyrocket since (+30.6% November, +38.4%
December, +34.1% January, +45% February, +66.6% March, +55.1% April).
Fabric represents 25%-40% of the cost of manufacturing a garment. There has been
a great deal of discussion in the marketplace regarding cotton prices and the potential
impact on apparel costing, especially as fabric typically accounts for 25%-40% of the
manufacturing cost of a garment.
Given the historical volatility of cotton prices combined with a roughly six- to nine-
month lead time, we do not expect to see the impact of the higher pricing on
margins until late 2010/early 2011. As illustrated in the chart below, declines and spikes
in gross margin lag cotton process by roughly two quarters.
• Among our universe, we believe the teen retailers have the highest
exposure to the cotton pricing headwind, particularly the private label guys
(ANF, AEO, ARO). Given that PSUN and ZUMZ have a mix of third-party
branded and private label, we believe there is less risk to cotton exposure. As
ZUMZ has the lowest mix of private label at 15% and is oftentimes the only mall-
based carrier of up-and-coming brands, we believe that it has even greater
negotiating power among its vendors than PSUN and thus do not expect to see
significant margin pressure as it relates to cotton on a go forward basis.
• Beyond teens, GPS and GYMB also have significant cotton exposure. At
GPS, that exposure has been broadened with the recent relaunch of its 1969
denim collection. Both core Gap and Old Navy have traditionally relied heavily on
cotton fabrications as does GYMB.
11
Exhibit 7. YoY Change in Cotton Prices, Composite Gross Margin, and Clothing/Accessory
Sales
YoY Chg in Cotton Prices, GM and C lothing/Accessories Sales
80%
60%
40%
YoY Chang e
20%
0%
-20%
-40%
Jul-07
Jan- 08
Jul-08
J an-10
J an-07
Apr-07
Oc t -07
Apr-08
Oc t -08
J an-09
A pr-09
Jul -09
Oc t-09
A pr-10
Cot ton Pri ces Compos ti e Change in Gross M argi n Clot hing andA cc essories S al es
Source: National Cotton Council of America
Reallocation of Dollar Spend

The common rule of thumb has been that when a hot new electronic gadget(s)
emerges, it takes potential dollar share away from apparel retailers. Over the past
decade we have seen the emergence of the iPod, iPhone, handheld gaming devices,
gaming hardware, laptops, netbooks, plasma’s, LCD’s, blue-rays, digital cameras and
GPS’s. Accompanying each new release has been the ringing of the death toll for apparel,
especially for the holiday season. Thankfully, beyond the netbook which arguably replaced
family spend slotted for laptops, there has not been a strong new product introduction over
the last several years.
This year we have both the 4G iPhone (among other android devices) and the iPad.
While it has been widely cited that the 4G iPhone buyer is an upgrade customer rather
than a new acquisition, the iPad is a completely new product with dollars being reallocated
from other purchases. With Oppenheimer & Co. analysts projecting global CY2009 iPhone
and iPad sales of $22B and $4.2B and CY10 sales of $25.9B and $9.7B, even assuming
iPhone sales are predominantly in foreign countries, the impact is significant.
Teen retailers are most at risk to a reallocation of spend away from apparel to these
new products. Given that the IPad targets the 18-34 year old, apps are approaching the
$5 range and there is no pervasive new “must-have” apparel trend, combined with above-
national average teen unemployment, we believe that the teen retailers are the most at
risk as we head into the important back-to-school selling season.
• The IPad fits into our high/low belief that the customer will pay a premium for
perceived quality and differentiation and trade down on basics (such as apparel).
We would expect the squeeze to continue into Holiday, especially if the rumors
that a smaller screen model will be introduced and that Walmart will be selling
the IPad (both by year-end) holds true.
12
Weather
The weather plays a crucial part in driving traffic to stores. Above average temperatures
early in a season may result in increased early purchases of said seasonal product while
below average temperatures may delay these purchases. In addition, mall traffic levels
are heavily impacted by weather patters. In a similar manner, heavy precipitation can also
have a positive impact. Below please find a historical analysis of temperatures and
precipitation by region with accompanying footnotes detailing percent store base exposure
for each retailer. We have taken a deeper dive into the results of those regions with
greatest store counts.
Tailwinds in the Northeast with one of the top five coolest months on record in July
and one of the top five warmest in November. This should benefit sales as easier YoY
comparison. Compounding the benefit, July ’09 was also one of the top five wettest
months on record. However, September, October and December may prove to be difficult
compares as temperatures were below average.
• Of the retailers in our universe, JCG, TJX, URBN, ZUMZ and AEO have the
largest percent of their respective store bases in the region.
Exhibit 8. Northeast Monthly Weather 2008-Present
Temperature Precipitation
Historic Avg 2010 2009 2008 Historic Avg 2010 2009 2008
Northeast
Jan 22.5 BELOW SIGNIF BELOW ABOVE 3.4 BELOW BELOW BELOW
Feb 25.5 IN-LINE IN-LINE IN-LINE 2.7 ABOVE SIGNIF BELOW Top 5 Wettest
Mar 34.7 Top 5 Warmest IN-LINE BELOW 3.5 ABOVE SIGNIF BELOW SIGNIF ABOVE
Apr 45.5 SIGNIF ABOVE ABOVE ABOVE 3.6 SIGNIF BELOW BELOW IN-LINE
May 56.4 ABOVE IN-LINE BELOW 4.0 BELOW ABOVE BELOW
Jun 65.0 BELOW ABOVE 4.1 IN-LINE ABOVE
Jul 69.7 Top 5 Coolest IN-LINE 4.1 Top 5 Wettest ABOVE
Aug 68.0 ABOVE BELOW 4.0 IN-LINE BELOW
Sep 60.2 BELOW IN-LINE 4.0 SIGNIF BELOW ABOVE
Oct 49.1 BELOW BELOW 3.5 SIGNIF ABOVE IN-LINE
Nov 39.2 Top 5 Warmest BELOW 3.8 BELOW BELOW
Dec 28.4 BELOW IN-LINE 3.6 ABOVE Top 5 Wettest
Northeast is defined as ME, VT, NH, MA, CT, RI, NJ, NY, PA, MD, DE
% store base in region: AEO (23%), ANF (22%), ARO (15%), CTRN (2%), GPS (22%), JCG (36%), LULU (20%), PSUN (22%), ROST (6%), TJX (24%), URBN (24%), ZUMZ (23%)
Source: NOAA Satellite and Information Service
Southeast up against warmer than normal temperatures in June and cooler

temperatures in July. The holiday season should benefit from average temperatures in
November and one of the top five wettest December’s on record.
• Of the retailers in our universe, CTRN, TJX, JCG, ANF and PSUN have the
13
Exhibit 9. Southeast Monthly Weather 2008-Present

Southeast
Jan 46.1 SIGNIF BELOW BELOW BELOW 3.8 ABOVE BELOW BELOW
Feb 47.9 SIGNF BELOW IN-LINE ABOVE 3.9 IN-LINE SIGNIF BELOW ABOVE
Mar 54.9 BELOW IN-LINE IN-LINE 4.5 IN-LINE ABOVE BELOW
Apr 62.2 ABOVE IN-LINE IN-LINE 3.6 BELOW ABOVE ABOVE
May 70.0 ABOVE IN-LINE BELOW 3.8 ABOVE Top 5 Wettest BELOW
Jun 76.5 ABOVE ABOVE 5.0 BELOW SIGNIF BELOW
Jul 79.0 BELOW IN-LINE 5.8 BELOW IN-LINE
Aug 78.4 IN-LINE IN-LINE 5.3 IN-LINE SIGNIF ABOVE
Sep 73.8 IN-LINE IN-LINE 4.6 ABOVE BELOW
Oct 64.1 IN-LINE BELOW 3.2 ABOVE IN-LINE
Nov 54.6 ABOVE BELOW 2.9 SIGNIF ABOVE IN-LINE
Dec 47.4 BELOW ABOVE 3.7 Top 5 Wettest IN-LINE
SE is defined as FLA, GA, AL, SC, NC, VA

The West should benefit from significantly above normal temperatures in

September last year, which could have a positive impact on late back-to-school shopping
comparisons. Temperatures in June were below average, which is also a positive,
although a below-average October and December could be a detriment. An above-
average July is a negative and an above-average November is a positive. Precipitation is
not as impactful in this region.
• Of the retailers in our universe, ROST, ZUMZ, URBN, LULU and PSUN have
the largest percent of their respective store bases in the region.
Exhibit 10. West Monthly Weather 2008-Present

West
Jan 38.1 ABOVE ABOVE BELOW 3.1 ABOVE SIGNIF BELOW ABOVE
Feb 42.1 IN-LINE IN-LINE IN-LINE 2.4 IN-LINE ABOVE IN-LINE
Mar 46.5 ABOVE IN-LINE ABOVE 2.2 BELOW BELOW Top 5 Driest
Apr 52.4 BELOW IN-LINE IN-LINE 1.3 ABOVE BELOW Top 5 Driest
May 59.6 SIGNIF BELOW Top 5 Warmest IN-LINE 0.9 IN-LINE IN-LINE IN-LINE
Jun 67.4 BELOW ABOVE 0.4 ABOVE BELOW
Jul 74.0 ABOVE ABOVE 0.3 IN-LINE IN-LINE
Aug 72.5 IN-LINE ABOVE 0.3 IN-LINE IN-LINE
Sep 66.0 SIGNIF ABOVE ABOVE 0.5 BELOW BELOW
Oct 56.0 BELOW ABOVE 1.0 ABOVE BELOW
Nov 46.2 ABOVE SIGNIF ABOVE 1.8 SIGNIF BELOW IN-LINE
Dec 39.1 BELOW BELOW 2.5 IN-LINE IN-LINE
West is defined as CA, NV, AK, HI

The South has a tailwind with above average June temperatures in 2009. This is
counterbalanced by an above-average November, which should benefit holiday shopping.
Significantly below average temperatures in October and December are a negative.
October results are counterbalanced by one of the top five wettest months on record.
• Of the retailers in our universe, CTRN, ROST, SRO, ANF and PSUN have the
14
Exhibit 11. South Monthly Weather 2008-Present

Historic Avg 2010 2009 2008 HistoricAvg 2010 2009 2008
South
Jan 42.3 BELOW IN-LINE IN-LINE 2.3 IN-LINE SIGNIF BELOW BELOW
Feb 45.9 SIGNIF BELOW SIGNIF ABOVE ABOVE 2.3 IN-LINE SIGNIF BELOW IN-LINE
Mar 53.7 BELOW ABOVE IN-LINE 2.7 IN-LINE ABOVE ABOVE
Apr 62.3 ABOVE IN-LINE IN-LINE 3.2 BELOW ABOVE IN-LINE
May 70.3 ABOVE IN-LINE IN-LINE 4.1 BELOW IN-LINE IN-LINE
Jun 78.0 ABOVE ABOVE 3.6 BELOW IN-LINE
Jul 81.4 IN-LINE IN-LINE 3.2 ABOVE BELOW
Aug 80.8 IN-LINE BELOW 3.0 IN-LINE Top 5 Wettest
Sep 74.3 BELOW BELOW 3.2 SIGNIF ABOVE ABOVE
Oct 63.9 SIGNIF BELOW BELOW 3.2 Top 5 Wettest BELOW
Nov 52.4 ABOVE IN-LINE 2.5 BELOW BELOW
Dec 44.0 SIGNIF BELOW IN-LINE 2.6 ABOVE IN-LINE
Southis defined as TX, OK, KS, AR, LA

%store base in region: AEO (11%), ANF (13%), ARO (13%), CTRN (26%), GPS(10%), JCG (8%) , LULU (6%), PSUN (12%), ROST (19%), TJX (6%), URBN (7%), ZUMZ (11%)
Source: NOAA Satell ite and Informati on Service
Tailwind in the Central region with one of the top five coolest July’s on record.
Below temperatures in July also serve as a positive but will be a negative in October and
December, with only November benefiting from warmer temperatures on a YoY basis.
October should benefit from being one of the top five wettest months on record.
• Of the retailers in our universe, ANF, ARO, AEO, PSUN and CTRN have the
Exhibit 12. Central Monthly Weather 2008-Present
Central
Jan 30.3 BELOW SIGNIF BELOW IN-LINE 3.1 BELOW BELOW BELOW
Feb 33.0 SIGNIF BELOW ABOVE BELOW 2.7 BELOW BELOW SIGNIF ABOVE
Mar 42.7 ABOVE ABOVE IN-LINE 3.8 BELOW IN-LINE SIGNIF ABOVE
Apr 53.3 Top 5 Warmest IN-LINE IN-LINE 3.9 BELOW ABOVE ABOVE
May 63.1 ABOVE IN-LINE BELOW 4.4 ABOVE ABOVE ABOVE
Jun 71.0 ABOVE ABOVE 4.3 IN-LINE ABOVE
Jul 75.6 Top 5 Coolest IN-LINE 4.1 ABOVE ABOVE
Aug 74.1 BELOW BELOW 3.6 IN-LINE BELOW
Sep 67.3 IN-LINE IN-LINE 3.5 IN-LINE ABOVE
Oct 55.8 SIGNIF BELOW BELOW 2.9 Top 5 Wettest IN-LINE
Nov 43.7 SIGNIF ABOVE BELOW 3.2 SIGNIF BELOW BELOW
Dec 33.5 BELOW BELOW 3.2 ABOVE Top 5 Wettest
Central is defined as MO, IL, IN, OH, WV, KY, TN,

% store base in region: AEO (15%), ANF (16%), ARO (16%), CTRN (13%), GPS (11%), JCG (10%), LULU (6%), PSUN (14%), ROST (2%), TJX (12%),URBN (9%), ZUMZ (6%)
Below please find the temperature and precipitation data on the remaining regions.
15
Exhibit 13. Monthly Weather of Remaining Regions
2010 2009 2008 Historic Avg 2010 2009 2008
East North Central
Jan 14.3 INLINE SIGNIF BELOW IN-LINE 1.2 IN-LINE IN-LINE IN-LINE
Feb 17.6 INLINE ABOVE BELOW 1.1 IN-LINE IN-LINE ABOVE
Mar 29.4 Top 5 Warmest ABOVE BELOW 1.7 BELOW ABOVE BELOW
Apr 43.8 SIGNIF ABOVE IN-LINE IN-LINE 2.6 IN-LINE IN-LINE Top 5 Wettest
May 55.6 ABOVE IN-LINE BELOW 3.5 IN-LINE BELOW IN-LINE
Jun 65.2 BELOW IN-LINE 3.5 ABOVE Top 5 Wettest
Jul 70.1 SIGNIF BELOW IN-LINE 3.5 BELOW IN-LINE
Aug 67.9 BELOW IN-LINE 3.5 ABOVE Top 5 Driest
Sep 59.5 ABOVE IN-LINE 3.3 SIGNIF BELOW IN-LINE
Oct 48.0 Top 5 Coolest IN-LINE 2.4 Top 5 Wettest IN-LINE
Nov 33.0 Top 5 Warmest ABOVE 1.8 BELOW IN-LINE
Dec 19.8 BELOW SIGNIF BELOW 1.3 Top 5 Wettest Top 5 Wettest
East North Central is defined as MN, WI, MI, IA

Southwest
Jan 31.7 IN-LINE ABOVE BELOW 0.9 ABOVE BELOW ABOVE
Feb 35.8 BELOW ABOVE IN-LINE 0.8 ABOVE IN-LINE IN-LINE
Mar 42.2 IN-LINE ABOVE IN-LINE 1 IN-LINE BELOW BELOW
Apr 50.2 IN-LINE IN-LINE IN-LINE 0.9 IN-LINE IN-LINE Top 5 Driest
May 59.0 BELOW ABOVE IN-LINE 1.0 BELOW IN-LINE IN-LINE
Jun 68.1 BELOW ABOVE 0.9 ABOVE BELOW
Jul 73.4 ABOVE ABOVE 1.9 IN-LINE ABOVE
Aug 71.5 IN-LINE IN-LINE 1.9 BELOW ABOVE
Sep 64.3 ABOVE IN-LINE 1.3 IN-LINE IN-LINE
Oct 53.4 BELOW IN-LINE 1.1 IN-LINE IN-LINE
Nov 41.3 ABOVE ABOVE 0.8 BELOW IN-LINE
Dec 32.8 SIGNIF BELOW IN-LINE 0.9 IN-LINE SIGNIF ABOVE
Southwest is defined as UT, CO, AZ, NM

% store base in region: AEO (4%), ANF (4%), ARO (7%), CTRN (0%), GPS (4%), JCG (5%), LULU (3%), PSUN (7%), ROST (10%), TJX (3%),A96 URBN (5%), ZUMZ (13%)
Northwest
Jan 28.4 Top 5 Warmest ABOVE BELOW 3.8 IN-LINE IN-LINE IN-LINE
Feb 32.8 ABOVE IN-LINE IN-LINE 2.9 BELOW BELOW BELOW
Mar 38.6 ABOVE BELOW BELOW 2.6 IN-LINE IN-LINE IN-LINE
Apr 45.4 BELOW IN-LINE Top 5 Coolest 1.9 ABOVE IN-LINE IN-LINE
May 52.7 Top 5 Coolest ABOVE IN-LINE 1.9 ABOVE IN-LINE IN-LINE
Jun 59.4 IN-LINE BELOW 1.5 ABOVE IN-LINE
Jul 66.3 ABOVE IN-LINE 0.6 IN-LINE BELOW
Aug 65.0 ABOVE ABOVE 0.7 IN-LINE ABOVE
Sep 57.4 SIGNIF ABOVE IN-LINE 1.2 BELOW BELOW
Oct 48.0 BELOW IN-LINE 2.2 ABOVE SIGNIF BELOW
Nov 37.1 IN-LINE SIGNIF ABOVE 3.7 IN-LINE IN-LINE
Dec 30.1 BELOW BELOW 3.9 SIGNIF ABOVE IN-LINE
Northwest is defined as WA, OR, ID
The Economy
Fiscal Distress Rankings by State
The Fiscal Distress Measure takes into account the number of foreclosures, levels of
unemployment and food stamp participation by state. According to the most recent
composite, which takes into account March and April numbers, the five most distressed
states are NV, FL, ID, RI and CA.
• Those with the highest levels of exposure in the most distressed states are
ROST (28.7%), URBN (28.1%), ZUMZ (27.6%), PSUN (22.5%) and LULU
(21.8%). Given ROST is a value player while URBN and LULU offer
differentiated product, we believe the exposure while not ideal is not critical. Both
ZUMZ and PSUN cater to the teen, a segment of the population with high
unemployment. We believe PSUN is more vulnerable than ZUMZ as it does not
carry as much exclusive third-party assortments. Excluding California, CTRN,
LULU, ANF, JCG and ZUMZ are the most exposed.
16
Exhibit 14. Fiscal Distress by State

State Fiscal Distress
Foreclosures Unemployment Food Stamp Participation Rank Across % Store Base in State
Mar-10 Rank Rate 04/10 YoY % Change Chg Rank % Chg Partic 03/10 Chg Rank All Measures AEO ANF ARO CTRN GPS JCG LULU PSUN ROST TJX UA URBN ZUMZ
US Total 352 NA 9.9% 1.0% NA 21.1% NA NA

AL 941 33 11.0 1.3 13 20.1 31 26 1.6% 1.2% 1.7% 6.5% 1.2% 1.2% 0.0% 0.9% 1.7% 0.9% 0.0% 0.9% 0.0%
AK 980 35 8.4 0.7 24 (tie) 18.1 35 35 (tie) 0.5% 0.1% 0.0% 0.0% 0.2% 0.0% 0.0% 0.3% 0.0% 0.0% 0.0% 0.0% 0.8%
AZ 144 2 (tie) 9.5 0.5 29 (tie) 28.5 11 8 1.5% 1.6% 0.8% 0.0% 1.3% 1.5% 0.9% 2.2% 5.2% 1.1% 2.3% 2.1% 3.4%
AR 505 16 7.8 0.7 24 (tie) 15.2 42 (tie) 29 (tie) 0.8% 0.6% 1.8% 1.7% 0.6% 0.0% 0.0% 0.4% 0.0% 0.3% 0.0% 0.0% 0.0%
CA 144 2 (tie) 12.6 1.6 8 (tie) 21.8 25 5 8.1% 12.1% 8.2% 1.2% 10.1% 12.2% 18.2% 13.0% 25.8% 8.6% 4.5% 20.8% 19.4%
CO 344 9 8.0 (0.1) 42 (tie) 28.4 12 14 (tie) 1.3% 1.1% 1.6% 0.0% 0.5% 2.1% 2.7% 2.3% 2.8% 0.8% 2.3% 1.8% 4.5%
CT 517 17 9.0 1.0 19 (tie) 32.6 10 9 1.6% 2.0% 1.2% 0.0% 1.7% 4.3% 1.8% 1.0% 0.0% 2.4% 2.3% 1.5% 2.1%
DE 1,142 36 9.0 1.2 14 (tie) 24.7 19 20 0.5% 0.4% 0.4% 0.2% 0.3% 0.3% 0.0% 0.4% 0.1% 0.3% 2.3% 0.0% 0.5%
DC 1,829 43 11.0 1.6 8 (tie) 14.2 47 39 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
FL 149 4 12.0 2.1 3 (tie) 35.9 7 2 4.5% 6.7% 5.7% 9.7% 4.8% 6.7% 2.7% 7.6% 12.3% 6.3% 11.4% 5.2% 4.2%
GA 226 6 10.4 1.2 14 tie) 26.2 16 (tie) 6 (tie) 3.1% 2.3% 2.8% 13.9% 2.5% 3.1% 0.0% 1.8% 4.4% 3.0% 2.3% 1.2% 0.0%
HI 468 15 6.7 (0.1) 42 (tie) 21.4 28 31 0.4% 0.4% 0.2% 0.0% 0.3% 0.3% 0.9% 1.0% 1.2% 0.0% 0.0% 0.0% 0.3%
ID 259 8 9.1 1.7 7 42.5 1 3 0.4% 0.4% 0.5% 0.0% 0.3% 0.0% 0.0% 0.6% 0.9% 0.3% 0.0% 0.6% 1.6%
IL 372 10 11.2 1.6 8 (tie) 13.2 48 17 3.4% 4.4% 3.6% 1.7% 3.4% 3.1% 6.4% 2.9% 0.0% 4.2% 2.3% 4.9% 4.2%
IN 536 18 10.0 (0.5) 47 16.8 41 42 2.0% 2.4% 2.4% 1.7% 1.4% 0.9% 0.0% 2.0% 0.0% 1.3% 2.3% 0.6% 1.6%
IA 1,978 45 6.9 1.4 12 17.0 39 (tie) 37 (tie) 1.2% 0.7% 1.3% 0.0% 0.8% 0.3% 0.0% 1.0% 0.0% 0.3% 0.0% 0.0% 0.5%
KS 447 14 6.5 (0.2) 45 (tie) 23.8 21 (tie) 28 0.9% 0.5% 0.8% 0.2% 0.7% 0.3% 0.0% 0.8% 0.0% 0.4% 0.0% 0.3% 0.8%
KY 1,429 40 10.6 0.2 36 (tie) 11.7 50 49 1.2% 1.3% 1.1% 0.7% 0.7% 0.6% 0.0% 0.8% 0.0% 0.7% 0.0% 0.0% 0.0%
LA 1,304 39 6.7 0.2 37 (tie) 17.1 38 46 1.3% 1.4% 1.6% 7.9% 1.2% 0.6% 0.0% 1.2% 1.1% 0.7% 0.0% 0.9% 0.0%
ME 1,725 42 8.1 - 40 (tie) 15.2 42 (tie) 48 0.4% 0.4% 2.7% 0.0% 0.4% 1.2% 0.0% 0.6% 0.0% 0.5% 2.3% 0.0% 0.3%
MD 441 13 7.5 0.6 27 (tie) 24.2 20 12 (tie) 1.9% 1.8% 2.0% 1.2% 1.6% 3.1% 3.6% 2.1% 1.8% 1.8% 11.4% 2.1% 2.1%
MA 591 23 9.2 1.2 14 (tie) 20.5 30 18 3.0% 3.0% 0.4% 0.0% 2.7% 4.3% 4.5% 2.5% 0.0% 5.0% 6.8% 4.3% 1.1%
MI 256 7 14.0 0.8 23 25.1 18 10 3.2% 3.0% 3.5% 3.7% 2.0% 2.8% 0.9% 2.9% 0.0% 2.6% 0.0% 1.5% 0.0%
MN 620 26 7.2 (1.1) 51 27.9 14 (tie) 34 2.0% 2.0% 1.8% 0.0% 1.5% 1.5% 0.0% 1.8% 0.0% 1.2% 2.3% 1.5% 2.9%
MS 2,446 46 11.5 2.3 2 15.2 42 (tie) 33 0.7% 0.5% 0.8% 5.5% 0.5% 0.6% 0.0% 0.6% 0.5% 0.3% 2.3% 0.3% 0.0%
MO 777 30 9.4 0.3 33 (tie) (11.8) 51 47 1.7% 1.6% 1.7% 1.0% 1.4% 1.5% 0.0% 1.7% 0.0% 1.1% 0.0% 1.2% 0.5%
MT 1,188 38 7.1 1.2 14 (tie) 26.2 16 (tie) 19 0.2% 0.3% 0.3% 0.0% 0.2% 0.0% 0.0% 0.4% 0.6% 0.1% 0.0% 0.0% 1.1%
NE 1,515 41 5.0 0.4 32 23.8 21 (tie) 35 (tie) 0.7% 0.5% 2.7% 0.0% 0.5% 0.3% 0.0% 0.4% 0.0% 0.2% 0.0% 0.6% 0.0%
NV 76 1 13.7 2.7 1 41.7 2 1 0.5% 1.3% 0.4% 0.0% 0.9% 1.2% 0.9% 1.1% 2.0% 0.7% 0.0% 1.2% 2.1%
NH 751 28 6.7 0.7 24 (tie) 35.7 8 12 (tie) 0.7% 1.0% 0.5% 0.0% 0.6% 0.9% 0.0% 0.8% 0.0% 1.0% 2.3% 0.0% 0.5%
NM 586 22 9.8 0.9 21 (tie) 21.5 27 21 0.3% 0.4% 3.4% 0.0% 0.0% 0.3% 0.0% 0.8% 0.6% 0.2% 0.0% 0.6% 1.3%
NJ 858 31 8.7 2.1 3 (tie) 22.1 24 11 2.5% 3.7% 0.7% 0.0% 3.6% 5.8% 1.8% 2.7% 1.0% 3.4% 6.8% 4.6% 4.2%
NY 1,893 44 8.4 0.3 33 (tie) 20.0 32 44 5.6% 5.1% 0.3% 0.0% 6.4% 8.9% 6.4% 4.0% 0.0% 4.9% 9.1% 7.0% 8.2%
NC 1,182 37 10.8 0.1 38 (tie) 18.3 36 45 2.8% 2.7% 0.7% 9.2% 2.2% 3.1% 0.0% 2.3% 3.2% 2.2% 2.3% 2.1% 0.0%
ND 5,697 49 3.8 (0.6) 48 15.1 45 51 0.4% 0.2% 5.4% 0.0% 0.2% 0.0% 0.0% 0.4% 0.0% 0.1% 0.0% 0.0% 0.0%
OH 395 11 10.9 0.9 21 (tie) 19.4 33 16 3.6% 3.6% 3.9% 3.7% 2.4% 2.4% 0.0% 3.7% 0.0% 2.7% 2.3% 1.8% 0.0%
OK 773 29 6.6 0.5 29 (tie) 27.9 14 (tie) 22 (tie) 1.1% 0.9% 0.7% 0.5% 0.8% 0.6% 0.9% 0.9% 1.8% 0.3% 0.0% 0.0% 0.8%
OR 398 12 10.6 (0.9) 50 21.7 26 32 1.0% 1.3% 0.7% 0.0% 1.1% 1.2% 0.0% 1.3% 2.5% 0.6% 2.3% 1.5% 3.2%
PA 970 34 9.0 1.2 14 (tie) 19.1 34 29 (tie) 6.0% 4.4% 5.7% 0.5% 3.8% 4.9% 0.9% 5.5% 3.2% 3.2% 0.0% 3.4% 4.0%
RI 624 27 12.5 2.1 3 (tie) 41.6 3 4 0.4% 0.4% 0.2% 0.0% 0.4% 0.6% 0.0% 0.2% 0.0% 0.5% 0.0% 0.3% 0.3%
SC 541 19 11.6 0.1 38 (tie) 17.0 39 (tie) 37 (tie) 1.5% 1.4% 1.6% 10.2% 1.2% 1.8% 0.0% 1.2% 2.0% 1.2% 2.3% 0.6% 0.0%
SD 4,203 48 4.7 (0.2) 45 (tie) 36.1 6 40 0.3% 0.2% 0.2% 0.0% 0.1% 0.0% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% 0.3%
TN 576 21 10.5 - 40 (tie) 14.9 46 43 2.2% 2.2% 2.3% 3.7% 1.6% 1.2% 0.0% 1.7% 2.5% 1.7% 2.3% 0.6% 0.0%
TX 617 25 8.3 1.0 19 (tie) 21.1 29 24 6.5% 8.9% 7.6% 10.4% 6.2% 5.8% 5.5% 7.7% 15.2% 4.5% 6.8% 5.5% 9.5%
UT 224 5 7.3 0.6 27 (tie) 39.6 4 6 (tie) 1.1% 0.6% 1.3% 0.0% 0.7% 0.9% 0.0% 1.2% 1.2% 0.4% 0.0% 0.6% 3.2%
VT 26,051 51 6.4 (0.8) 49 17.5 37 50 0.3% 0.2% 0.2% 0.0% 0.3% 0.6% 1.8% 0.4% 0.0% 0.2% 0.0% 0.3% 0.0%
VA 558 20 7.2 0.5 29 (tie) 22.5 23 22 (tie) 2.6% 2.6% 2.7% 4.2% 2.1% 2.8% 0.0% 2.9% 3.2% 2.7% 0.0% 2.8% 1.1%
WA 896 32 9.2 0.3 33 (tie) 28.0 13 27 1.8% 2.2% 2.1% 0.0% 1.6% 1.5% 2.7% 2.8% 3.0% 0.9% 0.0% 2.4% 6.1%
WV 12,143 50 9.2 1.8 6 12.3 49 41 0.8% 0.5% 0.6% 0.0% 0.3% 0.0% 0.0% 0.8% 0.0% 0.4% 4.5% 0.0% 0.0%
WI 607 24 8.5 (0.1) 42 (tie) 34.2 9 25 1.6% 1.5% 1.9% 0.5% 1.4% 1.2% 0.0% 2.0% 0.0% 1.1% 2.3% 1.2% 2.7%
WY 4,039 47 7.1 1.5 11 38.6 5 14 (tie) 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.0% 0.0% 0.0% 0.5%
Exposure to the Five M ost Distressed States: 5.9% 8.8% 6.9% 9.7% 6.6% 8.7% 3.8% 9.6% 15.4% 7.9% 11.4% 7.5% 8.4%
Source: statehealthfacts.org, RealtyTrac, Bureau of Labor Statistics, Department of Agriculture and company reports
17
Health Insurance Coverage
Another topic that is heavily in the news is healthcare reform. As it relates to the
companies within our universe, the states with the highest percent of uninsured residents
are TX, NJ, FL, AK and LA. Interestingly, three of the five are in the currently comprised
Gulf state region.
• Those with the most exposure in the largest uninsured states include
CTRN (28%), ANF (20.8)%, PSUN (19.6)%, JCG (19.0%) and ZUMZ (18.8%).
We believe that CTRN is the most at-risk not only based on their store base but
also on their core customer income demographic.
18
Exhibit 15. Health Insurance Facts by State

Health Insurance Coverage of the Total Population, states (2007-2008), U.S. (2008)
% Store Base in State

Employer Individual Medicaid Medicare Other Public Uninsured AEO ANF ARO CTRN JCG GPS LULU PSUN ROST TJX UA URBN ZUMZ
US Total 52.3% 4.7% 14.1% 12.4% 1.2% 15.4%

AL 55.2% 3.3% 14.2% 14.6% 0.8% 12.0% 1.6% 1.2% 1.7% 6.5% 1.2% 1.2% 0.0% 0.9% 1.7% 0.9% 0.0% 0.9% 0.0%
AK 52.0% 4.2% 11.9% 6.8% 5.6% 19.4% 0.5% 0.1% 0.0% 0.0% 0.0% 0.2% 0.0% 0.3% 0.0% 0.0% 0.0% 0.0% 0.8%
AZ 47.0% 4.7% 16.8% 11.4% 1.2% 18.9% 1.5% 1.6% 0.8% 0.0% 1.5% 1.3% 0.9% 2.2% 5.2% 1.1% 2.3% 2.1% 3.4%
AR 45.9% 4.4% 16.5% 14.2% 2.0% 17.0% 0.8% 0.6% 1.8% 1.7% 0.0% 0.6% 0.0% 0.4% 0.0% 0.3% 0.0% 0.0% 0.0%
CA 49.1% 6.1% 16.6% 9.1% 0.6% 18.5% 8.1% 12.1% 8.2% 1.2% 12.2% 10.1% 18.2% 13.0% 25.8% 8.6% 4.5% 20.8% 19.4%
CO 56.6% 6.7% 8.6% 9.6% 2.4% 16.2% 1.3% 1.1% 1.6% 0.0% 2.1% 0.5% 2.7% 2.3% 2.8% 0.8% 2.3% 1.8% 4.5%
CT 60.1% 4.6% 11.5% 13.6% 0.5% 9.7% 1.6% 2.0% 1.2% 0.0% 4.3% 1.7% 1.8% 1.0% 0.0% 2.4% 2.3% 1.5% 2.1%
DE 57.4% 3.9% 12.9% 14.0% 0.8% 11.1% 0.5% 0.4% 0.4% 0.2% 0.3% 0.3% 0.0% 0.4% 0.1% 0.3% 2.3% 0.0% 0.5%
DC 53.5% 6.0% 20.2% 10.1% 0.4% 9.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
FL 46.7% 5.2% 10.1% 16.5% 1.3% 20.2% 4.5% 6.7% 5.7% 9.7% 6.7% 4.8% 2.7% 7.6% 0.0% 6.3% 11.4% 5.2% 4.2%
GA 54.8% 3.4% 12.2% 10.1% 1.7% 17.8% 3.1% 2.3% 2.8% 13.9% 3.1% 2.5% 0.0% 1.8% 4.4% 3.0% 2.3% 1.2% 0.0%
HI 60.0% 2.7% 12.3% 13.8% 3.2% 7.9% 0.4% 0.4% 0.2% 0.0% 0.3% 0.3% 0.9% 1.0% 1.2% 0.0% 0.0% 0.0% 0.3%
ID 53.5% 7.1% 10.7% 12.7% 1.1% 14.8% 0.4% 0.4% 0.5% 0.0% 0.0% 0.3% 0.0% 0.6% 0.9% 0.3% 0.0% 0.6% 1.6%
IL 57.7% 4.4% 12.6% 11.6% 0.6% 13.2% 3.4% 4.4% 3.6% 1.7% 3.1% 3.4% 6.4% 2.9% 0.0% 4.2% 2.3% 4.9% 4.2%
IN 58.1% 3.5% 12.7% 13.4% 0.5% 11.9% 2.0% 2.4% 2.4% 1.7% 0.9% 1.4% 0.0% 2.0% 0.0% 1.3% 2.3% 0.6% 1.6%
IA 59.2% 6.2% 11.6% 12.9% 0.7% 9.4% 1.2% 0.7% 1.3% 0.0% 0.3% 0.8% 0.0% 1.0% 0.0% 0.3% 0.0% 0.0% 0.5%
KS 55.5% 6.5% 11.2% 12.2% 2.1% 12.5% 0.9% 0.5% 0.8% 0.2% 0.3% 0.7% 0.0% 0.8% 0.0% 0.4% 0.0% 0.3% 0.8%
KY 49.8% 4.0% 16.0% 14.3% 1.0% 14.8% 1.2% 1.3% 1.1% 0.7% 0.6% 0.7% 0.0% 0.8% 0.0% 0.7% 0.0% 0.0% 0.0%
LA 46.9% 4.9% 15.8% 12.5% 0.6% 19.3% 1.3% 1.4% 1.6% 7.9% 0.6% 1.2% 0.0% 1.2% 1.1% 0.7% 0.0% 0.9% 0.0%
ME 50.4% 4.5% 19.9% 14.0% 1.6% 9.6% 0.4% 0.4% 2.7% 0.0% 1.2% 0.4% 0.0% 0.6% 0.0% 0.5% 2.3% 0.0% 0.3%
MD 60.5% 4.4% 9.9% 11.2% 1.0% 12.9% 1.9% 1.8% 2.0% 1.2% 3.1% 1.6% 3.6% 2.1% 1.8% 1.8% 11.4% 2.1% 2.1%
MA 60.8% 3.4% 17.4% 12.6% 0.4% 5.4% 3.0% 3.0% 0.4% 0.0% 4.3% 2.7% 4.5% 2.5% 0.0% 5.0% 6.8% 4.3% 1.1%
MI 56.7% 4.0% 13.5% 13.8% 0.4% 11.7% 3.2% 3.0% 3.5% 3.7% 2.8% 2.0% 0.9% 2.9% 0.0% 2.6% 0.0% 1.5% 0.0%
MN 60.8% 5.9% 11.9% 12.3% 0.5% 8.5% 2.0% 2.0% 1.8% 0.0% 1.5% 1.5% 0.0% 1.8% 0.0% 1.2% 2.3% 1.5% 2.9%
MS 43.7% 4.1% 21.2% 11.2% 1.4% 18.4% 0.7% 0.5% 0.8% 5.5% 0.6% 0.5% 0.0% 0.6% 0.5% 0.3% 2.3% 0.3% 0.0%
MO 53.8% 5.0% 13.1% 14.2% 1.3% 12.6% 1.7% 1.6% 1.7% 1.0% 1.5% 1.4% 0.0% 1.7% 0.0% 1.1% 0.0% 1.2% 0.5%
MT 47.8% 7.2% 12.2% 14.8% 2.1% 15.9% 0.2% 0.3% 0.3% 0.0% 0.0% 0.2% 0.0% 0.4% 0.6% 0.1% 0.0% 0.0% 1.1%
NE 57.4% 6.4% 10.6% 11.5% 1.5% 12.6% 0.7% 0.5% 2.7% 0.0% 0.3% 0.5% 0.0% 0.4% 0.0% 0.2% 0.0% 0.6% 0.0%
NV 58.4% 3.7% 7.8% 11.0% 1.2% 18.0% 0.5% 1.3% 0.4% 0.0% 1.2% 0.9% 0.9% 1.1% 2.0% 0.7% 0.0% 1.2% 2.1%
NH 65.1% 4.3% 6.9% 12.5% 0.8% 10.4% 0.7% 1.0% 0.5% 0.0% 0.9% 0.6% 0.0% 0.8% 0.0% 1.0% 2.3% 0.0% 0.5%
NM 59.0% 3.8% 9.1% 12.6% 0.5% 14.9% 0.3% 0.4% 3.4% 0.0% 0.3% 0.0% 0.0% 0.8% 0.6% 0.2% 0.0% 0.6% 1.3%
NJ 41.2% 5.3% 16.0% 11.8% 2.5% 23.2% 2.5% 3.7% 0.7% 0.0% 5.8% 3.6% 1.8% 2.7% 1.0% 3.4% 6.8% 4.6% 4.2%
NY 51.2% 3.6% 19.4% 11.8% 0.3% 13.6% 5.6% 5.1% 0.3% 0.0% 8.9% 6.4% 6.4% 4.0% 0.0% 4.9% 9.1% 7.0% 8.2%
NC 49.8% 5.1% 13.8% 13.2% 2.2% 16.0% 2.8% 2.7% 0.7% 9.2% 3.1% 2.2% 0.0% 2.3% 3.2% 2.2% 2.3% 2.1% 0.0%
ND 56.9% 9.4% 8.7% 12.6% 1.5% 11.0% 0.4% 0.2% 5.4% 0.0% 0.0% 0.2% 0.0% 0.4% 0.0% 0.1% 0.0% 0.0% 0.0%
OH 57.6% 4.2% 12.3% 13.4% 0.9% 11.6% 3.6% 3.6% 3.9% 3.7% 2.4% 2.4% 0.0% 3.7% 0.0% 2.7% 2.3% 1.8% 0.0%
OK 48.5% 4.4% 14.3% 14.2% 2.5% 16.0% 1.1% 0.9% 0.7% 0.5% 0.6% 0.8% 0.9% 0.9% 1.8% 0.3% 0.0% 0.0% 0.8%
OR 52.7% 5.8% 11.4% 12.9% 0.7% 16.6% 1.0% 1.3% 0.7% 0.0% 1.2% 1.1% 0.0% 1.3% 2.5% 0.6% 2.3% 1.5% 3.2%
PA 56.8% 5.1% 12.9% 15.2% 0.3% 9.8% 6.0% 4.4% 5.7% 0.5% 4.9% 3.8% 0.9% 5.5% 3.2% 3.2% 0.0% 3.4% 4.0%
RI 55.6% 4.6% 14.8% 13.0% 0.7% 11.3% 0.4% 0.4% 0.2% 0.0% 0.6% 0.4% 0.0% 0.2% 0.0% 0.5% 0.0% 0.3% 0.3%
SC 50.8% 4.0% 13.1% 14.4% 1.5% 16.1% 1.5% 1.4% 1.6% 10.2% 1.8% 1.2% 0.0% 1.2% 2.0% 1.2% 2.3% 0.6% 0.0%
SD 53.9% 7.5% 10.2% 14.7% 2.4% 11.4% 0.3% 0.2% 0.2% 0.0% 0.0% 0.1% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% 0.3%
TN 47.5% 5.1% 16.6% 13.6% 2.4% 14.8% 2.2% 2.2% 2.3% 3.7% 1.2% 1.6% 0.0% 1.7% 2.5% 1.7% 2.3% 0.6% 0.0%
TX 45.6% 4.1% 13.5% 10.2% 1.4% 25.2% 6.5% 8.9% 7.6% 10.4% 5.8% 6.2% 5.5% 7.7% 15.2% 4.5% 6.8% 5.5% 9.5%
UT 62.5% 7.3% 8.2% 8.2% 0.9% 13.0% 1.1% 0.6% 1.3% 0.0% 0.9% 0.7% 0.0% 1.2% 1.2% 0.4% 0.0% 0.6% 3.2%
VT 53.2% 3.4% 19.2% 13.5% 0.5% 10.3% 0.3% 0.2% 0.2% 0.0% 0.6% 0.3% 1.8% 0.4% 0.0% 0.2% 0.0% 0.3% 0.0%
VA 57.6% 4.4% 8.6% 12.2% 3.5% 13.8% 2.6% 2.6% 2.7% 4.2% 2.8% 2.1% 0.0% 2.9% 3.2% 2.7% 0.0% 2.8% 1.1%
WA 55.8% 5.7% 12.8% 11.1% 2.7% 12.0% 1.8% 2.2% 2.1% 0.0% 1.5% 1.6% 2.7% 2.8% 3.0% 0.9% 0.0% 2.4% 6.1%
WV 49.6% 2.4% 14.8% 17.4% 1.2% 14.6% 0.8% 0.5% 0.6% 0.0% 0.0% 0.3% 0.0% 0.8% 0.0% 0.4% 4.5% 0.0% 0.0%
WI 59.5% 5.2% 13.2% 12.6% 0.6% 9.0% 1.6% 1.5% 1.9% 0.5% 1.2% 1.4% 0.0% 2.0% 0.0% 1.1% 2.3% 1.2% 2.7%
WY 54.7% 6.6% 10.3% 12.6% 2.1% 13.7% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.0% 0.0% 0.0% 0.5%
Exposure to States with Highest Level Uninsured: 15.3% 20.8% 15.5% 28.0% 19.0% 16.1% 10.0% 19.6% 17.3% 15.0% 25.0% 16.2% 18.8%
Source: US Census Bureau and statehealthfacts.org
Unemployment
Exposure to states with improving and low unemployment is negligible across our
universe.
• ROST has the most exposure to the five states with the highest level of
unemployment, at 40.1% of total store base followed by URBN (29.1%),
ZUMZ (26%), PSUN (24.8%) and JCG (24%). All have very high store counts in
CA relative to their bases. ROST is especially hard hit as it also has 12.3%
exposure in FL.
19
Exhibit 16. States with Greatest Improvement in Employment (Rolling 12 months)

Sta tes w ith Grea test Improvem ent in Em ploym ent (Rolling 12 months)
VT ND MN MD % of
Un emplo yment Ra te (0 .8)% (0.6)% (1.1)% 0.6% Store Base
AEO 0 .3 0.4 2.0 1.9 2.7%

ANF 0 .2 0.2 2.0 1.8 2.4
ARO 0 .2 0.4 1.8 2.0 2.4
CTRN 0 .0 0.0 0.0 1.2 0.0
GPS 0 .3 0.2 1.5 1.6 2.0
JCG 0 .6 0.0 1.6 3.1 2.2
LULU 1 .8 0.0 0.0 3.5 1.8
PSUN 0 .4 0.4 1.8 2.1 2.6
ROST 0 .0 0.0 0.0 1.8 0.0
TJX 0 .2 0.1 1.2 1.8 1.5
URB N 0 .3 0.0 1.5 2.1 1.8
ZUMZ 0 .0 0.0 2.9 2.1 2.9
Sourc e: Bureau of Labor Statistic s

Excludes UA as product is pri marily s old in in third-party retail outl ets
GYMB does not break out s tore exposure by s tate
Exhibit 17. States with Lowest Unemployment Rates

Lowest Une mp loyment States
ND SD NE VT KS % of
Unempl oy ment Rat e 3. 8% 4.7% 5.0% 6.4% 6.5% Store Base
AEO 0. 4 0.3 0.7 0.3 0.9 2. 5%

ANF 0. 2 0.2 0.5 0.2 0.5 1. 5
ARO 0. 5 0.2 0.5 0.2 0.8 2. 3
CTRN 0. 0 0.0 0.0 0.0 0.2 0. 2
GPS 0. 2 0.1 0.5 0.3 0.7 1. 8
JCG 0. 0 0.0 0.3 0.6 0.3 1. 2
LULU 0. 0 0.0 0.0 1.8 0.0 1. 8
PSUN 0. 4 0.2 0.4 0.4 0.8 2. 2
ROST 0. 0 0.0 0.0 0.0 0.0 0. 0
TJX 0. 1 0.1 0.2 0.2 0.4 1. 0
URBN 0. 0 0.0 0.6 0.3 0.3 1. 2
ZUMZ 0. 0 0.3 0.0 0.0 0.8 1. 1
Source: Bureau of Labor Stati stics

Excludes UA as product is primar ily sold in in third-party r etail outlets
GYMB does not break out store exposure by state
20
Exhibit 18. States with Highest Unemployment Rates

High est Unem ployment States
FL RI CA NV MI % of
Unempl oy ment Rat e 12. 0% 12.5% 12.6% 13.7% 14.0% Store Base
AEO 4. 5 0.4 8.1 0.5 3.2 16. 7%

ANF 6. 7 0.4 12.1 1.3 3.0 23. 5
ARO 5. 7 0.2 8.2 0.4 3.5 18. 0
CTRN 9. 7 0.0 1.2 0.0 3.7 14. 6
GPS 4. 8 0.4 10.1 0.9 2.0 18. 3
JCG 6. 9 0.6 12.5 1.2 2.8 24. 0
LULU 2. 6 0.0 17.5 0.9 0.9 21. 9
PSUN 7. 6 0.2 13.0 1.1 2.9 24. 8
ROST 12. 3 0.0 25.8 2.0 0.0 40. 1
TJX 6. 3 0.5 8.6 0.7 2.6 18. 7
URBN 5. 2 0.3 20.8 1.2 1.5 29. 1
ZUMZ 4. 2 0.3 19.4 2.1 0.0 26. 0
Source: Bureau of Labor Stati stics

Excludes UA as product is primar ily sold in in third-party r etail outlets
GYMB does not break out store exposure by state
Teen unemployment has been trending significantly above the national average,
peaking at 27.8% in June 2009 and fast approaching similar levels again (26.8% this
May). This is a negative for the teen players including ANF, AEO, ARO, PSUN and ZUMZ.
However, given that unemployment has been accelerated for over a year companies are
lapping easy compares.
Exhibit 19. National Unemployment vs. Teen Unemployment
National Unemployment Vs. Teen Unemployment
30
25
20
National Unemployment
15
10
0
May-00
Jan-03
Jan-05
May-06
Jan-08
Jan-09
Jan-00
Jan-01
May-01
Jan-02
May-02
May-03
Jan-04
May-04
Sep-04
May-05
Jan-06
Sep-06
Jan-07
May-07
Sep-08
May-09
Sep-09
Jan-10
May-10
Sep- 00
Sep-01
Sep-02
Sep-03
Sep-05
Sep-07
May-08
Teen Unemployment Rate National Unemployment Rate
Source: Bureau of Labor Statistics
Recent inverse relationship between teen unemployment and teen retailer revenues
reflects more difficult environment for parents. In the past, teen employment dollar
spend has typically been incremental as parents have contributed the lion’s share toward
apparel spend. Interestingly, since 2008 the inverse relationship between teen
unemployment and teen retailer sales has been magnified.
21
• ARO has fared the best during the recent rise in teen unemployment. We
attribute this to its value priced positioning combined with more trend right
assortments in an environment where there have been few “must-have” items.
Exhibit 20. Teen Unemployment Vs. Teen Sales
TeenUnemployment (BP Change) Vs. TeenSales(%Change)
70.0 800
60.0
600
50.0
40.0 400
TeenUnemployment Rate Bps Change

30.0
200
Sales% Change
20.0
0
10.0
0.0 -200
Feb-06
May-01
Aug-01
Feb-02
Feb-05
May-05
May-06
Feb-07
May-08
Feb-09
May-09
May-02
Aug-02
Nov-02
May-03
Aug-03
Nov-03
May-04
Aug-04
Nov-04
Aug-05
Nov-06
May-07
Aug-07
Nov-07
Aug-08
Nov- 08
Aug-09
May- 10
Feb-03
Feb-04
Feb-08
Feb-10
Nov-01
Nov-05
Aug-06
Nov-09
-10.0
-400
-20.0
-30.0 -600
AEO ARO ANF ZUMZ PSUN Teen Unemployment Rate (bpschange)
Inverse relationship between discounters and national unemployment rate not as

powerful as years past. While still impacted, it appears that the swings in sales are not
as significant recently relative to historical levels. We believe this reflects improved
product buys, a stickier core customer and the benefit of a trade-down customer as well
as an improved perception of the discount retail outlet in general.
o CTRN has experienced the most volatility. We believe this reflects company-
specific operating issues.
Exhibit 21. National Unemployment Vs. Discounters Sales Change
National Unemployment Vs. Discounters Sales Change
60.0 500
50.0
400
40.0
National Unemployment Rate BpsChange
300
30.0
Sales% Change
200
20.0
100
10.0
0.0 0
Feb-03
Feb-06
May-01
Nov-01
Feb-02
May-02
Aug-02
Nov-02
May-03
Feb-04
May-04
Nov-04
Feb-05
May-05
Aug-05
Nov-05
May-06
Feb-07
May-07
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Feb-10
May-10
Aug-01
Aug-03
Nov-03
Aug-04
Aug-06
Nov-06
Aug-09
Nov-09
-10.0 -100
CTRN ROST TJX National Unemployment
22
Recent RLX performance has moved in tandem with national unemployment levels.
Following the pain of that double dip in November 2008 and March 2009, the RLX has
continued its steady rise despite ongoing increases in the national unemployment level,
only declining recently despite what appears to be a stabilization of employment trends.
We attribute the rise in 2009 to a rush to take advantage of severely undervalued stocks in
the marketplace rather than being fundamentally driven, while the recent decline is a
reflection of full valuations and return to peak margins for many retailers combined with
concerns regarding ongoing domestic and international economic turmoil. Longer term we
would expect the historical inverse relationship between unemployment and RLX
performance to return.
Exhibit 22. Off-Price Comps Have Outpaced Department Stores for Many Years
National Unemployment Rate vs.

600 RLX Performance 12
500 10
400 8
Unemployment
RLX
300 6
200 4
100 2
0 0
Nov-02
Mar-03
Nov-03
Mar-04
Nov-04
Mar-05
Nov-05
Mar-06
Nov-06
Mar-07
Nov-07
Mar-08
Nov-08
Mar-09
Nov-09
Mar-10
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
RLX National Unemployment Rate
23
Consumer Sentiment
Stabilized Consumer Sentiment numbers support our thesis that the average
customer has grown accustomed to the new economic reality. While economic
datapoints are mixed at best with positive commentary arguably being supported by
various economic stimuli, we take the stabilization of consumer sentiment as a positive
sign that the average customer has become immune to the noise and has cautiously
returned to the shopping arena. Belts have been tightened and shopping habits have
changed, but a reset of expectations should benefit the retailers that are properly
positioned (which we assume to be those offering either perceived value and/or unique
product).
Exhibit 23. Consumer Sentiment
Co nsu mer Sent i m en t
10 5
10 0
95
90
85
80
75
70
65
60
55
Jan Feb Mar Apr May Jun Jul Au g Sep Oct Nov Dec
2007 20 08 2009 2010
Source: The University of Michigan's Institute for Social Research
Total Consumer Credit
Access to credit continues to be constrained. As the chart below illustrates, credit

available continues to decline on a YoY basis despite easy compares. As a result of the
tightening credit environment, we expect players offering low-price alternatives to continue
to attract new and maintain existing customers.
Exhibit 24. Total Consumer Credit YoY % Change
Tota l Con su me r Cr e dit YoY % Cha nge
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Jul- 00
Jul- 01
Jul- 04
Jul- 05
Jul-06
Jul- 09
Jan-00
Jan- 01
Jan- 02
Jul- 02
Jan- 03
Jul-03
Jan- 04
Jan-05
Jan- 06
Jan- 07
Jul- 07
Jan- 08
Jul-08
Jan- 09
Jan-10
- 2.0%
- 4.0%
- 6.0%
% Change Y oY
Source: Federal Reserve Board
24
Foreclosures
While the YoY incidence of foreclosures is declining, the number is misleading as

many banks are delaying the foreclosure process and allowing delinquent owners
to stay in their homes longer. This may result in a reversion to increased YoY rates later
this year as unemployment remains elevated and government refinancing initiatives fail.
Foreclosure rates still remain elevated, with ROST having the most store exposure
(53.5%) to the top ten states with the highest incident per household. ROST is
closely followed URBN and ZUMZ with 40.4% and 40.3% of their store base, respectively.
Although still significant, AEO has the lowest amount of locations in the troubled states at
27.6% of its total store base.
Exhibit 25. Foreclosures
1/Every Sequential YoY % Store Base in State

Foreclosures xx Hhold* % Chg % Chg AEO ANF ARO CTRN GPS JCG LULU PSUN ROST TJX UA URBN ZUMZ
US Total 322,920 400 (3.3)% 0.5 %
NV 14,346 79 (11.5)% (16.4)% 0.5% 1.3% 0.4% 0.0% 0.9% 1.2% 0.9% 1.1% 2.0% 0.7% 0.0% 1.2% 2.1%
AZ 16,097 169 6.0 % (4.6)% 1.5% 1.6% 0.8% 0.0% 1.3% 1.5% 0.9% 2.2% 5.2% 1.1% 2.3% 2.1% 3.4%
FL 50,685 174 4.8 % (14.0)% 4.5% 6.7% 5.7% 9.7% 4.8% 6.7% 2.7% 7.6% 12.3% 6.3% 11.4% 5.2% 4.2%
CA 72,030 186 3.3 % (21.9)% 8.1% 12.1% 8.2% 1.2% 10.1% 12.2% 18.2% 13.0% 25.8% 8.6% 4.5% 20.8% 19.4%
MI 20,322 223 6.0 % 46.3 % 3.2% 3.0% 3.5% 3.7% 2.0% 2.8% 0.9% 2.9% 0.0% 2.6% 0.0% 1.5% 0.0%
GA 13,778 292 (1.3)% 31.0 % 3.1% 2.3% 2.8% 13.9% 2.5% 3.1% 0.0% 1.8% 4.4% 3.0% 2.3% 1.2% 0.0%
ID 2,075 309 (26.8)% 43.7 % 0.4% 0.4% 0.5% 0.0% 0.3% 0.0% 0.0% 0.6% 0.9% 0.3% 0.0% 0.6% 1.6%
IL 15,061 350 (20.2)% 37.6 % 3.4% 4.4% 3.6% 1.7% 3.4% 3.1% 6.4% 2.9% 0.0% 4.2% 2.3% 4.9% 4.2%
UT 2,623 360 (38.5)% (10.4)% 1.1% 0.6% 1.3% 0.0% 0.7% 0.9% 0.0% 1.2% 1.2% 0.4% 0.0% 0.6% 3.2%
MD 5,852 399 7.5 % 65.4 % 1.9% 1.8% 2.0% 1.2% 1.6% 3.1% 3.6% 2.1% 1.8% 1.8% 11.4% 2.1% 2.1%
Composite % Base 27.6% 34.1% 28.8% 31.5% 27.7% 34.6% 33.6% 35.5% 53.5% 29.0% 34.1% 40.4% 40.3%
* Signifies that one in every xx household (substitute number in column) is in foreclosure

Source: RealtyTrac and company reports
25
Company-Specific Operating Metrics

Quarterly Comps, Sales, and Inventory Trends
Although there were signs of weakness ahead of 4Q08, most retailers were unable
to adjust their inventories accordingly heading into the holiday season. As a result,
we all remember the fire sales (and resulting margin pressure) throughout the first half of
2009 and the mad scramble to adjust inventories accordingly. While our universe as a
whole was able to cut future orders, some were more aggressive than others reflecting a
variety of factors including their respective views on the consumer and company-specific
outlooks on upcoming fashion flows.
• As of the most recent quarter, the majority of retailers in our universe

continued to post YoY declines in inventory/sf levels with only AEO, ANF,
GPS and URBN reporting gains. We are most comfortable with the inventory
build at URBN (+6.2)% followed by GPS (+14.3%) as both posted a 10% decline
in the prior period and have been posting improved sales trends. With 21.2%
inventory growth in the most recent quarter, we believe that ANF may be getting
a bit aggressive, especially given that core Abercrombie is stepping away from its
steep promotional posture of the last year and potential Europe risk. We are also
concerned that AEO posted a 17.0% rise in inventory/sf on a 7.3% sales/sf
number.
Exhibit 26. Sales/PSF and Inventory P/SF Analysis
4Q08 1Q09 2Q09

Sales/sf Inventory/sf Sales/sf Inventory/sf Sales/sf Inventory/sf
Comps $ YoY % Chg $ YoY % Chg Comps $ YoY % Chg $ YoY % Chg Comps $ % Change $ YoY % Chg
AEO (16.0)% $143.3 (18.4)% $46.6 (7.2)% (10.0)% $96.0 (13.0)% $43.6 (2.0)% (10.0)% $102.0 (10.9)% $54.9 (2.0)%
ANF (25.0) 117.0 (30.8) 46.0 (29.0) (30.0) 75.0 (29.0) 34.0 (27.0) (30.0) 79.0 (28.0) 40.0 (35.0)
ARO 6.0 211.0 6.0 39.0 2.6 11.0 123.0 10.0 39.0 (13.1) 12.0 136.0 11.0 60.0 2.9
CTRN (1.9) 41.4 (4.8) 24.0 (9.2) 7.4 38.8 3.7 23.0 (10.0) (12.4) 29.7 (15.3) 23.0 (9.5)
GPS (14.0) 102.8 (12.8) 38.1 (4.3) (8.0) 79.0 (7.1) 35.0 (10.0) (8.0) 82.0 (6.7) 37.0 (13.0)
GYMB (2.0) 175.0 (10.0) 66.0 (16.0) (10.0) 137.0 (16.0) 56.9 (7.0) (1.0) 123.0 (8.0) 71.1 (11.0)
JCG (13.0) 142.0 (12.0) 97.0 3.0 (5.0) 133.0 (5.0) 101.6 0.0 (5.0) 140.0 (4.0) 100.3 (11.0)
LULU (8.0) 318.0 (34.5) 179.0 (5.4) (8.0) 250.0 (26.0) 153.4 (42.0) (2.0) 291.0 (19.0) 158.4 7.2
PSUN (10.0) 98.0 (6.8) 30.0 (36.0) (18.0) 62.4 (15.2) 32.0 (31.0) (24.0) 68.3 (21.5) 49.0 (23.0)
ROST (1.0) 76.7 (2.3) 39.2 (19.0) 3.0 74.0 2.1 40.0 (16.0) 3.0 76.3 2.1 40.0 (13.0)
TJX (2.0) 87.6 (2.4) 42.7 (9.0) 2.0 70.0 (0.9) 48.0 (2.0) 4.0 76.0 2.3 51.0 (3.0)
URBN (1.0) 172.0 (8.4) 74.0 (13.7) (9.6) 129.0 (15.0) 81.0 (10.0) (6.0) 153.0 (11.0) 90.0 (7.0)
ZUMZ (13.4) 120.0 (4.6) 46.0 (10.8) (15.3) 75.2 (17.8) 52.0 (8.0) (18.8) 80.4 (20.0) 65.0 (15.2)
3Q09 4Q09 1Q10

Sales/sf Inventory/sf Sales per Sq Ft Inventory/sf Sales per Sq Ft Inventory/sf
Comps $ YoY % Chg $ % Change Comps $ YoY % Chg $ YoY % Chg Comps $ YoY % Chg $ YoY % Chg
AEO (4.0)% $116.0 (4.5)% $65.8 (2.0)% 5.0% $151.0 5.4% $51.0 9.0% 5.0% $103.0 7.3% $51.0 17.0%
ANF (22.0) 93.0 (18.0) 43.0 (33.0) (13.0) 117.0 (5.0) 40.0 (15.0) 1.0 89.0 18.7 41.2 21.2
ARO 10.0 169.0 12.0 65.0 2.2 9.0 235.0 11.0 40.0 3.6 8.0 136.0 10.6 35.0 (10.3)
CTRN 6.3 32.7 4.6 26.0 0.3 1.2 41.8 0.9 24.0 3.6 9.6 43.1 11.1 22.0 (4.3)
GPS 0.0 91.0 1.7 51.0 (9.0) 2.0 113.0 4.0 38.0 0.0 3.6 86.0 8.9 40.0 14.3
GYMB (4.0) 149.0 (9.0) 77.5 (7.0) (2.0) 164.0 (7.0) 64.5 (3.0) 2.0 134.0 (2.2) 55.7 (2.1)
JCG 8.0 159.0 10.0 114.6 (17.0) 17.0 149.0 13.0 97.1 (3.0) 15.0 149.0 12.0 97.6 (3.9)
LULU 10.0 331.0 7.0 173.9 (2.0) 29.0 450.0 42.0 141.8 (21.0) 35.0 365.0 46.0 123.3 (19.6)
PSUN (18.0) 76.3 (15.0) 48.0 (26.0) (19.0) 84.2 (13.9) 25.9 (13.2) (15.0) 55.3 (11.4) 31.0 (3.1)
ROST 8.0 73.9 6.9 43.0 (11.0) 10.0 83.0 8.6 37.0 (6.0) 10.0 81.0 9.5 38.0 (5.0)
TJX 7.0 83.0 6.4 53.0 (5.0) 11.6 94.0 6.9 43.0 (7.0) 9.0 78.0 11.4 45.0 (6.3)
URBN (2.0) 162.0 (4.0) 95.0 (14.0) 4.0 181.0 5.0 73.0 0.0 11.0 144.0 11.6 86.0 6.2
ZUMZ (8.0) 103.9 (10.4) 69.0 (16.2) (1.7) 120.3 (4.6) 46.0 (10.8) 9.1 80.4 6.9 52.0 0.0
Source: Company reports and Oppenheimer & Co. Inc. estimates.
• Among the private label teen retailers ARO has been the most disciplined
in its sales to inventory growth trends while AEO was the least disciplined
not only among the teens but also among our universe overall. Beginning in
4Q and through the most recent quarter, ARO has consistently had sales/sf
growth above its inventory numbers. ANF had been disciplined until the most
recent quarter, when inventories grew at a faster rate than sales due to higher
direct to consumer inventory. At AEO, inventory growth has continued to be
above sales growth. The range between the two was narrowing but began to
26
expand again in 3Q09 culminating in the most recent quarter where the spread
was 970 bp’s reflecting a large bet on knits that did not perform in line with
internal expectations.
Exhibit 27. Teen Sales/Square Foot Change
Sales/sf YoY Percent Change

30
20
10
Perce nt C h an g e
0
( 10)
( 20)
( 30)
( 40) F eb ru ar y -0 9
M a rc h- 09
J uly- 0 9
No ve m be r- 09
Dec em be r- 0 9
M ar ch -1 0
Ja nu ar y- 09
Ap ril- 09
Ju ne -0 9
Au gu st -0 9
Se pt em be r- 09
O cto be r- 09
Ja nu ar y- 10
F eb ru ar y- 10
Ap ril- 10
Ma y- 09
A EO ANF A RO
Source: Company reports; Oppenheimer & Co. Inc.
Exhibit 28. Teen Inventory/Square Foot Change
Inventory/sf YoY Percent Change
30
20
10
Percent Change
(10)
(20)
(30)
(40)
January-09
February-09
Marc h-09
April-09
May-09
J une-09
July-09
August-09
September-09
October-09
November-09
Dec ember-09
January-10
February-10
April-10
Marc h-10
AEO ANF ARO
Exhibit 29. Teen Sales/Inventory Growth
27
• Despite focus early in the cycle, improved sales trends still have not
materialized for PSUN. We attribute this to company-specific merchandising
issues that exacerbated an already tenuous relationship with the consumer. More
recently, PSUN has been taking a less aggressive approach to recurring
inventories. While we understand that there needs to be goods in the store to
attract the customer, we believe that this posture could be a near-term negative
driver given stores have yet to gain traction (initiatives should begin to be evident
in back-to-school).
• At ZUMZ the spread has been mixed throughout the year although we are
more comfortable with recent trends given several quarters of significant
sales improvement.
Exhibit 30. Surf and Skate Sales/Square Foot Change
Sales/sf YoY Per cent Change
10 .0
5 .0
0 .0
F eb -0 9
M a r-0 9
Ja n-0 9
Apr -0 9
M ay- 09
J un- 09
Jul- 09
Aug -0 9
Se p-0 9
O ct- 09
De c-0 9
Ja n- 10
Fe b- 10
Ma r- 10
Ap r-1 0
Nov -09
Per ce nt Ch an g e
(5 .0)
( 10 .0)
( 15 .0)
( 20 .0)
( 25 .0)
PSU N ZU MZ
Exhibit 31. Surf and Skate Inventory/Square Foot Change
Inventory/sf YoY Percent Change
0.0
Mar-09
May-09
Nov-09
Mar-10
Jan-09
Feb-09
Apr-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Dec-09
Jan-10
Feb-10
Apr-10
(5.0)
(10.0)
Percent Change
(15.0)
(20.0)
(25.0)
(30.0)
(35.0)
(40.0)
PSUN ZUMZ
28
Exhibit 32. Surf and Skate Sales/Inventory Growth
Sales/Inventory Gr owth BP Spread
3 ,50 0
3 ,00 0
2 ,50 0
2 ,00 0
BP Spread
1 ,50 0
1 ,00 0
50 0
Ju l-0 9
F eb -1 0
M ar -1 0
Ja n-0 9
F eb- 09
M ar -09
Apr -0 9
M ay- 09
Ju n- 09
Aug -0 9
Sep -0 9
Oc t-0 9
No v-0 9
De c-0 9
Ja n- 10
Ap r-1 0
(50 0)
(1 ,00 0)
(1 ,50 0)
PSU N Z UMZ
• While the discounters were all disciplined, ROST and TJX were more
consistent with their approach throughout the year than CTRN. At CTRN,
inventory growth exceeded sales growth in 2Q09 and 4Q09, but reversed in the
following quarters. Encouragingly, the spread between sales/sf and inventory/sf
was 1540 bp’s. As a reference, ROST was 1450 bp’s and TJX was 1770 bp’s.
Exhibit 33. Discounters Sales/Square Foot Growth
Sal es/sf Yo Y P ercent Chang e

15
10
5
Percent Change
(5)
(10)
(15)
(20)
M a y-0 9
Se pt em be r-0 9
J anu ar y- 10
Jan ua ry- 09
Fe br ua ry- 09
M ar ch- 09
Ap ril- 09
Jun e- 09
Ju ly-0 9
Au gus t-0 9
Oct obe r- 09
No vem be r- 09
De cem b er- 09
Fe br ua ry- 10
M arc h- 10
Apr il-1 0
CTR N ROST T JX
Exhibit 34. Discounters Inventory/Square Foot Change
I nventory/sf YoY P ercent Chan ge
0
Pe rc en t Ch an ge
( 5)
(1 0)
(1 5)
(2 0)
(2 5)
Se pte m ber -
Ja nu ar y-0 9
F eb ru ary -0 9
M ar ch- 09
Ap ril-0 9
Ju ne -0 9
Ju ly- 09
Au gus t-0 9
O cto ber -0 9
No vem b er- 09
J anu ar y-1 0
F eb ru ar y-1 0
M ar ch -10
Ap ril- 10
M ay -09
De ce mb er -09
09
C TRN RO ST T JX
29
Exhibit 35. Discounters Sales/Inventory Growth
S ales/ In ventory Gro wth BP Sp read
2000
1500
1000
BP Spread
500
Mar-09
May-09
Jun-09
Sep-09
Oct -09
Dec-09
Jan-09
Feb-09
Apr-09
J ul-09
Aug-09
Nov-09
Jan-10
Feb-10
Mar-10
Apr-10
(500)
(1000)
C TRN R OST T JX
• JCG and LULU were late to the game, which results in easier near-term
compares. JCG did not begin to reduce inventories until 2Q09 and was quite
aggressive in both that quarter and 3Q09. As the year progressed and sales
trends improved management eased its cautious stance a bit. At LULU,
inventories have been drastically reduced on strong sales growth in the last two
quarters.
• Of the remaining retailers in our universe, results were mixed with GPS and
URBN beginning to build inventories in 1Q10. At GPS, the inventory build is
reflective of its investments of denim and something that we need to keep an eye
on. At URBN we are less concerned with the inventory build, given consistent
sales improvement as the year has progressed. At GYMB and ZUMZ the spread
has been mixed throughout the year although we are more comfortable with
recent trends at ZUMZ given several quarters of significant sales improvement.
Exhibit 36. Others Sales/SF Change
Sales/sf YoY Per cent Change
60 .0
50 .0
40 .0
30 .0
Per ce nt Ch an g e
20 .0
10 .0
0 .0
Ja n-0 9
F eb -0 9
M a r-0 9
Apr -0 9
M ay- 09
J un- 09
Aug -0 9
Se p-0 9
O ct- 09
De c-0 9
Ja n- 10
Ap r-1 0
Jul- 09
Nov -09
Fe b- 10
Ma r- 10
( 10 .0)
( 20 .0)
( 30 .0)
( 40 .0)
G PS JCG L UL U URBN G YMB
30
Exhibit 37. Others Inventory/Square Foot Change
Inventor y/sf YoY Per cent Change
20 .0
10 .0
0 .0
M a y-0 9
Ju l-0 9
J an -1 0
M ar -1 0
J an -09
Fe b- 09
M ar- 09
Ap r- 09
Jun -0 9
Au g- 09
Se p- 09
Oct -0 9
No v-0 9
De c- 09
F eb- 10
Ap r- 10
Per ce nt Ch an g e
( 10 .0)
( 20 .0)
( 30 .0)
( 40 .0)
( 50 .0)
GPS JCG LUL U URBN GYM B
Exhibit 38 Others Sales/Inventory Growth
Sales/Inventory Gr owth BP Spread
8,0 00
6,0 00
4,0 00
BP Sp re ad
2,0 00
0
Ja n- 09
F e b-0 9
Ju n-0 9
Ju l-0 9
Au g-0 9
Se p- 09
O ct- 09
Jan -1 0
M ar -1 0
Ap r-1 0
Ma r- 09
Apr -09
Ma y- 09
Nov- 09
Dec -09
F eb- 10
( 2,0 00 )
( 4,0 00 )
GPS J CG L ULU U RBN GYM B
Monthly Comps: When Do Same Store Sales Comparisons Get More Difficult?
In CY2Q09, 23% of the names in our universe posted positive monthly same store sales
results. As the year progressed, the consumer began to show signs of life, and the various
initiatives that were employed when the world was seemingly coming to an end in late
2008 began to gain traction. The end result? Ninety-two percent of the companies in our
universe posted gains in the most recent quarter (CY1Q10), with only PSUN reporting a
negative comp (-15%).
• When evaluating comps on a 1-year basis, the only company with easing
comps over the next 12-month period is ARO, which nevertheless has held its
own with enviable comps of 12%, 10%, 9% and 8% in 2Q09, 3Q09, 4Q09 and
1Q10, respectively.
• Those with the absolute easiest compares on a 1-year basis are PSUN and
ANF, followed by GYMB and ZUMZ (which gets more challenging in 1Q).
• AEO, GPS and URBN have negative/flat compares for the next two quarters
before turning and staying positive in 4Q.
• Comps at CTRN, JCG and LULU become more difficult in 3Q with LULU
having the most aggressive ramp, while ROST and TJX were strongly
positive throughout the year.
31
Exhibit 39. 1-Year Comps
Jun Jul 2Q09 Aug Sep Oct 3Q09 Nov Dec Jan 4Q09 Feb Mar Apr 1Q10 May (A)
AEO (11.0)% (11.0)% (10.0)% (7.0)% 0.0% (5.0)% (4.0)% (2.0)% 7.0% 10.0% 5.0% 6.0% 15.0% (6.0)% 5.0% (3.0)%
ANF (32.0) (28.0) (30.0) (29.0) (18.0) (15.0) (22.0) (17.0) (19.0) 8.0 (13.0) 5.0 5.0 (7.0) 1.0 (3.0)
ARO 12.0 6.0 12.0 9.0 19.0 3.0 10.0 7.0 10.0 6.0 9.0 7.0 19.0 (5.0) 8.0 1.0
CTRN - - (12.4) - - - 6.3 - - - 1.2 - - - 9.6 -
GPS (10.0) (8.0) (8.0) (3.0) (1.0) 4.0 0.0 0.0 2.0 5.0 2.0 3.0 11.0 (3.0) 3.6 2.0
GYMB - - (1.0) - - - (4.0) - - - (2.0) - - - 2.0 1.0
JCG - - (5.0) - - - 8.0 - - - 17.0 - - - 15.0 -
LULU - - (2.0) - - - 10.0 - - - 29.0 - - - 35.0 -
PSUN - - (24.0) - - - (18.0) - - - (19.0) - - - (15.0) -
ROST 1.0 4.0 3.0 6.0 8.0 9.0 8.0 8.0 12.0 8.0 10.0 11.0 14.0 3.0 10.0 5.0
TJX 4.0 4.0 4.0 5.0 7.0 10.0 7.0 8.0 14.0 12.0 11.6 10.0 12.0 4.0 9.0 4.0
UA - - NA - - - NA - - - NA - - - NA -
URBN - - (6.0) - - - (2.0) - - - 4.0 - - - 11.0 -
ZUMZ (19.3) (16.8) (18.8) (12.1) (0.8) (8.9) (8.0) (8.5) 0.3 1.8 (1.7) 11.2 13.2 2.1 9.1 7.1
• Shifting to the 2-year basis, ARO and LULU have the most difficult
compares while ANF and PSUN once again have the easiest.
• ROST, TJX and URBN are all up against positive results on a rolling 12-
month basis while AEO, GPS and ZUMZ have negative comparisons.
• Both CTRN and JCG ramped as the year progressed, culminating in strong
CY1Q10 results.
• On a 2-yr basis GYMB’s most difficult comp is the current quarter with
easing comparisons as the year progresses.
Exhibit 40. 2-Year Comps
Jun Jul 2Q09 Aug Sep Oct 3Q09 Nov Dec Jan 4Q09 Feb Mar Apr 1Q10 May (A)
AEO (22.0)% (18.0)% (19.0)% (12.0)% (6.0)% (17.0)% (11.0)% (13.0)% (10.0)% (12.0)% (11.0)% (1.0)% (1.0)% (11.0)% (5.0)% (10.0)%
ANF (35.0) (35.0) (34.0) (40.0) (32.0) (35.0) (36.0) (45.0) (43.0) (12.0) (38.0) (25.0) (29.0) (29.0) (29.0) (31.0)
ARO 24.0 19.0 23.0 22.0 24.0 4.0 17.0 2.0 22.0 17.0 15.0 18.0 22.0 15.0 19.0 20.0
CTRN - - (5.9) - - - 2.1 - - - (0.7) - - - 17.0 -
GPS (17.0) (19.0) (18.0) (11.0) (12.0) (12.0) (12.0) (10.0) (12.0) (18.0) (12.0) (9.0) 3.0 (7.0) (4.4) (5.0)
GYMB - - 0.0 - - - (6.0) - - - (4.0) - - - (8.0) -
JCG - - (5.0) - - - 5.0 - - - 4.0 - - - 10.0 -
LULU - - 11.0 - - - 14.0 - - - 21.0 - - - 27.0 -
PSUN - - (25.0) - - - (25.0) - - - (29.0) - - - (33.0) -
ROST 9.0 8.0 9.0 9.0 6.0 7.0 8.0 6.0 12.0 6.0 9.0 12.0 17.0 9.0 13.0 9.0
TJX 9.0 7.0 7.0 6.0 8.0 9.0 8.0 2.0 14.0 8.0 9.6 10.0 14.0 7.0 11.0 9.0
UA - - NA - - - NA - - - NA - - - NA -
URBN - - 7.0 - - - 8.0 - - - 3.0 - - - 1.4 -
ZUMZ (22.7) (18.2) (20.5) (11.9) (9.8) (22.0) (13.8) (23.5) (12.0) (13.0) (15.1) (2.2) (4.7) (11.7) (6.2) (13.6)
Gross & Operating Margin Analysis
There has been a great deal of focus on gross and operating margins, and whether those
companies that have excelled in this difficult environment can maintain momentum and
what levers are left to pull.
• We believe that those companies that have recently reached peak margins
have done so based on solid fundamentals and disciplined strategies, and
32
do not warrant being penalized based on their strong business acumen.

Management teams of these companies are not sitting on their laurels, but are
continuing to find areas of opportunity to not only maintain but grow margins off
of new peak levels.
• Those most off of their peak levels (AEO, ANF, PSUN) have had pieces of
their respective businesses “broken” for quite a while and have had
investors taking bets that a turnaround will eventually occur because
comparisons are easy. But evidenced by ongoing underperformance an easy
compare is not always enough.
Exhibit 41. Peak vs. CY Gross and Operating Margins

Gross Margins Operating Margins
Peak/ Peak/
CY09 Prev Peak BP Off Peak CY09 Prev Peak BP Off Peak
Teens Teens
AEO 38.7% 47.9% (920) AEO 8.6% 21.0% (1240)
ANF 64.3 67.0 (270) ANF 5.2 20.0 (1480)
ARO 38.0 34.7 330 ARO 17.2 15.3 190
Surf/Skate Surf/Skate
PSUN 25.2 36.4 (1120) PSUN (7.9) 15.6 (2350)
ZUMZ 33.1 36.4 (330) ZUMZ 3.1 10.9 (780)
Discounters Discounters
CTRN 38.6 38.3 30 CTRN 5.3 7.9 (260)
ROST 25.8 25.6 20 ROST 10.1 9.5 60
TJX 26.2 24.5 170 TJX 9.8 8.2 160
Childrens Childrens
GYMB 47.3 48.6 (130) GYMB 16.1 14.8 130
Multi-Channel Multi-Channel
GPS 40.3 39.2 110 GPS 12.8 12.8 0
JCG 44.1 44.1 0 JCG 13.4 13.1 30
URBN 40.6 41.1 (50) URBN 17.5 19.0 (150)
Active Active
LULU 49.3 53.7 (440) LULU 19.1 19.1 0
UA 48.2 50.3 (210) UA 10.0 14.2 (420)
Source: Oppenheimer & Co. and Company reports
Store Count and Square Footage Growth Opportunity
For years people have been complaining about the lack of square footage growth stories
and the death of the traditional mall. While it cannot be argued that the US is overstored,
we do believe that growth opportunity remains. When comparing the names in our
universe, we think CTRN, LULU and URBN have the most opportunity to build their base
from current levels as a percent of total. However, other retailers that are typically thought
to have limited expansion, such as GYMB and TJX, continue to find real estate in new
markets.
33
Exhibit 42. Net Store Count

2006 2007 1Q08 2Q08 3Q08 4Q08 CY08 1Q09 2Q09 3Q09 4Q09 CY09 1Q10 CY10E
AEO 911 987 1,018 1,054 1,097 1,098 1,098 1,110 1,114 1,117 1,103 1,103 1,105 1,087
ANF 944 1,035 1,047 1,081 1,106 1,125 1,125 1,126 1,132 1,130 1,096 1,096 1,100 1,141
ARO 742 828 848 879 917 914 914 920 927 945 952 952 962 1,006
CTRN 272 319 331 335 341 357 357 365 370 392 403 403 420 462
GPS 3,131 3,167 3,177 3,170 3,190 3,149 3,149 3,149 3,145 3,143 3,095 3,095 3,085 3,040
GYMB 698 786 811 835 873 885 885 901 926 951 960 960 987 1,062
JCG 227 261 268 377 291 300 300 310 319 320 321 321 327 336
LULU 41 71 74 80 98 103 103 103 104 106 110 110 114 125
PSUN 1,199 954 942 938 940 932 932 927 916 904 894 894 883 863
ROST 797 890 918 943 963 956 956 974 990 1,008 1,005 1,005 1,021 1,052
TJX 2,489 2,563 2,596 2,615 2,647 2,652 2,652 2,680 2,690 2,747 2,743 2,743 2,766 2,904
URBN 207 245 257 269 286 294 294 299 309 319 327 327 335 372
ZUMZ 235 285 306 324 340 343 343 358 369 379 377 377 381 398
Source: Companyreports
ExcludesUAasproduct isprimari lysold in in thi rd-partyretail outlets
Exhibit 43. Net Store Opening
AEO 42 76 98 126 123 111 111 92 60 20 5 5 (5) (16)

ANF 93 91 93 97 92 90 90 79 51 24 (29) (29) (26) 45
ARO 71 86 83 87 94 86 86 72 48 28 38 38 42 54
CTRN 37 47 36 35 35 38 38 34 35 51 46 46 55 59
GPS 78 36 25 27 (1) (18) (18) (28) (25) (47) (54) (54) (64) (55)
GYMB 56 88 91 96 100 99 99 90 91 78 75 75 86 102
JCG 24 34 35 139 36 40 39 42 (58) 29 21 21 17 15
LULU 14 30 27 28 36 32 32 29 24 8 7 7 11 15
PSUN 94 (245) (20) (19) (17) (22) (22) (15) (22) (36) (38) (38) (44) (31)
ROST 63 93 88 81 70 66 66 56 47 45 49 49 47 47
TJX 131 74 105 119 82 89 89 84 75 100 91 91 86 161
URBN 32 38 44 51 56 49 49 42 40 33 33 33 36 45
ZUMZ 61 50 52 58 57 58 58 52 45 39 34 34 23 21
Source: Companyreports
Excludes UAasproduct is primarilysoldininthird-party retail outlets
Exhibit 44. Square Footage Growth
AEO 7.8% 10.4% 12.0% 13.9% 12.3% 10.8% 10.8% 8.8% 5.5% 2.4% 1.2% 1.2% (1.0)% (1.5)%
ANF 11.1 9.6 9.8 9.7 9.3 9.3 9.3 7.9 5.7 3.3 (2.2) (2.2) 1.0 2.4
ARO 11.9 11.1 11.1 11.9 11.1 11.9 11.9 9.9 6.3 4.8 4.4 4.4 4.6 7.0
CTRN 23.8 20.6 16.5 16.0 13.5 15.2 15.2 13.0 15.0 16.9 12.9 12.9 15.1 15.0
GPS 2.9 1.8 1.5 1.3 0.5 (0.3) (0.3) (0.8) (0.5) (1.3) (1.8) (1.8) (1.8) (3.0)
GYMB 18.4 15.4 15.1 15.1 14.6 14.7 14.7 12.3 12.0 9.4 8.3 8.3 11.2 8.5
JCG 4.4 9.3 10.1 11.3 9.4 10.4 10.4 10.6 10.7 7.6 5.0 5.0 3.6 3.0
LULU 62.0 72.0 56.0 55.0 59.0 45.0 45.0 39.0 30.0 8.0 7.0 7.0 11.0 13.6
PSUN 10.0 (15.4) (1.5) (1.6) (1.6) (1.9) (1.9) (0.5) (1.7) (3.2) (3.7) (3.7) (4.4) (3.3)
ROST 7.6 13.2 10.8 9.8 8.3 6.6 6.6 6.2 5.1 4.8 5.5 5.5 4.8 4.5
TJX 3.9 4.3 4.3 4.6 2.2 2.4 4.4 2.1 1.9 3.6 3.3 3.5 3.2 5.0
URBN 18.3 18.4 20.7 23.4 24.3 20.0 20.0 16.3 14.9 11.5 11.2 11.2 12.0 11.8
ZUMZ 40.3 42.0 23.6 23.5 20.5 20.6 20.6 17.0 13.9 11.4 9.9 9.9 7.3 6.4
Source:Companyreports
ExcludesUAasproduct isprimarilysoldininthird-partyretailoutlets
34
Direct To-Consumer
With less traditional square footage growth opportunity, retailers are focusing on
direct-to-consumer (with an emphasis on online sales) as a key area of growth.
Among our retailers JCG, UA and URBN have the largest direct exposure at 27.1%, 18%
and 16.7% of CY09 sales, but all still have room for growth in our opinion. Of the
remaining names, there is significant room to build the business among the teen retailers,
especially ZUMZ which only had 2.3% exposure in CY09. There is no exposure on the
discount end as the business does not lend itself to an online presence.
Exhibit 45. Direct to Consumer Sales
Total Sal es CY 2009 Direct to Consume r % CY09 Sa les

AEO $2,991 $344 11.5%
ANF 2,929 249 8.5
ARO 2,230 129 5.8
CTRN 552 0 0.0
GP S 14,197 1,118 7.9
GYMB* 1,014 NA NA
JCG 1,578 428 27.1
LULU 453 3,850 8.5
P SUN 1,027 51 5.0
ROST 7,184 0 0.0
TJX 20,288 0 0.0
UA 856 154 18.0
URBN 1,938 324 16.7
ZUMZ 408 9 2.3

* GYMB does not break out DTC sales
Share Repurchases
Given the current volatility in the market we do not anticipate a robust share repurchase
environment.
Exhibit 46. Share Repurchase
Authorized Remaining Cash & ST Investments Total Debt 1Q10 2009

AEO 60M shares 24.1M shares $544.3M $17.5M 5.9M shares .02M shares
ANF 16M shares 11.3M shares $632.8M $70.6M 0 0
ARO $850M $166.1M $312.7M 0 $36.7m $174.3M
CTRN 0 0 $113.4M 0 0 0
GPS $1,000M $704M $2,498M 0 $296.0M $510.0M
GYMB 0 0 $270.7M 0 $10.2M $26.4M
JCG 0 0 $332.3M $49.2M 0 0
LULU 0 0 $173.6M 0 0 0
PSUN $48M $48M $56.6M 0 0 0
ROST $750M $655.7M $825.6M $150.0M $94.3M $300.0M
TJX $1,000M $560.9M $1,959.3M $792.0M $230.2M $950.0M
UA 0 0 $166.0M $17.9M 0 0
URBN 8M Shares 6.78M Shares $583.3M 0 0 0
ZUMZ 0 0 $96.8M 0 0 0
*GYMB completed therepurchase of $40M out the Company's outstanding common stock on May 24, 2010
Sour ce: Company reports
35
Softlines Retail: The Players

American Eagle Outfitters, Inc. (NYSE-AEO)
Company Headquarters: Pittsburgh, PA
CEO: James. V. O’Donnell
Annual Revenues: $2.99 billion
Number of Stores: >1,100
Regions of Operation: U.S., Canada, Middle East
American Eagle Outfitters, Inc. operates as an apparel and accessories retailer. The
company targets the 15 to 25 year old guy and girl under the American Eagle Outfitters,
and Aerie names. American Eagle’s newest concept 77kids provides clothing and
accessories for children. Presently this division is only found online, but it plans to roll out
seven brick and mortar locations in July 2010.
Abercrombie & Fitch Co. (NYSE-ANF)

Company Headquarters: New Albany, OH
CEO: Michael S. Jeffries
Number of Stores: >1,100
Regions of Operation: U.S., Canada, Europe, Asia
Abercrombie & Fitch operates as a specialty retailer of casual apparel for men, women,
and kids. Presently the company offers the following brands: Abercrombie and Fitch,
Abercrombie for kids, Hollister, and Gilly Hicks.
Aeropostale, Inc. (NYSE-ARO)

Company Headquarters: New York, NY
CEO: Thomas P. Johnson, Mindy C. Meads
Number of Stores: >960 stores
Regions of Operation: U.S., Canada
Aeropostale, Inc. is a mall-based specialty retailer of casual apparel and accessories. Its
target customer is 14-17 year-old young men and women. The company’s newest
Concept P.S. offers apparel for the 7-12 year old young adult.
Citi Trends (NASDAQ-CTRN)

Company Headquarters: Savannah, GA
CEO: David Alexander, JR.
Annual Revenues: $552 million
Number of Stores: >420
Regions of Operation: U.S.
Citi Trends, Inc. offers sportswear, dresses, outerwear, footwear, intimate apparel, and
accessories targeted to the urban consumer.
Gap Inc. (NYSE-GPS)

Company Headquarters: San Francisco, CA
CEO: Glenn K. Murphy
Regions of Operation: U.S., Canada, Europe, Asia
The Gap, Inc. offers clothing, accessories, and personal care products for men, women,
children, and babies. Their brands include Gap, Baby Gap, Old Navy, Banana Republic,
Piperlime, and Athleta.
36
Gymboree Corp. (NASDAQ-GYMB)

Company Headquarters: San Francisco, CA
CEO: Matthew K. McCauley
Regions of Operation: U.S., Canada
Gymboree offers apparel, accessories, and play programs for children. It offers product
under the names Gymboree, Gymboree Outlet, Janie and Jack, Crazy 8, and Gymboree
Play & Music.
J. Crew Group, Inc. (NYSE-JCG)

Company Headquarters: New York, NY
CEO: Mickey Drexler
J. Crew Group, Inc. is a multi-brand retailer specializing in apparel, shoes, and

accessories in the United States. While the J. Crew brand is responsible for the vast
majority of the revenue, the company also offers products under the Madewell and
crewcuts labels.
Lululemon Athletica, Inc. (NASDAQ-LULU)

Company Headquarters: Vancouver, BC
CEO: Christine Day
Number of Stores: >114 (corporate owned)
Regions of Operation: U.S., Canada, Australia
Lululemon Athetlica engages in the design, manufacture, and distribution of athletic

apparel and accessories for women, men, and female youth. The company’s apparel
products are inspired by the active lifestyle including yoga, running, and general fitness.
Pacific Sunwear of California, Inc. (NASDQ-PSUN)

Company Headquarters: Anaheim, CA
CEO: Gary H. Schoenfeld
Pacific Sunwear of California, Inc. is a retailer specializing in the sale of apparel and
accessories pertaining to action sports, fashion, and music influences of the California
lifestyle.
Ross Stores Inc. (NASDQ-ROST)

Company Headquarters: Pleasanton, CA
CEO: Michael Balmuth
Ross Stores, Inc. operates two chains (Ross Dress for Less and dd’s DISCOUNTS) of off-
price retail apparel and home accessories stores in the United States. The Ross division
comprises over 90% of the store base.
37
The TJX Companies, Inc. (NYSE-TJX)

Company Headquarters: Framingham, MA.
CEO: Carol M. Meyrowitz
Regions of Operation: U.S., Canada, Europe
The TJX Companies operates as a multi-brand off-price retailer of home fashions and
apparel. In the United States the companies offer its T.J. Maxx, Marshalls, HomeGoods,
and A.J. Wright concepts. In Canada, the company operates its Winners, Homesense,
and STYLESENSE divisions. Additionally, TJX Europe utilizes the T.K. MAXX brand
Under Amour, Inc. (NYSE-UA)

Company Headquarters: Baltimore, MD
CEO: Kevin Plank
Number of Stores: NA
Regions of Operation: U.S., Canada, international
Under Armour, Inc. develops, markets, and distributes performance apparel, footwear,
and accessories for adults and youth in North America and internationally.
Urban Outfitters Inc. (NASDAQ-URBN)

Company Headquarters: Philadelphia, PA
CEO: Richard A. Hayne
Regions of Operation: U.S., Canada, Europe
Urban Outfitters, Inc. operates as a specialty retailer under the trade names Urban
Outfitters, Anthropologie, Free People, and Terrain brands. Additionally, it engages in the
wholesale business under the Free People and Leifsdottir brands.
Zumiez, Inc. (NASDAQ-ZUMZ)

Company Headquarters: Everett, WA
CEO: Richard M. Brooks, Jr.
Zumiez Inc. operates as a specialty retailer of action sports-related apparel, footwear,

equipment, and accessories in the United States. The company’s target customers are
young men and women between the ages of 12 and 24 that engage in skateboarding,
surfing, snowboarding, bicycle motocross, and motocross activities.
38
Exhibit 47. Growth Metrics
Opppenheimer &Co. Specialty Retail Universe

GrowthMetrics
All values inmillionsof U.S. Dollar, except per shareitems.
YoYAnnual Growth
Fiscal Gross Operating Net LongTerm Total Free Cash
Period Sales Profit EBIT EBITDA Income Income EPS Cash Assets Debt Debt Flow
TEENS
Abercrombie &Fitch Co.(ANF) 04/2010 ¹ (17.28) (20.24) (74.0) (48.6) (77.4) (0.71) (71.3) (17.4) (0.92) (28.79) (28.79) 166.5
American Eagle Outfitters,Inc. (AEO) 04/2010 ¹ 0.06 (2.90) (21.8) (11.7) (21.1) (0.06) (5.7) 26.7 8.88 - (60.00) (483.1)
Aeropostale,Inc. (ARO) 04/2010 ¹ 18.27 29.50 53.9 47.2 54.1 0.54 54.0 66.0 20.43 - - 136.4
Pacific Sunwear of California, Inc.(PSUN) 04/2010 ¹ (18.15) (19.21) 69.1 (139.0) 74.8 0.79 81.4 162.6 (16.21) - - (238.5)
Zumiez, Inc. (ZUMZ) 04/2010 ¹ (0.26) 0.15 (42.3) (18.8) (42.6) (0.47) (47.5) 16.0 11.53 - - 181.9
CHILDREN
The Gymboree Corp. (GYMB) 04/2010 ¹ 1.42 (0.50) 5.8 6.0 6.0 0.09 6.0 11.2 22.20 - - 35.4
DISCOUNTERS
Citi Trends, Inc. (CTRN) 04/2010 ¹ 13.04 14.44 16.9 15.5 27.8 0.13 10.6 7.1 16.28 - (100.00) 14.6
Ross Stores, Inc. (ROST) 04/2010 ¹ 10.76 21.40 44.5 37.4 46.6 0.45 52.5 59.9 17.54 0.00 0.00 129.2
The TJX Cos., Inc. (TJX) 04/2010 ¹ 6.78 15.53 37.6 31.2 39.1 0.33 33.0 103.5 20.81 105.89 1.76 330.8
MULTI-CONCEPT
Gap, Inc.(GPS) 04/2010 ¹ (2.26) 5.09 15.0 15.0 17.2 0.14 17.8 40.5 5.57 - (100.00) 89.6
J. Crew Group, Inc.(JCG) 04/2010 ¹ 10.51 25.25 114.3 83.6 118.5 1.28 123.9 141.1 20.32 (50.37) (50.77) 941.0
Urban Outfitters,Inc. (URBN) 04/2010 ¹ 5.62 10.18 11.3 11.6 13.2 0.10 9.2 29.1 23.11 - - 55.1
ACTIVE
Lululemon Athletica, Inc.(LULU) 04/2010 ¹ 28.49 25.31 53.1 48.5 55.3 0.44 40.7 154.0 45.18 - - 1,634.1
Under Armour, Inc.(UA) 03/2010 ¹ 18.09 16.35 18.9 22.0 10.9 0.22 19.0 68.7 11.90 (16.80) (55.64) 216.0
¹DataisLTM.
² Market valuecalculated usingall classes of sharesforthecompany.
Source: Compustat North America, FactSet DailyPrices, User DefinedComparables
39
Exhibit 48. Price Metrics
Opppenheimer & Co. Specialty Retail Universe

Leverage Metrics
All valuesin millionsof U.S. Dollar, except per shareitems.
Short Long Long Term Total Shareholders Debt

Fiscal Term Term Total Net Debt % Debt % Equity % Interest Total Debt / to
Period Debt Debt Debt Debt Capital Assets Assets Coverage EBIT EBITDA Equity
TEENS
Abercrombie & Fitch Co. (ANF) 04/2010 ¹ 0.0 70.6 70.6 - 3.77 2.58 65.7 18.2x 0.50x 0.19x 0.04x
American Eagle Outfitters, Inc. (AEO) 04/2010 ¹ 17.5 0.0 17.5 - 0.00 0.89 76.3 - 0.08x 0.05x 0.01x
Aeropostale, Inc. (ARO) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 59.7 - 0.00x 0.00x 0.00x
Pacific Sunwear of California, Inc. (PSUN) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 62.7 - 0.00x 0.00x 0.00x
Zumiez, Inc. (ZUMZ) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 71.0 - 0.00x 0.00x 0.00x
CHILDREN
The Gymboree Corp. (GYMB) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 70.9 - 0.00x 0.00x 0.00x
DISCOUNTERS
Citi Trends, Inc. (CTRN) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 67.0 673.3x 0.00x 0.00x 0.00x
Ross Stores, Inc. (ROST) 04/2010 ¹ - 150.0 150.0 - 10.87 5.20 42.6 97.2x 0.19x 0.15x 0.12x
The TJX Cos., Inc. (TJX) 04/2010 ¹ 2.4 789.5 792.0 - 20.61 10.21 39.2 42.7x 0.36x 0.30x 0.26x
MULTI-CONCEPT
Gap, Inc. (GPS) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 61.8 (323.7x) 0.00x 0.00x 0.00x
J. CrewGroup, Inc. (JCG) 04/2010 ¹ 0.0 49.2 49.2 - 10.34 6.41 55.6 51.0x 0.20x 0.16x 0.12x
Urban Outfitters, Inc. (URBN) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 79.6 - - - 0.00x
ACTIVE
Lululemon Athletica, Inc. (LULU) 04/2010 ¹ 0.0 0.0 0.0 - 0.00 0.00 80.4 - 0.00x 0.00x 0.00x
Under Armour, Inc. (UA) 03/2010 ¹ 9.0 8.9 17.9 - 2.07 3.26 75.2 44.2x 0.20x 0.15x 0.04x
¹Datais LTM.
² Market value calculatedusingall classesof shares for the company.
Source: Compustat NorthAmerica, FactSet DailyPrices, UserDefinedComparables
40
Exhibit 49. Leverage Metrics
Opppenheimer & Co. Specialty Retailing and Manufacturing Universe

Leverage Metrics
A ll values i nm illions of U.S. Doll ar, except per s hareit ems .
Short Long L ong Te rm Tot al Sharehol ders Deb t

Fisca l Term Term Tot al N et Deb t % Debt % Equit y % Int ere st Tot al Debt / to
Period D ebt De bt De bt De bt Capit al Asset s A sset s Coverage EBIT EBITDA Eq uit y
TEE NS
Abe rc ro mb ie & Fitc h Co . (ANF ) 0 4/20 10 ¹ 0.0 70. 6 7 0.6 - 3 .77 2.58 6 5.7 18. 2x 0. 50x 0. 19x 0 .04x
Ame r ic a n E agle O ut fitte rs , In c . ( AE O) 0 4/20 10 ¹ 17.5 0. 0 1 7.5 - 0 .00 0.89 7 6.3 - 0. 08x 0. 05x 0 .01x
Aer o p os tale, In c . (ARO ) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 5 9.7 - 0. 00x 0. 00x 0 .00x
P ac ific Su n wea r o f Ca lifo r nia, In c . (P SU N) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 6 2.7 - 0. 00x 0. 00x 0 .00x
Z umie z, In c . (Z UM Z ) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 7 1.0 - 0. 00x 0. 00x 0 .00x
CHIL D REN
The G ymbo re e Co rp . (G YM B) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 7 0.9 - 0. 00x 0. 00x 0 .00x
DISCOUN TERS
Cit i Tre n ds, In c . (CT RN) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 6 7.0 673. 3x 0. 00x 0. 00x 0 .00x
Ros s St o re s, In c. (R OS T) 0 4/20 10 ¹ - 150. 0 15 0.0 - 10 .87 5.20 4 2.6 97. 2x 0. 19x 0. 15x 0 .12x
The TJX Co s ., Inc . (TJ X) 0 4/20 10 ¹ 2.4 789. 5 79 2.0 - 20 .61 1 0.21 3 9.2 42. 7x 0. 36x 0. 30x 0 .26x
MUL TI-CONCEPT
Gap , In c . (GP S) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 6 1.8 ( 323.7 x) 0. 00x 0. 00x 0 .00x
J. Cre w Grou p , In c . (JCG) 0 4/20 10 ¹ 0.0 49. 2 4 9.2 - 10 .34 6.41 5 5.6 51. 0x 0. 20x 0. 16x 0 .12x
Urb an O ut fitte rs, In c . (U R BN ) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 7 9.6 - - - 0 .00x
ACTIV E
Lu lu le mo n At hle t ic a, In c . (LU LU) 0 4/20 10 ¹ 0.0 0. 0 0.0 - 0 .00 0.00 8 0.4 - 0. 00x 0. 00x 0 .00x
Un d er Armou r , In c. (UA) 0 3/20 10 ¹ 9.0 8. 9 1 7.9 - 2 .07 3.26 7 5.2 44. 2x 0. 20x 0. 15x 0 .04x
¹Dat a is LT M.
²M arket value calc ulat ed us ing all c lasses of shares f or the co mpany.
Source: C ompustat No rt h Am eric a, Fact Set Daily Pric es, User Def ined Comparables
41
APPENDIX 1
42
Pamela Quintiliano
Analyst
212-667-7945
pamela.quintiliano@opco.com
Abercrombie & Fitch Co. (ANF), Outperform, $40 Price Target

Price: $35.33 Market Cap (bil.): $3.1 Fiscal Yr. End: Jan.
52 wk. Price Range: 22.7-51.12 Float: 98.7% Dividend: $0.70
52 wk. Fwd. P/E Range: 18.7x-42.6x Short Interest: 6.1% Dividend Yld: 1.98%
Investment Thesis
We are reiterating our Outperform rating on ANF and adjusting 12-18 month price target from$46 to $40 (which assumes 13% upside from current
levels). Our target is based on 15x our above consensus FY2011 EPS estimate of $2.64 representing a slight premium to its historical 13.6x five-year
average. We believe this premium is justified given very easy comps, long-term international growth opportunity, near-term domestic store-closures and
anticipated improved merchandising. While many on the Street have been investing in ANF based on its international expansion opportunity, we had
been concerned that although the long-term strategy was viable the pace to get there was too aggressive. As such, we view management’s recent
decision to slow down upcoming store openings favorably. Plus given the uncertainty in the European economy we believe that ANF may be able to
negotiate better lease deals and locations as potential competitors close stores and/or rein in growth. Turning to domestic, ANF has maintained its
aspirational positioning, which we believe is critical in this environment. In addition there are several near-term catalysts including an improved back-to-
school assortment on the girls side (reflecting CEO Mike Jefferies return to a daily focus on merchandising early this year) combined with the opportunity
to close underperforming stores (230 with negative 4-wall contributions, predominantly adult and kids, half of which leases expire in 2010-2012), a
renewed interest in sharpening opening price points at Hollister, and becoming less promotionally driven.
(millions) 2008A 2009A 1Q10A 2Q10E 3Q10E 4Q10E 2010E 2011E Key Metrics TTM 2009A 2010E 2011E
Revenue 3,484.1 2,928.6 687.8 715.3 847.6 1,063.0 3,313.7 3,711.4 P/E 28.2x 31.5x 19.4x 13.4x
EBIT 517.9 152.7 (19.5) 19.7 71.8 176.3 248.2 369.9 Net Cash/Share: $6.87 $6.87 $8.99 $9.92
OPCO EPS $3.51 $1.12 ($0.13) $0.14 $0.56 $1.25 $1.82 $2.64 EV/EBITDA 8.5x 8.0x 8.2x 8.7x
Street EPS $0.14 $0.55 $1.23 $1.79 $2.63 EV/Sales 1.0x 1.1x 0.9x 0.8x
Comp Sales (13.0%) (25.0%) 1.0% (3.6%) (3.3%) (7.0%) 1.7% 0.3% Total Debt (bil.): 71 71 71 71
EBIT Margin 14.9% 5.2% (2.8%) 2.8% 8.5% 16.6% 7.5% 10.0% Debt/Cap: 3.8% 3.7% 3.5% 3.3%
Key Investment Considerations
10.0%
Upcoming Comps: Jun (-32%), Jul (-28%), Aug (-30%), Sept (-18%), Oct 5.0%
0.0%
Comp Store Sales
(-15%), Nov (-17%), Dec (-19%), Jan (+8%), Feb (+5%), Mar (+5%), Apr
(-7%), May (-3%) -5.0%
-10.0%
Ending 1Q Inventories: $41.2/psf, +21.2% -15.0%
-20.0%
-25.0%
CY2009 Operating Margin vs. Historic Peak: -1480 bps from peak
165.228 -30.0%
-35.0%
Jun Aug Oct Dec Feb Apr
3.5x 140
3.0x 120
Relative Price Perf
Rel. Fwd. P/E NTM
2.5x 100
2.0x 80
1.5x 60
1.0x 40
0.5x 20
0.0x 0
02 04 06 08 10 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr.
ANF S&P ANF S&P

Note: These results cannot and should not be used as an indicator of future performance.
43
AB ERCROMBIE & F IT CH INCOME STA TEMENT

Fis ca l y ear en ds Ja nu ar y; Dolla rs in millilon s e xc ep t p er s ha re da ta
20 08 1 Q0 9 2Q 09 3 Q09 4 Q09 20 09 A 1Q 10 A 2 Q10 E 3 Q10 E 4 Q1 0E 2 01 0E 20 11E
Ne t Sa l es $3, 4 84 .1 $6 01 .7 $6 37 .2 $7 53 .7 $ 93 6.0 $ 2,92 8. 6 $ 68 7.8 $7 15 .3 $8 47 .6 $1 ,0 63 .0 $3 ,3 13 .7 $ 3, 71 1.4

Co st of G oo ds Sold 11 53 .0 2 20 .3 2 12 .7 2 70 .6 34 1.4 1 04 5. 0 25 6.4 2 43 .2 2 96 .7 3 78 .4 11 74 .7 1 29 1.6
Gr os s Pr o f it 23 31 .1 3 81 .5 4 24 .5 4 83 .1 59 4.5 1 88 3. 6 43 1.4 4 72 .1 5 51 .0 6 84 .5 21 39 .0 2 41 9.8

Stor e s an d Dis tr ibu tio n Expe ns e 14 28 .1 3 30 .3 3 32 .3 3 49 .4 38 0.8 1 39 2. 8 35 4.4 3 59 .8 3 80 .6 4 18 .8 15 13 .6 1 65 9.0
MG& A 4 05 .2 86 .3 86 .7 87 .9 9 2.4 35 3. 3 9 6.6 97 .3 96 .6 1 03 .1 3 93 .7 41 5.7

Ot he r Op er a tin g Ex pe ns e (In co me ) ( 8 .8 ) ( 1 .3 ) (3 .3 ) (1 .6) ( 7.3) (1 3. 5) ( 0.9 ) ( 3 .5 ) ( 1 .7 ) (7 .2 ) ( 13 .3) ( 1 3.0)
Op e r a t in g In co m e 5 06 .6 ( 33 .9 ) 8 .9 47 .5 12 8.6 15 1. 1 (1 8.7 ) 18 .5 75 .4 1 69 .8 2 45 .1 35 8.2
Int er es t Exp en se ( Inc om e) ( 11 .4 ) ( 1 .4 ) (1 .8 ) 0 .5 1.1 ( 1. 6) 0.8 ( 1 .0 ) ( 1 .5 ) (1 .5 ) (3 .2) ( 3.2)
Ea r n in g s b e f or e In co m e Ta xe s 5 17 .9 ( 32 .5 ) 10 .7 47 .0 12 7.5 15 2. 7 (1 9.5 ) 19 .5 76 .9 1 71 .3 2 48 .3 36 1.4
Inc ome T ax es 2 04 .5 ( 9 .4 ) 18 .9 (2 .2) 4 6.0 5 3. 3 ( 7.7 ) 6 .8 26 .9 60 .0 86 .0 12 6.5
Ne t In c om e 3 13 .5 ( 23 .1 ) (8 .2 ) 49 .2 8 1.5 9 9. 4 (1 1.8 ) 12 .7 50 .0 1 11 .4 1 62 .3 23 4.9
Ad ju st me nt fo r Ext r ao rd ina ry It em s 0 .0 0 .0 0 .0 0 .0 0.0 0. 0 0.0 0 .0 0 .0 0 .0 0 .0 0.0

Ad ju st e d Ne t Inc om e 3 13 .5 ( 23 .1 ) (8 .2 ) 49 .2 8 1.5 9 9. 4 (1 1.8 ) 12 .7 50 .0 1 11 .4 1 62 .3 23 4.9
Weig ht ed Ave r ag e Dilut ed Sha r es 89 .3 87 .7 87 .9 88 .7 8 9.1 8 8. 6 8 9.0 89 .0 89 .0 89 .0 89 .0 8 9.0
Dil ut e d EPS f r o m Co n 't Op s $ 3.51 ( $ 0.26 ) ($ 0. 09 ) $ 0.5 5 $0 .9 1 $1 .1 2 ( $0 .13 ) $ 0. 14 $ 0.56 $ 1. 25 $ 1.8 2 $2 .6 4

Dilute d EPS - A djus te d $ 3.51 ( $ 0.26 ) ($ 0. 09 ) $ 0.5 5 $0 .9 1 $1 .1 1 ( $0 .13 ) $ 0. 14 $ 0.56 $ 1. 25 $ 1.8 2 $2 .6 4
Ma rg in Ana lys is
Gr os s Ma rg in 6 6.9% 6 3.4% 6 6. 6% 6 4.1 % 63 .5 % 64 .3 % 62 .7% 6 6. 0% 6 5.0% 6 4. 4% 6 4.6 % 65 .2 %
B as si Poi n t Ch an ge in G M ( 3 0) ( 35 0) ( 36 0) ( 22 0) (1 10 ) (2 60 ) ( 70 ) ( 60 ) 90 90 20 60
Stor e s/ Dist r ibu tio n % Sa le s 4 1.0% 5 4.9% 5 2. 1% 4 6.4 % 40 .7 % 47 .6 % 51 .5% 5 0. 3% 4 4.9% 3 9. 4% 4 5.7 % 44 .7 %
B as si Poi n t Ch an ge in SD 47 0 1 30 0 1 04 0 40 0 2 30 6 60 (3 40 ) (1 80 ) ( 15 0) ( 13 0) ( 19 0) ( 1 00 )
MG& A % of Sale s 1 1.6% 1 4.3% 1 3. 6% 1 1.7 % 9 .9 % 12 .1 % 14 .0% 1 3. 6% 1 1.4% 9. 7% 1 1.9 % 11 .2 %
B as si Poi n t Ch an ge in M G&A 14 0 15 0 90 20 ( 10 ) 40 ( 30 ) (0 ) ( 3 0) (2 0) (2 0) ( 70 )
Ot he r Exp en se % o f Sa les ( 0 .3 ) ( 0 .2 ) (0 .5 ) (0 .2) ( 0.8) ( 0. 5) ( 0.1 ) ( 0 .5 ) ( 0 .2 ) (0 .7 ) (0 .4) ( 0.4)
Op er at ing M ar gin 14 .5 ( 5 .6 ) 1 .4 6 .3 1 3.7 5. 2 ( 2.7 ) 2 .6 8 .9 16 .0 7 .4 9.7
Pr e- t ax Mar gin 14 .9 ( 5 .4 ) 1 .7 6 .2 1 3.6 5. 2 ( 2.8 ) 2 .7 9 .1 16 .1 7 .5 9.7
Ta x Ra t e 39 .5 28 .9 1 76 .8 (4 .7) 3 6.1 3 4. 9 3 9.5 35 .0 35 .0 35 .0 34 .6 3 5.0
Ne t Ma r gin 9 .0 ( 3 .8 ) (1 .3 ) 6 .5 8.7 3. 4 ( 1.7 ) 1 .8 5 .9 10 .5 4 .9 6.3
Gr ow t h A na ly sis ( Yr /Yr )
Ne t Sales ( 5.8 % ) (2 3.6 % ) ( 23 .5 % ) ( 14 .6% ) (4 .6% ) (1 5. 9% ) 14 .3% 1 2. 3% 1 2.5% 1 3. 6% 1 3.1 % 12 .0 %
Gr os s Pr of it ( 6 .3 ) ( 27 .6 ) ( 27 .5 ) ( 17 .4) ( 6.2) (1 9. 2) 1 3.1 11 .2 14 .1 15 .1 13 .6 1 3.1
Stor e s/ Dist r ibu tio n 6 .2 0 .2 (4 .5 ) (6 .5) 1.1 ( 2. 5) 7.3 8 .3 8 .9 10 .0 8 .7 9.6
MG& A 7 .6 ( 14 .5 ) ( 17 .8 ) ( 13 .3) ( 5.2) (1 2. 8) 1 1.9 12 .3 10 .0 11 .6 11 .4 5.6
Op er at ing In co me ( 35 .0 ) ( 1 37 .4 ) ( 93 .3 ) ( 56 .7) ( 2 2.1) (7 0. 2) (4 4.8 ) 1 08 .4 58 .9 32 .0 62 .2 ( 2.4)
Ne t Inc om e ( 37 .2 ) ( 1 39 .2 ) (1 09 .8 ) ( 29 .4) ( 1 2.6) (6 8. 3) (4 8.9 ) ( 2 54 .9 ) 1 .6 36 .6 63 .2 ( 5.7)
Dilute d EPS ( 35 .6 ) ( 1 40 .3 ) (1 10 .1 ) ( 29 .4) ( 1 3.5) (6 8. 0) (4 9.6 ) ( 2 53 .0 ) 1 .3 36 .8 62 .4 4 6.1
So ur ce : Comp an y r ep or ts, Opp en he imer & Co . Inc . e st ima te s
44
ABERCROMBIE & FITCH BALANCE SHEET

Fiscal year ends January; Dollars in millilons except per share data
2008 2009 2010E 2011E

Assets
Cash and Cash Equivalents $522.1 $680.1 $870.5 $953.2
Marketable Securities 0.0 32.4 32.4 32.4
Receivables 53.1 102.5 89.7 101.3
Merchandise Inventories 372.4 310.6 372.8 382.1
Store Supplies 0.0 0.0 0.0 0.0
Deferred Income Taxes 43.4 44.6 50.8 57.9
Other Current Assets 93.8 89.9 104.3 117.3
Total Current Assets $1,084.8 $1,260.1 $1,520.5 $1,644.3
Property & Equipment, Net 1398.7 1244.0 1206.7 1339.4

Other Assets 135.6 187.6 184.8 207.9
Total Assets $2,848.2 $2,821.9 $3,052.2 $3,331.9
Liabilities & Shareholders' Equity

Accounts Payable/Outstanding Checks 149.8 150.1 172.7 192.5
Accrued Expenses 241.2 264.1 283.9 302.4
Deferred Lease Credits 42.4 43.6 49.0 56.4
Income Taxes Payable 16.5 9.4 10.6 12.2
Current Liabilities $449.8 $467.2 $516.2 $563.4
LT Debt 100.0 71.2 70.6 70.6

Deferred Long-Term Lease Credits 212.0 212.1 243.9 274.3
Other Liabilities 206.7 207.9 233.9 274.9
Total Liabilities $1,002.6 $1,005.5 $1,111.2 $1,236.0
Shareholders' Equity $1,845.6 $1,827.9 $1,941.0 $2,095.9
Total Liabilities & Shareholders' Equity $2,848.2 $2,833.4 $3,052.2 $3,331.9
Source: Company reports, Oppenheimer & Co. Inc. estimates
45
ABERCROMBIE & FITCH OPERATING METRICS

Fiscal year ends January; Dollars in millions e xcept per shar e data.
5 Qtr Avg. 5 Yr Avg. 2005 2006 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10A
Valuation
Enterprise Value/EBITDA 5.0x 6.4x 8.3x 8.5x 7.3x 7.1x 5.1x 2.8x 1.7x 1.7x 3.5x 3.4x 4.7x 5.4x 6.3x 8.0x
Enterprise Value/EBIT 10.4x 10.6x 10.2x 10.5x 9.1x 8.9x 6.5x 3.7x 2.5x 2.5x 5.9x 5.4x 8.5x 13.2x 20.6x 18.6x
Enterprise Value/Sales 0.8x 1.4x 2.0x 2.0x 1.8x 1.7x 1.2x 0.6x 0.3x 0.3x 0.6x 0.7x 0.8x 0.7x 0.7x 1.1x
Total Debt/Enterprise Value 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Total Debt/EBITDA 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x 0.1x 0.1x 0.2x 0.1x 0.1x 0.2x 0.2x 0.2x
Total Debt/EBIT 0.3x 0.2x 0.0x 0.0x 0.0x 0.0x 0.1x 0.2x 0.2x 0.2x 0.3x 0.1x 0.2x 0.4x 0.7x 0.4x
Price/Earnings 30.5x 17.9x 17.3x 16.6x 14.6x 13.5x 10.1x 5.9x 5.7x 5.7x 12.5x 29.8x 32.8x 35.0x 35.0x 42.5x
Price/Sales 0.9x 1.5x 2.1x 2.1x 1.9x 1.8x 1.3x 0.7x 0.4x 0.4x 0.7x 0.8x 1.0x 1.0x 0.9x 1.3x
Price/Cash Flow 6.8x 9.0x 13.4x 12.6x 8.9x 8.4x 6.8x 4.4x 3.2x 3.2x 4.6x 5.4x 6.1x 7.0x 6.9x 11.2x
Price/BookValue 1.6x 3.5x 5.9x 5.0x 4.2x 3.9x 2.8x 1.4x 0.8x 0.8x 1.3x 1.4x 1.6x 1.5x 1.5x 2.1x
Dividend Yield 2.2% 1.8% 0.9% 0.9% 0.9% 0.9% 1.3% 2.4% 3.9% 3.9% 2.6% 2.4% 2.1% 2.2% 2.2% 1.6%
Profitability
Gross Margin 67.6% 66.2% 66.5% 66.6% 67.0% 67.2% 67.5% 67.5% 66.7% 66.7% 66.1% 70.7% 68.6% 66.4% 64.3% 66.0%
Operating Margin 6.0% 15.1% 19.8% 19.5% 19.4% 19.1% 19.0% 17.1% 13.0% 13.0% 10.1% 6.8% 5.5% 3.6% 3.6% 4.0%
Pretax Margin 5.7% 15.4% 19.7% 20.3% 20.2% 20.0% 19.7% 17.7% 12.7% 12.7% 9.6% 5.5% 5.1% 4.1% 4.1% 4.4%
Net Margin 3.4% 9.6% 12.0% 12.7% 12.7% 12.5% 12.3% 11.2% 7.7% 7.7% 5.6% 2.6% 2.9% 2.7% 2.7% 3.0%
EBIT Margin 8.7% 15.1% 19.8% 19.5% 19.4% 19.1% 19.0% 17.1% 13.0% 13.0% 10.1% 12.4% 9.5% 5.6% 3.6% 5.9%
EBITDA Margin 16.4% 20.7% 24.2% 23.9% 24.3% 24.2% 24.3% 22.8% 19.4% 19.4% 17.1% 19.9% 17.5% 13.8% 11.7% 13.7%
Return on Assets 3.9% 15.0% 21.3% 20.9% 19.8% 20.7% 18.7% 16.4% 10.1% 10.1% 7.3% 3.1% 3.1% 2.8% 2.8% 3.3%
Return on Equity 6.0% 25.4% 40.1% 35.2% 31.5% 31.5% 29.4% 26.2% 15.7% 15.7% 11.0% 4.7% 4.8% 4.3% 4.3% 5.1%
Basic DuPont ROE(3 Step) 5.8% 24.6% 38.3% 33.5% 31.3% 28.6% 28.6% 23.6% 14.8% 15.5% 10.2% 4.7% 5.0% 4.4% 4.3% 4.9%
Efficie ncy
Receivables Turnover 44.9x 68.8x 81.9x 78.0x 77.3x 62.2x 50.7x 53.8x 64.2x 66.2x 62.0x 51.6x 42.4x 35.5x 40.7x 33.0x
Days of Sales Outstanding (DSO) 8.6 Days 5.7 Days 4.5 Days 4.7 Days 4.7 Days 5.9 Days 7.2 Days 6.8 Days 5.7 Days 5.5 Days 5.9 Days 7.1 Days 8.6 Days 10.3 Days 9.0 Days 11.1 Days
Inventory Turnover 3.1x 3.1x 3.3x 2.8x 3.3x 3.7x 3.1x 2.5x 2.7x 3.3x 3.5x 3.1x 2.8x 3.0x 3.1x 3.3x
Days of Inventory on Hand (DIO) 117.5 Days 116.6 Days 112.2 Days 130.0 Days 112.1 Days 99.4 Days 119.4 Days 145.2 Days 135.9 Days 109.3 Days 104.3 Days 119.0 Days 130.7 Days 121.8 Days 119.3 Days 111.7 Days
Total Asset Turnover 1.1x 1.4x 1.6x 1.5x 1.5x 1.5x 1.4x 1.3x 1.2x 1.2x 1.3x 1.2x 1.1x 1.0x 1.0x 1.1x
Working Capital Turnover 4.7x 5.5x 6.1x 5.7x 6.3x 12.9x 9.7x 8.7x 5.6x 5.6x 5.4x 5.8x 4.5x 3.7x 3.7x 3.9x
Liquidity
Current Ratio 2.60x 2.27x 1.93x 2.14x 2.10x 1.71x 1.69x 1.76x 2.41x 2.41x 2.79x 2.22x 2.40x 2.75x 2.75x 2.85x
QuickRatio 1.86x 1.52x 1.19x 1.30x 1.49x 0.88x 0.87x 0.87x 1.58x 1.58x 1.99x 1.49x 1.67x 2.06x 2.06x 2.09x
Cash Ratio 1.23x 0.63x 0.10x 0.16x 0.22x 0.45x 0.53x 0.53x 1.16x 1.16x 1.36x 0.83x 0.99x 1.51x 1.51x 1.44x
Capital Structur e
Total Debt-to-Total Equity 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x 0.1x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x
LT Debt/Total Equity 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x
Net Debt/EBITDA (1.0)x (0.5)x (0.1)x (0.1)x (0.1)x (0.2)x (0.2)x (0.2)x (0.6)x (0.6)x (0.6)x (0.5)x (0.8)x (1.5)x (1.8)x (1.3)x
EBITDA/Interest Expense 94.2x - - - 912.5x - - - 201.9x 201.9x 146.3x 118.2x 91.9x 61.0x 52.0x 53.6x
Interest Coverage 51.7x - - - 728.8x - - - 135.6x 135.6x 86.7x 73.8x 50.1x 24.9x 15.8x 22.9x
Source: Compustat North America
46
Pamela Quintiliano
Analyst
212-667-7945
American Eagle Outfitters. (AEO), Perform

Investment Thesis
We are lowering our rating on American Eagle Outfitters to Perform from Outperform based on our belief that elevated 2Q inventories may
result in increased markdown pressure as we head into the back-to-school season. While 2H inventory buys will be more disciplined we
remain concerned that it may take a while for the planning team to become comfortable operating in its new chase mode rather than the
company's historical strong opposition to selling down. As such we expect markdown pressure to continue well into the third quarter. Longer
term, we continue to believe that Executive Creative Director Roger Markfield has a strong understanding of the core customer; however,
planning and allocation need to be more aligned with the current environment before stores can truly reap the benefit of improved fashions and
thus return to normalized operating margins. In addition to our near-term company specific concerns we also believe that AEO’s positioning in
the marketplace as a mid-priced retailer could cause it to get squeezed as elevated teen unemployment and ongoing uncertainty in the
economy may cause its core customer to trade down. At 10.5x our current FY11 EPS estimate of $1.24, which is inline with consensus, AEO
is trading at a slight discount to its historical five-year average of 12.6x, which we believe is appropriate given market position risk
Revenue 2,988.9 2,940.3 648.3 659.7 761.8 984.5 3,046.5 3,212.6 P/E 15.7x 16.9x 12.5x 10.5x
EBIT 326.6 253.8 12.9 45.0 103.4 133.8 295.2 387.8 Net Cash/Share: $0.10 $0.10 $0.10 $0.10
OPCO EPS $0.99 $0.77 $0.17 $0.15 $0.30 $0.43 $1.04 $1.24 EV/EBITDA 5.8x 6.0x 5.6x 5.6x
Comp Sales (10.0%) (3.6%) 5.0% 3.5% 3.5% 3.5% 3.8% 6.5% Total Debt (bil.): 39 39 0 0
EBIT Margin 10.9% 8.6% 2.0% 6.8% 13.6% 13.6% 9.7% 12.1% Debt/Cap: 0.0% 0.0% 0.0% 0.0%

20.0%
Upcoming Comps: Jun (-11%), Jul (-11%), Aug (-7%), Sep (0%), Oct (-5%), Nov (- 15.0%
Comp Store Sales
2%), Dec (+7%), Jan (+10%), Feb (+6%), Mar (+15%), Apr (-6%), May (-3%) 10.0%
5.0%
Ending 1Q Inventories: $51.0/psf, +17.0% 0.0%
-5.0%
CY2009 Operating Margin vs. Historic Peak: -1240 bps from peak -10.0%
176.06
-15.0%
Jul Sep Nov Jan Mar May (A)
120
2.5x
100
Relative Price Perf
2.0x
Rel. Fwd. P/E NTM
80
1.5x
60
1.0x 40
0.5x 20
0
0.0x
Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun.
03 05 07 09
AEO S&P AEO S&P

47
AMERICAN EAGLE OUTFITTERS INCOME STATEMENT

Fiscal year ends January; Dollars in millions except per share data.
FY2008 1Q09 2Q09 3Q09 4Q09 FY2009 1Q10A 2Q10E 3Q10E 4Q10E FY2010E FY2011E
Net Revenues $2,988.9 $601.7 $646.8 $736.0 $955.8 $2,940.3 $648.5 $659.7 $761.8 $984.5 $3,054.5 $3,146.1
Cost of Goods Sold 1814.8 378.1 392.9 431.8 564.0 1766.8 390.8 410.6 440.4 575.3 1817.1 1866.0
Gross Profit 1174.1 223.6 253.9 304.2 391.8 1173.5 257.7 249.2 321.3 409.2 1237.4 1315.8
SG&A 734.0 151.8 160.9 184.9 227.7 725.3 168.6 168.2 190.4 231.4 758.6 808.6
Depreciation/Amortization 131.2 33.0 33.4 34.7 36.7 137.8 35.5 33.0 32.6 34.5 135.6 157.3
Operating Income 308.8 38.8 59.6 84.6 127.4 310.4 53.5 47.9 98.3 143.3 343.2 390.8
Interest Expense (Income) 0.0 0.4 0.0 (0.4) 1.6 1.6 0.1 0.5 0.5 0.5 1.6 4.5
Earnings before income taxes 326.6 39.3 59.6 84.1 129.0 311.1 53.6 48.4 98.8 143.8 343.8 393.1
Income Taxes 121.7 15.7 22.9 30.8 48.7 118.1 17.8 18.4 37.5 54.7 128.4 137.6
Net Income 204.9 23.6 36.7 53.3 80.3 193.0 35.8 30.0 61.3 89.2 215.4 255.5
Adjusted Net Income 204.9 23.6 36.7 53.3 80.3 193.0 35.8 30.0 61.3 89.2 215.4 255.5
Weighted Average Diluted Shares 207.4 207.3 209.0 209.4 210.7 209.1 210.3 207.0 206.0 206.0 207.3 206.6
Diluted EPS Including Charges (GAAP) $0.99 $0.11 $0.18 $0.25 $0.38 $0.93 $0.17 $0.15 $0.30 $0.43 $1.04 $1.24
Charges $0.00 $0.04 $0.12 $0.03
Diluted EPS from Con't Ops (NON-GAAP) $0.99 $0.11 $0.22 $0.25 $0.38 $0.97 $0.29 $0.18 $0.30 $0.43 $1.20 $1.24
Margin Analysis
Gross Margin 39.3% 37.2% 39.3% 41.3% 41.0% 39.9% 39.7% 37.8% 42.2% 41.6% 40.5% 41.6%
Basis Point Change in GM (730) (400) (280) 30 660 60 260 (150) 90 60 60 110
SG&A 24.6% 25.2% 24.9% 25.1% 23.8% 24.7% 26.0% 25.5% 25.0% 23.5% 24.8% 25.7%
Basis Point Change in SG&A 120 (130) 50 100 10 10 80 60 (10) (30) 20 90
Depreciation/Amortization Margin 4.4% 5.5% 5.2% 4.7% 3.8% 4.7% 5.5% 5.3% 4.8% 4.4% 4.9% 5.0%
Operating Margin 10.3 6.4 9.2 11.5 13.3 10.6 8.2 7.3 12.9 14.6 11.2 12.0
Pre-tax Margin 10.9 6.5 9.2 11.4 13.5 10.6 8.3 7.3 13.0 14.6 11.3 12.1
Tax Rate 37.3 39.9 38.4 36.6 37.8 38.0 33.2 38.0 38.0 38.0 37.3 38.0
Net Margin 6.9 3.9 5.7 7.2 8.4 6.6 5.5 4.6 8.0 9.1 7.1 7.8
Growth Analysis (Yr/Yr)

Net Sales (2.2%) (6.0%) (6.1%) (2.4%) 5.5% (1.6%) 7.8% 0.0 0.0 3.0% 3.9% 3.0%
Gross Profit (17.5) (15.2) (12.3) (1.7) 25.7 (0.1) 15.3 (1.9) 5.6 4.4 5.4 5.7
SG&A 2.6 (10.5) (4.2) 1.8 6.0 (1.2) 11.1 4.6 3.0 1.6 4.6 6.6
Depreciation/Amortization 20.2 11.7 4.2 5.7 (0.3) 5.0 7.6 (1.2) (6.1) (6.0) (1.6) 16.0
Operating Income (48.4) (39.8) (33.4) (10.8) 112.1 0.5 37.9 (19.6) 16.2 12.5 10.5 21.8
Net Income (48.8) (46.2) (38.7) (14.7) 107.5 (5.8) 51.7 (18.2) 14.9 11.1 11.6 24.7
Diluted EPS (45.6) (46.0) (25.2) (15.6) 103.4 (2.3) 154.9 (18.8) 16.8 13.6 23.9 8.3
48
AM ERICAN EAGL E OUTFITT ERS BAL ANCE SHEET

($ million s ex c e pt p er s h are d ata)
20 08 2009 2 010 E 201 1E

As s e t s
Cas h a nd Cas h Equiv a le nt s $4 83.9 $ 698 .6 $7 12.6 $ 926 .4
Merc han dis e Inv en to ries 2 94.9 326 .5 3 06.9 309 .9
Rec e iv ables 41.5 34 .7 35.1 35 .8
Pre paid Ex pens es and Othe r 59.7 47 .0 48.0 48 .9
Def err ed Inc o me Tax es 45.4 60 .2 61.4 62 .6
Total Curr en t A s s e ts $9 25.4 $1,167 .0 $1 ,1 63.9 $1, 383 .6
Pro per ty & Eq uipmen t, Net 7 40.2 713 .1 6 49.0 629 .5

Good w ill 10.7 11 .2 11.4 11 .4
Oth er A s s ets 2 87.4 246 .7 2 46.7 246 .7
Total A s s et s $1 ,9 63.7 $2,138 .1 $2 ,0 71.0 $2, 271 .3
L ia b i li tie s & Sh ar e h o ld e r s ' Eq u it y

A c c o unt s Pay a ble $1 52.1 $ 158 .5 $1 60.1 $ 161 .7
A c c r ued Co mpen s ation and Pa y r oll Ta x es 29.4 55 .1 56.0 56 .8
A c c r ued Re nt 64.7 68 .9 69.9 70 .9
A c c r ued Inc ome Tax es 6.3 20 .6 20.9 21 .2
Cur ren t Po rtio n of No tes Pay ab le 75.0 30 .0 0.0 0 .0
Unr edee med S tor ed- V alue Car ds an d Gif t Ce rt if ic ates 42.3 39 .4 40.6 41 .8
Cur ren t Po rtio n of De f er re d Leas e Cre dits 13.7 17 .4 17.9 18 .4
Oth er Liab ilitie s and A c c rue d Ex pe ns e s 18.3 19 .1 19.3 19 .6
Cur ren t Liab ilitie s $4 01.8 $ 409 .0 $3 84.7 $ 390 .5
Notes Pay able - Re la te d Par ty 0.0 0 .0 0.0 0 .0

Def err ed Le as e Cr edits 88.3 89 .6 92.3 95 .0
Oth er Lo ng- Ter m L ia bilities 64.6 61 .1 62.9 64 .8
Total Liabilit ies $5 54.6 $ 559 .6 $5 39.9 $ 550 .4
Sh ar e h o l d e r s ' Eq u it y $1 ,4 09.0 $1,578 .5 $1 ,5 31.1 $1, 720 .9
T o ta l L i ab i lit ie s & Sh a r e h o l d e r s ' Eq u it y $1 ,9 63.7 $2,138 .1 $2 ,0 71.0 $2, 271 .3
Sour c e: Compa ny re por ts , Opp enhe im er & Co. In c . es timat es
49
AMERICAN EAGLE OUTFITTERS OPERATING METRICS

Fis cal yea r ends Januar y; Dollars in m illions e xcept pe r s har e data.
5 Qtr A vg. 5 Yr Av g. 2005 20 06 2007 1Q08 2Q08 3Q08 4 Q08 2 008 1 Q09 2Q0 9 3 Q09 4Q0 9 200 9 1Q1 0A
Valuat ion
Ente rprise Valu e/EBITDA 7.6 x 6.6x 6.4x 9.7 x 6.3x 5.3x 4.1x 3.5x 3.4x 3.4x 6 .7x 7.1x 9 .4x 7.0x 6.9x 8.1x
Ente rprise Valu e/EBIT 1 2.5 x 8.4x 7.5x 11.2 x 7.4x 6.4x 5.1x 4.4x 4.8x 4.8x 10 .2x 11.5x 16 .2x 11.2x 1 1.2x 13.4x
Ente rprise Valu e/Sales 1.0 x 1.3x 1.5x 2.4 x 1.5x 1.1x 0.8x 0.7x 0.5x 0.5x 0 .9x 0.9x 1 .1x 0.9x 0.9x 1.0x
Tota l Debt/Ente rprise Valu e 0.0 x 0.0x 0.0x 0.0 x 0.0x 0.0x 0.0x 0.0x 0.1x 0.1x 0 .0x 0.0x 0 .0x 0.0x 0.0x 0.0x
Tota l Debt/EBITDA 0.1 x 0.1x 0.0x 0.0 x 0.0x 0.1x 0.1x 0.1x 0.2x 0.2x 0 .2x 0.2x 0 .1x 0.1x 0.1x 0.0x
Tota l Debt/EBIT 0.2 x 0.1x 0.0x 0.0 x 0.0x 0.1x 0.1x 0.2x 0.2x 0.2x 0 .3x 0.3x 0 .3x 0.1x 0.1x 0.1x
Price/Earnin gs 2 1.7 x 14.9x 13.9x 18.6 x 12.4x 10.7 x 8.6x 8.1x 10.4x 10.4x 19 .2x 23.2x 25 .0x 19.1x 1 9.4x 21.8x
Price/Sales 1.1 x 1.5x 1.8x 2.6 x 1.6x 1.2x 0.9x 0.7x 0.6x 0.6x 1 .0x 1.0x 1 .3x 1.1x 1.1x 1.2x
Price/Cash Flow 9.4 x 8.9x 9.0x 9.9 x 10.9x 7.8x 5.9x 5.9x 6.2x 6.2x 9 .1x 8.7x 11 .0x 8.7x 8.6x 9.4x
Price/Book Valu e 2.2 x 3.1x 3.5x 5.1 x 3.5x 2.8x 2.0x 1.6x 1.3x 1.3x 2 .1x 2.0x 2 .4x 2.1x 2.1x 2.3x
Divi dend Yield 2.5% 2.1% 1.0% 0.8% 1.6% 2.2 % 2.9% 3.6 % 4.4% 4.4 % 2.7% 2.8% 2 .3% 2.5% 2 .5% 2.4%
Pr ofita bility
Gross Marg in 3 3.2% 40.0% 43.3% 4 4.8% 43.0% 4 1.4 % 40.5% 38.8% 34.9% 34.9 % 33.6% 32.5% 32 .1% 33.9% 33 .9% 34.2%
Operating Marg in 7.7% 15.7% 20.0% 2 1.0% 19.6% 1 7.7 % 16.7% 14.9% 10.1% 10.1 % 9.0% 7.6% 6 .7% 8.0% 8 .0% 7.4%
Pretax Margin 7.4% 16.3% 20.7% 2 2.5% 20.8% 1 8.8 % 17.7% 15.1% 9.9% 9.9 % 8.5% 6.8% 6 .5% 7.8% 7 .8% 7.3%
Net Margin 5.1% 10.3% 12.7% 1 3.9% 13.1% 1 1.8 % 11.2% 9.3 % 6.0% 6.0 % 5.3% 4.3% 4 .9% 5.7% 5 .7% 5.2%
EBIT Margin 7.7% 15.7% 20.0% 2 1.0% 19.6% 1 7.7 % 16.7% 14.9% 10.1% 10.1 % 9.0% 7.6% 6 .7% 8.0% 8 .0% 7.4%
EBITDA Ma rgin 1 2.5% 19.6% 23.2% 2 4.1% 23.2% 2 1.4 % 20.6% 18.9% 14.5% 14.5 % 13.6% 12.3% 11 .7% 12.8% 12 .8% 12.2%
Return on Asse ts 7.6% 16.0% 20.3% 2 1.6% 20.8% 1 9.7 % 18.1% 14.5% 9.3% 9.3 % 8.3% 6.4% 7 .0% 8.2% 8 .2% 8.1%
Return on Equity 1 0.4% 22.2% 27.7% 3 0.1% 29.0% 2 6.5 % 24.7% 20.5% 13.0% 13.0 % 11.2% 8.8% 9 .8% 11.3% 11 .3% 10.7%
Bas ic DuPo nt ROE (3 Step) 1 0.0% 22.3% 28.2% 3 0.2% 28.9% 2 6.8 % 24.9% 20.8% 12.7% 13.0 % 10.8% 8.8% 9 .5% 10.8% 11 .2% 10.1%
Efficie ncy
Rev enue/Emplo yee 0.1 0.1 0.1 0.1 - - - - 0 .1 - - - - 0.1 -
Rec eivable s Tu rnover - - - - - - - - 179.3x - - - - 15 6.9x -
Day s of Sales Outstanding (DSO) - - - - - - - - 2.0 Da ys - - - - 2.3 Days -
Inventory Turno ver 5.9 x 6.7x 7.5x 6.5 x 6.3x 6.6x 6.0x 4.9x 5.4x 6.7x 6 .8x 6.3x 5 .1x 5.3x 6.4x 6.1x
Day s of Inv ento ry on Hand (DIO) 62.4 Day s 54.8 Days 4 8.6 Days 56.1 Day s 5 7.7 Days 55.4 Day s 6 0.3 Days 74.0 Da ys 67.2 Days 54.5 Da ys 53.3 Days 58.3 Days 71.5 Days 69 .4 Days 57.3 Days 59 .6 Days
Tota l A sset Tur nover 1.5 x 1.5x 1.4x 1.4 x 1.6x 1.7x 1.6x 1.6x 1.5x 1.5x 1 .5x 1.5x 1 .4x 1.4x 1.4x 1.5x
Working Ca pita l Tu rnover 4.5 x 4.3x 3.2x 3.8 x 4.7x 6.8x 6.5x 6.3x 5.7x 5.7x 5 .1x 4.6x 4 .3x 3.9x 3.9x 4.2x
Liquidity
Cur rent Ratio 2 .81 x 2.69x 2.99x 2.60 x 2.71x 2.30 x 2.23x 2.1 5x 2.30x 2.3 0x 2.77x 2.60x 2.60x 2.85x 2 .85x 3.23x
Quick Ratio 1 .90 x 2.00x 2.41x 2.03 x 1.95x 1.55 x 1.34x 1.1 5x 1.57x 1.5 7x 1.91x 1.71x 1.59x 2.06x 2 .06x 2.22x
Cas h Ratio 1 .42 x 0.73x 0.36x 0.13 x 0.31x 0.97 x 0.92x 0.7 9x 1.18x 1.1 8x 1.29x 1.26x 1.22x 1.70x 1 .70x 1.65x
Capital Str ucture

Tota l Debt-to-Total Equity 0.0 x 0.0x 0.0x 0.0 x 0.0x 0.1x 0.1x 0.1x 0.1x 0.1x 0 .1x 0.1x 0 .0x 0.0x 0.0x 0.0x
LT Debt/Total Equity 0.0x 0.0x 0.0 x 0.0x - - - - 0.0x - - - - 0.0x -
Net Debt/EBITDA ( 1.3) x (0.6)x (0.2)x ( 0.1) x (0.2)x (0.4 )x (0.4)x (0.4 )x (0.9)x (0.9 )x (0.9)x (1.2)x (1 .4)x (1.7)x (1 .7)x (1.4)x
Sou rce: Compu sta t No rth Ame rica
50
Pamela Quintiliano
Analyst
212-667-7945
Aeropostale, Inc. (ARO), Outperform, $35 Price Target

Investment Thesis
We are raising our rating on Aeropostale to Outperform from Underperform and introducing our $35 price target, which conservatively assumes roughly
18% upside from current levels and is based on 11.9x our forward estimate of $2.95 (representing a discount to its historical 12.5x multiple).
We believe that ARO’s everyday value positioning plays well in this environment. When combined with improved in-store fashions, IT initiatives (size
allocation, workforce management, assortment planning), opportunity to relocate top-performing stores ($800+/sf) into larger formats including premier
“flagship” locations, a new Chief Head of Design (Beverly House), the successful tweaking of PS from Aeropostale (which resulted in recent
outperformance relative to internal expectations), strong sourcing relationships (5 vendors responsible for 80% goods), its ability to chase top-performing
classifications, an ongoing disciplined inventory and expense strategy and easing YoY comps should result in an ability to increase operating margins
above recent peak levels of 17.2&. While aware of investor concerns regarding recent AUR declines, we believe that these are overblown as the results reflect an
intentional mix shift to lower priced assortments rather than increased levels of markdowns.
Revenue 1,885.5 2,230.1 463.6 493.8 633.1 884.1 2,474.7 2,714.8 P/E 12.2x 13.1x 10.5x 10.1x
Comp Sales 8.0% 10.2% 8.0% 5.0% 6.0% 7.0% 6.5% 6.0% Total Debt (bil.): 0 0 0 0
25.0%
20.0%
Upcoming Comps: Jun (+12%), Jul (+6%), Aug (+9%), Sept (+19%), Oct
Comp Store Sales
15.0%
(+3%), Nov (+7%), Dec (+10%), Jan (+6%), Feb (+7%), Mar (+19%), Apr (-
5%), May (+1%) 10.0%
5.0%
Ending 1Q Inventories: $35.0/psf, -10.3% 0.0%
CY2009 Operating Margin vs. 280.557

Historic Peak: 190 bps above peak -5.0%
-10.0%
Jul Sep Nov Jan Mar
1.2x 250
1.0x 200
Relative Price Perf
Rel. Fwd. P/E NTM
0.8x
150
0.6x
100
0.4x
50
0.2x
0.0x 0
03 05 07 09 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr.
ARO S&P ARO S&P

51
AEROPOSTALE INCOME STATEMENT

Fiscal year ends January; dollars in millions except pe r s hare data.
2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10A 2Q10E 3Q10E 4Q10E 2010E 2011E
Net Revenue s $1,885.5 $408.0 $453.0 $567.8 $801.2 $2,230.1 $463.6 $493.8 $633.1 $884.1 $2,474.7 $2,714.8
Gr oss Profit 654.2 147.9 165.7 222.9 310.6 847.1 182.8 186.4 249.5 344.8 963.5 1061.5
SG&A 405.9 94.4 101.3 117.2 151.5 464.5 107.7 109.6 130.4 168.0 515.7 597.2
Interest Expense (Income) (0.5) 0.0 (0.2) (0.0) 0.0 (0.1) 0.0 0.0 0.0 0.0 0.0 0.0
Earnings Be fore Income Taxe s 248.8 53.4 64.6 105.7 159.1 382.8 75.1 76.8 119.0 176.8 447.8 464.2
Income Taxes 99.4 21.7 26.0 43.1 62.6 153.3 29.7 29.9 46.4 69.0 175.1 181.0
Net Income 149.4 31.7 38.6 62.6 96.6 229.5 45.4 46.8 72.6 107.9 272.7 283.2
Adjustment for Extraordinary Items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Diluted EPS from Con' t Ops $1.48 $0.31 $0.38 $0.61 $0.99 $2.27 $0.48 $0.49 $0.76 $1.14 $2.84 $2.95
Diluted EPS Including Charges $1.48 $0.31 $0.38 $0.61 $0.99 $2.27 $0.48 $0.49 $0.76 $1.14 $2.84 $2.95
Margin Analysis
Gross Margin 34.7% 36.2% 36.6% 39.3% 38.8% 38.0% 39.4% 37.8% 39.4% 39.0% 38.9% 39.1%
Basi s Poi nt Change in GM 20 320 320 330 350 330 320 120 10 20 90 (30)
SG&A 21.5% 23.1% 22.4% 20.6% 18.9% 20.8% 23.2% 22.2% 20.6% 19.0% 20.8% 22.0%
Basi s Poi nt Change in SG&A (30) (130) (170) (70) 10 (70) 10 (20) (0) 10 0 (120)
Depreciation/Amortization 2.4% 2.9% 2.8% 2.3% 6.6% 4.0% 2.9% 2.7% 2.2% 2.0% 2.4% 0.0%
Pre-tax Margin 13.2 13.1 14.3 18.6 19.9 17.2 16.2 15.6 18.8 20.0 18.1 17.1
Tax Rate (% of pretax income) 39.9 40.7 40.2 40.8 39.3 40.1 39.6 39.0 39.0 39.0 39.1 39.0
Net Margin 7.9 7.8 8.5 11.0 12.1 10.3 9.8 9.5 11.5 12.2 11.0 10.4
Grow th Analysis (Yr/Yr)

Net Sales 19.1% 21.3% 20.1% 17.8% 16.1% 18.3% 13.6% 9.0% 11.5% 10.4% 11.0% 9.7%
Gross Profit 19.9 32.9 31.6 28.5 27.6 29.5 23.6 12.5 11.9 11.0 13.7 10.2
SG&A 17.4 15.1 11.7 13.7 16.5 14.4 14.0 8.2 11.3 10.9 11.0 15.8
Net Income 17.2 81.0 83.3 46.9 41.5 53.6 43.3 21.4 15.9 11.7 18.8 3.8
Diluted EPS (13.4) 79.7 81.7 46.1 46.1 54.0 53.5 30.9 24.5 15.2 25.1 3.8
52
AEROPOSTALE BALANCE SHEET

Fis cal ye ar ends January; dollars in m illions except per share data.
2008 2009 2010E 2011E
Ass ets
Shor t-Term Investments 0.0 0.0 0.0 0.0
Mer chandise Inventor ies 128.9 132.9 144.9 159.4
Prepaid Expenses and Other 37.0 40.9 45.4 49.7
Total Curr ent Assets $413.6 $520.8 $606.6 $833.7

Intangible A ssets 0.0 0.0 0.0 0.0
Other Assets 13.3 20.0 22.0 24.2
Total Assets $676.7 $792.3 $912.9 $1,164.8
Liabilitie s & Share holders ' Equity

A ccounts Payable 70.3 90.9 89.9 96.7
A ccrued Expenses and Other 83.1 151.0 120.8 122.0
Revolving Cr edit Facility 0.0 0.0 0.0 0.0
LT Debt 0.0 0.0 0.0 0.0

Other Long-Term Liabilities 126.1 116.0 110.0 110.0
Total Long-Term Liabilities $126.1 $116.0 $110.0 $110.0
Share holders ' Equity $397.1 $434.5 $592.1 $836.1
Tot al Liabilit ies & Shareholde rs' Equity $676.7 $792.3 $912.9 $1,164.8
Sour ce: Company reports, Oppenheimer & Co. Inc. estimates
53
AEROPOSTALE OPERATING METRICS

Fis cal ye ar ends Januar y; Dollar s in m illions exce pt per sha re data.
5 Qtr Avg. 5 Yr Avg. 2005 2006 20 07 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10A
Valuation
Enterprise Valu e/EBITDA 5.6x 6.9x 9.3x 8.5x 8.2x 8.2x 7.8x 5.4x 4.1x 4.1x 6.4x 6.4x 5.8x 4.1x 4.3x 5.3x
Enterprise Valu e/EBIT 6.5x 8.0x 10.8x 10.0x 9.6x 9.6x 9.2x 6.3x 4.8x 4.8x 7.5x 7.4x 6.7x 4.7x 4.9x 6.0x
Enterprise Valu e/Sales 1.0x 1.0x 1.2x 1.2x 1.3x 1.3x 1.2x 0.9x 0.6x 0.6x 1.0x 1.1x 1.1x 0.8x 0.8x 1.1x
Total Debt/EBITDA - 0.0x 0.0x 0.0x 0.0x - - - - 0.0x - - - - 0.0x -
Total Debt/EBIT - 0.0x 0.0x 0.0x 0.0x - - - - 0.0x - - - - 0.0x -
Price/Book Value 5.5x 6.0x 5.7x 5.9x 9.5x 9.7x 8.8x 5.7x 4.0x 4.0x 5.8x 5.7x 5.5x 4.7x 4.7x 6.0x
Profitability
Gross Margin 36.9% 34.0% 30.1% 32.2% 3 4.8% 34.9% 35.2% 3 5.5% 34.7% 34.7% 35.3% 35.9% 36.8% 38.0% 38.0% 38.6%
Operating Marg in 15.9% 13.3% 11.2% 11.7% 1 3.0% 13.1% 13.3% 1 3.5% 13.2% 13.2% 13.9% 14.8% 15.9% 17.2% 17.2% 17.7%
Pretax Margin 15.9% 13.5% 11.5% 12.4% 1 3.1% 13.1% 13.2% 1 3.3% 13.2% 13.2% 13.9% 14.9% 15.9% 17.2% 17.2% 17.7%
Net Margin 9.5% 8.2% 7.0% 7.5% 8.1% 8.1% 8.1% 8.2% 7.9% 7.9% 8.4% 8.9% 9.5% 10.3% 10.3% 10.6%
EBIT Margin 15.9% 13.3% 11.2% 11.7% 1 3.0% 13.1% 13.3% 1 3.5% 13.2% 13.2% 13.9% 14.8% 15.9% 17.2% 17.2% 17.7%
EBITDA Margin 18.3% 15.5% 13.1% 13.8% 1 5.3% 15.4% 15.7% 1 5.9% 15.6% 15.6% 16.4% 17.3% 18.4% 19.5% 19.5% 20.1%
Return on Assets 29.7% 23.8% 18.5% 19.7% 2 3.6% 25.8% 23.5% 2 3.9% 25.5% 25.5% 28.2% 27.3% 27.4% 31.6% 31.6% 33.9%
Return on Equity 55.4% 46.2% 32.1% 35.7% 5 0.7% 48.8% 47.7% 5 4.1% 54.1% 54.1% 53.0% 53.7% 54.8% 58.1% 58.1% 57.2%
Basic DuPont ROE(3 Step) 47.5% 47.1% 32.7% 36.6% 6 1.5% 58.4% 61.6% 5 4.2% 42.7% 47.2% 41.8% 44.7% 46.7% 51.6% 57.7% 52.5%
Efficiency
Revenue/Emplo yee - 0.1 0.1 0 .1 0.1 - - - - 0.1 - - - - 0.2 -
Days of Inventory on Ha nd (DIO) 44.1 Days 37.9 Days 37.5 Days 36.8 Da ys 41.9 Days 46.1 Days 52.3 Da ys 61.9 Days 49.4 Days 39.0 Days 36.8 Days 46.2 Days 57.6 Da ys 46.8 Days 34.2 Days 33.2 Days
Total Asset Tur nover 2.8x 2.7x 2.4x 2.4x 3.1x 3.4x 3.0x 2.8x 2.9x 2.9x 2.9x 2.7x 2.6x 2.8x 2.8x 3.0x
Working Capita l Turnove r 7.5x 9.3x 5.7x 6.0x 18.2x 17.4x 16.7x 13.2x 8.6x 8.6x 7.5x 7.2x 7.5x 7.7x 7.7x 7.8x
Liquidity
Current Ratio 2.37x 2.20x 2.69x 2.4 2x 1.44x 1.68x 1.5 3x 1.60x 2.25x 2.25x 2.70x 2.37x 2.0 6x 2.19x 2.19x 2.52x
Quick Ratio 1.60x 1.54x 1.96x 1.8 0x 0.75x 0.71x 0.5 9x 0.68x 1.52x 1.52x 1.86x 1.40x 1.2 3x 1.64x 1.64x 1.88x
Cash Ratio 1.39x 1.23x 1.62x 1.2 1x 0.57x 0.46x 0.3 6x 0.48x 1.30x 1.30x 1.61x 1.19x 1.0 7x 1.43x 1.43x 1.62x
Capital Structure
Total Debt-to-Total Equity - 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Net Debt/EBITDA (0.7)x (0.9)x (1.3)x (1.0)x (0.5)x (0.3)x (0.3)x (0.4)x (0.8)x (0.8)x (0.8)x (0.7)x (0.7)x (0.8)x (0.8)x -0.7x
EBITDA/Interes t Expense - - 3,756.6x - - - - - - - - - - - - -
Interes t Covera ge - - 3,224.5x - - - - - - - - - - - - -
Sourc e: Compu stat North Americ a
54
`
Pamela Quintiliano
Analyst
212-667-7945
Citi Trends (CTRN), Perform

Investment Thesis
Our rating on Citi Trends remains Perform , as our cautious view on the economy, combined with our belief that attitude towards spending
has fundamentally changed, leads to our view that the discount group will continue to post above industry-average sales and comp results.
Looking specifically at CTRN, we believe that the company is firing on all cylinders. We are comfortable with the availability of goods in the
marketplace and believe that management is being appropriately aggressive on its markdown strategy and cautious with its inventories. In
addition, the testing of perpendicular racks by the register to capture impulse buys should be a longer-term positive. Trading at a slight
discount to its historical average of 22.7x, we believe CTRN is fairly valued given difficult compares and with strong exposure to the troubled
Gulf region.
Revenue 488.2 551.9 181.4 137.1 448.4 197.3 664.1 768.3 P/E 20.7x 25.6x 18.9x 16.0x
Street EPS $0.05 $0.86 $1.83 $2.15 EV/Sales 0.9x 0.9x 0.0x 0.0x
12.0%
Upcoming Comps: 2Q09 (-12.4%), 3Q09 (+6.3%) 4Q09 (+1.2%) 1Q10 10.0%
Comp Store Sales
(+9.6%) 8.0%

4.0%
CY2009 Operating Margin vs. Historic Peak: -260 bps from peak
2.0%
19.156
0.0%
2008A 1Q10 3Q10E 2010E
2.0x 120
100
Relative Price Perf
Rel. Fwd. P/E NTM
1.5x
80
1.0x 60
40
0.5x
20
0.0x 0
05 07 09 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr.
CTRN S&P CTRN S&P

55
CITITRENDS INCOME STATEMENT

Net Revenues $488.2 $143.1 $111.6 $127.4 $169.8 $551.9 $181.4 $137.1 $148.4 $197.3 $664.1 $768.3
Gross Profit 186.3 57.2 42.6 47.6 65.6 213.0 72.4 53.0 56.1 76.2 257.7 297.7
SG&A 147.0 40.1 39.0 42.0 44.1 165.2 48.5 46.7 49.7 51.5 196.4 229.7
Operating Income 23.1 12.7 (0.9) 0.8 16.8 29.4 19.2 1.3 1.0 19.2 40.6 48.0
Interest Expense (Income) (2.2) 0.1 (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.3) (0.1)
Earnings before income taxes 25.3 11.9 (0.1) 0.9 16.8 29.5 19.2 1.4 1.0 19.2 40.9 48.1
Income Taxes 7.9 4.1 (0.0) 0.3 5.6 10.0 6.8 0.5 0.4 6.7 14.4 16.8
Net Income 17.4 7.7 (0.1) 0.5 11.3 19.5 12.4 0.9 0.7 12.5 26.5 31.2
Adjustment for Extraordinary Items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted Net Income 17.4 7.7 (0.1) 0.5 11.3 19.5 12.4 0.9 0.7 12.5 26.5 31.2
Weighted Avg Diluted Shares 14.3 14.3 14.4 14.4 14.4 14.4 14.5 14.4 14.4 14.4 14.4 14.4
Diluted EPS from Con't Ops $1.22 $0.54 ($0.00) $0.04 $0.78 $1.36 $0.86 $0.06 $0.05 $0.87 $1.84 $2.17
Diluted EPS Including Charges $1.22 $0.54 ($0.00) $0.04 $0.78 $1.35 $0.86 $0.06 $0.05 $0.87 $1.84 $2.17
Gross Margin 38.2% 40.0% 38.2% 37.4% 38.6% 38.6% 39.9% 38.7% 37.8% 38.6% 38.8% 38.8%
Basis Point Change in GM 190 130 (70) 50 50 40 (10) 50 40 0 20 (0)
SG&A 30.1% 28.0% 34.9% 33.0% 25.9% 29.9% 26.7% 34.1% 33.5% 26.1% 29.6% 29.9%
Basis Point Change in SG&A 110 (190) 310 (180) 40 (20) (130) (80) 50 20 (30) 30
Depreciation/Amortization 3.3% 3.1% 4.0% 3.8% 2.8% 3.3% 2.6% 3.0% 3.0% 3.0% 3.1% 2.6%
Operating Margin 4.7 8.9 (0.8) 0.6 9.9 5.3 10.6 1.0 0.7 9.7 6.1 6.3
Pre-tax Margin 5.2 8.3 (0.1) 0.7 9.9 5.3 10.6 1.0 0.7 9.7 6.2 6.3
Tax Rate 31.2 34.8 35.5 36.5 33.1 33.8 35.3 35.0 35.0 35.0 35.1 35.0
Net Margin 3.6 5.4 (0.1) 0.4 6.6 3.5 6.9 0.7 0.5 6.3 4.0 4.1
Growth Analysis (Yr/Yr)

Net Sales 11.6% 18.3% (3.5%) 21.4% 15.8% 13.0% 26.8% 22.8% 16.5% 16.2% 20.3% 15.7%
Gross Profit 17.4 22.3 (5.2) 23.0 17.3 14.3 26.6 24.5 17.7 16.2 21.0 15.5
SG&A 15.7 10.7 5.7 15.1 17.8 12.4 20.7 19.9 18.4 16.9 18.9 17.0
Depreciation/Amortization 29.2 18.1 9.2 17.3 9.3 13.3 8.6 12.2 11.3 15.7 12.0 (3.3)
Operating Income 20.8 86.0 (121.5) (142.4) 18.4 27.4 51.3 (252.6) 23.1 14.4 38.4 18.2
Net Income 18.8 49.6 (102.4) (179.9) 11.9 12.3 61.0 NM 24.1 11.1 35.9 17.8
Diluted EPS 19.1 48.6 (102.4) (178.4) 10.7 11.3 59.1 NM 24.1 11.5 35.7 18.0
56
CITITRENDS BALANCE SHEET

Fiscal ye ar e nds January; Dollars in millions e xce pt pe r s hare data.
2008 2009 2010E 2011E

Ass et s
Income Tax Receivable 0.0 0.0 0.0 0.0
Deferred Tax Asset 3.4 4.5 3.1 3.0
Total Cur rent Assets $133.8 $211.8 $219.3 $229.2

Investment Securities 43.8 0.0 0.0 0.0
Goodw ill 1.4 1.4 1.4 1.4
Deferred Tax Asset 2.5 2.5 2.5 2.5
Other A ssets 0.4 0.5 0.5 0.5
Total Assets $240.8 $280.0 $309.8 $323.6
Liabilitie s & Shareholde rs' Equit y

Borrow ings Under Revolving Lines of Cr edit 0.0 0.0 0.0 0.0
A ccrued Expenses 11.5 12.8 13.0 13.6
A ccrued Compensation 7.5 9.5 9.0 9.0
Current Portion of LTD and CLO 1.4 0.0 0.0 0.0
Income Tax Payable 0.7 3.0 2.0 2.0
Layaw ay Deposits 0.6 0.6 1.0 1.0
Other 0.0 0.0 0.0 0.0
Long- Term Debt and CLO 0.0 0.0 0.0 0.0

Deferred Tax Liability 0.0 0.0 0.0 0.0
Redeemable Pref er red Stock 0.0 0.0 0.0 0.0
Other Long- Term Liabilities 8.6 10.0 0.0 0.0
Total Liabilities $82.6 $98.6 $97.1 $104.9
Share holde rs' Equity $158.2 $181.3 $212.7 $218.6
Total Liabilitie s & Share holde rs' Equit y $240.8 $280.0 $309.8 $323.5
57
CITITRENDS OPERATING METRICS

Fis cal year en ds Jan uar y; Do ll ars i n m i ll ion s exce pt pe r sh are d ata.
5 Qtr Avg. 5 Y r Avg. 2005 2006 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10A
V alu ation
Enterpris e V alue/ EBITDA 7.2x 9. 0x 18.3x 12. 5x 4.2x 9.5x 9. 3x 6.4x 2.6x 2. 6x 6.7x 8.2x 6. 8x 7.4x 7.4x 6. 8x
Enterpris e V alue/ EBIT 11.7x 12. 5x 23.0x 16. 0x 7.0x 16.8x 15. 8x 11.3x 4.5x 4. 5x 10.7x 14.2x 11. 4x 12.0x 11.9x 10. 4x
Enterpris e V alue/ Sales 0.6x 0. 9x 1.9x 1. 3x 0.3x 0.7x 0. 7x 0.5x 0.2x 0. 2x 0.6x 0.7x 0. 6x 0.6x 0.6x 0. 6x
Total Debt/ Enterpris e V alue 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x
Total Debt/ EBITDA 0.0x 0. 1x 0.0x 0. 1x 0.1x 0.1x 0. 1x 0.1x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x
Total Debt/ EBIT 0.0x 0. 1x 0.1x 0. 2x 0.2x 0.1x 0. 1x 0.1x 0.1x 0. 1x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x
Pric e/Earnings 21.1x 21. 4x 38.0x 25. 1x 13.4x 21.8x 20. 7x 15.1x 7.9x 7. 7x 17.7x 24.5x 20. 6x 22.9x 22.9x 20. 0x
Pric e/S ale s 0.8x 1. 0x 1.9x 1. 4x 0.4x 0.7x 0. 7x 0.5x 0.3x 0. 3x 0.7x 0.8x 0. 7x 0.8x 0.8x 0. 8x
Pric e/Cash Flow 9.5x 15. 6x 21.7x 30. 9x 11.7x 11.5x 8. 3x 6.0x 3.4x 3. 4x 7.3x 10.7x 9. 1x 10.5x 10.5x 9. 7x
Pric e/B ook V alue 2.4x 3. 3x 7.1x 4. 6x 1.4x 2.1x 2. 3x 1.6x 0.9x 0. 9x 2.2x 2.6x 2. 3x 2.5x 2.5x 2. 5x
Pr ofi tabil ity

Gross Margin 35.2% 36. 0% 38.2% 38. 3% 33.4% 33.3% 33. 8% 34.1% 34.8% 34. 8% 35.2% 35.0% 35. 1% 35.3% 35.3% 35. 5%
Operating Margin 5.4% 6. 1% 8.2% 7. 9% 4.4% 3.9% 4. 4% 4.2% 4.7% 4. 7% 5.7% 4.8% 5. 1% 5.3% 5.3% 6. 1%
Pretax Margin 5.5% 6. 2% 7.5% 8. 4% 4.7% 4.3% 4. 9% 4.7% 5.2% 5. 2% 5.8% 5.0% 5. 2% 5.4% 5.4% 6. 2%
Net Margin 3.7% 4. 2% 4.9% 5. 6% 3.2% 3.0% 3. 4% 3.3% 3.6% 3. 6% 3.9% 3.4% 3. 5% 3.6% 3.6% 4. 1%
EBIT Margin 5.4% 6. 1% 8.2% 7. 9% 4.4% 3.9% 4. 4% 4.2% 4.7% 4. 7% 5.7% 4.8% 5. 1% 5.3% 5.3% 6. 1%
EBITDA Margin 8.7% 8. 9% 10.2% 10. 1% 7.3% 6.9% 7. 5% 7.4% 8.1% 8. 1% 9.0% 8.2% 8. 5% 8.7% 8.7% 9. 3%
Ret urn on A s set s 8.1% 9. 5% 13.0% 12. 4% 7.0% 6.6% 7. 5% 7.4% 7.7% 7. 7% 8.7% 7.4% 7. 6% 7.6% 7.6% 9. 0%
Ret urn on Equit y 12.1% 16. 4% 26.4% 21. 1% 11.1% 10.2% 11. 5% 11.4% 11.7% 11. 7% 13.0% 11.0% 11. 7% 11.6% 11.6% 13. 4%
Bas ic DuPont ROE (3 S tep) 11.5% 15. 5% 22.9% 20. 6% 10.6% 9.7% 11. 0% 10.8% 11.4% 11. 7% 12.2% 10.2% 11. 4% 11.2% 11.7% 12. 7%
Effici en cy
Rev enue/Employee 0.1 0. 1 0.1 0. 1 - - - - 0.1 - - - - 0. 1 -
Inventory Turnov er 3.7x 3. 8x 4.0x 3. 7x 3.7x 3.6x 3. 7x 3.6x 3.6x 3. 8x 3.9x 3.8x 3. 5x 3.5x 3.8x 3. 9x
Day s of Inventory on Hand (DIO) 98. 7 Day s 96. 1 Days 92. 0 Days 98. 6 Days 97.6 Days 100.3 Days 98. 7 Day s 101.9 Day s 101.0 Day s 96. 8 Day s 94.4 Day s 96.2 Day s 103. 2 Days 105.3 Days 95.6 Days 94. 2 Days
Total A s set Turnov er 2.0x 2. 0x 2.0x 1. 9x 2.1x 2.1x 2. 2x 2.1x 2.0x 2. 0x 2.1x 2.1x 2. 0x 2.0x 2.0x 2. 0x
Working Capital Turnover 5.1x 5. 3x 4.6x 4. 3x 4.9x 12.7x 12. 1x 10.2x 8.1x 8. 1x 7.3x 4.5x 4. 7x 4.5x 4.5x 4. 3x
Li qu id ity
Current Rat io 2.38x 2. 18x 2.05x 2. 27x 2.40x 1.57x 1. 60x 1.69x 1.81x 1. 81x 1.97x 2.63x 2. 32x 2.39x 2.39x 2. 59x
Quic k Ratio 1.19x 1. 07x 1.14x 1. 22x 1.11x 0.24x 0. 29x 0.37x 0.64x 0. 64x 0.79x 1.34x 1. 08x 1.25x 1.25x 1. 48x
Cas h Ratio 0.64x 0. 32x 0.15x 0. 17x 0.10x 0.07x 0. 11x 0.18x 0.45x 0. 45x 0.62x 0.53x 0. 38x 0.71x 0.71x 0. 97x
Capi tal Stru ctur e

Total Debt-t o-Total Equity 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x
LT Debt/ Tot al Equit y 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x
Net Debt/EB ITDA (1.1)x (0. 5)x (0.3)x (0. 2)x (0.1)x (0.1)x (0. 1)x (0.3)x (0.8)x (0. 8)x (1.0)x (0.9)x (0. 7)x (1.3)x (1.3)x (1. 5)x
EBITDA /Interes t Expens e 442.0x 181. 9x 86.1x 107. 6x 67.9x 75.9x 96. 1x 100.2x 128.1x 128. 1x 175.7x 193.5x 327. 0x 519.6x 519.6x 994. 4x
Interes t Coverage 278.7x 117. 9x 68.5x 84. 4x 41.1x 43.2x 56. 4x 56.5x 75.1x 75. 1x 110.8x 112.6x 195. 4x 320.4x 320.4x 654. 2x
Source: Compust at Nort h A merica
58
Pamela Quintiliano
Analyst
212-667-7945
Gap Inc. (GPS), Perform

Price: $21.24 Market Cap (bil.): $13.8 Fiscal Yr. End:
52 wk. Price Range: 14.65-26.34 Float: 69.3% Dividend:
52 wk. Fwd. P/E Range: 11.2x-16.7x Short Interest: 1.8% Dividend Yld:
Investment Thesis
We are maintaining our Perform rating on GPS. While we are excited about several upcoming initiatives including planning and allocation
enhancements, the black pant launch, the introduction of 1969 denim for kids and significant global growth opportunity, we are concerned that high
exposure to cotton fabrications across concepts, combined with execution risk surrounding the premium black pant introduction (which may have more
difficulty in capturing the trade-up and trade-down customer due to the nature of the product), inventory build (even if in basic categories with longevity
and against low LYlevels), moderating average unit cost savings and more difficult compares could cause GPS to be rangebound in the near-term. As
such, we believe that a discount to its historical trading average of 13.7x is warranted and that the stock, (trading at 10.6x our above-consensus estimate
of $2.01) is fairly valued at current levels.
(millions) 2008A 2009A 1Q10A 2Q10E 3Q10E 4Q10E 2010E 2011E Key Metrics TTM 2009A 2010E
Revenue 14,526.0 14,197.0 3,329.0 3,361.8 3,668.0 4,320.7 14,679.5 15,046.5 P/E 12.3x 13.4x 11.5x
EBIT 1584.0 1816.0 485.0 402.5 506.9 599.4 1993.9 2134.6 Net Cash/Share: $0.17 $0.17 $3.60
OPCO EPS $1.34 $1.58 $0.45 $0.38 $0.47 $0.56 $1.84 $2.01 EV/EBITDA 5.5x 5.8x 5.6x
Street EPS $0.38 $0.47 $0.56 $1.84 $2.00 EV/Sales 1.0x 1.0x 0.9x
Comp Sales (12.0%) (3.0%) 3.6% 3.4% 3.4% 3.2% 3.4% 2.4% Total Debt (bil.): 0 0 0
EBIT Margin 10.9% 12.8% 14.6% 12.0% 13.8% 13.9% 13.6% 14.2% Debt/Cap: 0.0% 0.0% 0.0%
15.0%
Upcoming Comps: Jun (-10%), Jul (-8%), Aug (-3%), Sept (-1%), Oct (+4%), 10.0%
Comp Store Sales
Nov (0%), Dec (+2%), Jan (+5%), Feb (+3%), Mar (+11%), Apr (-3%), May
(+2%) 5.0%
0.0%
Ending 1Q Inventories: $55.7/psf, -2.1%
-5.0%
CY2009 Operating Margin vs. Historic Peak: Flat to peak -10.0%
1360
-15.0%
1.2x 220
1.0x 200
Relative Price Perf
Rel. Fwd. P/E NTM
180
0.8x
160
0.6x
140
0.4x
120
0.2x 100
0.0x 80
GPS S&P GPS S&P

59
GAP INCOME STATEMENT

Fiscal year ends January; dollars in m illions except per share data.
Net Revenues $14,526.0 $3,127.0 $3,245.0 $3,589.0 $4,236.0 $14,197.0 $3,329.0 $3,361.8 $3,668.0 $4,320.7 $14,679.5 $15,046.5
Gross Profit 5447.0 1239.0 1288.0 1524.0 1673.0 5724.0 1401.0 1378.3 1573.6 1715.3 6068.2 6289.4
SG&A 3899.0 886.0 913.0 1024.0 1086.0 3909.0 927.0 964.8 1067.4 1110.4 4071.2 4122.7
Operating Incom e 1548.0 353.0 375.0 500.0 587.0 1815.0 474.0 413.5 506.2 604.9 1997.1 2166.7
Loss on early retirement of debt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest expense and other (36.0) 0.0 (1.0) 0.0 0.0 (1.0) (11.0) (1.0) (1.0) (1.0) (14.0) (1.0)
Earnings before incom e taxes 1584.0 353.0 376.0 500.0 587.0 1816.0 485.0 414.5 507.2 605.9 2011.1 2167.7
Income Taxes 617.0 138.0 148.0 193.0 235.0 714.0 183.0 157.5 192.7 230.2 763.5 823.7
Net Income 967.0 215.0 228.0 307.0 352.0 1102.0 302.0 257.0 314.5 375.7 1247.6 1344.0
Adjustm ent for Convertible Interest
Diluted EPS from Con't Ops $1.34 $0.31 $0.33 $0.44 $0.51 $1.58 $0.45 $0.38 $0.47 $0.56 $1.84 $2.01
Margin Analysis
Gross Margin 37.5% 39.6% 39.7% 42.5% 39.5% 40.3% 42.0% 41.0% 42.9% 39.7% 41.1% 41.8%
Basis Point Change in GM 140 (0) 150 380 550 280 240 130 40 20 70 70
SG&A 26.8% 28.3% 28.1% 28.5% 25.6% 27.5% 28.7% 28.7% 29.1% 25.7% 27.7% 27.4%
Basis Point Change in SG&A (70) (0) 60 90 140 70 40 60 60 10 20 (30)
Pre-tax Margin 10.9 11.3 11.6 13.9 13.9 12.8 14.6 12.3 13.8 14.0 13.7 14.4
Tax Rate 39.0 39.1 39.4 38.6 40.0 39.3 37.7 38.0 38.0 38.0 38.0 38.0
Net Margin 6.7 6.9 7.0 8.6 8.3 7.8 9.1 7.6 8.6 8.7 8.5 8.9
Grow th Analysis (Yr/Yr) 0

Net Sales (7.8%) (7.6%) (7.3%) 0.8% 3.8% (2.3%) 6.5% 3.6% 2.2% 2.0% 3.4% 2.5%
Gross Profit (4.3) (7.7) (3.7) 10.6 20.4 5.1 13.1 7.0 3.3 2.5 6.0 3.6
SG&A (10.3) (7.6) (5.4) 4.1 9.6 0.3 4.6 5.7 4.2 2.2 4.1 1.3
Depreciation/Amortization 3.8 2.9 26.8 (23.4) (2.7) 0.9 2.8 (44.0) 1.9 (8.7) (14.9) (10.5)
Operating Income 14.8 (7.8) 0.5 26.9 47.5 17.2 34.3 10.3 1.2 3.0 10.0 8.5
Net Income 8.8 (13.7) (0.4) 24.8 44.9 14.0 40.5 12.7 2.4 6.7 13.2 7.7
Diluted EPS 20.2 (8.8) 2.3 26.2 47.6 17.2 44.8 15.2 6.7 10.4 16.9 8.8
60
G A P B A L A N C E S HE E T
Fis ca l y e a r e n d s J an u a r y ; do lla r s in m illio ns e x c e p t p e r s h a r e d at a .
2 00 8 2 0 09 2 0 1 0E 2011E
A s s e ts
Ca sh a n d c as h e q u iva le n ts $ 1 ,7 1 5.0 $ 2 ,3 4 8 .0 $ 1 ,9 9 5 .8 $2 ,3 7 5 .0
Re str ic te d c as h a n d sh o r t te r m in v e s tme n ts 4 1.0 2 4 3 .0 4 4 2 .0 4 4 2 .0
Me rc h a n d is e in v e n to rie s 1 5 0 6.0 1 4 7 7 .0 1 5 1 3 .9 1 5 2 9 .1
Pre pa id e x p en s e s a nd o th e r 7 4 3.0 5 9 6 .0 6 3 2 .0 6 3 2 .0
To tal Cu r r e n t A s s e ts 4 0 0 5.0 4 6 6 4 .0 4 5 8 3 .7 4 9 7 8 .1
Pro pe r ty & Eq u ip me n t, n e t 2 9 3 3.0 2 6 2 8 .0 2 6 1 0 .5 2 5 3 2 .2
L e as e Rig h ts a n d O the r A s s ets 6 2 6.0 6 9 3 .0 6 9 5 .0 6 9 5 .0
L o ng Te r m Inv e s tme nts 0.0 0 .0 0 .0 0 .0
To tal A s s e ts $ 7 ,5 6 4.0 $ 7 ,9 8 5 .0 $ 7 ,8 8 9 .3 $8 ,2 0 5 .3
L ia bilit ie s & S h a r e ho ld e r s ' Eq u it y

No tes p a y a ble 0.0 0 .0 0 .0 0 .0
A c co u n ts p ay a b le 9 7 5.0 1 0 2 7 .0 1 0 4 2 .4 1 0 5 8 .0
A c cr u e d e x pe n s e s 1 0 7 6.0 1 0 6 3 .0 1 0 0 9 .9 1 0 1 9 .9
In c ome ta x e s p a y a b le 5 7.0 4 1 .0 4 9 .2 5 1 .7
Cu r re n t p o rtio n o f lo ng te r m d eb t 5 0.0 0 .0 0 .0 0 .0
Cu r re n t d e f er r e d le a se c re d its/o th e r 0.0 0 .0 0 .0 0 .0
Cu r re n t L ia b ilitie s $ 2 ,1 5 8.0 $ 2 ,1 3 1 .0 $ 2 ,1 0 1 .5 $2 ,1 2 9 .6
L o ng te r m d eb t 0.0 0 .0 0 .0 0 .0
S e nio r c o n v er tib le n ote s 0.0 0 .0 0 .0 0 .0
De f er r e d le as e c r e d its & o th e r 1 0 1 9.0 9 6 3 .0 9 4 3 .7 9 3 4 .3
To tal L ia b ilities $ 3 ,1 7 7.0 $ 3 ,0 9 4 .0 $ 3 ,0 4 5 .2 $3 ,0 6 4 .0
S h ar e h o ld e r s ' Eq u it y $ 4 ,3 8 7.0 $ 4 ,8 9 1 .0 $ 4 ,8 4 4 .1 $5 ,1 4 1 .3
T o ta l L ia b ilit ie s & Sh a r e h old e r s ' Equ it y $ 7 ,5 6 4.0 $ 7 ,9 8 5 .0 $ 7 ,8 8 9 .3 $8 ,2 0 5 .3
S o ur c e : Co mp a n y r e po r ts , Opp e n h e imer & Co . In c . e s tima te s
61
GAP OPERATING METRICS

Fis cal ye ar ends January; Dollars in m illions e xce pt pe r s har e da ta.
5 Qtr Avg. 5 Yr Avg. 2005 20 06 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q0 9 2Q09 3Q09 4Q09 20 09 1 Q10A
Valuation
Enterpris e Value/EBITDA 4.8x 5.5x 5.8x 7.8x 6.8x 5.9 x 4.6x 3.5x 2.8x 2.9x 4.2x 4.3x 5.5x 4.3x 4.4x 5.5x
Enterpris e Value/EBIT 6.6x 8.0x 7.9x 1 1.9x 9.9x 8.5 x 6.5x 5.0x 4.0x 4.1x 6.0x 6.1x 7.8x 5.9x 5.9x 7.3x
Enterpris e Value/Sales 0.8x 0.8x 0.9x 0.9x 0.9x 0.8 x 0.7x 0.5x 0.4x 0.4x 0.6x 0.7x 0.9x 0.7x 0.8x 1.0x
Total Deb t/Enterpr ise Value 0.0x 0.0x 0.0x 0.0x 0.0x 0.0 x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Total Deb t/EBITDA 0.0x 0.1x 0.2x 0.3x 0.1x 0.1 x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Total Deb t/EBIT 0.0x 0.2x 0.3x 0.4x 0.1x 0.1 x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Price/Ear nings 13.1 x 14.5x 14.4x 2 0.4x 17.4x 15.6 x 12.2x 9.4x 8.4x 8.4x 11.8x 12.3x 15.0x 12.0x 12.0x 14.3x
Price/Sales 0.9x 0.9x 1.0x 1.0x 1.0x 0.9 x 0.8x 0.6x 0.5x 0.6x 0.8x 0.8x 1.1x 0.9x 0.9x 1.2x
Price/Cash Flow 7.7x 8.7x 10.5x 1 2.8x 7.3x 6.9 x 5.9x 4.8x 5.6x 5.7x 7.5x 7.3x 8.7x 6.9x 6.9x 8.1x
Price/Book Value 2.8x 2.7x 2.9x 3.0x 3.3x 3.1 x 2.7x 2.1x 1.8x 1.8x 2.4x 2.4x 3.0x 2.6x 2.6x 3.4x
Dividend Yield 1.9% 1.9% 1.1 % 1.7% 1.7% 1.8% 2 .1% 2.6% 3.0% 3.0% 2.2% 2.1% 1.6% 1.8 % 1.8% 1.6%
Pr ofitability
Gross Margin 39.0 % 37.2% 36.6 % 3 5.4% 36.1% 36.4% 37 .3% 37.6% 37.5% 37.5% 37.5% 37.8% 38.7% 40.3 % 4 0.3% 40.9%
Operating Margin 11.9 % 10.0% 10.9 % 7.3% 8.6% 9.1% 10 .1% 10.4% 10.7% 10.7% 10.6% 10.8% 11.6% 12.8 % 1 2.8% 13.4%
Pretax Margin 11.9 % 10.3% 11.2 % 7.9% 8.9% 9.5% 10 .5% 10.7% 10.9% 10.9% 10.7% 10.9% 11.6% 12.8 % 1 2.8% 13.5%
Net Marg in 7.3% 6.3% 6.9 % 4.9% 5.5% 5.8% 6 .4% 6.5% 6.7% 6.7% 6.5% 6.7% 7.1% 7.8 % 7.8% 8.3%
EBIT Margin 11.9 % 10.0% 10.9 % 7.3% 8.6% 9.1% 10 .1% 10.4% 10.7% 10.7% 10.6% 10.8% 11.6% 12.8 % 1 2.8% 13.4%
EBITDA Margin 16.5 % 14.2% 14.8 % 1 1.2% 12.6% 13.2% 14 .3% 14.7% 15.2% 15.2% 15.2% 15.5% 16.3% 17.4 % 1 7.4% 18.0%
Return on Assets 13.3 % 11.6% 11.8 % 9.0% 10.6% 11.0% 11 .7% 11.8% 12.6% 12.6% 12.5% 12.1% 12.0% 14.2 % 1 4.2% 15.7%
Return on Equity 22.4 % 20.1% 21.5 % 1 4.7% 18.4% 18.9% 20 .7% 22.1% 22.3% 22.3% 21.1% 20.8% 21.3% 23.8 % 2 3.8% 25.2%
Basic Du Pont ROE (3 Step) 21.5 % 19.6% 19.2 % 1 4.8% 19.4% 20.9% 23 .3% 23.6% 21.2% 21.7% 20.1% 20.3% 20.8% 21.9 % 2 3.1% 24.2%
Efficiency
Inventory Turnove r 5.5x 5.8x 5.8x 5.9x 6.0x 6.3 x 5.9x 4.8x 4.9x 5.9x 6.2x 6.1x 5.0x 4.9x 5.7x 5.7x
Days of Inventory on Hand (DIO) 66.5 Days 62.5 Days 63.1 Da ys 61.9 Days 61.1 Days 57.6 Day s 61.5 Days 75.9 Days 7 5.0 Days 61.9 Days 59.3 Days 60.0 Days 73.7 Days 74.9 Days 64.3 Days 64.5 Days
Total Asset Turno ver 1.8x 1.9x 1.8x 1.9x 2.0x 2.0 x 2.0x 1.8x 1.9x 1.9x 2.0x 1.8x 1.7x 1.8x 1.8x 1.8x
Working Capital Turnover 5.9x 6.7x 4.9x 5.8x 9.5x 9.2 x 9.2x 8.8x 7.9x 7.9x 6.8x 6.1x 5.4x 5.6x 5.6x 5.6x
Liquidit y
Current Ratio 2.17 x 2.13x 2.7 0x 2 .21x 1.68x 1.74 x 1.68x 1.60x 1.86x 1.86x 2.24x 2.17x 2.04x 2.19x 2.19x 2.23x
Quick Ra tio 1.41 x 1.39x 1.8 2x 1 .42x 1.03x 1.06 x 0.99x 0.82x 1.16x 1.16x 1.41x 1.42x 1.23x 1.50x 1.50x 1.50x
Cash Ratio 1.00 x 0.91x 1.0 5x 0 .89x 0.71x 0.77 x 0.66x 0.52x 0.79x 0.79x 1.01x 1.03x 0.88x 1.10x 1.10x 0.98x
Capital Structur e
Total Deb t-to-Tota l Equity 0.0x 0.0x 0.1x 0.1x 0.0x 0.0 x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
LT Debt/Total Equi ty 0.0x 0.0x 0.1x 0.0x 0.0x 0.0 x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Net Debt/EBITDA (0.9)x (0.8)x (0.6 )x ( 0.9)x (0.8)x (0.8) x (0 .6)x (0.6)x (0.8)x (0.8)x (0.8)x (0.9)x (1.0)x (1.0 )x ( 1.0)x (0.8)x
EBITDA/Interest Ex pense 144.4x 158.0x 42.3x 3 6.4x 55.1x 516.0 x - 554.5x 2,201.0x 244.6x 144.9x 217.3x 380.7x 411.7x 411.7x (432.5)x
Interest Coverage 100.8x 113.4x 31.2x 2 3.9x 37.5x 355.8 x - 392.5x 1,548.0x 172.0x 101.2x 152.0x 271.0x 302.5x 302.5x (322.7)x
62
Pamela Quintiliano
Analyst
212-667-7945
Gymboree Corp. (GYMB), Outperform, $52 Price Target

Investment Thesis
We are maintaining our Outperform rating on Gymboree, however moderating the 12-18 month price target from $58 to $52. This
assumes 14% upside from current levels. Our target is conservatively based on 11.9x our above consensus forward EPS estimate
of $4.34. We believe that GYMB is ideally positioned in the marketplace to capture a broad array of the children’s apparel consumer
with its low (Crazy 8), mid (Gymboree) and high (Janie & Jack) price point offerings. In addition, we believe there is limited risk in the
longer-term execution of its key growth strategies including the ongoing tweaking of Crazy 8’s, leveraging its existing store base to fill
out its portfolio of brands (with significant longer-term opportunity for Crazy 8) and a focus on sharpening opening price points rather
than steep discounting. When combined with relatively easy comps and a steep discount to its historical multiple (currently trading at
10.5x vs. historical average of 13.7x), we would be buyers at current levels.
Revenue 1,000.7 1,014.9 252.8 231.3 298.6 326.9 1,109.3 1,244.1 P/E 24.9x 28.8x 11.9x 10.5x
Comp Sales 0.0% (4.1%) 2.0% 0.0% 4.0% 2.0% 2.1% 2.0% Total Debt (bil.): 0 0 0 0
5.0%
4.0%
3.0%
Comp Store Sales
Upcoming Comps: 2Q09 (-1%), 3Q09 (-4%), 4Q09 (-2%), 1Q10 (3.6%) 2.0%
1.0%
-1.0%
CY2009 Operating Margin vs. Historic Peak: 130 bps above peak -2.0%
-3.0%
137.016 -4.0%
-5.0%
2008A 1Q10 3Q10E 2010E
1.2x 250
1.0x
Relative Price Perf..
200
Rel. Fwd. P/E NTM
0.8x
150
0.6x
100
0.4x
0.2x 50
0.0x 0
GYMB S&P GYMB S&P

63
GYMBOREE INCOME STATEMENT

FY2008 1Q09 2Q09 3Q09 4Q09 FY2009 1Q10A 2Q10E 3Q10E 4Q10E FY2010E 2011E
Net Revenues $1,000.7 $230.9 $215.4 $269.1 $299.6 $1,014.9 $252.8 $231.0 $298.6 $326.9 $1,109.3 $1,244.1
Gross Profit 476.2 109.5 93.2 137.1 140.0 479.9 130.2 98.9 150.7 152.3 532.0 586.6
SG&A Expense 327.9 73.3 75.8 80.7 86.4 316.3 81.5 82.1 91.1 94.5 349.2 385.7
Other income (expense), net 1.3 0.3 0.2 0.2 0.4 1.1 0.0 0.3 0.3 0.5 1.1 1.5
Interest Expense
Income Taxes 56.2 14.7 5.5 21.8 20.8 62.8 19.5 6.6 23.4 22.8 72.2 81.0
Net Income, con't ops 93.5 21.8 12.2 34.8 33.2 101.9 29.2 10.5 36.5 35.6 111.8 121.5
Extraordinary Items 0.0

Net Income 93.5 21.8 12.2 34.8 33.2 101.9 29.2 10.5 36.5 35.6 111.8 121.5
Avg. Shares Outstanding 29.2 29.5 29.9 30.1 30.0 29.9 29.5 29.2 28.9 28.6 29.0 28.0
Diluted EPS $3.21 $0.74 $0.41 $1.15 $1.11 $3.41 $0.99 $0.36 $1.26 $1.24 $3.86 $4.34
Margin Analysis
Gross Margin 47.6% 47.4% 43.3% 51.0% 46.7% 47.3% 51.5% 42.8% 50.5% 46.6% 48.0% 47.2%
Basis Point Change in GM (50) (350) (240) (0) 370 (30) 400 (50) (50) (10) 70 (140)
SG&A Ratio 32.8% 31.8% 35.2% 30.0% 28.9% 31.2% 32.2% 35.5% 30.5% 28.9% 31.5% 31.0%
Basis Point Change in SG&A (120) (200) (420) (200) 90 (160) 50 30 50 0 30 (0)
Pretax Margin 15.0 15.8 8.2 21.0 18.0 16.2 19.3 7.4 20.1 17.9 16.6 0.2
Income Tax Rate 37.5 40.2 31.0 38.6 38.6 38.1 40.1 38.5 39.0 39.0 40.8 40.0
Net Margin 9.3 9.4 5.6 12.9 11.1 10.0 11.5 4.5 12.2 10.9 10.1 9.8
Growth Analysis
Retail 83.7% (4.6%) 4.7% 1.6% 3.8% 71.6% 9.7% 7.3% 11.1% 9.2% 9.4% 12.3%
Play & Music 12.4 (9.2) 6.9 24.1 (0.5) 4.4 (2.1) 0.6 (1.0) 3.3 0.4 (0.3)
Net Sales 8.7 (4.6) 4.7 1.9 3.8 1.4 9.5 7.3 11.0 9.1 9.3 12.1
SG&A Expense 4.9 (10.4) (6.5) (4.4) 7.2 (3.5) 11.1 8.3 12.9 9.3 10.4 10.5
Operating Income 13.9 (13.0) 35.3 12.4 22.9 10.3 34.5 (3.7) 5.6 7.9 11.7 9.9
Net Income 16.4 (12.9) 51.8 12.3 12.6 9.0 33.8 (13.7) 5.1 7.2 9.7 8.6
Diluted EPS 19.9 (14.4) 48.3 8.6 10.3 6.5 33.6 (11.7) 9.4 12.5 12.9 12.5
64
GYM BOR EE BA LA NC E SHEET

Fis ca l ye ar e n ds Jan uar y; Dolla rs in m illilons e xce pt pe r s har e dat a
20 08 2 00 9 2 010 E 201 1E
As s e ts
Cas h and c ash e qu iv alen ts $ 150 .2 $25 7.7 $ 270 .6 $34 3.6
A cc oun ts r ec eivab le 24 .6 9.9 10 .8 1 1.9
Mer cha nd is e in ve ntorie s 100 .2 12 1.1 141 .1 15 5.2
Pr epa id e xp ens es an d other 26 .9 1 9.8 21 .6 2 4.2
Total cu rr ent ass ets $ 301 .9 $40 8.5 $ 444 .1 $53 5.0
Pr ope rty an d equ ipmen t 204 .6 20 5.5 222 .5 22 7.0

Oth er a ss ets 21 .7 2 2.2 24 .0 2 6.0
Total as sets $ 528 .2 $63 6.1 $ 690 .6 $78 8.0
Liabilit ie s & S har e ho lde rs ' Equ it y

A cc oun ts p aya ble 28 .3 4 6.5 48 .8 5 2.5
A cc rue d lia bilities 56 .6 6 9.3 75 .5 8 1.6
In co me ta x pay ab le 8 .1 5.4 5 .9 6.6
Total cu rr ent lia bilities $92 .9 $12 1.1 $ 130 .2 14 0.6
Def er re d re nt a nd othe r liabilitie s 75 .7 7 6.2 81 .9 8 8.1

LT De bt 0 .0 0.0 0 .0 0.0
Total Lo ng- term L ia bilities $75 .7 $7 6.2 $81 .9 $8 8.1
Sto ck h olde rs ' e q uit y $ 359 .6 $43 8.8 $ 478 .4 $55 9.3
Tot al liab. & s to ck ho ld e rs ' e qu it y $ 528 .2 $63 6.1 $ 690 .6 $78 8.0
Sou rc e: Compa ny r epo rts, Opp enh eimer & Co. Inc . e stimates
65
GYMBOREE OPERATING METRICS

Fiscal ye ar ends January; Dollars in millions except pe r s hare data.
Valuation
Profitability
Gross Margin 47.3% 47.0% 43.1% 48.6% 48.1% 48.5% 48.7% 49.1% 48.2% 48.2% 47.3% 46.8% 46.8% 47.3% 47.3% 48.3%
Pretax Margin 15.6% 13.6% 8.1% 14.2% 14.5% 14.7% 14.8% 15.1% 15.0% 15.0% 14.6% 14.9% 15.4% 16.2% 16.2% 17.1%
Net Margin 9.8% 8.4% 4.8% 9.0% 8.7% 8.9% 8.9% 9.2% 9.3% 9.3% 9.1% 9.4% 9.8% 10.0% 10.0% 10.5%
EBIT Margin 15.9% 13.5% 7.9% 14.0% 14.1% 14.5% 14.6% 15.0% 15.4% 15.4% 15.1% 15.4% 15.9% 16.1% 16.1% 17.0%
EBITDA Margin 19.5% 17.2% 12.2% 17.7% 17.5% 17.9% 18.0% 18.4% 18.9% 18.9% 18.6% 19.0% 19.5% 19.8% 19.8% 20.6%
Return on Assets 18.2% 16.3% 8.5% 16.2% 18.9% 20.7% 20.2% 20.2% 20.4% 20.4% 19.1% 18.2% 17.6% 17.6% 17.6% 18.4%
Return on Equity 27.8% 26.6% 13.4% 25.8% 33.2% 36.2% 36.4% 36.6% 34.5% 34.5% 30.0% 29.3% 27.0% 26.4% 26.4% 26.4%
Efficiency
Revenue/Employee 0.1 0.1 0.1 0.1 0.1 0.1
Liquidity
Quick Ratio 2.24x 1.52x 1.70x 1.43x 0.53x 1.00x 0.85x 1.03x 1.57x 1.57x 2.17x 1.76x 2.10x 2.37x 2.37x 2.77x
Capital Structure
Net Debt/EBITDA -1.1x -0.6x -0.4x -0.2x -0.2x -0.3x -0.2x -0.5x -0.7x -0.7x (0.8)x (1.2)x (1.2)x (1.5)x -1.3x (1.3)x
EBITDA/Interest Expense - 697.0x 243.5x 603.2x 901.7x - - - - 909.9x - - - - 826.9x -
Interest Coverage - 555.9x 156.9x 479.2x 727.6x - - - - 742.3x - - - - 673.4x -
66
Pamela Quintiliano
Analyst
212-667-7945
J. Crew Group, Inc. (JCG), Outperform, $50 Price Target

Investment Thesis
We are raising our rating on JCG to Outperform from Perform and introducing a $50 price target, representing 15% upside from current
levels. Our target conservatively assumes that JCG should trade at 19x our above-consensus forward EPS estimate of $2.78, representing a
discount to its historic average of 22x due to potential execution risk at Madewell and the recently introduced wedding concept. Longer-term,
we believe that JCG has the initiatives in place to drive margin improvements including direct-to-consumer growth, store expansion
opportunity across concepts and tight inventory controls. When combined with on-trend merchandising and its differentiated affordable luxury
positioning, we believe JCG is less susceptible to the macro environment than its competitors in the marketplace.
Revenue 1,428.0 1,578.0 413.9 403.3 448.5 498.8 1,764.5 1,959.0 P/E 19.5x 22.9x 17.7x 15.7x
Comp Sales (4.0%) 4.9% 15.0% 9.0% 5.0% 3.0% 7.7% 5.0% Total Debt (bil.): 49 49 24 0
20.0%
15.0%
Comp Store Sales
Upcoming Comps: 2Q09 (-5%),3Q09 (8%) ,4Q09 (17%) 1Q10 (15%)

10.0%
Ending 1Q Inventories: $87.6/psf -3.9%
5.0%
CY2009 Operating Margin vs. Historic Peak:. 30 bps above
0.0%
#Calc
-5.0%
2008A 1Q10 3Q10E 2010E
1.6x 140
1.4x 120
Relative Price Perf
Rel. Fwd. P/E NTM
1.2x 100
1.0x 80
0.8x
60
0.6x
40
0.4x
20
0.2x
0.0x 0
Jan.
Jan.
Apr.
Oct.
Apr.
Oct.
Jan.
Apr.
Jul.
Jul.
06 08 10
JCG S&P JCG S&P

67
J.CREW INCOME STATEMENT

Fiscal year ends January; dollars in millions except per share data.
2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10A 2Q10E 3Q10E 4Q10E 2010E 2011E
Net Sales $1,428.0 $345.8 $357.6 $414.1 $460.6 $1,578.0 $413.9 $403.3 $448.5 $498.8 $1,764.5 $1,959.0
Cost of Goods Sold 872.5 199.8 210.3 213.7 258.5 882.4 211.3 221.8 228.7 277.9 $939.6 1038.3
Gross Profit 555.4 145.9 147.2 200.4 202.1 695.7 202.6 181.5 219.8 221.0 824.8 920.7
SG&A Expense 458.7 108.4 115.0 125.2 133.5 484.4 127.2 129.0 139.0 149.7 $544.9 607.3
EBITDA 140.8 50.1 46.6 88.4 543.9 726.7 88.7 65.4 93.7 84.3 332.1 313.4
Depreciation/Amortization 44.1 12.5 14.4 13.3 475.3 515.5 13.2 13.0 13.0 13.0 $52.2 50.0
Interest Expense 5.9 1.1 1.1 1.1 2.2 5.4 1.0 1.0 1.0 1.0 $4.0 0.0
Income Taxes 36.6 14.8 12.5 30.3 26.0 82.5 30.1 20.6 31.9 28.1 $110.7 126.9
Net Income 54.1 21.7 18.6 43.9 40.4 123.4 44.4 30.9 47.8 42.2 165.2 186.5
Extraordinary Items
Avg. Shares Outstanding 64.0 63.3 64.3 65.2 65.9 64.7 66.1 67.0 67.0 67.2 66.8 67.0
Diluted EPS $0.85 $0.34 $0.29 $0.67 $0.61 $1.91 $0.67 $0.46 $0.71 $0.63 $2.47 $2.78
MARGIN ANALYSIS
Gross Margin 38.9% 42.2% 41.2% 48.4% 43.9% 44.1% 49.0% 45.0% 49.0% 44.3% 46.7% 47.0%
Basis Point Change in GM (520) (470) 20 680 1630 520 670 380 60 40 270 30
SG&A Ratio 32.1% 31.3% 32.2% 30.2% 29.0% 30.7% 30.7% 32.0% 31.0% 30.0% 30.9% 31.0%
Basis Point Change in SG&A 110 (0) 60 (230) (380) (140) (60) (20) 80 100 20 10
Depreciaton/Amortization Margin 3.1% 3.6% 4.0% 3.2% 103.2% 32.7% 3.2% 3.2% 2.9% 2.6% 3.0% 2.6%
EBITDA Margin 9.9 14.5 13.0 21.4 118.1 46.1 21.4 16.2 20.9 16.9 18.8 16.0
Pretax Margin 6.4 10.6 8.7 17.9 14.4 13.0 18.0 12.8 17.8 14.1 15.6 16.0
Income Tax Rate 40.4 40.5 40.2 40.8 39.1 40.1 40.4 40.0 40.0 40.0 40.1 40.5
Net Margin 3.8 6.3 5.2 10.6 8.8 7.8 10.7 7.7 10.7 8.5 9.4 9.5
GROWTH ANALYSIS (YR/YR)

Retail Sales 6.5% 5.1% 6.9% 19.6% 23.4% 14.0% 20.5% 12.0% 8.3% 8.3% 47.4% 10.7%
Direct Sales 8.3 (5.5) 6.0 3.6 13.2 4.7 19.9 13.5 8.3 8.3 54.9 (18.8)
Other 5.4 (8.1) (4.4) (17.6) (20.5) (13.1) (1.5) 26.3 8.3 8.3 90.6 (38.3)
Net Sales 7.0 1.5 6.3 14.1 18.7 10.5 19.7 12.8 8.3 8.3 11.8 11.0
SG&A Expense 10.9 1.4 8.3 5.8 4.8 5.6 17.4 12.2 11.0 12.1 12.5 11.5
Operating Income (44.7) (29.2) 2.2 131.0 (435.5) 118.5 100.8 62.7 7.4 4.0 32.5 12.0
Net Income (60.8) (28.8) 2.7 130.4 (398.4) 128.0 104.3 65.8 9.0 4.4 34.0 0.1
Diluted EPS (61.0) (28.0) 2.7 126.3 (380.8) 125.5 95.8 59.2 6.2 2.3 29.7 5.1
68
J.CREW BALANCE SHEET

Fis cal year ends January; dollars in millions exc ept per share data.
2008 2009 2010E 2011E
As sets
Cas h and c as h equivalents $154.6 $298.1 $447.2 $592. 5
Merchandise inv entories 193.9 190.2 205.4 231.1
Prepaid ex pens es and ot her 40.6 31.0 27.5 27. 5
Total current as sets $389.1 $519.3 $680.1 $851. 1
Propert y and equipment 205.7 194.6 200.5 210.5

Def erred income tax ass et s 8.9 14.9 24.8 24. 8
Ot her as sets 11.3 9.8 0.0 0.0
Total as sets $615.0 $738.6 $905.4 $1,086. 4
L iab iliti es & Shar ehol der s Equ ity

Ac counts pay able 97.5 127.7 140.5 151.7
Ot her current liabilities 89.0 107.6 121.6 130.7
Total current liabilities $186.5 $235.3 $262.1 $282. 5
Def erred credits 73.8 67.6 66.5 66. 5

Long-term debt 98.9 49.2 24.2 0.0
Ot her liabilit ies 7.4 10.5 10.5 10. 5
Total Long-term Liabilities $180.1 $127.3 $101.2 $77.0
Stock hold er s' equi ty $248.4 $375.9 $542.1 $727. 0
T otal liab. & sto ckh olde rs ' e quity $615.0 $738.5 $905.4 $1,086. 4
Source: Company reports , Oppenheimer & Co. Inc. es timates
69
J CREW OPERATING METRICS

Fiscal year ends January; Dollars in millions e xcept per shar e data.
Valuation
Enterprise Value/EBITDA 10.7x - - 11.7x 13.9x 13.8x 8.5x 6.4x 4.1x 4.2x 8.2x 12.9x 14.2x 8.9x 8.7x 9.2x
Enterprise Value/EBIT 15.5x - - 14.8x 16.6x 16.5x 10.3x 7.9x 5.9x 6.1x 13.1x 21.4x 20.6x 11.0x 10.8x 11.1x
Enterprise Value/Sales 1.3x - - 1.6x 2.2x 2.2x 1.3x 0.9x 0.4x 0.4x 0.7x 1.2x 1.7x 1.5x 1.5x 1.7x
Total Debt/Enterprise Value 0.0x - - 0.1x 0.0x 0.0x 0.1x 0.1x 0.2x 0.2x 0.1x 0.1x 0.0x 0.0x 0.0x 0.0x
Price/Earnings 28.0x - - 20.9x 28.3x 28.1x 17.5x 13.5x 11.4x 11.4x 24.2x 39.1x 36.7x 19.9x 19.9x 19.8x
Price/Sales 1.5x - - 1.4x 2.1x 2.2x 1.3x 0.9x 0.4x 0.4x 0.8x 1.2x 1.8x 1.6x 1.6x 1.9x
Price/Cash Flow 12.1x - - 14.4x 17.3x 18.3x 14.6x 9.8x 6.5x 6.7x 10.3x 11.6x 15.3x 11.1x 10.9x 12.4x
Price/BookValue 6.5x - - 387.1x 20.0x 15.7x 8.4x 5.4x 2.8x 2.8x 4.4x 6.5x 7.9x 6.7x 6.7x 7.0x
Profitability
Gross Margin 41.1% 42.5% 41.8% 43.4% 44.1% 44.3% 43.6% 42.6% 38.9% 38.9% 37.8% 37.9% 39.9% 44.1% 44.1% 45.7%
Pretax Margin 9.2% 7.7% 0.7% 6.2% 12.1% 12.4% 11.8% 10.7% 6.4% 6.4% 5.2% 5.2% 7.8% 13.0% 13.0% 15.0%
Net Margin 5.5% 5.2% 0.4% 6.8% 7.3% 7.5% 7.1% 6.4% 3.8% 3.8% 3.1% 3.1% 4.6% 7.8% 7.8% 9.0%
EBIT Margin 9.6% 10.5% 8.2% 10.9% 13.1% 13.3% 12.6% 11.3% 6.8% 6.8% 5.5% 5.5% 8.1% 13.4% 13.4% 15.3%
EBITDA Margin 12.9% 13.5% 11.7% 13.8% 15.7% 15.9% 15.3% 14.1% 9.9% 9.9% 8.9% 9.1% 11.7% 16.7% 16.7% 18.4%
Return on Assets 12.9% 13.9% 1.2% 20.3% 20.1% 21.1% 18.5% 16.1% 9.4% 9.4% 7.6% 7.2% 10.2% 18.2% 18.2% 21.4%
Return on Equity 29.6% - - - 133.0% 88.0% 68.5% 53.5% 29.6% 29.6% 20.1% 18.3% 24.5% 41.1% 41.1% 43.7%
Basic DuPont ROE(3 Step) 25.0% 337.1% (0.8)% 1,548.1% 76.9% 55.0% 48.8% 40.8% 23.6% 25.7% 17.8% 16.8% 22.0% 33.3% 35.8% 35.3%
Efficie ncy
Revenue/Employee - 0.1 0.1 0.2 0.2 - - - - 0.1 - - - - 0.1 -
Liquidity
Capital Structur e
Total Debt-to-Total Equity 0.3x 7.2x (1.3)x 35.6x 0.9x 0.5x 0.5x 0.4x 0.4x 0.4x 0.4x 0.4x 0.3x 0.1x 0.1x 0.1x
LT Debt/Total Equity 0.3x 7.2x (1.3)x 35.6x 0.9x 0.5x 0.5x 0.4x 0.4x 0.4x 0.4x 0.4x 0.3x 0.1x 0.1x 0.1x
Net Debt/EBITDA (0.8)x 0.9x 5.1x 0.7x (0.0)x (0.1)x (0.1)x (0.1)x (0.3)x (0.3)x (0.4)x (0.8)x (0.8)x (0.9)x (0.9)x (0.9)x
EBITDA/Interest Expense 41.0x 16.5x 1.5x 3.4x 13.7x 16.7x 20.6x 28.3x 23.7x 17.7x 27.3x 30.7x 36.9x 48.9x 46.2x 61.3x
Interest Coverage 30.3x 12.9x 1.1x 2.7x 11.4x 14.0x 17.0x 22.7x 16.3x 12.1x 17.0x 18.5x 25.6x 39.2x 37.1x 51.0x
70
Pamela Quintiliano
Analyst
212-667-7945
pamela.quinitiliano@opco.com
Lululemon Athletica Inc. (LULU), Perform

Investment Thesis
We are maintaining our Perform rating on LULU. While we believe that LULU is executing well in this environment and that it’s differentiated
product, focus on inventory management, new verticals, store growth opportunity and disciplined approach to entering new markets should
enable it to continue to expand both its top and bottom line, we struggle to find the unknowns in the story to propel the stock further from
current levels. Trading at 30.5x our above consensus forward estimate of $1.45 we believe it is fairly valued at current levels.
Revenue 353.5 452.9 138.3 146.6 152.5 200.8 638.1 772.1 P/E 44.3x 53.9x 38.1x 30.5x
*** constant $ comps

40.0%
35.0%
Upcoming Comps: 2Q09 (-2%), 3Q09 (10%) 4Q09 (29%) 1Q10
30.0%
Comp Store Sales
(-15%)
25.0%
15.0%
CY2009 Operating Margin vs. Historic Peak: Flat to peak 10.0%
#Calc 5.0%
0.0%
2008A 1Q10 3Q10E 2010E
3.0x 140
2.5x 120
Relative Price Perf
Rel. Fwd. P/E NTM
100
2.0x
80
1.5x 60
1.0x 40
0.5x 20
0.0x 0
Nov.
Feb.
May.
Nov.
Feb.
May.
Nov.
Feb.
May.
Aug.
Aug.
Aug.
07 09
LULU S&P LULU S&P

71
LULULEMON INCOME STATEMENT

FY2008 1Q09A 2Q09A 3Q09A 4Q09E FY2009 1Q10A 2Q10E 3Q10E 4Q10E FY2010E FY2011E
Corporate-owned stores 315.5 72.9 85.1 98.1 137.4 393.5 115.6 117.8 132.4 171.8 537.6 650.5
Franchises 16.2 2.7 3.0 4.1 3.4 13.2 13.6 21.2 5.6 4.3 44.6 54.0
Other income 21.7 6.1 9.6 10.7 19.8 46.2 9.1 7.6 14.5 24.8 55.9 67.6
Net sales 353.5 $81.7 $97.7 $112.9 $160.6 452.9 $138.3 $146.6 $152.5 $200.8 638.1 $772.1
Cost of goods sold 174.5 46.7 52.6 56.6 74.0 229.9 63.9 71.8 73.9 92.3 302.1 362.1
Gross profit 179.0 34.9 45.2 56.4 86.6 223.1 74.4 74.8 78.5 108.4 336.0 410.0
SG&A expense 118.0 25.1 30.8 35.4 44.9 136.3 41.9 47.8 50.3 57.2 197.2 237.4
Depreciation 15.8 4.3 4.4 5.1 15.1 28.9 0.0 0.0 0.0 0.0 0.0 0.0
Operating income 61.0 9.9 14.3 21.0 41.6 86.8 32.5 27.0 28.2 51.2 138.8 172.6
Interest income (0.8) 0.0 0.0 (0.0) (0.1) (0.1) (0.2) (0.1) (0.1) (0.1) (0.4) (0.3)
Interest expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income taxes 18.5 3.4 5.1 6.9 13.1 28.5 13.0 10.8 11.3 20.5 55.7 69.1
Net income, cont oper. 43.3 6.5 9.3 14.1 28.6 58.4 19.6 16.2 17.0 30.8 83.5 103.7
Diluted Shares Outstanding 70.3 70.3 70.4 71.1 71.3 70.8 71.6 72.1 72.1 72.1 72.2 71.7
Diluted EPS (inc. options) $0.62 $0.09 $0.13 $0.20 $0.40 $0.82 $0.27 $0.23 $0.24 $0.43 $1.16 $1.45
MARGIN ANALYSIS
Gross margin 50.6% 42.8% 46.2% 49.9% 53.9% 49.2% 53.8% 51.0% 51.5% 54.0% 52.7% 53.1%
Basis Point Change in GM (300) (1060) (570) 180 420 (140) 1100 480 160 10 340 40
SG&A ratio 33.4% 30.7% 31.5% 31.4% 28.0% 30.1% 30.3% 32.6% 33.0% 28.5% 30.9% 30.8%
Basis Point Change in SG&A (120) (710) (220) (180) (210) (330) (40) 110 160 50 80 (20)
Depreciation/Amortization Margin 4.5% 5.2% 4.5% 4.5% 9.4% 6.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Operating margin 17.3 12.1 14.7 18.6 25.9 19.2 23.5 18.4 18.5 25.5 21.8 22.4
Pretax margin 17.5 12.2 14.7 18.6 26.0 19.2 23.6 18.4 18.5 25.5 21.8 22.4
Income tax rate 29.9 34.4 35.6 32.7 31.5 32.8 40.0 40.0 40.0 40.0 40.0 40.0
Net margin 12.3 8.0 9.5 12.5 17.8 12.9 14.2 11.1 11.1 15.3 13.1 10.7
GROWTH ANALYSIS (Y/Y)

Corporate-owned stores 31.2% 5.1% 8.6% 26.4% 52.2% 24.7% 58.6% 38.5% 35.0% 25.0% 36.6% 21.0%
Franchises (10.7) (40.7) (29.9) (14.2) 31.0 (18.5) 405.4 609.3 35.0 25.0 238.0 21.0
Other income 91.4 93.8 234.3 128.4 79.6 112.7 49.5 (21.6) 35.0 25.0 20.8 21.0
Net sales 30.9 6.0 14.3 29.7 54.5 28.1 69.3 50.0 35.0 25.0 40.9 21.0
Constant Currency Same Store Sales 3.0 (8.0) (2.0) 10.0 29.0 7.8 35.0 25.0 15.0 15.0 0.0 0.0
SG&A expense 26.4 (13.9) 6.9 22.8 43.9 15.4 66.9 55.0 42.1 27.3 44.7 20.4
Operating income 18.3 (17.5) (7.7) 60.6 103.6 42.3 229.6 88.1 34.5 23.0 60.0 24.3
Net income 34.9 (23.1) (25.0) 60.1 108.8 34.7 200.6 75.3 20.0 7.7 43.2 24.1
Diluted EPS 33.0 (21.7) (25.0) 59.0 100.7 33.8 195.3 71.2 18.3 6.5 40.3 25.0
72
L UL UL E M O N B A L A NC E S HEE T
Fis c al ye a r e nd s J an ua r y; d o lla r s in m il lion s e x ce p t p e r s h ar e d ata .
20 08 20 09 20 10E 20 11 E
A s s e ts
Cas h a nd c as h e qu iv a lent s $ 59. 3 $1 59 .6 $ 251 .3 $ 34 9.3
Cus t omer ac c ou nts rec eiv ab le 3. 9 8 .2 8 .5 1 0.0
Merc ha ndis e inv ent orie s 44. 6 44 .1 55 .1 6 8.9
Prep aid ex pen s e s a nd oth er c ur ren t a s s e ts 6. 1 4 .5 5 .9 5.9
Def f err ed inc ome ta x e s 0. 0 0 .0 0 .0 0.0
Tota l c u rre nt as s ets $1 13. 9 $2 16 .4 $ 320 .8 $ 43 4.1
Prop ert y a nd equ ipmen t 61. 0 61 .6 68 .7 7 5.5

Mark eta ble s e c u ritie s 0. 0 0 .0 0 .0 0.0
G oo dw ill a nd inta ng ible as s e ts , net 8. 2 8 .1 8 .1 8.1
Def e rre d in c o me tax es an d o the r 24. 7 21 .2 23 .8 2 2.8
Tota l as s e ts $2 07. 8 $3 07 .3 $ 421 .4 $ 54 0.5
L iab ilit ie s & Sh ar e h o ld e r s Eq u i ty
A c c oun ts pay ab le $5. 2 $ 11 .0 $14 .5 $1 6.0

A c c rue d liabilitie s 21. 7 39 .5 0 .0 0.0
In c o me tax es pa y ab le 0. 0 0 .0 0 .0 0.0
O the r c urr ent lia bilit ies 0. 5 8 .1 2 .5 2.5
Tota l c u rre nt liab ilitie s $ 27. 4 $ 58 .7 $17 .0 $1 8.5
Def e rre d in c o me tax es an d o the r n on- c u rren t liabilitie s 12. 2 15 .5 21 .8 2 7.8

Tota l Lo ng -ter m Liab ilities $ 12. 2 $ 15 .5 $21 .8 $2 7.8
Nonc on tro lling in tere s t 0. 0 0 .0 0 .0 0.0
S toc k h o ld e r s ' e q uit y $1 68. 3 $2 33 .1 $ 382 .6 $ 49 4.2
T ota l li ab . & s to ck h o ld e r s ' e qu ity $2 07. 8 $3 07 .3 $ 421 .4 $ 54 0.5
S our c e : Co mp an y r epo rts , O ppe nh eimer & Co. Inc . es timate s
73
LULULEMON OPERATING METRICS

Fiscal year ends January;Dollars in millions except per shar e data.
Valuation
Enterprise Value/EBITDA 17.1x - - - 39.3x 31.2x 18.7x 10.8x 5.7x 5.9x 12.7x 16.0x 20.4x 17.1x 17.0x 19.2x
Enterprise Value/EBIT 21.8x - - - 45.8x 36.6x 21.9x 12.8x 7.2x 7.5x 16.5x 21.3x 27.0x 21.1x 21.0x 23.1x
Enterprise Value/Sales 3.8x - - - 8.4x 7.2x 4.6x 2.7x 1.2x 1.2x 2.6x 3.1x 4.2x 4.1x 4.1x 4.9x
Price/Earnings 34.9x - - - 73.7x 56.3x 34.2x 21.5x 11.3x 11.5x 24.9x 34.7x 43.3x 34.4x 34.0x 37.2x
Price/Sales 4.1x - - - 8.2x 7.3x 4.7x 2.8x 1.3x 1.3x 2.7x 3.4x 4.5x 4.4x 4.4x 5.3x
Price/Cash Flow 20.0x - - - 61.7x 66.4x 39.4x 17.6x 10.0x 10.4x 16.5x 19.4x 26.0x 17.1x 17.0x 21.1x
Price/Book Value 10.3x - - - 26.8x 22.6x 14.5x 9.0x 3.9x 3.9x 7.4x 9.0x 11.7x 10.9x 10.9x 12.7x
Profitability
Gross Margin 48.8% 51.1% 51.1% 51.0% 53.3% 55.1% 55.8% 55.2% 50.7% 50.7% 48.5% 47.1% 47.7% 49.4% 49.4% 51.5%
Pretax Margin 17.2% 13.9% 4.4% 11.0% 18.6% 19.0% 19.1% 18.1% 16.2% 16.2% 15.3% 14.5% 15.5% 19.1% 19.1% 21.5%
Net Margin 11.5% 8.5% 1.7% 5.1% 11.2% 12.2% 13.3% 12.7% 11.5% 11.5% 10.7% 9.6% 10.3% 12.8% 12.8% 14.0%
EBIT Margin 17.3% 14.8% 4.4% 15.7% 18.2% 19.7% 20.9% 20.9% 16.0% 16.0% 15.5% 14.7% 15.7% 19.3% 19.3% 21.4%
EBITDA Margin 22.0% 18.4% 7.4% 18.8% 21.3% 23.1% 24.6% 24.8% 20.5% 20.5% 20.2% 19.6% 20.7% 23.9% 23.9% 25.7%
Returnon Assets 21.2% - - 13.5% 27.2% 32.2% 34.1% 26.4% 22.1% 22.1% 21.0% 17.8% 18.3% 22.5% 22.5% 26.4%
Returnon Equity 27.3% - - 23.4% 41.3% 44.3% 46.5% 37.7% 30.4% 30.4% 26.6% 22.7% 24.5% 30.0% 30.0% 32.7%
Basic DuPont ROE(3 Step) 24.2% - - 25.9% 37.6% 30.7% 33.7% 34.0% 27.0% 30.2% 22.7% 20.9% 22.1% 27.7% 29.6% 27.7%
Efficiency
Revenue/Employee - - - 0.1 0.1 0.1
Receivables Turnover 90.7x - - 82.9x 81.7x 79.4x 119.4x 129.6x 99.2x 83.6x 98.4x 106.7x 100.3x 72.8x 74.1x 75.5x
Daysof Sales Outstanding (DSO) 4.1 Days - - 4.4 Days 4.5 Days 4.6 Days 3.1 Days 2.8 Days 3.7 Days 4.4 Days 3.7Days 3.4 Days 3.6 Days 5.0 Days 4.9Days 4.8 Days
Inventory Turnover 4.5x - - 3.1x 3.9x 2.9x 3.0x 3.4x 3.4x 3.8x 3.8x 4.3x 4.2x 4.8x 4.8x 5.2x
Daysof Inventory on Hand (DIO) 82.6 Days - - 119.4 Days 93.4 Days 126.5 Days 122.6 Days 106.5 Days 105.8 Days 95.4 Days 95.3Days 84.6 Days 86.5 Days 76.4 Days 76.3Days 70.0 Days
WorkingCapital Turnover 3.3x 5.3x 5.6x 8.7x 4.4x 4.5x 4.7x 5.8x 4.9x 4.9x 4.2x 3.5x 3.1x 2.9x 2.9x 2.6x
Liquidity
CashRatio 2.71x 1.26x 0.32x 0.51x 1.49x 1.13x 1.55x 1.11x 1.25x 1.25x 2.17x 2.38x 2.58x 2.72x 2.72x 3.71x
Capital Str ucture

Net Debt/EBITDA (1.2)x (0.9)x (0.6)x (0.6)x (0.9)x (0.5)x (0.5)x (0.6)x (0.8)x (0.8)x (0.8)x (1.2)x (1.2)x (1.5)x (1.5)x (1.3)x
EBITDA/Interest Expense - 121.4x 597.0x 292.3x - - - - 723.9x - - - - - -
Interest Coverage - 73.1x 498.7x 250.6x - - - - 565.7x - - - - - -
74
Pamela Quintiliano
Analyst
212-667-7945
Pacific Sunwear of California Inc. (PSUN), Outperform, $4 Price Target

52 wk. Fwd. P/E Range: NA Short Interest: 9.2% Dividend Yld: 0.00%
Investment Thesis
We are raising our rating on Pacific Sunwear to Outperform from Perform and introducing a $4 price target which assumes 12% upside
from current levels and is based on 6x EV/EBITDA. While many investors have gotten burnt on this name waiting for the turnaround to
finally occur, we believe at current levels the risk/reward ratio is favorable especially given that the bar has been reset very low and the
long awaited back-to-school collection (reflecting new GMM Christine Lee Gartner) is just a few short months away. However patience
is key. While we do not expect a complete product turnaround we do believe that a focus on key categories combined with the impact
of new heads of store operations, marketing and Juniors, and the introduction of localized assortment planning should result in
renewed excitement among the teen customer. This should serve as a positive and could help build buzz for the Holiday season. In
addition, we are pleased with management’s cautious attitude regarding its core teen consumer and as a result believe that it was not
overly enthusiastic with back half buys. Last but certainly not least, it is important to note that PSUN has the absolute easiest comps of
any retailer in our universe.
Revenue 1,254.9 1,027.1 190.3 214.9 247.6 289.3 942.1 958.1 P/E 1.3x 2.3x 0.9x 0.8x
EBIT 149.6 164.7 (30.6) (23.4) (8.5) (12.0) (74.5) (31.4) Net Cash/Share: $1.42 $1.42 $1.55 $1.71
OPCO EPS ($0.44) ($1.07) ($0.30) ($0.21) ($0.08) ($0.11) ($0.70) ($0.30) EV/EBITDA NA NA NA NA
Street EPS ($0.22) ($0.10) ($0.10) ($0.73) ($0.29) EV/Sales 0.24x 0.23x 0.25x 0.25x
Comp Sales 0.0% (20.5%) (15.0%) (10.0%) (9.0%) 5.0% (3.6%) 3.0% Total Debt (bil. ): 0 0 0 0
EBIT Margin 11.9% 16.0% (16.1%) (10.9%) (3.4%) (4.1%) (7.9%) (3.3%) Debt/Cap: 0.0% 0.0% 0.0% 0.0%
5.0%
4.0%
Upcoming Comps: 2Q09 (-24%), 3Q09 (-18%), 4Q09 (-19%), 1Q10 (- 3.0%
Comp Store Sales
15%) 2.0%
1.0%
0.0%
Ending 1Q Inventories: $31.0/psf, -3.1%:
-1.0%
-2.0%
CY2009 Operating Margin vs. Historic Peak: -2350 bps from peak -3.0%
63.953 -4.0%
-5.0%
2008A 1Q10 3Q10E 2010E
1.5x 120
1.0x
100
0.5x
Relative Price Perf
Rel. Fwd. P/E NTM
0.0x 80
-0.5x 03 05 07 09
60
-1.0x
-1.5x 40
-2.0x
-2.5x 20
-3.0x 0
-3.5x Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr.
PSUN S&P PSUN S&P

75
PACIFIC SUNWEAR INCOME STATEMENT

FY2008 1Q09 2Q09 3Q09 4Q09 FY2009 1Q10A 2Q10E 3Q10E 4Q10E 2010E 2011E
Net Sales $1,254.9 $223.5 $242.8 $268.3 $292.5 $1,027.1 $190.3 $214.9 $247.6 $289.3 $942.1 $958.1
Gross Profit 321.3 61.3 57.7 73.5 66.1 258.6 42.5 50.5 74.3 77.5 244.8 275.0
SG&A 368.1 76.8 79.3 89.4 94.3 339.7 73.2 74.1 83.0 89.7 319.9 306.6
EBITDA 29.6 1.6 (4.2) 2.9 (11.1) (10.8) (20.2) (10.7) 6.2 5.2 (19.5) (17.3)
Depreciation 76.4 17.1 17.4 18.8 17.0 70.4 10.4 12.9 14.9 17.4 55.6 14.3
Operating Income (46.8) (15.5) (21.6) (15.9) (28.1) (81.1) (30.6) (23.6) (8.7) (12.2) (75.1) (31.6)
Net Interest Expense (Income) (2.5) (0.2) (0.1) 0.0 0.6 0.3 0.0 (0.2) (0.2) (0.2) (0.6) (0.2)
Earnings before income taxes (44.3) (15.3) (21.6) (15.9) (28.7) (81.4) (30.6) (23.4) (8.5) (12.0) (74.5) (31.4)
Income Taxes (14.1) (7.0) (7.4) (5.0) 8.3 (11.1) 0.3 0.3 (3.1) (4.4) (6.9) (11.6)
Net Income (30.2) (8.3) (14.2) (10.9) (37.0) (70.3) (31.0) (23.7) (5.3) (7.5) (67.6) (19.8)
Adjustment for Extraordinary Items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted Net Income (29.5) (8.3) (14.2) (10.9) (37.0) (70.3) (31.0) (23.7) (5.3) (7.5) (67.6) (19.8)
Diluted EPS Including Charges (GAAP) ($0.45) ($0.13) ($0.22) ($0.17) ($0.56) ($1.07) ($0.47) ($0.36) ($0.08) ($0.11) ($1.02) ($0.30)
Diluted EPS from Cont Charges (Non-GAAP) ($0.44) ($0.13) ($0.22) ($0.17) ($0.56) ($1.07) ($0.30) ($0.21) ($0.08) ($0.11) ($0.70) ($0.30)
MARGIN ANALYSIS
Gross Margin 25.6% 27.4% 23.8% 27.4% 22.6% 25.2% 22.3% 23.5% 30.0% 26.8% 26.0% 28.7%
Basis Point Change in GM (650) (130) (670) (130) 650 (40) (510) (30) 260 420 80 270
SG&A 29.3% 34.4% 32.7% 33.3% 32.2% 33.1% 38.4% 34.5% 33.5% 31.0% 34.0% 32.0%
Basis Point Change in SG&A 280 110 380 570 380 370 410 180 20 (120) 90 (200)
EBITDA Margin 2.4 0.7 (1.7) 1.1 (3.8) (1.0) (10.6) (5.0) 2.5 1.8 (2.1) (1.8)
Operating Margin (3.7) (6.9) (8.9) (5.9) (9.6) (7.9) (16.1) (11.0) (3.5) (4.2) (8.0) (3.3)
Pre-tax Margin (3.5) (6.8) (8.9) (5.9) (9.8) (7.9) (16.1) (10.9) (3.4) (4.1) (7.9) (3.3)
Tax Rate 31.8 45.7 34.4 31.7 (29.0) 13.6 (1.1) 37.0 37.0 37.0 36.7 37.0
Net Margin (2.4) (3.7) (5.8) (4.1) (12.7) (6.8) (16.3) (11.0) (2.2) (2.6) (7.2) (2.1)
GROWTH ANALYSIS (Y/Y)

Net Sales (3.9%) (16.3%) (22.4%) (17.1%) (16.8%) (18.2%) (14.8%) (11.5%) (7.7%) (1.1%) (8.3%) 1.7%
Gross Profit (23.4) (20.1) (39.4) (20.8) 16.8 (19.5) (30.6) (12.5) 1.1 17.3 (5.3) 12.3
SG&A 6.4 (13.6) (12.0) 0.1 (5.6) (7.7) (4.7) (6.6) (7.2) (4.8) (5.8) (4.2)
Operating Income (163.9) 27.6 (525.5) (558.0) (34.9) 73.2 97.8 9.2 (45.4) (56.8) (7.4) (57.9)
Net Income (163.1) 19.1 (481.7) (1697.9) 33.9 132.7 274.0 67.7 (50.9) (79.7) (3.9) (70.7)
Diluted EPS (166.0) 27.7 (489.5) (1684.1) 32.7 137.0 270.4 66.1 (51.3) (79.8) (4.7) (70.7)
76
PACIFIC SUNWEAR BALANCE SHEET

Fiscal ye ar e nds January; Dollars in millilons e xcept per share data
2008 2009 2010E 2011E
A ssets
Receivables 0.0 0.0 0.0 0.0

Goodw ill 0.0 0.0 0.0 0.0
Other A ssets 51.5 29.3 29.3 29.3
Total Assets $569.5 $477.2 $435.6 $454.3
Liabilities & Shareholders' Equity

A ccounts Payable $45.3 $38.5 $57.7 $63.5
Current Portion of Long-Term Debt 0.0 0.0 0.0 0.0
Current Portion of Capital Lease 0.0 0.0 0.0 0.0
A ccrued Liabilities 47.6 43.7 48.1 52.9
Current Liabilit ies $92.8 $82.2 $105.8 $116.4
Long- Term Debt 0.0 0.0 0.0 0.0

Deferred Lease Incentives 52.3 39.2 36.0 36.0
Deferred Rent 23.0 21.4 21.4 21.4
Deferred Taxes 0.0 0.0 0.0 0.0
Total Liabilitie s & Shareholde rs' Equit y $569.5 $477.2 $435.6 $454.3
77
PACIFIC SUNWEAR OPERATING METRICS

Fi scal year en ds January; Doll ar s i n m il li ons e xcept per share d ata.
V aluation
Enterpris e V alue/EBITDA (11. 7x) 2.7x 6.5x 8. 4x 9.4x 6.3x 4. 5x 2.4x 1.9x 1. 9x 10.4x (31. 2)x (15.1)x (12.8)x (12. 8)x (9.5)x
Enterpris e V alue/EBIT (3. 1x) (12.9x) 8.5x 15. 6x (85.8)x 15.2x 12. 0x 9.8x (1.2)x (1. 3)x (4.7)x (2. 5)x (4.0)x (1.7)x (1. 7)x (2.9)x
Enterpris e V alue/Sales 0. 2x 0.6x 1.2x 0. 9x 0.5x 0.7x 0. 5x 0.2x 0.0x 0. 0x 0.2x 0. 2x 0.4x 0.1x 0. 1x 0.3x
Total Debt/Enterpris e V alue 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.2x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x
Total Debt/EB ITDA 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 1x 0.4x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x
Total Debt/EB IT 0. 0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 2x 1.6x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x
Pric e/ Earnings (5. 0x) - 14.5x 35. 0x - 27.4x 20. 7x 28.5x (2.2)x - (7.5)x (4. 1)x (6.4)x (3.3)x - (3.6)x
Pric e/ Sales 0.3x 0. 6x 1.3x 1. 0x 0.5x 0.7x 0. 4x 0.2x 0. 1x 0.1x 0.2x 0. 2x 0.4x 0. 2x 0.2x 0.3x
Pric e/ Cash Flow 5.1x 6. 1x 10.1x 8. 6x 6.7x 9.3x 6. 5x 3.9x 2. 4x 2.5x 3.7x 4. 1x 7.4x 2. 6x 2.6x 7.9x
Pric e/ Book V alue 0.9x 1. 7x 3.3x 2. 7x 1.6x 2.1x 1. 4x 0.6x 0. 2x 0.2x 0.7x 0. 6x 1.2x 0. 8x 0.8x 1.2x
P rofitabil ity
Gross Margin 24. 2% 29.5% 36.4% 30.8% 29.4% 31.7% 31. 2% 30.0% 25.5% 25. 5% 25.3% 23. 5% 22.9% 25.2% 25. 2% 24.1%
Operating Margin (7. 4)% 1.6% 14.2% 5.8% (0. 5)% 4.5% 3. 8% 2.1% (3.7)% (3. 7)% (4.1)% (6.7)% (8. 9)% (7.9)% (7. 9)% (9.7)%
Pretax Margin (7. 6)% 0.8% 14.6% 4.4% (2. 3)% 4.1% 3. 3% 1.0% (4.7)% (4. 7)% (4.5)% (7.1)% (8. 6)% (7.9)% (7. 9)% (9.7)%
Net Margin (5. 9)% 0.1% 9.1% 2.7% (1. 3)% 2.6% 2. 2% 0.6% (3.1)% (3. 1)% (3.0)% (4.7)% (5. 6)% (6.8)% (6. 8)% (9.3)%
EBIT Margin (7. 4)% 1.6% 14.2% 5.8% (0. 5)% 4.5% 3. 8% 2.1% (3.7)% (3. 7)% (4.1)% (6.7)% (8. 9)% (7.9)% (7. 9)% (9.7)%
EBITDA Margin (1. 0)% 7.2% 18.7% 10.8% 5. 0% 10.9% 10. 1% 8.3% 2.4% 2. 4% 1.8% (0.5)% (2. 3)% (1.0)% (1. 0)% (2.9)%
Ret urn on A ssets (11. 2)% 0.0% 17.0% 5.0% (2. 4)% 4.7% 3. 7% 1.1% (5.9)% (5. 9)% (5.7)% (8.3)% (9. 8)% (13.4)% (13. 4)% (18.5)%
Ret urn on Equit y (17. 9)% (0.2)% 25.1% 7.5% (3. 8)% 7.3% 6. 4% 1.8% (9.2)% (9. 2)% (9.0)% (14.4)% (16. 6)% (20.7)% (20. 7)% (29.0)%
B as ic DuPont ROE (3 Step) (19. 3)% (0.2)% 25.1% 7.7% (3. 8)% 7.5% 7. 3% 2.0% (9.4)% (9. 1)% (9.8)% (15.6)% (17. 4)% (21.6)% (20. 9)% (32.2)%
-5. 9% 0.1% 9.1% 2.7% -1.3% 2.6% 2. 2% 0.6% -3.1% -3. 1% -3.0% -4. 7% -5.6% -6.8% -6. 8% -9.3%
2.1x 1. 9x 1.9x 1. 8x 1.9x 1.8x 1. 8x 1.8x 2. 0x 1.9x 2.2x 2. 0x 2.0x 2. 0x 2.0x 2.2x
1. 6 1.5 1.5 1.5 1. 6 1.6 1.8 1.8 1.5 1. 5 1.5 1.6 1. 6 1.6 1.6 1.6
Efficien cy
Rev enue/Employee - 0.1 0.1 0.1 0. 1 - - - - 0. 1 - - - - 0.1 -
Rec eivables Turnov er - - 342.3x - - - - - - - - - - - - -
Day s of Sales Outst anding (DS O) - 0.2 Days 1.1 Days 0. 0 Days 0.0 Days - - - - 0.0 Day s - - - - 0.0 Days -
Inv ent ory Turnov er 6.5x 5. 9x 4.5x 4. 8x 5.5x 5.3x 4. 5x 3.9x 5. 5x 6.7x 8.1x 6. 0x 4.9x 6. 0x 7.8x 7.7x
Day s of Inventory on Hand (DIO) 57.9 Day s 64.9 Days 80.5 Days 76. 6 Days 66.8 Days 69.2 Day s 80. 7 Days 93.8 Day s 66. 6 Days 54.2 Day s 44.9 Days 60. 7 Days 74.9 Days 61. 3 Days 46.8 Days 47.5 Days
Total A sset Turnover 2.1x 2. 0x 1.7x 1. 9x 1.9x 1.9x 1. 8x 1.8x 2. 2x 2.2x 2.2x 2. 0x 2.0x 2. 2x 2.2x 2.3x
Working Capital Turnov er 10.8x 8. 3x 4.6x 7. 4x 7.8x 8.4x 12. 7x 11.9x 12. 8x 12.8x 11.6x 12. 5x 11.3x 8. 8x 8.8x 10.0x
L iqui dity
Current Ratio 2.09x 2.55x 3.48x 2.39x 2. 40x 2.08x 1. 49x 1.53x 2.06x 2.06x 2.12x 1.73x 1.93x 2.42x 2. 42x 2.25x
Quick Ratio 0.75x 1.20x 1.73x 0.93x 1. 13x 0.91x 0. 40x 0.38x 0.90x 0.90x 0.88x 0.33x 0.30x 1.33x 1. 33x 0.91x
Cas h Ratio 0.51x 0.66x 0.78x 0.37x 0. 73x 0.30x 0. 01x 0.02x 0.27x 0.27x 0.35x 0.21x 0.15x 1.13x 1. 13x 0.71x
Capital Structure
Total Debt-to-Tot al Equity 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.1x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x
LT Debt/ Total Equity 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0.0x 0. 0x 0.0x 0.0x
Net Debt/EBITDA 2.8x 1. 2x (0.4)x (0.3)x (1.3)x (0.3)x 0. 1x 0.4x (0.8)x (0. 8)x (1.4)x 4. 3x 0.6x 8. 7x 8.7x 2.0x
EBITDA /Interes t Expense - - - - - - - - - - - - - - - -
Interest Cov erage - - - - - - - - - - - - - - - -
S ourc e: Compustat Nort h America
78
Pamela Quintiliano
Analyst
212-667-7945
Ross Stores (ROST), Perform

Investment Thesis
We are raising our rating on ROST to Perform from Underperform as our cautious view on the economy, combined with our belief that
consumer's attitude towards spending has fundamentally changed, leads to our view that the discount group will continue to post above
industry-average sales and comp results. Looking specifically at ROST, we believe that its inventory management focus combined with
ongoing learnings from last year’s micromerchandising rollout and the opportunity to enter new markets should ensure continued growth.
Plus by catering to two different spectrums of the value customer with its core Ross Stores ($50K-$60K hhold income) and smaller dd’s
Discounts concept ($30K-$40K hhold income), we believe ROST is able to capture a very broad customer base. While we are impressed
with ROST’s execution strategy, we believe it is fairly valued at current levels (trading at slight discount to its historical forward multiple)
given strong exposure to states with high unemployment and foreclosure rates combined with difficult upcoming compares.
Revenue 6,468.1 7,184.2 1,934.8 1,917.3 1,826.7 2,075.2 7,754.0 8,296.7 P/E 14.4x 16.2x 13.5x 12.2x
16.0%
Upcoming Comps: Jun (1%), Jul (4%), Aug (6%), Sept (8%), Oct (9%), 14.0%
12.0%
Comp Store Sales
Nov (8%), Dec (12%), Jan (8%), Feb (11%), Mar (14%), Apr (3%), May
(5%) 10.0%
8.0%
4.0%
CY2009 Operating Margin vs. Historic Peak: 60 bps above peak 2.0%
#Calc
0.0%
1.2x 120
1.0x 100
Relative Price Perf
Rel. Fwd. P/E NTM
0.8x 80
0.6x 60
0.4x 40
0.2x 20
0.0x 0
03 05 07 09 Jan.
ROST S&P ROST S&P

79
ROSS STORES INCOME STATEMENT

Fiscal ye ar ends January; dollar s in m illions except per s har e data.
FY2008 1Q09 2Q09 3Q09 4Q09 FY2009 1Q10 2Q10E 3Q10E 4Q10E 2010E 2011E
Net Re venue s $6,486.1 $1,691.6 $1,768.6 $1,744.1 $1,979.8 $7,184.2 $1,934.8 $1,917.3 $1,826.7 $2,075.2 $7,754.0 $8,296.7
Gr os s Pr ofit 1529.6 422.9 457.5 459.3 517.3 1856.9 528.7 506.2 471.3 531.3 2037.4 2170.4
SG&A 1034.4 272.0 286.2 286.5 286.1 1130.8 294.5 306.8 299.6 292.6 1193.4 1290.1
Depreciation 141.8 37.6 37.9 39.7 43.9 159.0 35.0 50.0 50.0 55.0 190.0 55.0
Oper ating Incom e 495.2 150.9 171.3 172.8 231.1 726.1 234.2 199.4 171.7 238.7 844.0 880.3
Interest expense and other (0.2) 1.7 1.4 1.9 2.6 7.6 2.4 2.5 2.0 2.0 8.9 2.0
Ear nings be for e income taxe s 495.4 149.2 170.0 170.8 228.5 718.5 231.8 196.9 169.7 236.7 835.1 878.3
Income Taxes 189.9 57.8 66.5 65.8 85.7 275.8 89.5 76.8 66.2 92.3 324.8 338.1
Net Incom e 305.4 91.4 103.4 105.1 142.9 442.8 142.3 120.1 103.5 144.4 510.3 540.1
Dilute d EPS fr om Con' t Ops $2.33 $0.72 $0.82 $0.84 $1.16 $3.54 $1.16 $0.99 $0.87 $1.22 $4.25 $4.70
Margin Analysis
Gross Margin 23.6% 25.0% 25.9% 26.3% 26.1% 25.8% 27.3% 26.4% 25.8% 25.6% 26.3% 26.2%
Basis Poi nt Change in GM 90 90 240 340 230 230 230 50 (50) (50) 40 (10)
SG&A 15.9% 16.1% 16.2% 16.4% 14.5% 15.7% 15.2% 16.0% 16.4% 14.1% 15.4% 15.6%
Basis Poi nt Change in SG&A 30 20 (20) (50) (30) (20) (90) (20) (0) (40) (30) 20
Operating Margin 7.6% 8.9% 9.7% 9.9% 11.7% 10.1% 12.1% 10.4% 9.4% 11.5% 10.9% 10.6%
Pre-tax Margin 7.6% 8.8% 9.6% 9.8% 11.5% 10.0% 12.0% 10.3% 9.3% 11.4% 10.8% 10.6%
Tax Rate 38.3% 38.8% 39.2% 38.5% 37.5% 38.4% 38.6% 39.0% 39.0% 39.0% 38.9% 38.5%
Net Margin 4.7% 5.4% 5.8% 6.0% 7.2% 6.2% 7.4% 6.3% 5.7% 7.0% 6.6% 6.5%
Grow th Analysis (Yr/Yr)

Net Sales 8.6% 8.7% 7.8% 12.1% 14.2% 10.8% 14.4% 8.4% 4.7% 4.8% 7.9% 7.0%
Gross Profit 12.7 12.8 18.8 28.7 25.3 21.4 25.0 10.6 2.6 2.7 9.7 6.5
SG&A 10.5 9.8 6.4 9.1 12.1 9.3 8.2 7.2 4.6 2.3 5.5 8.1
Operating Income 17.6 18.7 47.3 83.2 46.8 46.6 55.3 16.4 (0.6) 3.2 16.2 4.3
Net Income 17.0 15.0 45.0 83.5 46.7 45.0 55.8 16.1 (1.5) 1.0 15.3 5.8
Diluted EPS 22.2 21.1 52.8 93.0 52.4 52.3 61.2 20.6 3.2 5.6 20.0 10.5
80
R O SS ST O R ES B A LA NC E S HEET
Fis ca l y e a r e n d s Ja nu a ry ; Do lla rs in m illio n s e x ce p t p er s h ar e d at a .
2 0 08 2009 2 01 0 E 2 0 11 E
A s s e ts
C a s h a nd ca s h e q u iv a le n ts $ 3 2 1 .4 $7 6 8 .3 $ 1 ,1 3 3 .3 $1 , 70 0 .0
R e s tric te d c a sh an d s h o r t te rm inv e s tm en t s 0 .8 1 .8 1 .8 0 .0
A c co u n ts R e c eiv a ble 4 1 .2 4 4 .2 4 1 .0 4 1 .0
M e rc ha n d is e in v en t or ie s 8 8 1 .1 8 7 2 .5 8 4 2 .0 88 4 .1
Pre p a id ex p e n se s a n d o th e r 5 5 .2 5 8 .6 5 8 .0 6 0 .0
D e f e rre d In co m e Tax e s 1 4 .1 0 .0 0 .0 0 .0
To ta l C u rre n t A s se t s $ 1 ,3 1 3 .7 $ 1 ,7 4 5 .4 $ 2 ,0 7 6 .1 $2 , 68 5 .0
L a n d a n d b uildin g s 2 0 1 .4 0 .0 0 .0 0 .0
Fix tu re s a n d e qu ip me n t 1 0 7 4 .0 0 .0 0 .0 0 .0
L e a s eh o ld Im p ro ve m en t s 5 1 0 .0 0 .0 0 .0 0 .0
C o n st r u c tion - in - pr og re s s 7 2 .8 0 .0 0 .0 0 .0
L e s s a c cu m ula te d d e p re cia tio n a nd am o rtiz at io n 9 0 6 .5 0 .0 0 .0 0 .0
PPE, Ne t 9 5 1 .7 9 4 3 .0 9 6 6 .6 99 0 .7
L o n g Te rm In v e st me n ts 3 8 .0 1 6 .8 1 5 .9 1 5 .9
O th e r L o n g Te rm A s s et s 5 2 .1 6 3 .3 7 3 .0 7 3 .0
To ta l A ss e ts $ 2 ,3 5 5 .5 $ 2 ,7 6 8 .6 $ 3 ,1 3 1 .5 $3 , 76 4 .7
L ia b il iti e s & S ha r e ho ld e r s ' Equ ity

A c co u n ts p a y a ble $ 5 3 6 .7 $6 5 8 .3 $8 0 3 .1 $ 97 9 .8
A c cr ue d e x p e ns e s 2 3 8 .5 2 5 9 .6 3 1 1 .5 37 3 .8
A c cr ue d p a y ro ll a n d b e n ef it s 1 7 0 .9 2 1 8 .2 1 7 4 .6 13 9 .7
In c om e Ta xe s Pa y a ble 9 .1 5 4 .4 1 0 1 .0 10 1 .0
C u rre n t Lia b ilit ie s $ 9 5 5 .3 $ 1 ,1 9 0 .5 $ 1 ,3 9 0 .2 $1 , 59 4 .3
L o n g te rm d e b t 1 5 0 .0 1 5 0 .0 1 5 0 .0 15 0 .0
O th e r L o n g Te rm lia bilit ie s 1 5 6 .7 1 7 4 .5 1 7 4 .5 17 4 .5
D e f e rre d in co m e ta x e s 9 7 .2 9 6 .3 8 8 .0 8 8 .0
To ta l L iab ilitie s $ 1 ,3 5 9 .1 $ 1 ,6 1 1 .3 $ 1 ,8 0 2 .8 $2 , 00 6 .8
S h ar e h ol de r s ' Eq ui ty $ 9 9 6 .4 $ 1 ,1 5 7 .3 $ 1 ,3 2 8 .7 $1 , 75 7 .9
T o ta l L ia b il iti e s & S ha r e ho ld e r s ' Equ ity $ 2 ,3 5 5 .5 $ 2 ,7 6 8 .6 $ 3 ,1 3 1 .5 $3 , 76 4 .7
S o u rc e: C o mp a ny re po rt s , O p pe n h e im er & C o. In c. e s tima te s
81
ROSS STORES OPERATING METRICS

Fiscal year ends January; Dol lars in mi lli ons except per shar e data.
V al uation
Ent erpris e Value/EBITDA 6.4x 7.4x 6.5x 8.8x 7. 2x 7.2x 7.3x 5.8x 5. 6x 5.8x 6.8x 7.1x 6. 3x 5.7x 5.8x 6.4x
Ent erpris e Value/EBIT 8.0x 9.5x 8.5x 11.2x 9. 2x 9.1x 9.1x 7.1x 7. 3x 7.5x 8.7x 9.0x 7. 8x 6.9x 7.1x 7.6x
Ent erpris e Value/Sales 0.7x 0.7x 1.2x 0.8x 0. 7x 0.7x 0.8x 0.7x 0. 6x 0.6x 0.7x 0.8x 0. 7x 0.7x 0.7x 0.8x
Tot al Debt/Enterpris e Value 0.0x 0.0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0.0x
Tot al Debt/EBITDA 0.2x 0.2x 0.0x 0.3x 0. 3x 0.3x 0.2x 0.2x 0. 2x 0.2x 0.2x 0.2x 0. 2x 0.2x 0.2x 0.2x
Tot al Debt/EBIT 0.2x 0.3x 0.0x 0.4x 0. 4x 0.3x 0.3x 0.3x 0. 3x 0.3x 0.3x 0.3x 0. 2x 0.2x 0.2x 0.2x
Pric e/Earnings 14.3x 15.9x 14.5x 18.7x 15. 1x 16.3x 17.0x 14.2x 12. 4x 12.5x 15.2x 15.9x 13. 8x 12.7x 12.8x 13.8x
Pric e/Sale s 0.8x 0.7x 1.3x 0.8x 0. 7x 0.7x 0.8x 0.7x 0. 6x 0.6x 0.7x 0.8x 0. 8x 0.8x 0.8x 0.9x
Pric e/Cash Flow 7.3x 8.9x 10.1x 9.1x 11. 3x 7.7x 7.7x 7.3x 6. 5x 6.6x 7.2x 8.0x 6. 9x 6.4x 6.5x 8.2x
Pric e/Book Value 5.0x 4.5x 3.3x 5.0x 4. 0x 4.5x 5.0x 4.3x 3. 8x 3.8x 4.6x 5.2x 4. 9x 4.9x 4.9x 5.6x
Div idend Y ield 1.1% 1.0% - 0. 7% 1.0% 1.1% 1.0% 1. 2% 1.3% 1.3% 1.2% 1. 0% 1.0% 1.0% 1.0% 1. 1%
Pro fi tabili ty
Gross Margin 25.2% 23.4% 36.4% 22. 5% 22.7% 23.3% 24.2% 25. 1% 23.6% 23.6% 23.8% 24. 4% 25.3% 25.8% 25.8% 26. 4%
Operat in g Margin 9.4% 7.7% 14.2% 7. 0% 7.0% 7.2% 7.5% 7. 6% 7.6% 7.6% 7.8% 8. 5% 9.4% 10.1% 10.1% 10. 9%
Pret ax Margin 9.3% 7.7% 14.6% 7. 2% 7.1% 7.2% 7.5% 7. 7% 7.6% 7.6% 7.8% 8. 4% 9.3% 10.0% 10.0% 10. 8%
Net Margin 5.7% 4.7% 9.1% 4. 3% 4.4% 4.5% 4.7% 4. 7% 4.7% 4.7% 4.8% 5. 2% 5.7% 6.2% 6.2% 6. 6%
EBIT Margin 9.4% 7.7% 14.2% 7. 0% 7.0% 7.7% 8.5% 9. 2% 7.6% 7.6% 7.8% 8. 5% 9.4% 10.1% 10.1% 10. 9%
EBITDA Margin 11.6% 9.7% 18.7% 8. 9% 9.1% 9.7% 10.5% 11. 3% 9.8% 9.8% 10.0% 10. 7% 11.7% 12.3% 12.3% 13. 1%
Return on As sets 15.4% 12.7% 17.0% 11. 2% 11.0% 11.6% 12.4% 12. 5% 12.9% 12.9% 12.7% 13. 8% 15.2% 17.3% 17.3% 18. 2%
Return on Equity 37.5% 30.5% 25.1% 27. 7% 27.8% 28.3% 30.3% 31. 6% 31.1% 31.1% 31.3% 33. 7% 38.0% 41.1% 41.1% 43. 6%
Bas ic DuPont ROE (3 St ep) 36.2% 30.6% 25.1% 29. 2% 27.0% 27.9% 29.4% 30. 7% 29.8% 30.6% 31.8% 33. 0% 36.8% 38.4% 41.3% 41. 0%
Effi ci ency
Rev enue/Employ ee - 0.2 0.1 0. 2 0.2 - - - - 0.2 - - - - 0.2 -
Rec eiv ables Turnover 146.3x 172.4x 342.3x 188.1x 176. 9x 141.8x 128.5x 132.7x 147. 0x 165.0x 145.1x 135.7x 143. 3x 156.6x 168.2x 150.8x
Day s of Sales Outs tanding (DSO) 2. 5 Day s 2. 1 Days 1. 1 Day s 1.9 Days 2.1 Days 2.6 Days 2. 8 Day s 2.8 Day s 2.5 Days 2.2 Days 2. 5 Day s 2.7 Day s 2.5 Days 2.3 Days 2. 2 Days 2.4 Day s
Inventory Turnover 5.7x 4.9x 4.5x 4.3x 4. 4x 4.6x 4.7x 4.5x 5. 0x 5.2x 5.6x 5.5x 5. 3x 5.6x 6.1x 6.1x
Day s of Invent ory on Hand (DIO) 64. 7 Day s 76. 4 Days 80. 5 Day s 84.1 Days 82.1 Days 79.8 Days 78. 1 Day s 80.3 Day s 72.7 Days 70.2 Days 65. 1 Day s 66.0 Day s 68.3 Days 64.6 Days 60. 1 Days 59.5 Day s
Tot al Asset Turnov er 2.6x 2.6x 1.7x 2.4x 2. 5x 2.5x 2.5x 2.6x 2. 8x 2.8x 2.6x 2.6x 2. 5x 2.6x 2.6x 2.6x
Working Capital Turnover 13.7x 14.7x 4.6x 12.9x 15. 4x 14.6x 16.0x 17.9x 18. 1x 18.1x 15.8x 14.4x 13. 7x 12.9x 12.9x 11.8x
Li quidity
Current Ratio 1. 44x 1.40x 3. 48x 1. 40x 1.38x 1.40x 1. 37x 1. 33x 1.38x 1.38x 1. 38x 1. 42x 1.42x 1.47x 1.47x 1. 51x
Quick Ratio 0. 64x 0.46x 1. 73x 0. 43x 0.37x 0.42x 0. 42x 0. 33x 0.45x 0.45x 0. 54x 0. 59x 0.58x 0.73x 0.73x 0. 77x
Cas h Ratio 0. 54x 0.36x 0. 78x 0. 34x 0.25x 0.29x 0. 29x 0. 21x 0.34x 0.34x 0. 42x 0. 47x 0.48x 0.65x 0.65x 0. 67x
Capi tal Str ucture

Tot al Debt-to-Total Equit y 0.1x 0.1x 0.0x 0.2x 0. 2x 0.2x 0.1x 0.2x 0. 2x 0.2x 0.1x 0.1x 0. 1x 0.1x 0.1x 0.1x
LT Debt/ Total Equit y 0.1x 0.1x 0.0x 0.2x 0. 2x 0.2x 0.1x 0.2x 0. 2x 0.2x 0.1x 0.1x 0. 1x 0.1x 0.1x 0.1x
Net Debt/EBITDA (0.6)x (0.4)x (0.4)x (0. 4)x (0.2)x (0.3)x (0.2)x (0. 1)x (0.3)x (0.3)x (0.5)x (0. 5)x (0.5)x (0.7)x (0.7)x (0. 7)x
EBITDA /Interest Expense - 91.8x - 171.5x 50. 6x - - - - 55.4x - - - 116.6x 79.1x 116.6x
Interes t Coverage - 72.2x - 134.4x 39. 4x - - - - 43.1x - - - 95.6x 64.9x 97.2x
Sourc e: Compus tat North America
82
Pamela Quintiliano
Analyst
212-667-7945
The TJX Companies (TJX), Perform

Investment Thesis
W e are raising our rating on TJX to Perform from Underperform as our cautious view on the economy, combined with our belief that consumers attitude towards
spending has fundamentally changed, leads to our view that the discount group will continue to post above industry-average sales and comp results. TJX is the
largest player in the discounter group, and with its low packaway philosophy (5%-10%) and the ability to quickly execute on merchandise strategies, we believe that it
will continue to take advantage of inventory buys both domestically and internationally. Near-term we believe there could even be an opportunity for improved
European buys as competitors drop out of the marketplace/become less aggressive. Plus European store operations should benefit from a trade-down customer.
While we have confidence in the fundamentals and TJX’s ability to execute across a variety of economic environments we believe that the story is well-known. Plus
upcoming difficult compares provide near-term headline risk. As such, despite trading at a discount to its historical forward multiple of 13.3x, we would wait for a
better entry point to get involved.
Revenue 18,999.5 20,288.4 5,016.5 5,127.3 5,580.5 6,348.6 22,020.6 23,340.0 P/E 14.6x 16.2x 13.6x 12.3x
Comp Sales 1.0% 6.1% 9.0% 3.0% 2.8% 2.8% 4.4% 1.3% Total Debt (bil.): 1,487 1,487 1,487 1,487
16.0%
14.0%
Upcoming Comps: Jun (4%), Jul (4%), Aug (5%), Sept (7%), Oct (10%), Nov
12.0%
Comp Store Sales
(8%), Dec (14%), Jan (12%), Feb (10%), Mar (12%), Apr (4%), May (4%)
10.0%
8.0%
Ending 1Q Inventories: $45.0/psf, -6.3%
6.0%
CY2009 Operating Margin vs. Historic Peak: 160 bps above peak 4.0%
2.0%
#Calc
0.0%
1.2x 250
1.0x 200
Relative Price Perf
Rel. Fwd. P/E NTM
0.8x
150
0.6x
100
0.4x
0.2x 50
0.0x 0
TJX S&P TJX S&P

83
TJX INCOME STATEMENT

Fiscal year ends January ; dollars in millions exc ept per share data.
2009 1Q10 2Q10 3Q10 4Q10 2010 1Q11A 2Q11E 3Q11E 4Q11E 2011E 2012E
Net Reven ues $18,999. 5 $4,354. 2 $4,747.5 $5, 244.9 $5,941. 7 $20,288. 4 $5,016. 5 $5,127.3 $5, 580.5 $6,298. 3 $22,022. 6 $23,344. 0
Cost of Goods Sold 14394. 8 3273. 3 3534.3 3802.2 4358. 6 14968. 4 3648. 7 3789.1 4051.4 4635. 5 16124. 7 17076. 1
Gro ss P rofit 4604. 7 1080. 9 1213.2 1442.8 1583. 1 5320. 0 1367. 9 1338.2 1529.1 1662. 7 5897. 9 6267. 9
SG&A 3170. 0 735. 1 790.9 864.1 938. 9 3328. 9 821. 4 851.1 920.8 1020. 3 3613. 6 3828. 4
Depreciation 401. 7 104. 1 105.3 109.5 116. 3 435. 2 100. 0 100.0 100.0 100. 0 400. 0 400. 0
Oper ati ng I ncom e 1434. 7 345. 8 422.4 578.7 644. 2 1991. 1 546. 5 487.1 608.3 642. 4 2284. 3 2439. 4
Unusal It ems
Interest expense and other (16. 2) 6. 6 9.2 12.7 11. 0 39. 5 10. 2 10.5 10.0 10. 0 40. 7 40. 0
Earni ngs before in co m e taxe s 1450. 9 339. 2 413.1 566.0 633. 2 1951. 6 536. 3 476.6 598.3 632. 4 2243. 6 2399. 4
Income Taxes 536. 1 130. 0 151.5 218.2 238. 2 738. 0 204. 9 184.0 230.9 244. 1 863. 9 921. 4
Net In co me from Cont Operatio ns 914. 9 209. 2 261.6 347.8 395. 0 1213. 6 331. 4 292.6 367.3 388. 3 1379. 7 1478. 1
Extra Items (34. 3) 0. 0 0.0 0.0 0. 0 0. 0 0. 0 0.0 0.0 0. 0 0. 0
A djust ed Net Income 880. 6 209. 2 261.6 347.8 395. 0 1213. 6 331. 4 292.6 367.3 388. 3 1379. 7 1478. 1
Weighted A verage Diluted Shares 442. 3 431. 9 430.5 428.1 419. 2 427. 4 414. 0 413.0 411.0 409. 0 411. 8 395. 0
Dilu te d EPS from Con' t Ops $2. 07 $0.48 $0.61 $0. 81 $0. 94 $2. 84 $0.80 $0.71 $0. 89 $0. 95 $3. 35 $3. 74
MA RGIN A NA LY SIS
Gross Margin 24. 2% 24.8% 25.6% 27. 5% 26. 6% 26. 2% 27.3% 26.1% 27. 4% 26. 4% 26. 8% 26. 9%
Change i n GM (30) 100 120 180 400 200 240 50 (10) (20) 60 10
S G&A 16. 7% 16.9% 16.7% 16. 5% 15. 8% 16. 4% 16.4% 16.6% 16. 5% 16. 2% 16. 4% 16. 4%
Change i n SG&A 10 0 (20) (50) 20 (30) (50) (10) 0 40 0 0
Operating Margin 7. 6 7. 9 8.9 11.0 10. 8 9. 8 10. 9 9.5 10.9 10. 2 10. 4 10. 5
Pre-tax Margin 7. 6 7. 8 8.7 10.8 10. 7 9. 6 10. 7 9.3 10.7 10. 0 10. 2 10. 3
Tax Rate 36. 9 38. 3 36.7 38.6 37. 6 37. 8 38. 2 38.6 38.6 38. 6 38. 5 38. 4
Net Margin 4. 8 4. 8 5.5 6.6 6. 6 6. 0 6. 6 5.7 6.6 6. 2 6. 3 6. 3
GROWTH ANALY SIS

Net Sales 3. 6% 1.2% 4.2% 10. 2% 10. 4% 6. 8% 15.2% 8.0% 6. 4% 6. 0% 8. 5% 6. 0%
Gross Prof it 2. 4 5. 3 9.6 17.8 29. 8 15. 5 26. 6 10.3 6.0 5. 0 10. 9 6. 3
S G&A 4. 3 0. 9 3.1 7.0 11. 8 5. 0 11. 7 7.6 6.6 8. 7 8. 6 5. 9
Operating Income (1. 4) 16. 0 24.2 38.9 69. 6 38. 8 58. 0 15.3 5.1 (0. 3) 14. 7 6. 8
Net Income 16. 9 5. 7 30.6 36.9 57. 6 32. 6 58. 4 11.9 5.6 (1. 7) 13. 7 7. 1
Dilut ed EPS 23. 7 10. 2 35.2 40.9 61. 8 37. 3 65. 3 16.6 10.0 0. 8 18. 0 11. 7
S ource: Company reports, Oppenheimer & Co. Inc. est imat es
84
TJX BALANCE SHEET

Fiscal ye ar e nds January; dollars in millions e xce pt pe r s hare data.
2009 2010 2011E 2012E

Ass e ts
Cash and cash equivalents $453.5 $1,745.2 $1,762.7 $1,780.3
Accounts Receivable, Net 417.6 403.9 422.4 447.2
Merchandise inventories 2619.3 2532.3 2650.6 2789.2
Current Deferred income taxes, net 135.7 122.5 132.1 139.9
Total Current A ssets 3626.1 4803.9 4967.8 5156.6
Property & Equipment, net 2185.8 2287.1 2527.1 2743.2
Property Under Cap Lease 15.4 0.0 0.0 0.0
Other 171.4 193.2 193.2 193.2
Goodw ill 179.5 179.8 179.8 179.8
Total A ssets $6,178.3 $7,464.0 $7,867.9 $8,272.8
Liabilities & Shareholde rs ' Equity
Current portion of long term debt 392.9 0.0 0.0 0.0

Obligations under capital lease due w ithin 1 year 2.2 0.0 0.0 0.0
Accounts payable 1276.1 1507.9 1634.6 1749.2
Accr ued expenses 1096.8 1387.1 1451.2 1553.0
Current Liabilities $2,767.9 $2,895.0 $3,085.8 $3,302.2
Long term debt 365.6 774.3 774.3 774.3

Other LT liabilities 765.0 713.0 713.0 713.0
Non Cur rent deferred taxes 127.0 192.4 192.4 192.4
Obligations under capital, less current portion 18.2 0.0 0.0 0.0
Total Liabilities $4,043.7 $4,574.7 $4,765.5 $4,981.9
Share holde rs' Equity $2,134.6 $2,889.3 $3,102.4 $3,290.9
Total Liabilitie s & Shareholde rs' Equit y $6,178.2 $7,464.0 $7,867.9 $8,272.8
Source: Company r eports, Oppenheimer & Co. Inc. estimates
85
TJX CO'S OPERATING METRICS

Fiscal ye ar ends Januar y; Dollars in millions e xcept per s har e data.
Valuation
Dividend Yield 1.3% 1.3% 0.9% 0.9% 1.1% 1.1% 1.3% 1.6% 2.3% 2.2% 1.6% 1.3% 1.3% 1.3% 1.2% 1.0%
Profitability
Gross Margin 25.4% 24.5% 23.4% 24.1% 24.5% 24.4% 24.5% 24.6% 24.1% 24.2% 24.3% 24.6% 25.1% 26.2% 26.2% 26.8%
Pretax Margin 8.9% 7.5% 6.3% 7.2% 6.7% 7.0% 8.1% 8.1% 7.6% 7.6% 7.8% 8.2% 8.7% 9.6% 9.6% 10.3%
Net Margin 5.5% 4.7% 4.3% 4.5% 4.1% 4.4% 5.1% 5.1% 4.8% 4.8% 4.9% 5.1% 5.4% 6.0% 6.0% 6.4%
EBIT Margin 9.0% 7.8% 6.6% 7.3% 7.8% 7.9% 8.0% 8.0% 7.6% 7.6% 7.8% 8.2% 8.8% 9.8% 9.8% 10.5%
EBITDA Margin 11.1% 9.8% 8.5% 9.3% 9.7% 10.0% 10.1% 10.1% 9.7% 9.6% 9.9% 10.3% 10.9% 12.0% 12.0% 12.6%
Return on Assets 15.5% 14.2% 13.1% 13.4% 12.2% 12.5% 14.4% 14.1% 14.3% 14.3% 13.6% 13.3% 14.5% 17.8% 17.8% 18.2%
Return on Equity 44.2% 40.4% 38.9% 37.1% 34.9% 35.9% 45.2% 45.4% 42.9% 42.9% 41.4% 39.5% 42.2% 48.3% 48.3% 49.7%
Basic DuPont ROE (3 Step) 40.1% 39.7% 37.9% 35.6% 37.7% 38.4% 46.2% 45.5% 40.8% 41.4% 42.0% 36.5% 36.7% 40.6% 46.0% 44.8%
Efficie ncy
Liquidity
Capital Structur e
Net Debt/EBITDA (0.2)x 0.0x 0.3x (0.0)x 0.1x 0.5x 0.4x 0.5x 0.2x 0.2x 0.1x (0.1)x (0.2)x (0.3)x (0.3)x (0.4)x
EBITDA/Interest Expense 50.5x 43.9x 35.2x 41.5x 45.4x 48.1x 50.1x 52.7x 50.3x 48.1x 52.2x 51.1x 48.3x 49.8x 49.3x 51.1x
Interest Coverage 40.7x 34.8x 27.2x 32.5x 36.2x 38.3x 39.9x 41.8x 39.3x 37.7x 41.0x 40.4x 38.9x 40.9x 40.5x 42.5x
86
Pamela Quintiliano
Analyst
212-667-7945
Under Armour, Inc., Perform

Price: $37.50 Market Cap (bil.): $1.9 Fiscal Yr. End: Dec.
Investment Thesis
We are maintaining our Perform rating on UA. While we believe in the long-term viability of management's five key growth initiatives
(domestic women’s apparel, domestic men’s apparel, footwear, international and direct-to-consumer) we are concerned that there is potential
execution risk as there are multiple moving pieces to each, including increased product penetration that the current economic environment
may not support. When combined with declining operating margins of 10.6% in 2008 and a high valuation of 29.3x our inline forward estimate
of $1.28, we believe the stock is fairly valued at current levels.
Revenue 725.2 8,564.0 229.4 189.3 309.4 253.3 981.5 1,128.7 P/E 35.4x 40.8x 33.8x 29.3x
OPCO EPS $0.77 $0.92 $0.14 $0.03 $0.58 $0.35 $1.11 $1.28 EV/EBITDA $17.05 18.0x 15.5x 13.9x
25.0%
20.0%
Total Sales Change
15.0%
CY2009 Operating Margin vs. Historic Peak: -420 bps from peak 10.0%
5.0%
#Calc
0.0%
2008A 1Q10 3Q10E 2010E
5.0x 120
100
Rel. Fwd. P/E NTM
4.0x
Relative Price Perf
3.0x 80
2.0x 60
40
1.0x
20
0.0x
03 05 07 0
Jan. Jan.
UA S&P
UA S&P 500
87
UNDER ARMO UR, INC.

Fi sca l year e nds Jan uary; D ol lars i n m il li on s exc ep t pe r sh are data.
FY 2008 1Q09 2Q09 3Q09 4Q 09 FY2009 1Q10A 2Q10E 3Q1 0E 4 Q10E FY2010E FY 201 1E
T otal n et r eve nu e $725. 2 $200.0 $164. 6 $26 9.5 $222.2 $856. 4 $229.4 $18 9.3 $309. 4 $253.3 $981. 5 $1,1 28.7
CO GS and oc cu panc y 370. 3 109.4 90. 4 13 5.5 108.1 443. 4 121.8 10 1.7 152. 9 122.7 499. 1 5 73.4
Gr os s pro fit 354. 9 90.6 74. 3 13 4.1 114.1 413. 0 107.6 8 7.7 156. 6 130.6 482. 5 5 55.3
S G &A ex pens e s 278. 0 82.7 70. 9 8 7.0 87.2 327. 8 94.0 8 4.1 103. 7 98.4 84. 1 4 40.2
Dep rec iat ion an d amortiz at i on 21. 3 6.8 5. 0 5.0 3.7 20. 6 6.8 5.0 5. 0 5.0 21. 8 22.0
Op er ating I nco m e 76. 9 7.9 3. 4 4 7.1 26.9 85. 3 13.6 3.6 52. 9 32.2 101. 0 1 15.1
Int ere s t ex pens e ( inc ome), ne t 0. 0 0.9 0. 6 0.5 0.4 2. 3 0.5 0.5 0. 5 0.5 2. 0 0.5
Res tru cturing c harges (ass et impairment) 0. 0 0.0 0. 0 0.0 0.0 0. 0 0.7 0.0 0. 0 0.0 0. 0 0.0
Oth er exp en se (in com e ) 7. 0 (0.0) 0. 4 (0.1) 0.3 0. 5 0.0 0.0 0. 0 0.0 0. 0 0.0
EB T 69. 9 7.0 2. 4 4 6.7 26.2 82. 4 12.4 3.1 52. 4 31.7 98. 9 1 14.6
Tax es / (benef i t) 31. 7 3.1 1. 0 2 0.5 11.0 35. 6 5.2 1.3 22. 5 13.6 42. 7 49.3
Net in com e 38. 2 4.0 1. 4 2 6.2 15.2 46. 8 7.2 1.8 29. 9 18.1 56. 8 65.3
EPS - (dilut ed) 0. 77 0.08 0. 0 3 0 . 52 0.30 0. 92 0.14 0 .03 0. 58 0.35 1.1 1 1. 28
Los s f rom dis c ont inued opera tions 0. 0 0.0 0. 0 0.0 0.0 0. 0 0.0 0.0 0. 0 0.0 0. 0 0.0
Non-r ecurring item s (af t er-t ax ) 0. 0 0.0 0. 0 0.0 0.0 0. 0 0.0 0.0 0. 0 0.0 0. 0 0.0
Repor ted net inc o me 38. 2 4.0 1. 4 2 6.2 15.2 46. 8 7.2 1.8 29. 9 18.1 56. 8 65.3
Weigh t ed A v erage Dilut ed Sha res 49. 9 50.4 50. 6 5 0.7 50.8 50. 7 50.9 5 1.2 51. 2 51.2 51. 1 51.2
Rep o r ted EPS (d i lu ted ) $0. 77 $0.08 $0. 0 3 $0 . 52 $0.30 $0. 92 $0.14 $0 .03 $0. 58 $0.35 $1.1 1 $ 1. 28
Margin Analy s is
Gros s Margin 48. 9% 45.3% 45. 1 % 49 . 7% 51.4% 48. 2% 46.9% 46 .3% 50. 6% 51.6% 49.2 % 4 9. 2%
B as i s Point Cha nge i n GM (130) (230) (10 ) ( 130) 60 (70) 160 1 20 90 20 90 0
S G&A 38. 3% 41.3% 43. 1 % 32 . 3% 39.2% 38. 3% 41.0% 44 .4% 33. 5% 38.8% 38.9 % 3 9. 0%
B as i s Point Cha nge i n SG &A 230 (350) (10 ) 130 130 (10) (30 ) 1 30 120 (40) 60 10
Depre ciat ion/A mo rtiz at ion Mar gin 2. 9% 3.4% 3. 0 % 1 . 9% 1.7% 2. 4% 3.0% 2 .6% 1. 6% 2.0% 2.2 % 1. 9%
Opera t ing Margin 10. 6 3.9 2. 1 1 7.5 12.1 10. 0 5.9 1.9 17. 1 12.7 10. 3 10.2
Pre-t a x Margin 9. 6 3.5 1. 5 1 7.3 11.8 9. 6 5.4 1.6 16. 9 12.5 10. 1 10.2
Tax Rate 45. 3 43.8 40. 9 4 3.9 42.1 43. 2 42.0 4 3.0 43. 0 43.0 42. 6 43.0
Net M argin 5. 3 2.0 0. 9 9.7 6.8 5. 5 3.1 0.9 9. 7 7.1 5. 8 5.8
Grow t h A naly s is (Y r/Y r)

Net Sa les 19. 6% 21.3% 4. 8 % 13 . 9% 19.3% 18. 1% 12.8% 13 .0% 12. 9% 12.3% 14.6 % 1 5. 0%
Gros s Prof it 16. 4 17.4 4. 5 1 1.8 20.3 16. 4 15.9 1 5.3 14. 4 12.6 16. 8 15.1
S G&A 27. 1 14.7 4. 6 1 7.5 21.9 17. 9 12.1 1 5.7 16. 1 11.4 16. 8 14.5
Depre ciat ion/A mo rtiz at ion 46. 0 34.3 (5. 7) 0.0 (76.6) (3. 7) 0.0 0.0 0. 0 25.6 6. 2 0.8
Opera t ing Inc ome (10. 8) 45.6 3. 2 1.2 15.1 10. 9 41.9 6.0 11. 1 16.4 18. 4 8.5
Net In c ome (27. 3) 27.6 4. 4 2.0 45.3 22. 4 44.7 1 8.5 12. 4 15.9 21. 4 9.4
Diluted EPS (37. 3) 26.9 3. 0 0.4 44.2 17. 0 44.2 1 7.5 11. 6 15.3 16. 9 9.2
S ourc e: Company reports , Op penheimer & Co. Inc . es t imates
88
UA BALANCE SHEET
2009 2010 2011E 2012E

Ass et s
Cash and cash equivalents $102.0 $187.3 $177.9 $169.0
A ccounts Receivable, Net 81.3 79.4 103.2 113.5
Merchandise inventories 182.2 148.5 163.4 179.7
Prepaid Expenses & Other 18.0 12.9 16.8 21.8
Current assets $396.4 $448.0 $477.3 $501.1
Property & Equipment, net $73.5 $72.9 $76.5 $80.4

Intangible Assets $5.5 $5.7 $5.2 $5.2
Other 3.4 5.1 5.1 5.1
Total Assets $487.6 $545.6 $581.1 $608.7
Liabilitie s & Shareholde rs' Equit y

Revolving credit $25.0 $0.0 $0.0 $0.0
A ccounts payable $72.4 $68.7 $103.1 $103.1
A ccrued expenses $25.9 $40.9 $0.0 $0.0
Current maturities on LT debt 7.1 9.2 9.0 0.0
Current maturities on capit al lease 0.4 0.1 0.0 0.0
Other 2.3 1.3 0.0 0.0
Subordinated debt $13.1 $10.9 $10.9 $7.0

Obligations under capital, less current portion $0.1 $0.0 $0.0 $0.0
Other $10.2 $14.5 $15.9 $16.3
Total Liabilitie s & Share holde rs' Equit y $487.6 $545.6 $581.1 $501.1
89
UNDER ARMOUR OPERATING METRICS

Fiscal yearends January; Do llars in m il lions except per share data.
V al uati on
Enterprise Value/EBITDA 10.4x 23.0x 34.8x 36.4x 21.4x 20. 3x 14.7x 15.6x 11. 7x 11. 5x 7.5x 10.0x 12. 4x 10. 7x 10.8x 11.2x
Enterprise Value/EBIT 13.7x 27.5x 40.8x 42.6x 25.0x 24. 7x 18.6x 19.4x 14. 9x 14. 7x 9.7x 13.2x 16. 5x 14. 3x 14.2x 14.8x
Enterprise Value/Sale s 1.4x 3.5x 5.2x 5.7x 3.6x 2. 9x 1.9x 2.2x 1. 6x 1. 6x 1.0x 1.4x 1. 6x 1. 4x 1.4x 1.5x
Total Debt/ Enterpris e Value 0.0x 0.0x 0.0x 0.0x 0.0x 0. 0x 0.0x 0.0x 0. 0x 0. 0x 0.0x 0.0x 0. 0x 0. 0x 0.0x 0.0x
Total Debt/ EBITDA 0.2x 0.2x 0.2x 0.1x 0.1x 0. 2x 0.3x 0.4x 0. 5x 0. 5x 0.2x 0.2x 0. 2x 0. 2x 0.2x 0.1x
Total Debt/ EBIT 0.2x 0.3x 0.2x 0.1x 0.2x 0. 3x 0.4x 0.5x 0. 6x 0. 6x 0.2x 0.3x 0. 2x 0. 2x 0.2x 0.2x
Price/Earnings 28.5x 51.7x 98.2x 60.8x 40.1x 38. 5x 29.8x 33.1x 30. 6x 30. 2x 20.5x 28.0x 34. 8x 29. 3x 29.0x 29.7x
Price/Sales 1.5x 3.4x 5.1x 5.5x 3.5x 2. 9x 1.9x 2.2x 1. 7x 1. 6x 1.1x 1.4x 1. 7x 1. 6x 1.6x 1.7x
Price/Cas h Flow 12.5x - 96.3x 233.8x - - - 41.3x 17. 3x 17. 1x 9.8x 11.3x 15. 9x 11. 6x 11.6x 13.7x
Price/Book Value 3.3x 7.5x 11.8x 11.2x 7.6x 6. 3x 4.3x 4.9x 3. 6x 3. 6x 2.4x 3.2x 3. 7x 3. 4x 3.4x 3.6x
Pr ofi tabi lity

Gross Margin 48.0% 49. 0% 48. 3% 49.9% 50.0% 49.9% 49. 0% 49.2% 48.9% 48. 7% 48. 1% 48.0% 47.6% 47. 9% 48. 0% 48.4%
Operating Margin 10.2% 12. 2% 12. 8% 13.3% 14.2% 11.7% 10. 3% 11.4% 10.6% 10. 6% 10. 5% 10.4% 10.0% 10. 0% 10. 0% 10.3%
Pret ax Margin 9.5% 11. 9% 11. 7% 13.7% 14.7% 12.1% 10. 4% 11.1% 9.6% 9. 6% 9. 4% 9.3% 9.1% 9. 6% 9. 6% 9.9%
Net Margin 5.2% 7. 1% 7. 0% 9.1% 8.7% 7.1% 6. 1% 6.5% 5.3% 5. 3% 5. 1% 5.1% 4.9% 5. 5% 5. 5% 5.6%
EBIT Margin 10.2% 12. 2% 12. 8% 13.3% 14.2% 11.7% 10. 3% 11.4% 10.6% 10. 6% 10. 5% 10.4% 10.0% 10. 0% 10. 0% 10.3%
EBITDA Margin 13.5% 14. 8% 15. 0% 15.5% 16.6% 14.2% 13. 0% 14.2% 13.6% 13. 5% 13. 6% 13.6% 13.3% 13. 3% 13. 1% 13.5%
Return on A ssets 9.0% 12. 3% 12. 5% 15.8% 15.5% 13.4% 11. 2% 10.9% 8.7% 8. 7% 9. 3% 8.8% 8.1% 9. 1% 9. 1% 9.9%
Return on Equity 12.5% 18. 0% 22. 1% 21.3% 21.2% 17.8% 15. 6% 16.1% 12.5% 12. 5% 12. 6% 12.3% 11.4% 12. 8% 12. 8% 13.3%
Bas ic DuPont ROE (3 St ep) 11.6% 17. 0% 16. 9% 21.3% 21.5% 15.9% 14. 7% 15.6% 11.7% 12. 8% 11. 2% 11.6% 10.9% 12. 0% 12. 4% 12.1%
Effi ci ency
Rev enue/ Employ ee - 0. 4 0. 5 0.4 0.4 - - - - 0.3 - - - - 0. 3 -
Rec eiv ables Turnover 8.1x 7.9x 6.1x 6.9x 7.3x 6. 5x 6.6x 5.7x 6. 2x 8. 3x 8.2x 8.1x 7. 1x 7. 6x 10.7x 9.3x
Day s of Sales Outs tanding (DSO) 45.6 Day s 48. 1 Days 59. 5 Day s 53.0 Days 49.8 Days 55.8 Days 55. 3 Day s 64.2 Day s 58.5 Days 44.0 Days 44. 5 Day s 45.0 Day s 51.7 Days 47.8 Days 34. 2 Days 39.1 Day s
Inventory Turnover 2.6x 2.7x 2.9x 3.2x 2.5x 1. 9x 2.0x 2.1x 2. 1x 2. 1x 2.3x 2.3x 2. 6x 3. 0x 2.7x 3.1x
Day s of Inventory on Hand (DIO) 139.9 Day s 139. 4 Days 127. 8 Day s 113.9 Days 148.8 Days 190.3 Days 186. 3 Day s 173.3 Day s 170.4 Days 170.9 Days 158. 7 Day s 156.3 Day s 143.1 Days 123.2 Days 135. 5 Days 118.3 Day s
Total Ass et Turnov er 1.6x 1.5x 1.4x 1.5x 1.6x 1. 6x 1.6x 1.5x 1. 5x 1. 5x 1.7x 1.6x 1. 6x 1. 6x 1.6x 1.6x
Working Capital Turnover 2.7x 2.5x 2.1x 2.5x 2.7x 2. 8x 2.9x 2.8x 2. 8x 2. 8x 2.9x 2.8x 2. 7x 2. 6x 2.6x 2.6x
Li quidi ty
Current Rat io 3.74x 3. 46x 3. 81x 3.42x 3.37x 3.82x 3. 34x 2.99x 2.98x 2.98x 3. 74x 3.57x 3.64x 3.73x 3. 73x 4.01x
Quick Rat io 2.29x 2. 14x 2. 69x 2.29x 1.63x 1.76x 1. 50x 1.73x 1.61x 1.61x 2. 05x 1.89x 2.31x 2.49x 2. 49x 2.68x
Cas h Rat io 1.05x 1. 01x 1. 32x 0.99x 0.42x 0.22x 0. 13x 0.31x 0.77x 0.77x 0. 67x 0.74x 0.81x 1.56x 1. 56x 1.49x
Cap ital Structu re

Total Debt-t o-Tot al Equit y 0.1x 0.1x 0.1x 0.0x 0.1x 0. 1x 0.1x 0.1x 0. 1x 0. 1x 0.1x 0.1x 0. 0x 0. 1x 0.1x 0.0x
LT Debt /Tot al Equit y 0.0x 0.0x 0.0x 0.0x 0.0x 0. 0x 0.1x 0.0x 0. 0x 0. 0x 0.0x 0.0x 0. 0x 0. 0x 0.0x 0.0x
Net Debt/ EBITDA (0.9)x (0. 9)x (1. 3)x (1.0)x (0.3)x 0.0x 0. 2x (0.0)x (0.6)x (0. 6)x (0. 5)x (0.6)x (0.7)x (1. 5)x (1. 5)x (1.2)x
EBITDA/Interest Ex pense 58.3x 69.3x 13.2x 112.1x 125.8x 96. 6x 77.4x 91.1x 67. 8x 53. 0x 64.8x 57.7x 51. 3x 58. 4x 42.5x 59.1x
Interes t Cov erage 44.3x 57.8x 11.3x 95.9x 107.8x 79. 4x 61.3x 73.2x 53. 1x 41. 6x 50.1x 44.0x 38. 6x 43. 9x 32.3x 44.8x
Sourc e: Compus tat North America
90
Pamela Quintiliano
Analyst
212-667-7945
Urban Outfitters (URBN), Outperform, $41 Price Target

Investment Thesis
We are maintaining our Outperform rating on URBN and a $41 12-18 month price target, representing 12% upside from current levels. Our
target conservatively assumes that URBN should trade inline with its historic average at 20x our above-consensus forward EPS estimate of
$2.01. We believe this is justified given its cautious approach to the long-term buildout of its multi-brand strategy. Near-term, we are excited
about several opportunities including: ongoing direct-to-consumer expansion; IT initiatives (calendar/lead times, CRM, store performance
predictors, company-wide single SKU); international expansion in Europe and Asia; the introduction of product engineers to manage costing;
and the buildout of Free People, Liefsdotter and the wedding business. We believe these, combined with the ongoing success of the dual-
leadership at Anthropologie and fresh blood at the Urban Outfitters division (new President Steve Murray should have an impact on 3Q) will
result in ongoing operating margin expansion opportunity beyond recent peak levels
Revenue 1,834.6 1,937.8 480.0 543.7 594.4 679.7 2,292.8 2,645.9 P/E 25.9x 28.5x 22.1x 23.0x
Comp Sales 7.8% (2.4%) 11.0% 6.7% 5.1% 5.0% 7.8% 3.9% Total Debt (bil.): 0 0 0 0
12.0%
10.0%
Comp Store Sales
Upcoming Comps: 2Q09 (-6%), 3Q09 (-2%), 4Q09 (4%), 1Q10 (11%) 8.0%
6.0%
Ending 1Q Inventories: $86.0/psf, +6.2% 4.0%
2.0%
CY2009 Operating Margin vs. Historic Peak: -150 bps from peak 0.0%
-2.0%
#Calc
-4.0%
2008A 1Q10 3Q10E 2010E
1.8x 200
1.6x
Relative Price Perf
Rel. Fwd. P/E NTM
1.4x 150
1.2x
1.0x
100
0.8x
0.6x
0.4x 50
0.2x
0.0x 0
URBN S&P URBN S&P

91
UR BAN O UTFITTE RS INCO ME S TATEME NT

Fi scal ye ar en ds Jan uary; Dol lars in m i ll ilo ns except p er shar e d ata
FY 2008 1Q09 2Q09 3Q09 4Q09 FY2009 1Q10 2Q10E 3Q10E 4Q10E FY 2010E FY2010E
Urban Outf it ters $771. 4 $152. 8 $177.1 $202.3 $227.9 $760.1 $174. 3 $199. 7 $235. 7 $263.2 $872.8 $1, 007.3
A nthropologie 642. 2 138. 3 173.1 181.6 211.7 704.8 182. 7 211. 7 $211. 6 $244.6 $850.6 $981.6
Direct to Consumer 272. 5 60. 8 70.9 79.8 112.2 323.7 86. 3 88. 7 $92. 9 $129.6 $397.5 $458.7
Free People 143. 0 31. 5 35.1 41.0 35.2 142.8 35. 1 41. 2 $47. 7 $40.7 $164.7 $190.1
Terrain 5. 7 1. 3 2.3 1.2 1.4 6.3 1. 6 2. 5 $1. 4 $1.7 $7.2 $8.3
Net s al es $1, 834. 6 $384. 8 $458.6 $505.9 $588.5 $1, 937.8 $480. 0 $543. 7 $589. 4 $679.7 $2,292.8 $2, 645.9
Cos t of goods sold 1121. 1 241. 5 271.5 295.8 342.8 1151.7 279. 2 312. 7 338. 3 393.6 1323.7 1518.7
Gr oss pro fit 713. 5 143. 3 187.1 210.1 245.7 786.1 200. 8 231. 1 251. 1 286.2 969.1 1127.1
SG&A ex pens e 414. 0 97. 2 108.7 114.3 127.0 447.2 118. 6 128. 3 130. 8 143.4 521.2 600.6
Deprecia t ion 81. 9 22. 1 23.0 23.6 23.6 92.4 0. 0 0. 0 0. 0 0.0 0.0 0.0
Ope ratin g i ncom e 299. 4 46. 1 78.4 95.8 118.7 339.0 82. 2 102. 8 120. 2 142.7 447.9 526.5
Other inc ome 10. 1 2. 1 0.9 1.8 0.6 5.4 0. 4 0. 7 0. 7 0.7 2.5 11.8
EBIT 309. 5 48. 2 79.4 97.6 119.2 344.4 82. 6 103. 5 120. 9 143.4 450.5 538.3
Inc ome t axes 110. 1 17. 4 30.4 35.2 41.6 124.5 29. 7 37. 0 43. 3 51.4 161.4 193.8
Net I ncom e 199. 4 30. 8 49.0 62.4 77.7 219.9 53. 0 66. 4 77. 6 92.1 289.1 344.5
Net income 199. 4 30. 8 49.0 62.4 77.7 219.9 53. 0 66. 4 77. 6 92.1 289.1 344.5
Dilut ed Shares Out s tanding 170. 9 170. 3 170.7 171.4 172.4 171.2 172. 8 172. 5 172. 3 172.1 172.4 171.5
Dil uted EPS $1. 17 $0.18 $0.29 $0.36 $0.45 $1. 28 $0. 31 $0.39 $0.45 $0.54 $1.68 $2. 01
MA RGIN ANALY SIS

Gross margin 38. 9% 37.2% 40.8% 41.5% 41.7% 40. 6% 41. 8% 42.5% 42.6% 42.1% 42.3% 42. 6%
B asi s Point Change i n GM 60 (300) (30) 60 770 170 460 170 110 40 170 10
S G&A r ati o 22. 6% 25.3% 23.7% 22.6% 21.6% 23. 1% 24. 7% 23.6% 22.2% 21.1% 22.7% 22. 7%
B asi s Point Change i n SG& A (80) 100 90 60 (0) 50 (60) (10) (40) (50) (30) (90)
Depreciation/A mort izat ion Margin 4. 5 5. 7 5.0 4.7 4.0 4.8 0. 0 0. 0 0. 0 0.0 0.0 0.0
Ope ratin g m ar gin 16. 3 12. 0 17.1 18.9 20.2 17.5 17. 1 18. 9 20. 4 21.0 19.5 19.9
Pretax margin 16. 9 12. 5 17.3 19.3 20.3 17.8 17. 2 19. 0 20. 5 21.1 19.6 20.3
Inc ome tax rate 35. 6 36. 1 38.2 36.1 34.9 36.2 35. 9 35. 8 35. 8 35.8 35.8 36.0
Net margin 10. 9 8. 0 10.7 12.3 13.2 11.3 11. 0 12. 2 13. 2 13.5 12.6 13.0
GROWTH ANALYS IS (Y/Y )

Retail sales 19. 5% (3.8% ) (1.5% ) 3.4% 13.3% 3. 3% 21. 5% 17.4% 16.5% 15.5% 17.8% 17. 8%
Direct sales 32. 4 4. 4 17.2 21.0 27.8 18.8 41. 9 25. 0 16. 5 15.5 22.8 15.4
Net sales 21. 7 (2. 4) 1.0 5.8 15.8 5.6 24. 7 18. 6 16. 5 15.5 18.3 15.0
Comparable Store S ales (9. 6) (6. 0) (2.0) 4.0 11.0 6.7 5. 1 5. 0 (7. 4) 2.8 9.1 21.6
S G& A ex pens e 17. 7 1. 5 4.9 8.9 15.8 8.0 22. 0 18. 1 14. 4 12.9 16.5 15.2
Operating income 33. 1 (26. 7) (5.4) 6.0 87.8 13.2 78. 3 31. 0 25. 6 20.3 32.1 17.5
Net income 28. 6 (27. 6) (14.0) 5.3 91.6 10.3 71. 9 35. 5 24. 4 18.6 31.5 19.2
Dilut ed EPS 27. 7 (27. 5) (13.5) 5.0 89.0 10.1 69. 4 34. 1 23. 8 18.8 30.6 19.8
S ourc e: Company reports , Oppenheimer & Co. Inc. estimates
92
URBAN OUTFITTERS BALANCE SHEET

Fis cal year e nds January; Dollars in m illilons exce pt pe r s hare dat a
2008 2009 2010E 2011E
As se ts
Cash and cash equivalents $224.7 $159.0 $413.5 $620.2
Marketable securities 72.9 342.5 325.4 325.4
Customer accounts receivable 28.5 38.4 45.9 50.4
Merchandise inventor ies 189.9 186.1 214.0 246.2
Other curr ent assets 42.0 80.1 94.8 108.8
Total current assets 558.0 806.2 1093.6 1351.0
Property and equipment 520.9 540.0 569.7 601.0

Marketable securities 266.5 243.4 189.5 189.5
Deferr ed income taxes and other 43.3 46.5 55.0 63.2
Total assets $1,388.8 $1,636.1 $1,907.8 $2,204.7
Liabilit ies & Share holders Equity
Accounts payable $81.4 $78.0 $89.7 $98.7

Accrued liabilities 82.9 110.5 127.0 146.1
Total current liabilit ies $164.3 $188.5 $216.7 $244.7
Deferr ed r ent 132.8 150.8 158.3 166.2

Total Long-term Liabilities $132.8 $150.8 $158.3 $166.2
St ock holders ' equity $1,091.6 $1,296.8 $1,531.9 $1,793.7
Total liab. & s tockholde rs' e quity $1,388.8 $1,636.1 $1,906.9 $2,204.7
93
URBAN OUTFITTERS OPERATING METRICS

Fiscal year ends January;Dollars in millions except per share data.
Valuation
Price/BookValue 3.9x 5.2x 8.0x 6.0x 5.6x 6.3x 5.7x 3.6x 2.5x 2.5x 3.0x 3.5x 4.3x 4.1x 4.1x 4.7x
Pr ofitability 40.8%
Gross Margin 16.4% 39.1% 41.1% 36.9% 38.3% 39.2% 40.1% 40.4% 38.9% 38.9% 41.7% 40.5% 39.5% 40.6% 40.6% 41.5%
Pretax Margin 10.6% 16.7% 19.4% 13.9% 15.5% 16.6% 17.6% 18.3% 16.9% 16.9% 16.0% 15.6% 15.7% 17.8% 17.8% 18.6%
Net Margin 17.8% 10.9% 12.0% 9.5% 10.6% 10.9% 11.7% 11.9% 10.9% 10.9% 10.3% 9.8% 9.8% 11.3% 11.3% 11.9%
EBIT Margin 22.5% 16.2% 19.0% 13.4% 14.9% 15.9% 17.0% 17.7% 16.3% 16.3% 18.9% 17.5% 16.4% 17.5% 17.5% 18.4%
EBITDA Margin 14.2% 20.5% 22.6% 17.8% 19.5% 20.5% 21.5% 22.1% 20.8% 20.7% 23.6% 22.3% 21.2% 22.3% 21.9% 23.1%
Return on Assets 18.1% 16.1% 19.7% 13.9% 15.7% 16.2% 17.7% 17.7% 16.1% 16.1% 14.5% 13.2% 12.7% 14.8% 14.8% 15.6%
Return on Equity 16.9% 21.3% 27.2% 18.8% 21.0% 21.4% 23.2% 23.4% 20.9% 20.9% 18.8% 17.0% 16.3% 18.7% 18.7% 19.8%
Efficiency
Liquidity
Capital Structure
Net Debt/EBITDA (0.5)x (0.4)x (0.2)x (0.1)x (0.4)x 0.0x 0.0x 0.0x 0.0x (0.8)x (0.5)x (0.4)x (0.5)x (0.4)x (0.4)x (0.6)x
94
Pamela Quintiliano
Analyst
212-667-7945
Zumiez (ZUMZ), Outperform, $21 Price Target

Investment Thesis
We are raising our rating on ZUMZ to Outperform from Perform and introducing a $21 12-18 month price target. Our price target assumes that ZUMZ should trade at 27.6x our
above-consensus forward EPS estimate of $0.76, which is inline with its historic average and represents 19% appreciation from current levels. We believe that ZUMZ’s
oftentimes exclusive third party branded assortments (roughly 84% of mix) serve as a strong traffic driver. Despite lower AUR than private label product, goods are
differentiated in the marketplace and thus the customer is more apt to pay full price rather than wait for markdowns- which benefits margins. While management is very
focused on the macro environment, it is being opportunistic with inventory buys reflecting areas of strength that have shown little to no price resistance. This is against last
year’s lean commitments, which resulted in lost sales. In addition to building inventories in proven categories, management will cautiously inch up prices on proven successes
for holiday. While not usually a fan of raising opening price points we believe it is prudent on a selective basis. Longer-term stores should benefit from the introduction of
business intelligence and micromerchandising software (rollout scheduled for 2011-2014).
Revenue 408.7 407.6 89.1 96.2 124.5 145.0 454.9 504.9 P/E 54.1x 58.9x 34.7x 23.0x
EBIT 27.5 14.0 (2.9) (3.4) 11.0 16.9 21.6 36.1 Net Cash/Share: $3.59 $3.59 $4.64 $4.75
OPCO EPS $0.60 $0.30 ($0.03) ($0.05) $0.25 $0.37 $0.53 $0.76 EV/EBITDA 15.8x 24.7x 12.2x 9.8x
Street EPS ($0.04) $0.24 $0.37 $0.53 $0.75 EV/Sales 1.3x 1.3x 1.2x 1.1x
Comp Sales (6.3%) (9.4%) 9.1% 8.0% 4.0% 4.0% 5.8% 5.0% Total Debt (bil.): 0 0 0 0
EBIT Margin 6.7% 3.4% (3.3%) (3.5%) 9.0% 11.7% 4.8% 7.3% Debt/Cap: 0.0% 0.0% 0.0% 0.0%
15.0%
Upcoming Comps: Jun (-19.3%), Jul (-16.8%), Aug (-12.1%), Sept (- 10.0%
5.0%
Comp Store Sales
0.8%),
Oct (-8.9%), Nov (-8.5%), Dec (0.3%), Jan (1.8%), Feb (11.2%), Mar 0.0%
(13.2%), Apr (2.1%), Dec (7.1%) -5.0%
-10.0%
Ending 1Q Inventories: $52.0/psf, 0% -15.0%
-20.0%
CY2009 Operating Margin vs.#Calc
Historic Peak: -1780 bps from peak
-25.0%
7.0x 120
6.0x 100
Relative Price Perf
Rel. Fwd. P/E NTM
5.0x
80
4.0x
60
3.0x
40
2.0x
1.0x 20
0.0x 0
05 07 09 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr.
ZUMZ S&P ZUMZ S&P

95
ZUMIEZ INCOME STATEMENT

Fis cal y ear ends January; Dollars in millions ex cept per share dat a.
FY 2008 1Q09A 2Q09A 3Q09A 4Q09A FY2009 1Q10A 2Q10E 3Q10E 4Q10E FY 2010E FY 2011E
Net Re venue s $408. 7 $76. 8 $85.2 $113.2 $132.4 $407.6 $89.1 $96.2 $124.5 $145.0 $454.9 $504. 9
Cost of Goods Sold 274. 1 54. 9 60.5 73.1 84.3 272.9 63.3 64.7 77.7 89.0 294.8 323. 1
Gro ss Pro fi t 134. 5 21. 9 24.6 40.1 48.1 134.7 25.8 31.6 46.8 56.0 160.1 181. 8
SG&A 109. 1 25. 3 29.9 31.7 35.1 122.0 29.0 33.2 35.0 38.4 135.6 146. 4
Depreciat io n/A mortization 19. 5 5. 3 5.4 5.5 5.7 22.0 4.7 5.3 5.0 5.0 20.0 20. 0
Ope rating In com e 25. 4 (3. 4) (5.2) 8.4 13.0 12.7 (3.3) (1.6) 11.8 17.5 24.5 35. 3
Interest Expense (Income) (2. 1) (0. 4) (0.3) (0.2) (0.4) (1.2) (0.4) (0.4) (0.4) (0.4) (1.6) (1. 6)
Ot her Ex pens e (Inc ome) (0. 0) 0. 0 0.0 (0.0) (0.1) (0.1) (0.0) 0.0 (0.0) (0.1) (0.1) (0. 0)
Earnings bef ore income tax es 27. 5 (3. 1) (4.9) 8.5 13.5 14.0 (2.9) (1.2) 12.2 18.0 26.2 37. 0
I ncom e Taxes 9. 7 (1. 4) (1.8) 3.5 4.7 4.9 (1.0) (0.5) 4.7 6.9 10.2 14. 2
Net Income 17. 8 (1. 7) (3.1) 5.1 8.8 9.1 (1.9) (0.8) 7.5 11.1 16.0 22. 7
Adj uste d Ne t In co m e 17. 8 (1. 7) (3.1) 5.1 8.8 9.1 (1.9) (0.8) 7.5 11.1 16.0 22. 7
Weight ed A verage Diluted S hares 29. 4 29. 3 29.5 29.6 30.3 30.1 29.7 29.9 30.0 30.0 29.9 30. 0
Dilut ed EPS Including Charges (GA A P) $0. 60 ($0. 06) ($0. 10) $0. 17 $0. 29 $0.30 ($0.06) ($0.03) $0.25 $0.37 $0.53 $0.76
Dilut ed EPS f rom Con't Ops (NON-GA AP) $0. 60 ($0. 06) ($0. 10) $0. 17 $0. 29 $0.30 ($0.03) ($0.05) $0.25 $0.37 $0.54 $0.76
Margin A naly sis

Gross Margin 32. 9% 28. 5% 28. 9% 35. 4% 36. 3% 33.1% 28.9% 32.8% 37.6% 38.6% 35.2% 36.0%
B asi s Point Change in GM (310) (270) (370) 40 390 10 40 390 220 230 210 80
SG&A 26. 7% 33. 0% 35. 1% 28. 0% 26. 5% 29.9% 32.6% 34.5% 28.1% 26.5% 29.8% 29.0%
B asi s Point Change i n SG& A 90 380 670 230 170 320 (40) (60) 10 0 (10) (80)
Depreciation/A mort izat ion Margin 4. 8% 6. 9% 6. 4% 4. 9% 4. 3% 5.4% 5.3% 5.5% 4.0% 3.4% 4.4% 4.0%
Operating Margin 6. 2 (4. 5) (6.1) 7.4 9.8 3.1 (3.7) (1.7) 9.5 12.1 5.4 7. 0
Pre-tax Margin 6. 7 (4. 0) (5.8) 7.5 10.2 3.4 (3.2) (1.3) 9.8 12.4 5.8 7. 3
Tax Rat e 35. 4 46. 2 37.3 40.5 34.7 34.8 39.4 38.5 38.5 38.5 39.0 38. 5
Net Margin 4. 3 (2. 2) (3.6) 4.5 6.6 2.2 (2.1) (0.8) 6.0 7.6 3.5 4. 5
Grow t h Analys is (YoY )

Net Sales 12. 3% (2. 4%) (7. 7%) 0. 8% 5. 6% (0. 3% ) 16.0% 13.0% 10.0% 9.5% 11.6% 11.0%
Gross Prof it (2. 0) (10. 8) (18.1) 2.1 18.4 0.2 17.6 28.1 16.8 16.4 18.8 13. 5
SG&A 11. 0 10. 5 14.0 9.9 12.6 11.8 14.5 11.2 10.2 9.6 11.2 8. 0
Deprec ia t ion/ Amortization (23. 1) 20. 9 14.0 10.0 8.4 13.0 (11.0) (3.1) (9.1) (13.0) (9.1) 0. 0
Operating Income (34. 8) (311. 4) (233.6) (19.5) 37.5 (49.9) (5.4) (68.7) 41.5 34.5 92.3 44. 3
Net Income (29. 9) (221. 7) (213.1) (25.6) 28.5 (48.6) 14.6 (75.4) 48.3 26.0 74.8 42. 5
Diluted EPS (30. 3) (221. 9) (212.7) (26.1) 37.6 (49.8) (40.1) (56.6) 46.1 27.1 79.4 39. 4
S ourc e: Company report s, Oppenheimer & Co. Inc . estimates
96
ZUMIEZ BALANCE SHEET

2008 2009 2010E 2011E
Ass et s
A ccounts Receivable 4.6 6.4 7.0 7.5

Goodw ill 13.2 13.2 13.2 13.2
Marketbable Securities, Long Term 0.0 0.9 0.9 0.9
Deferred tax assets 2.9 5.5 5.6 5.6
Total Assets $233.3 $260.3 $305.9 $315.3
Liabilitie s & Shareholde rs' Equity

Revolving Credit Facility 0.0 0.0 0.0 0.0
Book Overdraft 0.0 0.0 0.0 0.0
A ccrued Payroll and Payroll Taxes 4.7 6.6 7.3 7.6
Current Portion of Deferred Rent 2.7 3.2 3.6 4.0
Other Liabilities 7.6 9.1 10.1 10.1
Current Liabilit ies $31.2 $39.8 $39.7 $42.3
Long- Term Defer red Rent and TA s 24.2 26.4 26.4 26.4
Total Liabilitie s & Shareholde rs' Equit y $233.3 $260.3 $305.9 $315.3
97
ZUMIEZ O PERATING METRICS

Fiscal year e nds January; Dol lars i n m illio ns except per share data.
V aluati on
Enterprise V alue/EBITDA 8.7x 12.7x 22.4x 20.8x 9.1x 10.1x 6. 7x 4. 1x 3. 0x 3. 1x 6. 8x 6. 1x 10. 4x 7.6x 8.0x 12.3x
Enterprise V alue/EBIT 22.7x 19.2x 30.9x 27.5x 12.5x 14.3x 9. 8x 6. 3x 5. 4x 5. 4x 13. 9x 17. 1x 33. 6x 19.6x 19.5x 29.3x
Enterprise V alue/Sales 0.7x 1.7x 3.0x 3.0x 1.3x 1.4x 0. 9x 0. 5x 0. 3x 0. 3x 0. 7x 0. 5x 0.8x 0.7x 0.7x 1.1x
Total Debt /EBITDA 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0.0x 0.0x 0.0x 0.0x
Total Debt /EBIT 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0.0x 0.0x 0.0x 0.0x
Price/Earnings 43.5x 33.4x 48.8x 43.3x 21.6x 24.1x 17. 4x 12. 2x 12. 1x 12. 1x 25. 1x 32. 9x 58. 6x 41.1x 41.1x 59.9x
Price/Sales 1.0x 1.8x 3.0x 3.0x 1.4x 1.6x 1. 1x 0. 7x 0. 5x 0. 5x 0. 9x 0. 7x 1.0x 0.9x 0.9x 1.3x
Price/Cash Flow 10.2x 18.7x 31.4x 31.6x 16.4x 11.1x 7. 6x 5. 2x 5. 5x 5. 5x 9. 1x 7. 8x 11. 4x 8.5x 8.5x 14.2x
Price/Book V alue 2.2x 4.9x 8.9x 8.8x 3.6x 3.9x 2. 7x 1. 7x 1. 2x 1. 2x 2. 0x 1. 6x 2.2x 2.0x 2.0x 2.9x
Pr ofitability 34.7%
Gros s Margin 32.4% 8.1% 35. 4% 36. 4% 35. 9% 35. 7% 35. 3% 34. 8% 32.9% 32.9% 32.4% 31.6% 31.8% 33.1% 33.1% 33.3%
Operating Margin 3.5% 8.4% 9. 8% 10. 9% 10. 2% 9. 8% 9. 4% 8. 6% 6.0% 6.0% 4.8% 2.9% 2.4% 3.5% 3.5% 3.7%
Pret ax Margin 3.5% 5.3% 10. 1% 11. 3% 10. 7% 10. 3% 9. 9% 9. 2% 6.5% 6.5% 5.3% 3.0% 2.4% 3.4% 3.4% 3.4%
Net Margin 2.3% 8.1% 6. 3% 7. 0% 6. 6% 6. 4% 6. 1% 5. 7% 4.2% 4.2% 3.5% 2.1% 1.7% 2.2% 2.2% 2.1%
EBIT Margin 3.5% 12.2% 9. 8% 10. 9% 10. 2% 9. 8% 9. 4% 8. 6% 6.0% 6.0% 4.8% 2.9% 2.4% 3.5% 3.5% 3.7%
EBITDA Margin 8.7% 10.9% 13. 4% 14. 4% 14. 0% 13. 9% 13. 6% 13. 1% 10.8% 10.6% 9.8% 8.2% 7.8% 8.9% 8.4% 8.8%
Return on As s et s 3.8% 16.8% 15. 2% 14. 8% 13. 2% 12. 6% 11. 2% 10. 1% 7.7% 7.7% 6.0% 3.3% 2.5% 3.7% 3.7% 3.4%
Return on Equity 5.4% 16.1% 25. 8% 23. 4% 19. 5% 18. 4% 17. 2% 15. 0% 10.3% 10.3% 8.5% 5.0% 3.8% 4.9% 4.9% 4.8%
Bas ic DuPont ROE (3 Step) 5.2% 5.3% 23. 6% 23. 6% 18. 5% 16. 3% 16. 0% 14. 0% 9.2% 10.0% 8.2% 4.9% 3.7% 4.7% 5.0% 4.7%
Efficiency
Rev enue/Employ ee - 0.1 0. 1 0. 1 0. 1 - - - - 0.1 - - - - 0.1 -
Rec eiv ables Turnov er 174.4x 129.9x 72.7x 66.5x 104.1x 180.3x 141. 1x 147. 7x 205. 7x 204. 7x 208. 2x 149. 4x 143. 2x 184.0x 201.5x 187.3x
Day s of Sales Out st andin g (DSO) 2.1 Day s 3.5 Day s 5. 0 Day s 5. 5 Day s 3. 5 Day s 2. 0 Day s 2. 6 Days 2. 5 Days 1. 8 Days 1.8 Days 1.8 Days 2.4 Days 2.5 Days 2.0 Day s 1.8 Day s 1.9 Day s
Inv entory Turnov er 4.6x 5.3x 4.9x 5.2x 5.4x 4.7x 4. 0x 3. 5x 4. 1x 5. 4x 5. 2x 4. 4x 3.7x 4.3x 5.3x 5.1x
Day s of Inv ent ory on Hand (DIO) 81.4 Day s 69.5 Day s 73. 9 Day s 70. 0 Day s 67. 9 Day s 77. 9 Day s 91. 8 Days 105. 1 Days 89. 1 Days 67.0 Days 70.4 Days 82.6 Days 97.4 Days 85.1 Day s 68.8 Day s 71.4 Day s
Total As set Turnover 1.6x 1.7x 1.8x 1.8x 1.8x 1.7x 1. 6x 1. 6x 1. 8x 1. 8x 1. 7x 1. 5x 1.5x 1.6x 1.6x 1.5x
Working Capit al Turnov er 3.4x 4.1x 4.3x 5.4x 4.1x 4.4x 4. 4x 4. 1x 3. 6x 3. 6x 3. 7x 3. 6x 3.3x 3.0x 3.0x 3.3x
Li quidi ty
Current Rat io 3. 56x 3.34x 2. 50x 2. 11x 3. 12x 2. 83x 2.42x 2.53x 4.59x 4.59x 3.78x 2.91x 3.23x 4.39x 4.39x 3.51x
Quic k Ratio 2. 29x 2.17x 1. 53x 1. 26x 2. 00x 1. 63x 1.30x 1.26x 2.93x 2.93x 2.43x 1.73x 1.83x 3.11x 3.11x 2.34x
Cas h Ratio 0. 38x 0.45x 0. 15x 0. 16x 0. 28x 0. 16x 0.13x 0.14x 1.06x 1.06x 0.51x 0.36x 0.19x 0.58x 0.58x 0.26x
Capital Structure
Total Debt -t o-Total Equity 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0. 0x 0.0x 0.0x 0.0x 0.0x
Net Debt /EBITDA (0.5)x (0.4)x (0. 2)x (0. 2)x (0. 2)x (0. 1)x (0. 1)x (0. 2)x (0.7)x (0.8)x (0.5)x (0.7)x (0.3)x (0.6)x (0.7)x (0.3)x
EBITDA/ Int erest Expens e - - - - - - - - - - - - - - - -
Interes t Cov erage - - - - - - - - - - - - - - - -
Source: Compus tat Nort h Americ a
98
Price Target Calculation

ANF: Our $40 price target is based on a multiple of 15x our FY11 EPS estimate of $2.64—a P/E consistent with its reduced European
risk, improved domestic merchandising and premium positioning in the marketplace.
ARO: Our $35 price target is based on a multiple of 12x our FY11 EPS estimate of $2.95—a P/E consistent with its multiple initiatives in
place to support operating margin expansion.
GYMB: Our $52 price target is based on a multiple of 12x our FY11 EPS estimate of $4.34—a P/E consistent with its multiple concept
growth opportunity (reduced for potential near-term execution risk).
JCG: Our $50 price target is based on a multiple of 19x our FY11 EPS estimate of $2.78—a P/E consistent with its long-term
multi-channel growth prospects discounted for near-term execution risk.
PSUN: Our $4 price target is based on a multiple of 6x EV/EBITDA—a premium to the group reflecting our belief that improved
merchandising and store operations will propel multiple expansion opportunity.
URBN: Our $41 price target is based on a multiple of 20x our FY11 EPS estimate of $2.0—a P/E consistent with its historical average
and long-term multi-channel growth prospects.
ZUMZ: Our $21 price target is based on a multiple of 28x our FY11 EPS estimate of $0.76—a P/E consistent with its historical average
and long-term growth prospects.
Key Risks to Price Target

ANF, ARO, GYMB, JCG, PSUN, URBN, ZUMZ: In addition to the macro-economic climate, risks to our price targets include poor
customer response to new fashion offerings, declines in mall traffic levels, excess inventory commitments, increased promotional activity
among competitors, rising sourcing costs and unplanned senior management departures.
Note: We view stocks trading under $5 as speculative and appropriate for risk-tolerant investors.
Companies with Updates:

OUTPERFORM
Gymboree Corp.(GYMB,$42.60)
Pacific Sunwear(PSUN,$3.25)
Abercrombie & Fitch Co.(ANF,$33.15)
Aeropostale Inc.(ARO,$29.34)
J. Crew Group, Inc.(JCG,$39.96)
Urban Outfitters Inc.(URBN,$34.70)
Zumiez, Inc.(ZUMZ,$16.26)
PERFORM
Gap Inc.(GPS,$20.44)
Lululemon Athletica Inc.(LULU,$41.47)
Under Armour, Inc.(UA,$35.90)
American Eagle Outfitters(AEO,$12.76)
Citi Trends, Inc.(CTRN,$33.65)
Ross Stores Inc.(ROST,$55.27)
TJX Companies, Inc.(TJX,$44.48)
Important Disclosures and Certifications

Analyst Certification - The author certifies that this research report accurately states his/her personal views about the
subject securities, which are reflected in the ratings as well as in the substance of this report.The author certifies that no
part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views
contained in this research report.
99
Potential Conflicts of Interest:

Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm
including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation
based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any
research analyst and any member of his or her household from executing trades in the securities of a company that such
research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an
officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in
covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long
position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in
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foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of
interest.
Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by
Oppenheimer & Co. Inc:
Stock Prices as of June 23, 2010
American Eagle Outfitters (AEO - NYSE, 12.76, PERFORM)
Abercrombie & Fitch Co. (ANF - NYSE, 33.15, OUTPERFORM)
Aeropostale Inc. (ARO - NYSE, 29.34, OUTPERFORM)
Citi Trends, Inc. (CTRN - Nasdaq, 33.65, PERFORM)
Gap Inc. (GPS - NYSE, 20.44, PERFORM)
Gymboree Corp. (GYMB - Nasdaq, 42.60, OUTPERFORM)
J. Crew Group, Inc. (JCG - NYSE, 39.96, OUTPERFORM)
Lululemon Athletica Inc. (LULU - Nasdaq, 41.47, PERFORM)
Pacific Sunwear (PSUN - Nasdaq, 3.25, OUTPERFORM)
Ross Stores Inc. (ROST - Nasdaq, 55.27, PERFORM)
TJX Companies, Inc. (TJX - NYSE, 44.48, PERFORM)
Under Armour, Inc. (UA - NYSE, 35.90, PERFORM)
Urban Outfitters Inc. (URBN - Nasdaq, 34.70, OUTPERFORM)
Zumiez, Inc. (ZUMZ - Nasdaq, 16.26, OUTPERFORM)
All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer &
Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price
histories, please write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017, Attention: Equity Research
Department, Business Manager.
Oppenheimer & Co. Inc. Rating System as of January 14th, 2008:
Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.
Perform (P) - Stock expected to perform in line with the S&P 500 within the next 12-18 months.
Underperform (U) - Stock expected to underperform the S&P 500 within the next 12-18 months.
Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential
conflict of interest.
Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008:
100
Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments,
and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector.
Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to
a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than
higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy,
aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere.
Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness
perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group.
Distribution of Ratings/IB Services Firmwide
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
OUTPERFORM [O] 333 51.30 132 39.64

PERFORM [P] 296 45.60 79 26.69
UNDERPERFORM [U] 20 3.10 3 15.00
Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not
correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned
buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.
Company Specific Disclosures

Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3
months from ANF, CTRN, LULU, and UA.
In the past 12 months Oppenheimer & Co. Inc. has provided non-investment banking, non-securities-related services for
URBN.
In the past 12 months Oppenheimer & Co. Inc. or an affiliate has received compensation for non-investment banking
services from URBN.
Oppenheimer & Co. Inc. makes a market in the securities of CTRN, GYMB, LULU, PSUN, ROST, URBN, and ZUMZ.
Additional Information Available
Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017,
Attention: Equity Research Department, Business Manager.
101
Other Disclosures
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EQUITY RESEARCH

June 23, 2010

A Fresh Look at Specialty

■ Fundamental shift in consumer behavior. We believe that there has been a

■ Rating changes. We are raising our rating on Aeropostale (ARO) to Outperform

■ Herein we create a framework that investors can use to examine "hot

Fine-Tuning Our View on the

Consumers spending more, but acting increasingly selective. Arguably consumers

Our new ratings are as follows:

• Outperform ratings. We are raising our rating on Aeropostale (ARO) to

Exhibit 1. Rating Changes/Price Targets

Companies with Updates: Summary

Abercrombie & Fitch A NF 46 40 NC O Jan 201 0 1.78E 1.82E NA 2.64E

Aero postale ARO Non e 35 U P Jan 201 0 2.48E 2.84E NA 2.95E

CitiTrend s CTRN Non e None NC P Jan 201 0 1.55E 1.84E NA 2.17E

Gymboree GYMB 58 52 NC O Jan 201 0 3.90E 3.86E 4.30E 4.34E

J Crew JCG Non e 50 P O Jan 201 0 2.12E 2.47E NA 2.78E

Urban Outfitters URBN NC 41 NC O Jan 201 0 1.64E 1.68E 1.90E 2.01E

Zu miez ZUMZ Non e 21 P O Jan 201 0 0.50E 0.53E NA 0.76E

HISTORICAL WEATHER TRENDS

COMPANY SPECIFIC OPERATING METRICS

GYMB does not break out stores by state

Source: Company reports and Oppenheimer & Co. Inc.

Exhibit 2. Gulf State Exposure

Sour ce: Company reports

• Commercial fishing industry. Although the region supplies roughly 20%-30% of

Exhibit 3. Tourism in Gulf States

2008 Tourism Tourism as %

Exhibit 4. Unemployment in Gulf States

Unemployment % Population Below

Exhibit 5. European Store Base

Source: Company reports

o Value wins, no matter what the market. Although the European

o Stronger dollar and weakened international competitors allow TJX

o ANF’s premium brand positioning could be a potential near-term

o However, we view ANF’s slowdown of aggressive growth plans

o When the dust settles, ANF should be in a superior position to take

• Best of both worlds, international growth at a more tempered pace enables

Exhibit 6. European Sales ($, millions)

Source: Company reports

Following 12 months of YoY declines, cotton prices began to inch up in October

YoY Chg in Cotton Prices, GM and C lothing/Accessories Sales

Source: National Cotton Council of America

Reallocation of Dollar Spend

Exhibit 8. Northeast Monthly Weather 2008-Present

Southeast up against warmer than normal temperatures in June and cooler

Exhibit 9. Southeast Monthly Weather 2008-Present

SE is defined as FLA, GA, AL, SC, NC, VA

The West should benefit from significantly above normal temperatures in

Exhibit 10. West Monthly Weather 2008-Present

West is defined as CA, NV, AK, HI

Exhibit 11. South Monthly Weather 2008-Present

Southis defined as TX, OK, KS, AR, LA

Exhibit 12. Central Monthly Weather 2008-Present

Central is defined as MO, IL, IN, OH, WV, KY, TN,

Exhibit 13. Monthly Weather of Remaining Regions

East North Central is defined as MN, WI, MI, IA

Southwest is defined as UT, CO, AZ, NM

Northwest is defined as WA, OR, ID

Exhibit 14. Fiscal Distress by State

US Total 352 NA 9.9% 1.0% NA 21.1% NA NA

Health Insurance Coverage

Exhibit 15. Health Insurance Facts by State