American Eagle Outfitters Reports Strong Third Quarter Sales and EPS Growth

Comparable Sales Increase 9% and EPS Rises 59% to $0.35

PITTSBURGH–(BUSINESS WIRE)–American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS from
continuing operations of $0.35 for the third quarter ended October 31,
2015, a 59% increase from adjusted EPS of $0.22 for the comparable
quarter last year. The EPS figures refer to diluted earnings per share.

Jay Schottenstein, chief executive officer commented, “We are extremely
pleased with our third quarter results. Both the American Eagle and
Aerie brands performed exceptionally well, delivering increased sales
and profitability. It is gratifying to see positive momentum, which
speaks volumes to the strength of our teams, brands and operations.”

“The holiday season is off to a solid start, and we are optimistic as we
look ahead. We will continue executing on our priorities to further
strengthen and grow our business, while delivering returns to
shareholders,” he continued.

Third Quarter 2015 Results

The following discussion is based on Non-GAAP results, as presented in
the accompanying GAAP to Non-GAAP reconciliation.

• Total net revenue increased 8% to a record $919 million from $854
  million last year.
• Consolidated comparable sales increased 9%, compared to a 5% decrease
  last year.
• Gross profit increased 17% to $368 million and the gross margin rate
  leveraged 310 basis points to 40.0%. Approximately 250 basis points of
  margin improvement was due to lower markdowns as the company continued
  to reduce promotional activity. Buying, occupancy and warehousing
  leveraged 60 basis points reflecting rent leverage, partially offset
  by higher incentive costs.
• Selling, general and administrative expense of $221 million increased
  8% from $205 million last year. The increase in dollars was primarily
  the result of higher incentive costs related to strong sales and
  margin performance. Planned investments in digital marketing also
  contributed to the increase, and had a positive effect on AEO direct
  sales. As a rate to revenue, SG&A remained flat to last year at 24.0%.
• Operating income increased to $109 million from $74 million last year,
  and the operating margin expanded 320 basis points to 11.9% as a rate
  to revenue.
• EPS from continuing operations of $0.35 increased 59% from adjusted
  EPS of $0.22 last year.

Inventory

Total merchandise inventories at the end of the third quarter increased
2% to $480 million compared to $469 million last year. Fourth quarter
2015 ending inventory at cost is expected to be up in the high
single-digits. The increase is primarily due to earlier receipts, as the
company laps last year’s delays caused by the port slow down.

Capital Expenditures

In the third quarter, capital expenditures totaled $30 million. For
fiscal 2015, the company continues to expect capital expenditures of
approximately $150 million. The company expects capital spending to be
in the range of $150 to $175 million in 2016.

Store Information

In the quarter, the company opened 12 new stores, including six
mainline, five factory and one aerie stand alone stores, and closed one
AE store. Internationally, the company opened 13 licensed stores during
the quarter, including the first stores in Chile and Greece. For
additional third quarter 2015 actual and fiscal 2015 projected store
information, see the accompanying table.

Cash, Share Repurchases

The company ended the quarter with total cash of $363 million, an
increase of $83 million compared to $280 million last year. During the
quarter, the company repurchased one million shares for $15 million. The
remaining authorization under the current repurchase program is for 17.4
million shares, which expires on January 28, 2017.

Fourth Quarter Outlook

Based on an anticipated mid single-digit increase in comparable sales,
management expects fourth quarter 2015 EPS to be approximately $0.40 to
$0.42. This guidance excludes potential asset impairment and
restructuring charges, and compares to EPS from continuing operations of
$0.36 last year.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at
4:15 p.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or
internationally dial 1-201-689-8562 or go to http://investors.ae.com
to access the webcast and audio replay. Also, a financial results
presentation is posted on the company’s website.

Non-GAAP Measures

This press release includes information on non-GAAP financial measures
(“non-GAAP” or “adjusted”), including earnings per share information.
These financial measures are not based on any standardized methodology
prescribed by U.S. generally accepted accounting principles (“GAAP”) and
are not necessarily comparable to similar measures presented by other
companies. The company believes that this non-GAAP information is useful
as an additional means for investors to evaluate the company’s operating
performance, when reviewed in conjunction with the company’s GAAP
financial statements. These amounts are not determined in accordance
with GAAP and therefore, should not be used exclusively in evaluating
the company’s business and operations.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global
specialty retailer offering high-quality, on-trend clothing, accessories
and personal care products at affordable prices under its American Eagle
Outfitters® and Aerie® brands. The company operates more than 1,000
stores in the United States, Canada, Mexico, China, Hong Kong and the
United Kingdom, and ships to 81 countries worldwide through its
websites. American Eagle Outfitters and Aerie merchandise also is
available at 140 international stores operated by licensees in 22
countries. For more information, please visit www.ae.com.

“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,
including fourth quarter 2015 results. 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
operating, financial and capital plans 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)
				October 31,				January 31,				November 1,
				2015				2015				2014
				(unaudited)								(unaudited)
ASSETS
	Cash and cash equivalents		$	363,116			$	410,697			$	280,445
	Merchandise inventory			479,729				278,972				468,628
	Accounts receivable			63,775				67,894				55,875
	Prepaid expenses and other			78,091				70,477				73,095
	Deferred income taxes			65,636				59,102				53,445
	Total current assets			1,050,347				887,142				931,488
	Property and equipment, net			709,261				698,227				714,166
	Intangible assets, net			46,756				47,206				47,864
	Goodwill			12,978				13,096				13,512
	Non-current deferred income taxes			17,052				14,035				26,598
	Other assets			51,442				37,202				38,444
	Total Assets		$	1,887,836			$	1,696,908			$	1,772,072
LIABILITIES AND STOCKHOLDERS’ EQUITY
	Accounts payable		$	304,989			$	191,146			$	309,348
	Accrued compensation and payroll taxes			66,466				44,884				49,562
	Accrued rent			77,892				78,567				77,102
	Accrued income and other taxes			43,721				33,110				27,472
	Unredeemed gift cards and gift certificates			28,259				47,888				27,712
	Current portion of deferred lease credits			13,055				12,969				13,392
	Other current liabilities and accrued expenses			43,761				50,529				41,893
	Total current liabilities			578,143				459,093				546,481
	Deferred lease credits			53,877				54,516				58,988
	Non-current accrued income taxes			4,876				10,456				11,312
	Other non-current liabilities			41,667				33,097				35,044
	Total non-current liabilities			100,420				98,069				105,344
	Commitments and contingencies			–				–				–
	Preferred stock			–				–				–
	Common stock			2,496				2,496				2,496
	Contributed capital			588,293				569,675				566,449
	Accumulated other comprehensive income			(19,797	)			(9,944	)			10,876
	Retained earnings			1,602,550				1,543,085				1,506,519
	Treasury stock			(964,269	)			(965,566	)			(966,093	)
	Total stockholders’ equity			1,209,273				1,139,746				1,120,247
	Total Liabilities and Stockholders’ Equity		$	1,887,836			$	1,696,908			$	1,772,072
	Current Ratio			1.82				1.93				1.70

AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)
			13 Weeks Ended
			October 31,		% of			November 1,		% of
			2015		Revenue			2014		Revenue
Total net revenue		$	919,072		100.0%		$	854,290		100.0%
Cost of sales, including certain buying, occupancy and warehousing expenses			551,540		60.0%			538,818		63.1%
Gross profit			367,532		40.0%			315,472		36.9%
Selling, general and administrative expenses			220,798		24.0%			204,641		24.0%
Loss on impairment of assets			–		0.0%			33,468		3.9%
Restructuring charges			–		0.0%			17,752		2.1%
Depreciation and amortization			37,623		4.1%			36,528		4.2%
Operating income			109,111		11.9%			23,083		2.7%
Other income, net			521		0.0%			649		0.1%
Income before income taxes			109,632		11.9%			23,732		2.8%
Provision for income taxes			40,367		4.4%			14,697		1.7%
Income from continuing operations			69,265		7.5%			9,035		1.1%
Gain from discontinued operations, net of tax			4,847		0.5%			–		0.0%
Net income		$	74,112		8.0%		$	9,035		1.1%
Basic income per common share:
Income from continuing operations		$	0.35				$	0.05
Gain from discontinued operations			0.03					–
Net income per basic share		$	0.38				$	0.05
Diluted income per common share:
Income from continuing operations		$	0.35				$	0.05
Gain from discontinued operations			0.03					–
Net income per diluted share		$	0.38				$	0.05
Weighted average common shares
outstanding – basic			195,215					194,573
Weighted average common shares
outstanding – diluted			197,478					195,221
			39 Weeks Ended
			October 31,		% of			November 1,		% of
			2015		Revenue			2014		Revenue
Total net revenue		$	2,416,020		100.0%		$	2,211,014		100.0%
Cost of sales, including certain buying, occupancy and warehousing expenses			1,501,237		62.1%			1,432,150		64.8%
Gross profit			914,783		37.9%			778,864		35.2%
Selling, general and administrative expenses			601,680		24.9%			579,777		26.2%
Loss on impairment of assets			–		0.0%			33,468		1.5%
Restructuring charges			–		0.0%			17,752		0.8%
Depreciation and amortization			108,861		4.5%			104,312		4.7%
Operating income			204,242		8.4%			43,555		2.0%
Other income, net			4,254		0.2%			2,185		0.1%
Income before income taxes			208,496		8.6%			45,740		2.1%
Provision for income taxes			76,915		3.2%			27,027		1.2%
Income from continuing operations			131,581		5.4%			18,713		0.9%
Gain from discontinued operations, net of tax			4,847		0.2%			–		0.0%
Net income		$	136,428		5.6%		$	18,713		0.9%
Basic income per common share:
Income from continuing operations		$	0.67				$	0.10
Gain from discontinued operations			0.02					–
Net income per basic share		$	0.70				$	0.10
Diluted income per common share:
Income from continuing operations		$	0.67				$	0.10
Gain from discontinued operations			0.02					–
Net income per diluted share		$	0.69				$	0.10
Weighted average common shares
outstanding – basic			195,308					194,381
Weighted average common shares
outstanding – diluted			197,017					194,934

AMERICAN EAGLE OUTFITTERS, INC.
GAAP to Non-GAAP EPS reconciliation
(unaudited)
		13 Weeks Ended November 1, 2014							52 Weeks Ended January 31, 2015
		Operating income				Diluted income per common share			Operating income				Diluted income per common share
GAAP Basis from Continuing Operations		$	23,083			$	0.05		$	155,765			$	0.46
Add back: Asset Impairment and Corporate Overhead Reduction Charges(1):			51,220				0.17			51,220				0.17
Non-GAAP Basis from Continuing Operations		$	74,303			$	0.22		$	206,985			$	0.63
% of Total Net Revenue			8.7	%						6.3	%

(1) Non-GAAP adjustments consist of $33.5 million of corporate and store asset impairments and $17.7 million of severance and related employee costs and corporate charges.

AMERICAN EAGLE OUTFITTERS, INC.
COMPARABLE SALES RESULTS BY BRAND
(unaudited)
		Third Quarter Comparable Sales
		2015		2014
American Eagle Outfitters, Inc. (1)		9%		-5%
AE Total Brand (1)		8%		-6%
aerie Total Brand (1)		21%		3%
		YTD Third Quarter Comparable Sales
		2015		2014
American Eagle Outfitters, Inc. (1)		9%		-7%
AE Total Brand (1)		9%		-8%
aerie Total Brand (1)		17%		3%

(1) AEO Direct is included in consolidated and total brand comparable sales.

AMERICAN EAGLE OUTFITTERS, INC.
STORE INFORMATION
(unaudited)
				Third Quarter		YTD Third Quarter		Fiscal 2015
				Fiscal 2015		Fiscal 2015		Guidance
Consolidated stores at beginning of period				1,057		1,056		1,056
	Consolidated stores opened during the period
		AE Brand		11		21		21
		aerie		1		1		1
	Consolidated stores closed during the period
		AE Brand		(1)		(6)		(27 – 31)
		aerie		–		(4)		(7 – 10)
Total consolidated stores at end of period				1,068		1,068		1,037 – 1,044
Stores remodeled and refurbished during the period				5		20		25 – 30
Total gross square footage at end of period				6,712,312		6,712,312		Not Provided
International license stores at end of period (1)				126		126		143

(1) International license stores are not included in the consolidated store data or the total gross square footage calculation.

Contacts

American Eagle Outfitters, Inc.
Kristen Zaccagnini, 412-432-3300