Aeropostale Conference Call Highlights

reported its Q3 earnings. Shares of the company are down 20 percent. Below are some key highlights from its conference call.

• As you might have read in our press release, our sales for the third quarter were $453 million, a 12% decrease from last year. • Our comparable sales for the quarter decreased 11% versus the same quarter in the previous year. • Our non-adjusted loss per share for the quarter was $0.66 per diluted share or $0.45 per share on an adjusted basis. • These results were in line with the guidance we had issued last quarter. • We ended the quarter with inventories down 16% on a retail per square foot basis, positioning us well heading into the fourth quarter. • Over Thanksgiving and the Black Friday weekend, however, we experienced a mid-teens comparable sales decrease as the decline in mall traffic and average consumer spending was evident. • We are clearly not happy with these results. • To this end, during the last three months, we have continued to support and accelerate a variety of well-conceived and executed initiatives that started before my arrival. • These include: reading and reacting to the tests that proved successful in our pathway store program; • Creating a limited number of proprietary sub-brands that complement our Aropostale assortments in stores; • Endorsing and increasing our focus on the use of social media influencers in order to be more relevant to today's teenagers; • Focusing on additional and improved customer engagement within our stores; • Accelerating the growth of our international store licensing business; • Strategically and surgically reducing our store base through store closings while pursuing significant rent relief in appropriate remaining stores to become more profitable.

• First, organizational structure and composition. During November, we implemented a new vertical organizational structure encompassing both Aropostale and P.S. from Aropostale. The entire product development team, merchants, designers, planners and allocators, is now focused on specific, more narrowly defined merchandise classifications. • We do think that the mid single digit comparable sales decreases we generated throughout the month of October and November after a year and a half of predominantly double-digit comparable sales decreases indicate small but measurable steps in the right direction • Once again, we view ourselves as being entrepreneurial with discipline and we are actively reengaging the organization to think like owners. • Regrettably, the term core has developed an extremely negative connotation, one intimately linked with basic and cheap and many times with logo. • During the fourth quarter, we saw 434 million social impressions across Instagram, Twitter and Facebook. We continue to lead the field in new fan acquisitions on both Instagram and Facebook and our positive sentiment continues to grow.

• Total net sales for the quarter were down 12% versus last year, reflecting an 11% decline in comparable sales, which includes our e-commerce channel. • Net revenues from our e-commerce business for the third quarter decreased 15% to $43.4 million from $51.1 million last year. • Including our e-commerce channel, our girl's business was down 11% and our guy's business was down 12%. • Our comparable sales decline for the quarter was driven by a 3% increase in average unit retail, offset by an 11% decrease in transactions and a 4% decrease in units per transaction. • During the quarter, for our Aropostale brand, we opened three stores and closed 16 stores, ending the quarter with 911 stores. • For our P.S. from Aropostale brand, we closed seven stores ending with 141 stores. • On a GAAP basis, the tax rate for the quarter was 8.4% versus 38.0% last year. • In 2015, we are considering potentially closing approximately 50 to 75 additional doors, which would bring our total closures to a range of approximately 220 to 240 Aropostale stores. • For 2015, we expect our expense reduction plan to generate savings of approximately $30 million to $35 million on an annualized basis, which includes approximately $15 million in operating profit improvement in our P.S. business as a result of the closing of our mall-based P.S. stores. • We continue to evaluate all cash utilization carefully and, as a result, expect our 2015 capital expenditures to total approximately $16 million versus approximately $22 million in 2014. • We are initiating guidance for the fourth quarter of 2014 at an operating loss range of $28 million to $34 million, which ties to a loss of $0.37 to $0.44 per diluted share.