American Eagle Outfitters Reports First Quarter Results

PITTSBURGH--(Business Wire)--
American Eagle Outfitters, Inc. (NYSE: AEO) today announced that earnings for
the first quarter ended May 2, 2009 were $0.11 per diluted share, which includes
a tax benefit of $0.04 per diluted share and a realized loss related to the sale
of investment securities of $0.01 per diluted share. First quarter EPS compares
to $0.21 per diluted share for the same period last year. The company`s first
quarter EPS guidance was a range of $0.06 to $0.07.

"While we are never satisfied with an earnings decline, there are early
indications that the business is stabilizing. For example, we are seeing
improvements in the AE brand, particularly in denim and other key fashion
categories such as dresses and accessories," said Jim O`Donnell, chief executive
officer, American Eagle Outfitters, Inc. "There are also critical areas of our
business that still need considerable work in order to drive top line sales and
profitability. They include further progress in assortments across AE categories
and strengthening our merchandise margin. We are aggressively focused on these
issues and expect to be better positioned as we move ahead."

First Quarter Results

Total sales for the quarter ended May 2, 2009 decreased 4% to $612.0 million,
compared to $640.3 million for the quarter ended May 3, 2008. Comparable store
sales decreased 10% for the quarter, compared to a 6% decrease last year.

Gross profit for the first quarter was $220.9 million, or 36.1% as a rate to
sales, compared to $263.7 million, or 41.2% as a rate to sales last year. The
merchandise margin declined by 260 basis points, due to a lower initial markup
and higher markdowns compared to the first quarter last year. As a rate to
sales, buying, occupancy and warehousing costs increased by 250 basis points due
to the de-leveraging of rent related to new stores and the decline in first
quarter comparable store sales.

Selling, general and administrative expense of $158.7 million decreased 6% from
$169.6 million last year. As a rate to sales, SG&A decreased to 25.9% from 26.5%
last year, primarily due to expense controls and the timing of initiatives.

Operating income for the quarter was $27.3 million, compared to $64.5 million
last year. The operating margin was 4.5% compared to 10.1% last year.

Other expense of $2.3 million compared to other income of $6.5 million last
year. The decline was the result of a lower rate of return on investments. In
addition, the company realized a $2.7 million loss related to the sale of
investment securities.

Net income was $22.0 million compared to $43.9 million in the first quarter of
last year.

AEO Direct

AEO Direct, which includes ae.com, aerie.com, 77kids.com and martinandosa.com,
is an important area of growth and profitability. In the first quarter, sales
increased 26%, driven by increased traffic and conversion.

Real Estate

In the first quarter, the company opened five AE stores, closed six stores and
completed the renovation of nine stores. The company also opened 13 aerie stores
during the quarter. For the year, the company is planning approximately 9 new
and 25 to 30 remodeled AE stores, and 21 new aerie stores for total square
footage growth of 3%.

International

Additionally, AEO signed an agreement with leading international retail
operator, M.H. Alshaya Co. to open a series of American Eagle Outfitters stores
throughout the Middle East over the next several years. The first store is
slated to open in early 2010. M.H. Alshaya has significant experience and a
proven track record of presenting the world`s most prominent brands in this
important region.

Capital Expenditures

Capital expenditures were $35 million compared to $74 million in the first
quarter of last year. The company continues to expect 2009 capital expenditures
to be in the range of $110 to $135 million. Of this amount, approximately one
half relates to new and remodeled stores, including a flagship store in Times
Square. The remaining half relates to the completion of the current distribution
center and headquarters projects, as well as information technology initiatives.

Inventory

Total merchandise inventories at the end of the first quarter were $279 million,
compared to $262 million last year, a 6% increase. The increase was the result
of new stores and the growth in AEO Direct. On a cost per foot basis, inventory
decreased 4%. Looking ahead, for the AE brand, second quarter average weekly
inventory on a cost-per-square-foot basis is planned down in the high single
digits, while aerie is planned to increase in the double digits, related to
expanded category offerings. Consolidated second quarter total average weekly
inventory is planned down in the low single digits on a cost-per-square-foot
basis.

Cash and Cash Equivalents, Short-term and Long-term Investments

The company ended the first quarter with total cash and cash equivalents,
short-term and long-term investments of $682 million. This included $264 million
of investments in auction rate securities, net of impairment.

"AEO remains in excellent financial condition, with a healthy balance sheet and
a significant cash position," said Joan Hilson, chief financial officer,
American Eagle Outfitters, Inc. "We will continue our conservative approach to
inventories and expense management, with the goal of achieving stronger
operating margins. At the same time, we are selectively investing in long-term
initiatives designed to capitalize on a future economic recovery and growth
opportunities within the business."

Second Quarter 2009 Guidance

Based on management`s current view of sales trends, the company expects second
quarter earnings to be in a range of $0.12 to $0.15 per share, compared to
earnings of $0.29 per share last year. This guidance excludes the possibility of
additional impairments or losses related to investment securities.

Conference Call Information

At 9:00 a.m. Eastern Time on May 27, 2009 the company`s management team will
host a conference call to review the financial results. To listen to the call,
please dial 877-407-0789 or internationally dial 201-689-8562. The conference
call will be simultaneously broadcast over the Internet at www.ae.com. A replay
will be available beginning May 27, 2009 at 12:00 p.m. Eastern Time. To listen
to the replay, dial 877-660-6853, or internationally dial 201-612-7415,
reference account 3055 and confirmation code 320676. An audio replay of the
conference call will also be available at www.ae.com.

American Eagle Outfitters, Inc., through its subsidiaries, ("AEO, Inc.") offers
high-quality, on-trend clothing, accessories and personal care products at
affordable prices. The American Eagle Outfitters® brand targets 15 to 25 year
old girls and guys, with 953 stores in the U.S. and Canada and online at
www.ae.com. aerie® by american eagle offers Dormwear® and intimates collections
for the AE® girl, with 131 standalone stores in the U.S. and Canada and online
at www.aerie.com. MARTIN + OSA® provides Refined Casual fashions for 28 to 40
year old men and women at its 28 stores and online at www.martinandosa.com. The
latest brand, 77kids by american eagle, is available online only at
www.77kids.com. 77kids offers "kid cool," durable clothing and accessories for
kids ages two to 10. AE.COM®, the online home of the brands of AEO, Inc. ships
to more than 60 countries worldwide.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This release contains forward-looking statements, which represent our
expectations or beliefs concerning future events, specifically regarding second
quarter sales and earnings. All forward-looking statements made by the company
involve material risks and uncertainties and are subject to change based on
factors beyond the company's control. Such factors include, but are not limited
to the risk that the Company`s second quarter sales and earnings expectations
may not be achieved and the risks described in the Risk Factor Section of the
company's Form 10-K and Form 10-Q filed with the Securities and Exchange
Commission. Accordingly, the company's future performance and financial results
may differ materially from those expressed or implied in any such
forward-looking statements. The company does not undertake to publicly update or
revise its forward-looking statements even if future changes make it clear that
projected results expressed or implied will not be realized.

AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

May 2, January 31, May 3,
2009 2009 2008
(unaudited) (unaudited)

ASSETS
Cash and cash equivalents $ 418,807 $ 473,342 $ 338,238
Short-term investments 30,525 10,511 31,195
Merchandise inventory 279,233 294,928 262,201
Accounts receivable 62,176 41,471 41,651
Prepaid expenses and other 61,479 59,660 92,403
Deferred income taxes 47,140 45,447 41,091
Total current assets 899,360 925,359 806,779
Property and equipment, net 739,702 740,240 667,691
Goodwill, net 10,831 10,706 11,402
Long-term investments 232,953 251,007 335,390
Non-current deferred income taxes 9,434 15,001 27,038
Other assets, net 21,017 21,363 20,195
Total Assets $ 1,913,297 $ 1,963,676 $ 1,868,495

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 91,671 $ 152,068 $ 116,268
Notes payable 75,000 75,000 75,000
Accrued compensation and payroll taxes 17,520 29,417 19,461
Accrued rent 65,065 64,695 59,467
Accrued income and other taxes 12,567 6,259 13,297
Unredeemed gift cards and gift certificates 27,284 42,299 36,512
Current portion of deferred lease credits 16,056 13,726 13,995
Other current liabilities and accrued expenses 19,226 18,299 16,333
Total current liabilities 324,389 401,763 350,333
Deferred lease credits 101,806 88,314 74,632
Non-current accrued income taxes 33,766 39,898 47,922
Other non-current liabilities 19,866 24,670 31,138
Total non-current liabilities 155,438 152,882 153,692
Commitments and contingencies - - -
Preferred stock - - -
Common stock 2,486 2,485 2,485
Contributed capital 519,675 513,574 502,243
Accumulated other comprehensive income (loss) 448 (14,389 ) 29,353
Retained earnings 1,691,823 1,694,161 1,624,800
Treasury stock (780,962 ) (786,800 ) (794,411 )
Total stockholders' equity 1,433,470 1,409,031 1,364,470
Total Liabilities and Stockholders' Equity $ 1,913,297 $ 1,963,676 $ 1,868,495

Current Ratio 2.77 2.30 2.30

AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)

13 Weeks Ended
May 2, % of May 3, % of
2009 Sales 2008 Sales
Net sales $ 611,986 100.0 % $ 640,302 100.0 %
Cost of sales, including certain buying, occupancy and warehousing expenses 391,061 63.9 % 376,635 58.8 %
Gross profit 220,925 36.1 % 263,667 41.2 %
Selling, general and administrative expenses 158,692 25.9 % 169,638 26.5 %
Depreciation and amortization 34,894 5.7 % 29,550 4.6 %
Operating income 27,339 4.5 % 64,479 10.1 %
Other (expense) income, net (2,308 ) (0.4 %) 6,458 1.0 %
Income before income taxes 25,031 4.1 % 70,937 11.1 %
Provision for income taxes 3,064 0.5 % 27,042 4.2 %
Net income $ 21,967 3.6 % $ 43,895 6.9 %

Net income per basic common share $ 0.11 $ 0.21

Net income per diluted common share $ 0.11 $ 0.21

Weighted average common shares outstanding - basic 205,408 204,841
Weighted average common shares outstanding - diluted 207,286 208,104

Total gross square footage at end of period: 6,406,703 5,888,629

Store count at end of period: 1,110 1,018

AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
For the 13 Weeks Ended
May 2, May 3,
2009 2008
Operating activities:
Net income $ 21,967 $ 43,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 35,410 29,961
Share-based compensation 5,550 8,882
Provision for deferred income taxes (2,192 ) 5,192
Tax benefit from share-based payments 592 154
Excess tax benefit from share-based payments (87 ) (125 )
Foreign currency transaction loss 869 12
Realized loss on sale of investment securities 2,749 -
Changes in assets and liabilities:
Merchandise inventory 16,560 23,836
Accounts receivable (20,604 ) (9,769 )
Prepaid expenses and other (1,635 ) (56,972 )
Other assets, net 658 (460 )
Accounts payable (58,683 ) (41,456 )
Unredeemed gift cards and gift certificates (15,115 ) (17,970 )
Deferred lease credits 15,508 4,355
Accrued compensation and payroll taxes (11,929 ) (30,006 )
Accrued income and other taxes 110 (6,480 )
Accrued liabilities (3,892 ) (4,196 )
Total adjustments (36,131 ) (95,042 )
Net cash used for operating activities $ (14,164 ) $ (51,147 )
Investing activities:
Capital expenditures (34,875 ) (73,629 )
Purchase of available-for-sale securities - (49,897 )
Sale of available-for-sale securities 11,537 347,133
Other investing activities (430 ) (163 )
Net cash (used for) provided by investing activities $ (23,768 ) $ 223,444
Financing activities:
Payments on capital leases (466 ) (589 )
Net proceeds from issuance of notes payable - 75,000
Repurchase of common stock from employees (178 ) (3,365 )
Net proceeds from stock options exercised 2,308 984
Excess tax benefit from share-based payments 87 125
Cash dividends paid (20,639 ) (20,425 )
Net cash (used for) provided by financing activities $ (18,888 ) $ 51,730
Effect of exchange rates on cash 2,285 (1,850 )
Net (decrease) increase in cash and cash equivalents $ (54,535 ) $ 222,177
Cash and cash equivalents - beginning of period 473,342 116,061
Cash and cash equivalents - end of period $ 418,807 $ 338,238

American Eagle Outfitters, Inc.
Judy Meehan, 412-432-3300

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