ANN_deck_3e2672393c_b4e047575e

ANN INC.Presentation to the Board

September 2014

Table of contents

Situation overview

Relevant overview of the Company

Financial sponsor transaction

Corporate transaction

Potential buyers & transaction summary

Other alternatives (status quo, levered recapitalization and acquisition)

Conclusion & next steps

2

Table of contents

Situation overview







3

Engine Capital LP

Engine Capital LP is a value-oriented special situations fund that invests both actively and passively in companies undergoing change.

Engine Capital was launched on July 1, 2013, by Arnaud Ajdler and is currently managing just under $150 million in assets.

Significant experience investing in specialty apparel retailers and consumer companies

Significant experience working with companies on strategic, operational, corporate governance, and M&A matters from within the boardroom and from the outside

Relevant experience includes: Chairman of Destination Maternity (Nasdaq: DEST)

Former board member of Charming Shoppes (Nasdaq: CHRS) until its sale to Ascena Retail Group (Nasdaq: ASNA)

Former board member of OCharleys (Nasdaq: CHUX) until its sale to Fidelity National Financial (Nasdaq: FNF)

Former board member of Topps (Nasdaq: TOPP) until its sale to Madison Dearborn

Former or current board member of Hill International (Nasdaq: HIL), Stewart Information Systems (Nasdaq: STC), and Imvescor Restaurant Group (TSX: IRG)

4

Red Alder LLC

Red Alder LLC (Red Alder) is an SEC-registered investment adviser based in New York City that focuses on event-driven, value-oriented investment opportunities.

Red Alders hedge funds were launched on September 1, 2012 by Schuster Tanger and Joshua Packwood and are currently managing around $150 million in assets.

Significant experience investing in special situations and corporate actions; representative events include demutualizations, levered recaps, M&A, MLP & REIT conversions, restructurings, and spins.

Recent active engagement with companies on strategic, operational, and corporate governance matters, such as board reconstitutions, includes:

Speed Commerce, Inc. (Nasdaq: SPDC): reached settlement agreement on 7/14/2014, whereby Red Alder, among other terms, placed two well-qualified directors onto the board and removed one

LSB Industries, Inc. (NYSE: LXU): reached settlement agreement on 4/3/2014, whereby Red Alder and Engine Capital LP agreed to withdraw its director nominations notice in support of a simultaneous settlement agreement by Starboard Value LP that replaced three directors with three new well-qualified directors and established a four-person Strategic Committee of the Board

5

Situation overview

ANN is a great Company with two great brands that is currently undervalued. The Board has levers within its control to create value compared to the status quo.

Engine Capital LP and Red Alder LLC (We) own in excess of 1% of ANN and are publicly urging the Board to review all strategic alternatives, including a sale of the Company.

Since publicly releasing our letter to ANNs Board, the stock is up more than 10% and more than 10 million shares have traded, indicating that shareholders agree with our strongly recommended course of action and that investors are buying shares on the assumption that the Board will act accordingly.

We have spoken to a number of shareholders and not a single shareholder disagrees with our strong recommendation that ANN immediately conduct a strategic alternatives review. The consensus is that the status quo is not sustainable and that exploring a sale makes sense. We think some of these shareholders may have even shared similar views with ANN management and/or the Board.

6

The board owes it to the shareholders to explore strategic alternatives and see what someone would be willing to pay for the Company. Large, long-term ANN shareholder

Valuation range7

$25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00 $70.00


Financial sponsortransaction

Levered recapitalization

Status quo

52-week range

$55.00$50.00

$60.00 $65.00

$49.00$42.00

$37.00 $40.00

$43.61$30.71

Status quo and levered recapitalization range represent 2015 and 2016 stock prices discounted back to 1/30/2015.

In this presentation, we analyze different options for ANN and conclude that a sale is the best option.

Sell-side analysts agree8

we believe a sale would be in the best interest of ANNs shareholders, likely providing a significant premium to the pre-announcement stock price Richard Jaffe, Stifel (8/26/14)

We also believe the company could be encouraged to pursue a sale to a strategic acquirer. With meaningful synergies, an acquirer could pay a significant premium and still generate significant accretion. Liz Dunn, Macquarie Equities Research (4/14)

Board of directors9

We are particularly concerned about the board dynamics in light of the fact that 4-5 directors are retired and may view ANNs board compensation as their retirement income.

We are also concerned that 4 directors have been on the Board for more than 9 years, which could impair their objectivity. In particular, we note that James Burke has been on the Board for 25 years.

We question whether the Boards interests are directly aligned with the best interests of shareholders. Specifically, we note that independent directors only own 0.43% of the Company, yet receive a combined $1.5 million in annual Board compensation.

A majority of the Board is up for reelection at the next annual meeting, which we expect to be held in May or June of 2015.

Age# years on the board Occupation

2013 board compensation

ANN stock ownership

% ownership of ANN

Term expires in May/June

James J. Burke, Jr. 62 25 Retired / managing own capital $195,001 42,878 0.09% 2015

Dale W. Hilpert 71 10 Retired since 2006 $200,001 38,348 0.08% 2015

Ronald W. Hovsepian 53 16 CEO of a technology company $349,997 28,255 0.06% 2015

Linda A. Huett 69 9 Retired since 2006 $186,815 31,924 0.07% 2015

Michael C. Plansky 64 3 Retired since 2009 $205,523 14,697 0.03% 2016

Stacey Rauch 56 3 Retired since 2010 $180,001 16,534 0.04% 2015

Daniel W. Yih 55 7 COO Starwood Capital Group $185,001 25,744 0.06% 2016

$1,502,339 198,380 0.43%

Insider transactions10

Over the last 48 months, the independent directors have sold more than $10 million of stock at an average price of $31.57 per share. There has been minimal insider buying. How can this Board argue that a sale at $52.50 per share would undervalue ANN and is not the best outcome for the shareholders in light of their recent sales of ANN shares at much lower prices?

We continue to request the formation of a special committee of independent directors and, inparticular, request that the Committee be led by Daniel Yih. As C.O.O. of Starwood Capital, wethink that Mr. Yih has the requisite financial expertise. Moreover, his experience as a seniorexecutive of a leading private equity firm would be invaluable to the process. We also doubtthat Mr. Yihs decision would be influenced by the lost income caused by a sale of ANN.

Purchases last 48 months Sales last 48 months

# shares $ amount average price # shares $ amount average price

James J. Burke, Jr. 0 0 NA 235,337 7,249,437 $30.80

Dale W. Hilpert 0 0 NA 16,875 672,638 $39.86

Ronald W. Hovsepian 0 0 NA 48,609 1,548,248 $31.85

Linda A. Huett 0 0 NA 0 0 NA

Michael C. Plansky 0 0 NA 0 0 NA

Stacey Rauch 0 0 NA 0 0 NA

Daniel W. Yih 14,400 467,257 $32.45 22,000 721,125 $32.78

Total 14,400 467,257 $32.45 322,821 10,191,448 $31.57

Why now?11

Source: PitchBook 3Q 2014 U.S. PE BREAKDOWN

The unusually favorable credit markets have created an environment where buyers are able to pay up for assets given their ability to obtain financing at very attractive rates.

Table of contents

Situation overview







12

ANN is an ideal private equity target

Consistent performance (see slide 14 below)

Margin opportunity Long-term target of double digit EBIT margin compared to LTM EBIT margin of 6.3%

Significant supply chain opportunity leading to further store productivity and margin gains

Growing free cash flow Capital expenditures will decrease significantly over the next few years, as most of the

stores are new or have recently been renovated.

Significant growth opportunities (see slide 15 below)

Well-recognized brand & very strong customer loyalty

Size Not too big, yet large enough to move the needle for large private equity firms

13

Consistent performance14

Gross margins consistently between 52% and 54% (because of strict inventory guidelines and a strong sourcing organization) with upside potential based on management initiatives.

Excluding the 2008/2009 period, EBITDAmargins around 11% with upsidepotential based on managementinitiatives (target of double digit EBITmargin)

Significant growth opportunities

Lou & Grey Third concept is currently being launched

Our analysis indicates that Lou & Grey could contribute meaningfully to ANNs EBITDA over the long term.

Omnichannel Further improvement of mobile capabilities and integration of online and store

environments to create true omnichannel experience.

International expansion Significant opportunity to expand ANNs iconic brands internationally (beyond

managements current efforts in Canada and Mexico)

Many other specialty apparels are expanding internationally using a capital light model.

New channels Opportunity to open ANN stores within a store in select department stores in the US

and internationally

NYC relocation New York lease is coming due in 2019 there may be a significant opportunity to reduce

cost through a relocation outside Manhattan; we question why the Company needs to rent 300,000 sq. ft. in Times Square, Manhattan

Tax rate is higher than peers and could potentially be reduced outside of NYC

15

Financial model base case scenario16

Projected

2014 2015 2016 2017 2018 2019

EBITDA 268 306 329 353 378 405

- Interest 0.0 0.0 0.0 0.0 0.0

- Tax (75) (83) (91) (99) (108)

- Change in Working Capital (2) (1) (1) (1) (1)

as % of change in sales 1.5% 1.5% 1.5% 1.5% 1.5%

- Capex (100) (103) (106) (109) (113)

as % of Sales 3.8% 3.8% 3.8% 3.8% 3.8%

Free Cash Flow 130 142 155 169 183

Projected

2014 2015 2016 2017 2018 2019

Sales 2,560 2,662 2,742 2,825 2,909 2,997

Growth Rate 4.0% 3.0% 3.0% 3.0% 3.0%

Gross Profit 1,331 1,404 1,454 1,503 1,557 1,613

Gross Margin 52.0% 52.7% 53.0% 53.2% 53.5% 53.7%

SG&A 1,175 1,214 1,245 1,274 1,306 1,339

as % of Sales 45.9% 45.6% 45.4% 45.1% 44.9% 44.7%

EBITDA 268 306 329 353 378 405

as % of Sales 10.5% 11.5% 12.0% 12.5% 13.0% 13.5%

Depreciation (112) (116) (120) (124) (127) (131)

as % of Sales 4.4% 4.4% 4.4% 4.4% 4.4% 4.4%

EBIT 156 190 209 229 251 273

as % of Sales 6.1% 7.1% 7.6% 8.1% 8.6% 9.1%

Taxes (62) (75) (83) (91) (99) (108)

Net Income 94 115 127 139 152 165

as % of Sales 3.7% 4.3% 4.6% 4.9% 5.2% 5.5%

Income statement Cash flow statement

This model does not incorporate the growth opportunities highlighted in the prior slide. We would expect a management presentation to potential buyers to include these opportunities with more granularity leading to upside to our numbers.

Source: Capital IQ; Engine Capital & Red Alders analysis

We assume ANN reaches a 9.1% EBITmargin in 2019 vs. managements targetof double digit EBIT margins.

Table of contents

Situation overview







17

LBO model18

Cash flow statement

Sources

Senior Debt 1,340.0

Equity 917.0

Total sources 2,257.0

Uses

ANN equity @ $52.50 2,457.0

Refinance existing net debt (225.0)

Transaction fees 25.0

Total uses 2,257.0

Transaction financing

IRR

Assumptions include leverage at 5x LTM EBITDA, cost of debt of 6.0%, closing on 1/30/2015, and $75 million in free cash flow generated in Q3 and Q4.

Projected

2014 2015 2016 2017 2018 2019

EBITDA 268.0 306.2 329.1 353.1 378.2 404.5

- Interest (77.9) (72.5) (66.1) (58.6) (50.1)

- Tax (44.2) (54.0) (64.5) (76.0) (88.2)

- Change in Working Capital (1.5) (1.2) (1.2) (1.3) (1.3)

as % of change in sales 1.5% 1.5% 1.5% 1.5% 1.5%

- Capex (100.0) (103.0) (106.1) (109.3) (112.6)

as % of Sales 3.8% 3.8% 3.8% 3.8% 3.8%

FCF for Debt Service 82.6 98.4 115.1 133.1 152.4

Debt Repayment Schedule

Senior Debt 1,340.0 1,257.4 1,159.0 1,043.9 910.8 758.5

ANN purchase price

Exit Multiple $50.00 $52.50 $55.00

7.0x 21.0% 17.7% 14.9%

7.5x 23.3% 19.9% 17.1%

8.0x 25.4% 22.0% 19.1%

We would expect a financial sponsor to reduce capital expenditures (capex) further. Out of conservatism and to be consistent with the other alternatives, we have kept capex at 3.8% of sales.

At $52.50 per share, a financial sponsor would realize a 19.9% IRR. We think this IRR is conservative as the financial model does not incorporate the growth opportunities highlighted in slide 12.

Financial sponsor transaction multiples19

Based on prior private equity transactions, we think ANN would trade between 8 and 9x EBITDA, implying a price between $50 to $55 per share, consistent with our LBO model.

Financial sponsor transactions

Date Target Acquirer Deal Value EV/ LTM EBITDA

Dec-13 The Jones Group Sycamore Partners 2,200 8.8x

May-13 rue21 Apax Partners 996 9.6x

Mar-13 Hot Topic Sycamore Partners 550 8.6x

Nov-12 Cole Haan Apax Partners 570 11.1x

Aug-12 David's Bridal Clayton, Dubillier & Rice 1,050 9.0x

Jun-12 Savers TPG/LGP 1,800 11.0x

Nov-10 J Crew TPG/LGP 2,700 9.0x

Oct-10 Gymboree Bain Capital 1,761 8.2x

Aug-09 Charlotte Russe Advent 320 7.6x

Jul-07 Deb Shops Lee Equity 259 7.8x

May-07 Express Golden Gate Capital 755 9.0x

Mar-07 Claire's Apollo 2,739 9.0x

Nov-06 David's Bridal Leonard Green & Partners (LGP) 750 9.0x

Jan-06 Burlington Coat Bain Capital 1,958 7.2x

Dec-05 Tommy Hilfiger Apax Partners 1,547 7.9x

Median 9.0x

Average 8.9x

Table of contents

Situation overview







20

Potential strategic interest

Synergies for a strategic buyer would make a potential acquisition highly compelling.

A couple of specialty apparel retailers have developed M&A and integration expertise and have built a shared service model that allow them to extract very meaningful cost savings from horizontal acquisitions.

In this uncertain retail environment, this type of acquisition can create significant value for both the acquirer and the target with limited risk.

Three recent retail transactions highlight this trend: Acquisition of Charming Shoppes by Ascena Retail group

Acquisition of Zale by Signet Group

Acquisition of Jos. A. Bank by Mens Wearhouse

Our analysis indicates that a potential strategic buyer could extract $150 million of cost savings from ANN.

For illustrative purposes, we show that Chicos could pay up to $67.50 for ANN shares and it would still be 20% accretive for Chicos EPS (assuming 2x leverage).

If Chicos paid $60 per share for ANN and assuming 2x leverage and $100 million of synergies, the deal would be 30.5% EPS accretive for Chicos.

An international retailer could also significantly accelerate ANN growth overseas.

21

Cost synergies case studies22

MW / JOSB cost synergies

SIG / ZLC cost synergies

Notes:(1) Mens Wearhouse and Signet deals closed on 6/18/14 and 5/29/14, respectively. Synergy figures are current management estimates.(2) Other/operations of ~$49m for ZLC includes revenue and cost synergies in undisclosed amounts. We assumed 50% are attributable to cost synergies.(3) % savings represent estimated savings divided by LTM cost items immediately prior to the acquisition. SIG synergies updated to midpoint of 8/28/14

revised synergy estimates

Synergies % Savings Comments

Sourcing & purchasing 81 9.4% % COGS

SG&A 33 3.4% % SG&A

Other / operations 24 1.3% % total operating costs

Total 138 7.6% % total operating costs

Synergies % Savings Comments

Sourcing & merchandising 30 6.8% % COGS

Store operations 14 1.6% % total operating costs

G&A 46 56.9% % G&A

E-commerce, advertising 14 3.3% % selling & marketing

Other TBD High end of management estimates

includes another 46m of synergies

Total 104 10.9% % total operating costs

Potential cost synergies for ANNs acquirer23

Potential ANN cost synergies

$152 million of synergies represent 6.4% of ANN total operating costs. This compares to synergies of 10.9% and 7.6% of total operating costs for JOSB and ZLC, respectively.

Out of conservatism, we are estimating $100 million in potential cost synergies.

Product

Sourcing & Store

LTM Purchasing Operations SG&A Total Assumptions

Sales 2,520

Cost of goods sold 1,192 6.8% 80 % savings JOSB deal

Gross profit 1,328

SG&A 1,171 3.4% 40 % savings ZLC deal

EBIT 158

Total operating costs 2,362 1.3% 32 % savings ZLC deal

Potential synergies 152

An acquisition by CHS would be highly accretive24

Pro forma LTM P&LChicos EPS accretion

LTM numbers

CHS ANN Adjustments Pro Forma

Sales 2,618.5 2,520.0 5,138.5

COGS 1,210.5 1,191.8 (60.0) 2,342.3

Gross profit 1,408.0 1,328.2 2,796.2Gross Margin 53.8% 52.7% 54.4%

SG&A 1,234.7 1,170.7 (40.0) 2,365.4

EBIT 173.3 157.5 430.8

EBIT Margin 6.6% 6.3% 8.4%

Interest expense -0.2 1.1 59.6 60.5

PBT 173.5 156.4 370.3

Tax expense 65.1 61.8 142.4

Net income 108.4 94.6 228.0

# shares outstanding 150.7 46.8 92.0 242.7

EPS 0.72 2.02 0.94

EPS accretion 30.5%

Credit metrics

Total debt / LTM EBITDA 0.0x 0.0x 2.00x

Adj. debt / LTM EBITDAR 3.59x 3.61x 4.70x

ANN purchase price

LTM Leverage $50.00 $55.00 $60.00 $65.00 $70.00

1.5x 43.1% 34.6% 26.9% 20.1% 14.0%

2.0x 48.5% 38.9% 30.5% 23.1% 16.4%

2.5x 54.8% 44.0% 34.6% 26.4% 19.1%

Pro forma ownership # shares Ownership %

# CHS shares 150.7 62.1%

CHS shares issued for ANN shares 92.0 37.9%

Pro forma # CHS shares 242.7 100.0%

Sources

Cash 259.0

Senior Debt 1,100.6

Issuance of CHS shares 1,472.7

Total sources 2,832.3

Uses

ANN equity @ $60 2,808.0

Financing fees 11.0

Fees & exp. 13.3

Total uses 2,832.3

Pro forma ownership & transaction financing

Assumptions include $100 million in synergies (60% COGS; 40% SG&A), cost of debt of 5.5%,

and CHS stock issued at $16 per share.

Corporate transaction multiples25

Corporate transactions

Based on prior corporate transactions, we think ANN wouldtrade between 10 and 11x EBITDA, implying a price between$60 and $65 per share, consistent with our accretion model.

Date Target Acquirer Deal Value EV/ LTM EBITDA

Mar-14 Jos. A. Bank Men's Wearhouse 1,800 10.6x

Feb-14 Eddie Bauer Jos. A. Bank 825 13.1x

Feb-14 Zale Corporation Signet 1,425 18.5x

Jan-13 Intermix Gap 130 9-10x

May-12 Collective Brands Wolverine / Golden Gate 1,781 8.6x

May-12 Charming Shoppes Ascena Retail Group 886 10.9x

Aug-11 Boston Proper Chico's 205 10.0x

Median 10.8x

Average 12.0x

Table of contents

Situation overview







26

Potential buyers27

Golden Gate Capital

Significant retail experience

Owns 9.5% of ANN

Sycamore Partners


Quasi strategic given MAST ownership

Apax Partners


Tommy Hilfiger, Rue21, New Look

Bain Capital


Gymboree, Burlington Coat

Leonard Green & Partners


Davids Bridal, J. Crew

TPG

KKR

Blackstone

Financial sponsors Strategic buyers

Chicos

Highly accretive transaction

M&A experience

Shared service model

Ascena Retail Group


M&A experience

Shared service model

J. Crew


Both companies are based in NYC

Mr. Drexler (CEO of J. Crew) worked at ANN

Fast Retailing


Desire to expand in the US

There is a long list of potential buyers . The names below represent the most obvious ones. We are confident J.P. Morgan will come up with an appropriate list of potential buyers.

Transaction summary

ANN is a very attractive asset for a financial sponsor and could be a very compelling acquisition for a strategic party.

A sale to a financial sponsor would likely take place between $50.00 to $55.00 per share, implying a 40% premium to the unaffected price of $37.52 on August 22, 2014, before we publicly released our letter to ANNs board.

While less likely, a strategic buyer could pay significantly more than financial sponsors because of the significant synergies.

For illustrative purposes, we highlight that Chicos could pay up to $67.50 per share for ANN and it would still be 20% EPS accretive for CHS shareholders.

Unless the Board instructs J.P. Morgan to solicit bids, we will never know .

28

Table of contents

Situation overview







29

Status quo30

Under the status quo scenario, the stock price of ANN discounted to present doesnt reach $50 per share. A sale of ANN today is vastly superior.

Income statement, EPS & stock price calculation

Assumptions include a discount rate of 12%, 100% of free cash flow used to buy back shares, $75 million of free cash flow generated in Q3 and Q4 of 2014, and $150 million on the Companys balance sheet. BOP stands for beginning of period. EOP stands for end of period.

Projected

2014 2015 2016 2017 2018 2019

EBIT 156.0 189.7 209.1 229.5 250.9 273.4

as % of Sales 6.1% 7.1% 7.6% 8.1% 8.6% 9.1%

Interest 0.0 0.0 0.0 0.0 0.0 0.0

Profit Before Taxes 156.0 189.7 209.1 229.5 250.9 273.4

Tax (61.6) (74.9) (82.6) (90.7) (99.1) (108.0)

Net Income 94.4 114.8 126.5 138.8 151.8 165.4

Free Cash Flow 75.0 129.7 142.3 155.1 168.5 182.7

# shares BOP 46.8 45.0 41.8 38.6 35.7 33.0

# shares EOP 45.0 41.8 38.6 35.7 33.0 30.6

Average # shares 45.9 43.4 40.2 37.1 34.3 31.8

EPS 2.06 2.64 3.15 3.74 4.42 5.20

Stock price at 14x (BOP) $37.03 $44.07 $52.33 $61.88 $72.85

Price discounted to 1/30/2015 $37.03 $39.35 $41.72 $44.05 $46.30

Levered recapitalization31

While a levered recapitalization creates value compared to the status quo, a sale today would deliver more short and long-term value with significantly less risk.

Income statement, EPS & stock price calculation

Assumptions include a tender offer on 10/1/2014 for 13.3 million ANN shares at $45 per share funded by $600 million senior debt at 5%, no additional share repurchases in 2014, 100% of free cash flow in following years used to buy back shares, and a discount rate of 12%. BOP stands for beginning of period. EOP stands for end of period.

Projected

2014 2015 2016 2017 2018 2019

EBIT 156.0 189.7 209.1 229.5 250.9 273.4

as % of Sales 6.1% 7.1% 7.6% 8.1% 8.6% 9.1%

Interest (7.5) (30.0) (30.0) (30.0) (30.0) (30.0)

Profit Before Taxes 148.5 159.7 179.1 199.5 220.9 243.4

Taxes (58.7) (63.1) (70.7) (78.8) (87.3) (96.2)

Net Income 89.8 96.6 108.4 120.7 133.7 147.3

Free Cash Flow 70.5 111.6 124.1 136.9 150.4 164.5

# shares BOP 46.8 33.5 30.8 28.4 26.2 24.1

# shares EOP 33.5 30.8 28.4 26.2 24.1 22.3

Average # shares 40.1 32.1 29.6 27.3 25.2 23.2

EPS 3.01 3.66 4.43 5.31 6.35

Stock price at 14x (BOP) $42.09 $51.26 $61.96 $74.40 $88.87

Price discounted to 1/30/2015 $42.09 $45.77 $49.39 $52.96 $56.48

Levered recapitalization accretion32

EPS accretion

Stock price at beginning of year

Assumptions include a tender offer on 10/1/2014 for 13.3 million ANN shares at $45 per share funded by $600 million senior debt at 5%, no additional share repurchases in 2014, 100% of free cash flow in following years used to buy back shares, and a discount rate of 12%. Stock price calculated using a 14x price to earnings ratio. BOP stands for beginning of period.

As indicated on the left, a conservativelylevered recapitalization is around 15%EPS accretive relative to the status quo.That said, when discounted back to1/30/2015, the resulting stock prices arestill inferior to the likely outcome of asale without taking into accountexecution risk.

Stock price discounted to 1/30/2015

2015 2016 2017

EPS (status quo) $2.64 $3.15 $3.74

EPS (levered recapitalization) $3.01 $3.66 $4.43

Accretion 13.7% 16.3% 18.4%

2015 2016 2017

Stock price Status Quo (BOP) $37.03 $44.07 $52.33

Stock price Levered Recap (BOP) $42.09 $51.26 $61.96

Difference 13.7% 16.3% 18.4%

2015 2016 2017

Stock price Status Quo (1/30/2015) $37.03 $39.35 $41.72

Stock price Levered Recap (1/30/2015) $42.09 $45.77 $49.39

Difference 13.7% 16.3% 18.4%

Acquisition

Unlike other specialty retailers (like CHS or ASNA, for example) that have developed M&A and integration expertise through the development of a shared service model, ANN has never executed an acquisition in the past. Acquisitions are not the Companys core competence and are fraught with execution risks.

These M&A retailers are positioning themselves as holding companies with a portfolio of different brands. This has an impact on the DNA of the Company. We do not think that ANN views itself as a holding company and neither do we.

An acquisition would complicate the business. One of the knocks on ANN over the years has been that when one of the divisions works, the other does not. An acquisition would merely compound this problem.

Shareholders agree with our recommended course of action and would rather see the Company be the target than the acquirer.

33

Table of contents

Situation overview







34

Valuation range35

$25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00 $70.00


Financial sponsortransaction

Levered recapitalization

Status quo

52-week range

$55.00$50.00

$60.00 $65.00

$49.00$42.00

$37.00 $40.00

$43.61$30.71

Status quo and levered recapitalization range represent 2015 and 2016 stock prices discounted back to 1/30/2015.

In this presentation, we analyze different options for ANN and conclude that a sale is the best option.

Conclusion and next steps

Based on shareholders feedback, we think that the Board has heard from a number of shareholders that the status quo is untenable.

Based on our analysis, a sale would maximize value while minimizing risks for shareholders. While not as optimal as a sale, a levered recapitalization is better than the status quo.

We urge the Company to acknowledge publicly that it is reviewing all strategic alternatives and, in particular, actively soliciting bids from financial sponsors and strategic parties as part of a robust sale process. We also request the formation of a special committee of independent directors led by Mr. Yih.

Millions of shares are trading based on incomplete information.

A leak has already taken place with a Reuters story about J.P. Morgan having been hired to evaluate strategic alternatives, although it is not clear what J.P. Morgan has been hired to do.

A public announcement will put a floor on the stock and increase the likelihood of a successful transaction.

36

Certain information regarding this investor presentation

This Investor Presentation does not constitute a recommendation to any shareholder as to any investment or other decision by such shareholder. We have not made any independent evaluation or appraisal of the assets, liabilities or solvency of the Company. We have not been retained by the Company or any other person to prepare this analysis and have not received any compensation therefore. The information presented herein reflects our best judgment as of the date of this Investor Presentation and reflects assumptions we believe to be reasonable based on currently available information. However, it does not purport to address all potential alternatives, the relative merits of different alternatives or all risks, uncertainties or assumptions associated therewith.

The disclosure in this Investor Presentation is necessarily based on economic, market, financial and other conditions as they existed, and on the information publicly available to us, as of the date we prepared this Investor Presentation and, except to the extent required by law, we undertake no obligation to update or otherwise revise these materials. The analyses included herein are not necessarily indicative of future actual values and future results, which may be significantly more or less favorable than suggested by such analyses. We make no representation herein as to the price at which the Companys common stock will trade at any future time. Such trading prices may be affected by a number of factors, including but not limited to changes in prevailing interest rates and other factors which generally influence the price of securities, adverse changes in the current capital markets, and the occurrence of adverse changes in the financial condition, business, assets, results of operations or prospects of the Company or in the industries it participates in. In connection with the views expressed herein, we reviewed certain financial and other information that was publicly available to us from SEC filings of the Company and others, conference calls of Company management and industry competitors, Wall Street analyst reports, industry publications and other sources. In the analysis of the Company in this Investor Presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all of the financial and other information that was available to us from publicly available sources, and do not assume any responsibility or liability therefor. Any estimates and projections for the Company reflected herein involve numerous and significant subjective determinations, which may or may not prove to be correct. No representation or warranty, expressed or implied, is made as to the accuracy or completeness of any such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past or the future.

37

ANN_deck_3e2672393c_b4e047575e

Documents

Transcript of ANN_deck_3e2672393c_b4e047575e