UNITED STATES

SECURITIES AND EXEXCHANGE COMMISSION~~CHANGE COMMISSION~~

WASHINGTON, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended October ~~30, 2021~~29, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Commission File Number: 1-33338

American Eagle Outfitters, Inc.

(Exact name of registrant as specified in its charter)


Delaware		No. 13-2721761
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

77 Hot Metal Street, Pittsburgh, PA		15203-2329
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: ~~(412)~~ (412) 432-3300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AEO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐No☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~168,621,661 Common Shares~~187,406,236 shares of common stock were outstanding at November ~~19, 2021.~~21, 2022.

AMERICAN EAGLE OUTFITTERS, INC.

TABLE OF CONTENTS


				Page Number
	PART I - FINANCIAL INFORMATION

	Forward Looking Statements		3
~~Item 1.~~
Item 1.	Financial Statements		76
		Consolidated Balance Sheets: October ~~30, 2021,~~29, 2022, January ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021		76
		Consolidated Statements of Operations: 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021		87
		Consolidated Statements of Comprehensive Income: 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021		98
		Consolidated Statements of ~~Stockholders’~~Stockholders' Equity: 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021		109
		Consolidated Statements of Cash Flows: 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021		11
		Notes to Consolidated Financial Statements		12
Item 2.		~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations		2926
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		3935
Item 4.		Controls and Procedures		4035

	PART II - OTHER INFORMATION
~~Item 1.~~
Item 1.	Legal Proceedings		4136
Item 1A.		Risk Factors		4136
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		4136
Item 3.		Defaults Upon Senior Securities		N/A
Item 4.		Mine Safety Disclosures		N/A
Item 5.	Other Information	~~Other Information~~		N/A
Item 6.		Exhibits		4337

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on the views and beliefs of management, as well as assumptions and estimates made by management. Actual results could differ materially from such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q are forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “potential,” and similar expressions may identify forward-looking statements. Our forward-looking statements include, but are not limited to, statements about:

•	~~the planned opening of approximately 20 to 30 American Eagle stores and 75 Aerie and OFFLINE~~^TM ~~stores (which includes stand-alone locations as well as side-by-side locations), during Fiscal 2021 (as defined below);~~

•	~~the anticipated remodeling of approximately 25 to 35 American Eagle and Aerie stores in the U.S. and Canada during Fiscal 2021;~~

•	~~the potential closure of approximately 30 to 50 American Eagle and five to 10 Aerie stores at the expiration of their lease term, primarily in North America, during Fiscal 2021;~~

•	~~the success of our core American Eagle and Aerie brands through our omni-channel and licensed outlets within North America and internationally;~~

•	~~the success of our business priorities and strategies;~~

•	~~the continued validity of our trademarks;~~

•	~~our performance during the year-end holiday selling season;~~

•	~~the accuracy of the estimates and assumptions we make pursuant to our critical accounting policies and estimates;~~

•	~~the payment of a dividend in future periods;~~

•	~~the possibility that future access to the debt markets may not be available, or available at terms or interest rates that are attractive;~~

•	~~the availability of sufficient cash flow to fund anticipated capital expenditures, future dividends, and working capital requirements;~~

•

the possibility that product costs are adversely affected by foreign trade issues (including import tariffs and other trade restrictions with China and other countries), currency exchange rate fluctuations, increasing prices for raw materials, supply chain issues, political instability, or other reasons;

•	the impact of changes in global economic and financial conditions, and resulting impacts on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; and

•	~~the possibility that we may be required to take additional impairment or other restructuring charges.~~

~~Our forward-looking statements surrounding the coronavirus (COVID-19) pandemic include, but are not limited to, statements about:~~

•	~~the ongoing impact of the COVID-19 pandemic on global economic conditions, our customers’ discretionary income, and freedom of movement;~~

•	~~the currently unknown duration of the COVID-19 pandemic, including a potential resurgence in the fourth quarter of Fiscal 2021 or beyond;~~

•	the impact of governmental regulations that have been, and may in the future be, imposed in response to the COVID-19 pandemic, including regulations that could adversely affect our business or cause us to cease our digital business

~~if we are required to close our distribution and fulfillment centers or are otherwise unable to acquire or deliver merchandise, or to close our recently reopened retail stores;~~

•	~~the deterioration in economic conditions in the U.S., which could have an impact on discretionary consumer spending;~~

•	~~the ability of our distribution centers to maintain adequate staffing to meet increased customer demand;~~

•	~~the possibility of temporary furloughs of store, field, and corporate associates surrounded by store closures;~~

•	~~the reduction of operating expenses; and~~

•	~~the uncertainties surrounding whether currently open stores will remain open.~~

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:

•	~~the risk associated with our inability to anticipate and respond to changing consumer preferences;~~

•	~~the risk associated with pricing pressure from existing and new competitors;~~

•	~~the risk of economic pressures and other business factors on discretionary consumer spending and changes in consumer preferences;~~

•	~~the risk that seasonality could cause sales to fluctuate and negatively impact our results of operations;~~

•	the risk that the COVID-19 global pandemic has and could continue to have a material adverse effect on our business and results of operations, the nature and extent of which are highly uncertain and unpredictable;

•	the risk that our results could be adversely affected by natural disaster, public health crises (including, without limitation, the COVID-19 pandemic), political crises, negative global climate patterns, or other catastrophic events;

•	the risk that any current or future federal, or state or local regulations on employers requiring COVID-19 vaccination or frequent testing of employees could have a material adverse impact on our business, financial conditions, results of operations, and prospects;

•	~~the risk that impairment to goodwill, intangible assets, and other long-lived assets could adversely impact our profitability;~~

•	the risk that our inability to grow our digital channels and leverage omni-channel capabilities could impact our business, particularly if our stores are closed or our customers have restricted freedom of movement;

•	~~the risk that failure to define, launch, and communicate a brand relevant customer experience could have a negative impact;~~

•	~~the risk that our efforts to execute on our key business priorities could have a negative impact;~~

•	~~the risk that our efforts to expand internationally expose us to risks inherent in operating in new countries;~~

•	~~the risk that failure to protect our reputation could have a material adverse effect;~~

•	~~the risk that we are unable to implement and sustain adequate information technology systems;~~

•	~~the risk that measures intended to prevent the spread of COVID-19 may negatively impact our operations;~~

•	~~the risk that our inability to safeguard against security breaches with respect to our information technology systems could damage our reputation and adversely impact our profitability;~~

•	~~the risk that we may be exposed to costs associated with the loss of customer information;~~

•	~~the risk that we may fail to manage growth in our omni-channel operations and the resulting impact on our distribution and fulfillment networks may have an adverse effect on our results of operations;~~

•	~~the risk that our international merchandise sourcing strategy subjects us to risks that could impact our business and results of operations;~~

•	the risk that rising freight costs and difficulty procuring shipping capacity beyond our control resulting from recent increased demand, supply chain shutdowns and congestion at ports and supply lines, could continue to negatively impact our business and results of operations;

•	~~the risk that our product costs may be adversely affect by foreign trade issues, currency exchange rate fluctuations, increasing prices for raw materials, political instability, or other reasons;~~

•	~~the risks associated with our inability to achieve planned store performance, gain market share in the face of declining shopping center traffic, or attract customers to our stores;~~

•	~~the risks associated with leasing substantial amount of space, including increases in occupancy costs and the need to generate significant cash flow to meet our lease obligations;~~

•	~~the risk that we rely on key personnel, the loss of whom could have a material adverse effect on our business;~~

•	the risk from the Company’s (as defined below) amended and restated bylaws (“Bylaws”) provides, to the fullest extent permitted by law, that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal

actions between the Company and its stockholders, which could increase costs to bring a claim, discourage claims, or limit the ability of the Company’s stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with the Company or the Company’s directors, officers, or other employees;

•	~~the risk that we may be unable to protect our trademarks and other intellectual property rights;~~

•	~~the risks associated with a complex regulatory, compliance, and legal environment;~~

•	~~the risk that fluctuations in our tax obligations and effective tax rate could adversely affect us; and~~

•	~~the risk that the impact of various legal proceedings, lawsuits, disputes, and claims could have an adverse impact on our business, financial condition, and results of operation.~~

Any forward-looking statement speaks only as of the date on which such statement is made, and we do not intend to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Actual results could differ materially from such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “potential,” and similar expressions may identify forward-looking statements. Our forward-looking statements include, but are not limited to, statements about:

•

the planned opening of approximately 10 to 20 American Eagle stores and approximately 40 Aerie locations and over 40 OFFLINETM stores, which will be a mix of stand-alone and Aerie side-by-side locations, during Fiscal 2022;

•

the anticipated selection of approximately 15 to 30 American Eagle and Aerie stores in the U.S. and Canada for remodeling during Fiscal 2022;

•

the potential closure of approximately 30 to 50 American Eagle stores at the expiration of their lease terms, primarily in North America, during Fiscal 2022;

•

the success of our core American Eagle and Aerie brands through our omni-channel and licensed outlets within North America and internationally;

•

our plans for our supply chain platform;

•

our acquisitions' ability to achieve expected results;

•

the success of our business priorities and strategies;

•

the continued validity of our trademarks;

•

our performance during the back-to-school and holiday selling seasons;

•

the reduction of operating expenses and capital expenditures;

•

the accuracy of the estimates and assumptions we make pursuant to our critical accounting policies and estimates;

•

the payment of a dividend in future periods;

•

our ability to fund our current and long-term cash requirements through current cash holdings and available liquidity, including under our revolving credit facility;

•

the possibility of changes in global economic and financial conditions, and resulting impacts on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits; and

•

the possibility that we may be required to take additional impairment or other restructuring charges.

6Our forward-looking statements surrounding the novel strain of coronavirus ("COVID-19") include, but are not limited to, statements about:

•

the ongoing impact of the COVID-19 pandemic on global economic conditions;

•

the currently unknown duration and trajectory of the COVID-19 pandemic;

•

the impact of governmental regulations that have been, and may in the future be, imposed in response to the COVID-19 pandemic, including regulations that could adversely affect our business or cause us to cease our digital business if we are required to close our distribution and fulfillment centers or are otherwise unable to acquire or deliver merchandise, or to close our retail stores;

•

the impact of the COVID-19 pandemic on the operations of our partners, suppliers and vendors;

•

the potential for the impacts of the COVID-19 pandemic to cause or exacerbate supply chain disruptions, shipping delays, and freight costs;

•

the ability of our distribution centers and stores to maintain adequate staffing to meet increased customer demand;

•

the possibility of temporary furloughs of store, field, and corporate associates surrounded by store closures; and

•

our potential actions in response to the COVID-19 pandemic.

•

the risk that our inability to anticipate and respond to changing consumer preferences and fashion trends and fluctuations in consumer demand in a timely manner could adversely impact our business and results of operations;

•

the risk that the ongoing COVID-19 pandemic and any other adverse public health development have had, and may continue to have, an adverse effect on our business and results of operations;

•

the risk that governmental regulations relating to the ongoing COVID-19 pandemic could have a material adverse impact on our business, financial conditions and results of operations;

•

the risk that global economic conditions, such as a slowing economy, inflation, rising interest rates, and the effect of economic pressures and other business factors on discretionary consumer spending and changes in consumer preferences could have a material adverse effect on our business, results of operations and financial condition;

•

the risk that our interest expense may be negatively impacted by rising interest rates;

•

the risk that recent inflationary pressures could have a material adverse effect on demand based on pricing actions and operating measures taken to mitigate inflation's impact;

•

the risk that seasonality may cause sales to fluctuate and negatively impact our results of operations;

•

the risks associated with operating in a highly competitive industry, as we face significant pricing pressures from existing and new competitors;

•

the risk that our results could be adversely affected by events beyond our control, such as natural disasters, public health crises, political crises, negative global climate patterns, armed conflicts, including the war in Ukraine, or other catastrophic events;

•

the risk that impairment to goodwill, intangible assets, and other long-lived assets could adversely impact our profitability;

•

the risk that our inability to grow our digital channels and leverage omni-channel capabilities could adversely impact our business;

•

the risk that failure to define, launch and communicate a brand relevant customer experience or otherwise achieve the desired results of our advertising initiatives could have a negative impact on our growth and profitability;

•

the risk that our efforts to execute on our key business priorities could have a negative impact on our growth and profitability;

•

the risks that our efforts to expand operations in new countries inherently expose us to;

•

the risk that failure to protect our reputation could have a material adverse effect on the value of our brands;

•

the risk that failure to manage growth in our omni-channel operations and the resulting impact on our distribution and fulfillment networks may have an adverse effect on our results of operations;

•

the risks associated with our inability to implement and sustain adequate information technology;

•

the risk that the loss or disruption of information technology services could affect our ability to implement our strategies and have a material adverse effect on our business;

•

the risks related to our electronic processing of sensitive and confidential personal and business data. If such data is lost or disclosed in an unauthorized manner, or if we or our third-party vendors are subject to cyberattacks, data breaches, other security incidents, or disruption of information technology systems or software, such events could expose us to liability, damage our reputation, and have a material adverse effect on our business;

•

the risks associated with climate change, and related legislative and regulatory responses to climate change, which may adversely impact our business;

•

the risk that telework measures intended to prevent the spread of COVID-19 may negatively impact our operations or increase our risk exposures;

•

the risks that our international merchandise sourcing strategy subject us to, which could adversely impact our business and results of operations;

•

the risk that our product costs may be adversely affected by foreign trade issues (including import tariffs and other trade restrictions with China), currency exchange rate fluctuations, increasing prices for raw materials due to inflationary pressures or otherwise, political instability, or for other reasons, which could impact our profitability;

•

the risk that our suppliers may be impacted by economic conditions and cycles and changing laws and regulatory requirements which could impact their ability to do business with us or cause us to terminate our relationship with them and require us to find replacements, which we may have difficulty doing;

•

the risks relating to foreign laws and regulations, among others, that our international operations subject us to;

•

the risks associated with changes in tax policy, including as a result of the Inflation Reduction Act, or trade regulations or the imposition of new tariffs on imported products that could have an adverse effect on our business and results of operations;

•

the risk that our inability to achieve planned store performance, gain market share in the face of declining shopping center traffic or attract customers to our stores could adversely impact our profitability and our results of operations;

•

the possibility that our credit facilities may not be available for future borrowings;

•

the risks that our share repurchase program may not be successfully consummated, that it may not enhance shareholder value, or that share repurchases could be negatively perceived by investors;

•

the risks associated with our substantial lease obligations, including future increases in occupancy costs and the need to generate significant cash flow to meet our lease obligations;

•

the risk that our inability to successfully integrate Quiet Logistics, Inc.'s ("Quiet Logistics") business and operations may adversely affect our results;

•

the risk that the integration of Quiet Logistics may result in significant accounting charges that adversely affect our results;

•

the risk associated with our reliance on key personnel, the loss of whom could have a material adverse effect on our business;

•

the risks associated with stringent and changing privacy laws, regulations, and standards as well as policies, contracts, and other obligations related to data privacy and security. Our failure to comply with privacy laws and regulations, as well as other legal obligations, could have a material adverse effect on our business;

•

the risk that we may be unable to protect our trademarks and other intellectual property rights;

•

the risks associated with changes in the regulatory or administrative landscape which could adversely affect our financial condition and results of operations;

•

the risk that fluctuations in our tax obligations and effective tax rate could adversely affect us; and

•

the risk that the unfavorable outcome of pending or future litigation could have an adverse impact on our business, financial condition, and results of operations.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS


	October 30,			January 30,			October 31,			October 29,			January 29,			October 30,
(In thousands, except per share amounts)	2021			2021			2020			2022			2022			2021
	(Unaudited)						(Unaudited)			(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	740,668		$	850,477		$	692,356		$	82,133		$	434,770		$	740,668
Merchandise inventory		739,808			405,445			559,961			797,731			553,458			739,808
Accounts receivable, net		228,461			146,102			124,560			250,879			286,683			228,461
Prepaid expenses and other		66,593			120,619			130,909			146,362			122,013			66,593
Total current assets		1,775,530			1,522,643			1,507,786			1,277,105			1,396,924			1,775,530
Operating lease right-of-use assets											1,148,832			1,193,021			1,148,108
Property and equipment, at cost, net of accumulated depreciation		665,408			623,808			650,397			789,809			728,272			665,408
Operating lease right-of-use assets		1,148,108			1,155,965			1,243,311
Intangible assets net, including goodwill		69,332			70,332			50,864
Goodwill, net											271,209			271,416			16,389
Intangible assets, net											96,530			102,701			52,943
Non-current deferred income taxes		57,753			33,045			12,774			34,135			44,167			57,753
Other Assets		33,884			29,013			33,083
Other assets											54,857			50,142			33,884
Total assets	$	3,750,015		$	3,434,806		$	3,498,215		$	3,672,477		$	3,786,643		$	3,750,015
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	314,561		$	255,912		$	304,552		$	188,448		$	231,782		$	314,561
Current portion of operating lease liabilities		299,693			328,624			346,321			332,160			311,005			299,693
Unredeemed gift cards and gift certificates											47,531			71,365			42,070
Accrued compensation and payroll taxes		123,588			142,272			117,736			36,436			141,817			123,588
Accrued income and other taxes											13,056			16,274			33,570
Other current liabilities and accrued expenses		56,090			55,343			47,587			67,799			70,628			56,090
Unredeemed gift cards and gift certificates		42,070			62,181			39,794
Accrued income and other taxes		33,570			14,150			15,503
Dividends payable		—			—			22,843
Total current liabilities		869,572			858,482			894,336			685,430			842,871			869,572
Non-current liabilities:
Non-current operating lease liabilities		1,123,681			1,148,742			1,196,755			1,089,710			1,154,481			1,123,681
Long-term debt, net		336,249			325,290			321,081			411,911			341,002			336,249
Other non-current liabilities		23,816			15,627			17,846			22,894			24,617			23,816
Total non-current liabilities		1,483,746			1,489,659			1,535,682
Total non-current liabilities											1,524,515			1,520,100			1,483,746
Commitments and contingencies		—			—			—			—			—			—
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; NaN issued and outstanding		—			—			—
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 168,622, 166,335, and 166,129 shares outstanding, respectively		2,496			2,496			2,496
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding											—			—			—
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 187,388, 168,699, and 168,622 shares outstanding, respectively											2,496			2,496			2,496
Contributed capital		627,264			663,718			655,891			389,726			636,355			627,264
Accumulated other comprehensive loss		(39,049	)		(40,748	)		(44,673	)		(41,267	)		(40,845	)		(39,049	)
Retained earnings		2,185,393			1,868,613			1,865,370			2,080,852			2,203,772			2,185,393
Treasury stock at cost, 80,944, 83,231, and 83,437 shares, respectively		(1,379,407	)		(1,407,414	)		(1,410,887	)
Treasury stock, at cost, 62,178, 80,867, and 80,944 shares, respectively											(969,275	)		(1,378,106	)		(1,379,407	)
Total stockholders’ equity		1,396,697			1,086,665			1,068,197			1,462,532			1,423,672			1,396,697
Total liabilities and stockholders’ equity	$	3,750,015		$	3,434,806		$	3,498,215		$	3,672,477		$	3,786,643		$	3,750,015

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	13 Weeks Ended						39 Weeks Ended						13 Weeks Ended					39 Weeks Ended
	October 30,			October 31,			October 30,			October 31,			October 29,		October 30,			October 29,			October 30,
(In thousands, except per share amounts)	2021			2020			2021			2020			2022		2021			2022			2021

Total net revenue	$	1,274,078		$	1,031,617		$	3,502,848		$	2,466,819		$	1,240,583	$	1,274,078		$	3,493,745		$	3,502,848
Cost of sales, including certain buying, occupancy and warehousing expenses		709,554			616,840			1,999,743			1,758,537			760,810		709,554			2,255,929			1,999,743
Gross profit		564,524			414,777			1,503,105			708,282			479,773		564,524			1,237,816			1,503,105
Selling, general and administrative expenses		313,890			273,297			872,320			685,206			311,101		313,890			917,687			872,320
Impairment, restructuring and COVID-19 related charges		—			6,955			—			177,186
Depreciation and amortization expense		40,947			38,974			119,674			120,818			51,124		40,947			146,664			119,674
Operating income (loss)		209,687			95,551			511,111			(274,928	)
Operating income														117,548		209,687			173,465			511,111
Debt related charges														—		—			60,066			—
Interest expense, net		8,612			7,924			26,038			16,617			3,878		8,612			11,887			26,038
Other (income), net		(3,130	)		(2,223	)		(6,354	)		(793	)
Income (loss) before income taxes		204,205			89,850			491,427			(290,752	)
Provision (benefit) for income taxes		51,981			31,742			122,226			(77,943	)
Net income (loss)	$	152,224		$	58,108		$	369,201		$	(212,809	)
Other expense (income), net														782		(3,130	)		(5,501	)		(6,354	)
Income before income taxes														112,888		204,205			107,013			491,427
Provision for income taxes														31,616		51,981			36,466			122,226
Net income														81,272		152,224			70,547			369,201

Net income (loss) per basic share	$	0.91		$	0.35		$	2.20		$	(1.28	)
Net income (loss) per diluted share	$	0.74		$	0.32		$	1.78		$	(1.28	)


Net income per basic share													$	0.44	$	0.91		$	0.39		$	2.20
Net income per diluted share													$	0.42	$	0.74		$	0.36		$	1.78

Weighted average common shares outstanding - basic		167,637			166,185			168,062			166,385			186,305		167,637			178,637			168,062
Weighted average common shares outstanding - diluted		205,013			184,397			207,032			166,385			195,776		205,013			207,499			207,032

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

13 Weeks Ended

39 Weeks Ended

October 30,

October 31,

October 30,

October 31,

(In thousands)

2021

2020

2021

2020

Net income (loss)

$
152,224

$
58,108

$
369,201

$
(212,809
)
Other comprehensive (loss) income:

Foreign currency translation adjustments

(2,155
)

3,318

1,699

(11,505
)
Other comprehensive (loss) income

(2,155
)

3,318

1,699

(11,505
)
Comprehensive income (loss)

$
150,069

$
61,426

$
370,900

$
(224,314
)


	13 Weeks Ended						39 Weeks Ended
	October 29,			October 30,			October 29,			October 30,
(In thousands)	2022			2021			2022			2021
Net income	$	81,272		$	152,224		$	70,547		$	369,201
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,250	)		(2,155	)		(422	)		1,699
Other comprehensive income (loss)		(1,250	)		(2,155	)		(422	)		1,699
Comprehensive income	$	80,022		$	150,069		$	70,125		$	370,900

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

13 Weeks Ended October 30, 2021 and October 31, 2020

(In thousands, except per share amounts)

Shares
Outstanding

Common
Stock

Contributed
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
(Loss)

Stockholders'
Equity

Balance at August 1, 2020

166,090

$
2,496

$
647,284

$
1,807,687

$
(1,411,576
)

$
(47,991
)

$
997,900

Stock awards

—

—

8,946

—

—

—

8,946

Repurchase of common stock from employees

(11
)

—

—

—

(142
)

—

(142
)
Reissuance of treasury stock

50

—

(536
)

(420
)

831

—

(125
)
Net income

—

—

—

58,108

—

—

58,108

Other comprehensive income

—

—

—

—

—

3,318

3,318

Cash dividends declared and dividend
   equivalents ($0.1375 per share)

—

—

197

(5
)

—

—

192

Balance at October 31, 2020

166,129

$
2,496

$
655,891

$
1,865,370

$
(1,410,887
)

$
(44,673
)

$
1,068,197

Balance at July 31, 2021

168,454

$
2,496

$
630,506

$
2,058,448

$
(1,379,025
)

$
(36,894
)

$
1,275,531

Stock awards

—

—

7,791

—

—

—

7,791

Repurchase of common stock from employees

(188
)

—

—

—

(6,452
)

—

(6,452
)
Reissuance of treasury stock

356

—

(11,778
)

5,820

6,070

—

112

Net income

—

—

—

152,224

—

—

152,224

Other comprehensive (loss)

—

—

—

—

—

(2,155
)

(2,155
)
Cash dividends declared and dividend
   equivalents ($0.1800 per share)

—

—

745

(31,099
)

—

—

(30,354
)
Balance at October 30, 2021

168,622

$
2,496

$
627,264

$
2,185,393

$
(1,379,407
)

$
(39,049
)

$
1,396,697

39 Weeks Ended October 30, 2021 and October 31, 2020

(In thousands, except per share amounts)

Shares
Outstanding

Common
Stock

Contributed
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
(Loss)

Stockholders'
Equity

Balance at February 1, 2020

166,993

$
2,496

$
577,856

$
2,108,292

$
(1,407,623
)

$
(33,168
)

$
1,247,853

Stock awards

—

—

24,300

—

—

—

24,300

Repurchase of common stock as part of
   publicly announced programs

(1,720
)

—

—

—

(20,000
)

—

(20,000
)
Repurchase of common stock from employees

(447
)

—

—

—

(5,357
)

—

(5,357
)
Convertible Senior Notes - Equity portion, net of tax

—

—

68,330

—

—

—

68,330

Reissuance of treasury stock

1,303

—

(15,324
)

(7,270
)

22,093

—

(501
)
Net loss

—

—

—

(212,809
)

—

—

(212,809
)
Other comprehensive (loss)

—

—

—

—

—

(11,505
)

(11,505
)
Cash dividends declared and dividend
   equivalents ($0.1375 per share)

—

—

729

(22,843
)

—

—

(22,114
)
Balance at October 31, 2020

166,129

$
2,496

$
655,891

$
1,865,370

$
(1,410,887
)

$
(44,673
)

$
1,068,197

Balance at January 30, 2021

166,335

$
2,496

$
663,718

$
1,868,613

$
(1,407,414
)

$
(40,748
)

$
1,086,665

Stock awards

—

—

29,245

—

—

—

29,245

Repurchase of common stock from employees

(779
)

—

—

—

(23,963
)

—

(23,963
)
Reissuance of treasury stock

2,719

—

(58,063
)

26,417

46,071

—

14,425

Equity portion of partial extinguishment of Convertible Senior Notes, net of tax

347

—

(9,876
)

6,995

5,899

—

3,018

Net income

—

—

—

369,201

—

-

369,201

Other comprehensive income

—

—

—

—

—

1,699

1,699

Cash dividends declared and dividend
   equivalents ($0.4975 per share)

—

—

2,240

(85,833
)

—

—

(83,593
)
Balance at October 30, 2021

168,622

$
2,496

$
627,264

$
2,185,393

$
(1,379,407
)

$
(39,049
)

$
1,396,697

13 Weeks Ended October 29, 2022 and October 30, 2021


(In thousands, except per share amounts)	Shares Outstanding			Common Stock		Contributed Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Stockholders' Equity
Balance at July 31, 2021		168,454		$	2,496	$	630,506		$	2,058,448		$	(1,379,025	)	$	(36,894	)	$	1,275,531
Stock awards		—			—		7,791			—			—			—			7,791
Repurchase of common stock from employees		(188	)		—		—			—			(6,452	)		—			(6,452	)
Reissuance of treasury stock		356			—		(11,778	)		5,820			6,070			—			112
Net income		—			—		—			152,224			—			—			152,224
Other comprehensive (loss)		—			—		—			—			—			(2,155	)		(2,155	)
Cash dividends and dividend equivalents ($0.18 per share)		—			—		745			(31,099	)		—			—			(30,354	)
Balance at October 30, 2021		168,622		$	2,496	$	627,264		$	2,185,393		$	(1,379,407	)	$	(39,049	)	$	1,396,697

Balance at July 30, 2022		187,312		$	2,496	$	380,959		$	2,000,021		$	(970,536	)	$	(40,017	)	$	1,372,923
Stock awards		—			—		6,591						—			—			6,591
Repurchase of common stock from employees		(18	)		—		—			—			(193	)		—			(193	)
Reissuance of treasury stock		94			—		(660	)		(441	)		1,454			—			353
Net income		—			—		—			81,272			—			—			81,272
Other comprehensive (loss)		—			—		—			—			—			(1,250	)		(1,250	)
Contributions from noncontrolling interests		—			—		2,836			—			—			—			2,836
Balance at October 29, 2022		187,388		$	2,496	$	389,726		$	2,080,852		$	(969,275	)	$	(41,267	)	$	1,462,532

39 Weeks Ended October 29, 2022 and October 30, 2021


(In thousands, except per share amounts)	Shares Outstanding			Common Stock		Contributed Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Stockholders' Equity
Balance at January 30, 2021		166,335		$	2,496	$	663,718		$	1,868,613		$	(1,407,414	)	$	(40,748	)	$	1,086,665
Stock awards		—			—		29,245			—			—			—			29,245
Repurchase of common stock from employees		(779	)		—		—			—			(23,963	)		—			(23,963	)
Reissuance of treasury stock		2,719			—		(58,063	)		26,417			46,071			—			14,425
Equity portion of partial extinguishment of Convertible Senior Notes, net of tax		347			—		(9,876	)		6,995			5,899			—			3,018
Net income		—			—		—			369,201			—			—			369,201
Other comprehensive income		—			—		—			—			—			1,699			1,699
Cash dividends and dividend equivalents ($0.4975 per share)		—			—		2,240			(85,833	)		—			—			(83,593	)
Balance at October 30, 2021		168,622		$	2,496	$	627,264		$	2,185,393		$	(1,379,407	)	$	(39,049	)	$	1,396,697

Balance at January 29, 2022		168,699		$	2,496	$	636,355		$	2,203,772		$	(1,378,106	)	$	(40,845	)	$	1,423,672
Stock awards		—			—		29,249			—			—			—			29,249
Repurchase of common stock from employees		(584	)		—		—			—			(9,772	)		—			(9,772	)
Reissuance of treasury stock		1,617			—		(24,618	)		(1,539	)		27,425			—			1,268
Adoption of Accounting Standards Update 2020-06, net of tax		—			—		(67,686	)		18,830			—			—			(48,856	)
Accelerated share repurchase		(17,023	)		—		—			—			(200,000	)		—			(200,000	)
Exchange of Convertible Senior Notes		34,679			—		(187,894	)		(144,507	)		591,178			—			258,777
Net income		—			—		—			70,547			—			—			70,547
Cash dividends and dividend equivalents ($0.36 per share)		—			—		1,484			(66,251	)		—			—			(64,767	)
Other comprehensive (loss)		—			—		—			—			—			(422	)		(422	)
Contributions from noncontrolling interests		—			—		2,836			—			—			—			2,836
Balance at October 29, 2022		187,388		$	2,496	$	389,726		$	2,080,852		$	(969,275	)	$	(41,267	)	$	1,462,532

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	39 Weeks Ended						39 Weeks Ended
	October 30,			October 31,			October 29,			October 30,
(In thousands)	2021			2020			2022			2021
Operating activities:
Net income (loss)	$	369,201		$	(212,809	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Net income							$	70,547		$	369,201
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		122,906			123,094			150,462			122,906
Share-based compensation		29,435			24,685			29,962			29,435
Deferred income taxes		(28,261	)		12,013			25,416			(28,261	)
Loss on impairment of assets		—			153,617
Loss on exchange of convertible senior notes								55,687			—
Changes in assets and liabilities:
Merchandise inventory		(333,871	)		(114,907	)		(244,864	)		(333,871	)
Operating lease assets		222,403			189,630			256,523			222,403
Operating lease liabilities		(269,153	)		(146,809	)		(248,721	)		(269,153	)
Other assets		(44,120	)		(86,501	)		(4,404	)		(44,120	)
Accounts payable		57,363			17,769			(43,378	)		57,363
Accrued compensation and payroll taxes		(18,690	)		74,374			(105,466	)		(18,690	)
Accrued and other liabilities		26,488			(44,550	)		(28,466	)		26,488
Net cash provided by (used for) operating activities		133,701			(10,394	)
Net cash (used for) provided by operating activities								(86,702	)		133,701
Investing activities:
Capital expenditures for property and equipment		(144,405	)		(92,591	)		(199,364	)		(144,405	)
Purchase of available-for-sale investments		(75,000	)		(14,956	)		-			(75,000	)
Sale of available-for-sale investments		75,000			69,956			-			75,000
Other investing activities		(4,372	)		(511	)		(700	)		(4,372	)
Net cash (used for) investing activities		(148,777	)		(38,102	)
Net cash used for investing activities								(200,064	)		(148,777	)
Financing activities:
Repurchase of common stock as part of publicly announced programs		—			(20,000	)
Accelerated share repurchase								(200,000	)		—
Proceeds from revolving line of credit, net								343,000			—
Principal paid in connection with exchange of convertible senior notes due 2025								(136,077	)		—
Repurchase of common stock from employees		(23,963	)		(5,357	)		(9,772	)		(23,963	)
Proceeds from revolving line of credit and convertible senior notes		—			736,108
Principal payments on revolving line of credit		—			(330,000	)
Net proceeds from stock options exercised		13,065			—			1,799			13,065
Cash dividends paid		(83,593	)		—			(64,767	)		(83,593	)
Other financing activities		(329	)		(889	)		1,670			(329	)
Net cash (used for) provided by financing activities		(94,820	)		379,862
Net cash used for financing activities								(64,147	)		(94,820	)
Effect of exchange rates changes on cash		87			(940	)		(1,724	)		87
Net change in cash and cash equivalents		(109,809	)		330,426			(352,637	)		(109,809	)
Cash and cash equivalents - beginning of period		850,477			361,930			434,770			850,477
Cash and cash equivalents - end of period	$	740,668		$	692,356		$	82,133		$	740,668

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Interim Financial Statements

The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the ~~“Company,” “we,” ”us,”~~“Company", "AEO", “we”, and “our”), a Delaware corporation, at October 29, 2022, January 29, 2022, and October 30, 2021 and ~~October 31, 2020 and~~ for the ~~13-and 39-week~~13 and 39 week periods ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to ~~the Quarterly Report on~~ Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and ~~footnotes~~notes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly ~~Report on Form 10-Q.~~Report. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January ~~30, 2021~~29, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March ~~11, 2021~~14, 2022 (the “Fiscal ~~2020~~2021 Form 10-K”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the ~~footnotes~~notes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly ~~Report~~Report.

The Company operates under the American Eagle® ("AE") and Aerie® brands. We also operate Todd Snyder New York ("Todd Snyder"), a premium menswear brand, and Unsubscribed, which focuses on ~~Form 10-Q.~~consciously-made slow fashion.

Founded in 1977, the Company is a leading multi-brand ~~global~~ specialty retailer that operates ~~under~~more than 1,000 retail stores in the ~~American Eagle~~^® ~~(“AE” or “American Eagle”)~~U.S. and ~~Aerie~~internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.com and more than ^®260~~(“Aerie”) brands. The Aerie brand includes OFFLINE~~^TM international store locations managed by ~~Aerie, a new sub-brand offering a complete collection of active wear and accessories built for REAL movement and REAL comfort launched in Fiscal 2020 (as defined below).~~

~~We also operate Todd Snyder New York, a premium menswear brand, and Unsubscribed, a new brand with a focus on consciously-made, slow fashion launched in Fiscal 2020.~~

third-party operators. We offer a broad assortment of high quality, on-trend apparel, accessories, and personal care products at affordable prices for men and women under the AE brand, and intimates, apparel, active wear, and swim collections under the Aerie brand. We sell directly to consumers through our retail channel, which includes our stores and concession-based shop-within-shops. We operate stores in the U.S., Canada, Mexico, Hong Kong, and ~~Hong Kong.~~Japan. We also have license agreements with third parties to operate American Eagle and Aerie stores throughout Asia, Europe, India, Latin America, and the Middle East. The Company's online business, AEO Direct, ships to 81 countries worldwide.

~~The Company operates more than 1,000 retail stores in the U.S. and internationally, online at~~ ~~www.ae.com~~ ~~and~~ ~~www.aerie.com, as well~~ ~~www.toddsnyder.com~~ ~~and~~ ~~www.unsubscribed.com~~ ~~(which e-commerce operations we collectively refer to as “AEO Direct”), and more than 200 international store locations managed by third-party operators.~~

In Fiscal 2021, we acquired AirTerra, Inc. ("AirTerra") and Quiet Logistics, Inc. ("Quiet Logistics"), creating a ~~logistics and~~new supply chain platform ("Quiet Platforms”). AirTerra is a middle-mile freight consolidator that ~~solves ecommerce~~provides cost effective shipping solutions. Quiet Logistics is a leading logistics company that operates a network of in-market fulfillment centers, locating products closer to need, creating inventory efficiencies, cost benefits and ~~shipping challenges in a unique~~affordable same-day and ~~innovative way~~next-day delivery options for ~~retailers~~customers and ~~brands of all sizes. This acquisition represents the first~~stores. Both acquisitions represent an important step in ~~building our supply chain platform, as part~~ our ongoing supply chain transformation ~~strategy~~strategy. Quiet Platforms provides fulfillment benefits to American Eagle and Aerie. Additionally, it provides the Company with a new long-term growth opportunity by extending its cutting-edge shared supply chain assets and capabilities to the platform's third party customer file of ~~leveraging scale~~small- and ~~innovation to help us manage costs and improve service.~~mid-sized retailers.

Historically, our operations have been seasonal, with a large portion of total net revenue and operating income occurring in the third and fourth fiscal quarters, reflecting increased demand during the back-to-school and year-end holiday selling seasons, respectively. Our quarterly results of operations also may fluctuate based upon such factors as the timing of certain holiday seasons, the number and timing of new store openings, the acceptability of seasonal merchandise offerings, the timing and level of markdowns, store closings and remodels, competitive factors, weather and general economic and political conditions. ~~During Fiscal 2020, historic seasonal trends were impacted by consumer behavior due to the coronavirus (“COVID-19”) global pandemic.~~

COVID-19 Pandemic

Impacts related to the ~~onging~~ongoing COVID-19 pandemic have been significantly negative for the retail industry, our Company, our customers, and our associates. We have experienced and may continue to experience significant disruptions to our business due to the COVID-19 pandemic and the related suggested and mandated social distancing and shelter-in-place ~~orders, which initially resulted in the temporary closure of all our~~orders. During periods when stores ~~and furlough of our associates during the first-half of Fiscal 2020. During Fiscal 2021 and Fiscal 2020, while stores were~~have been impacted by ~~negative~~reduced mall traffic, we have focused on our

omni-channel capabilities. As of ~~the 13 and 39 weeks ended~~ October ~~30, 2021,~~29, 2022, all of our stores have reopened and remain open, although we continue to see residual impacts on foot traffic and in-store revenues.

The impacts of the COVID-19 pandemic on our business are discussed in further detail within these ~~notes~~Notes to the Consolidated Financial Statements and within Item 2 of this Quarterly Report, ~~on Form 10-Q,~~ of which these ~~notes~~Notes form a part.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned ~~subsidiaries.~~subsidiaries and consolidated entities where the Company's ownership percentage is less than 100%. Non-controlling interests are included as a component of contributed capital within the Consolidated Balance Sheets and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At October ~~30, 2021,~~29, 2022, the Company operated in 2two reportable segments, American Eagle and Aerie.

Fiscal Year

Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal ~~2021”~~2022” refers to the 52-week period that will end on January ~~29, 2022.~~28, 2023. “Fiscal ~~2020”~~2021” refers to the 52-week period ended January ~~30, 2021. “Fiscal 2019” refers to the 52-week period ended February 1, 2020.~~29, 2022.

Estimates

~~Estimates~~

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Recent Accounting Pronouncements

In ~~June 2016,~~August 2020, the Financial Accounting Standards Board ~~(“FASB”)~~ issued Accounting Standards Update (“ASU”), ~~Financial Instruments–Credit Losses~~ (Topic 326) (“ASU 2016-13”), which modifies the measurement of expected credit losses of certain financial instruments. The Company adopted ASU 2016-13 on February 2, 2020. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

~~In December 2019, the FASB amended Accounting Standards Codification ("ASC") 740,~~ ~~Income Taxes~~ ~~(issued under ASU 2019-12,~~ ~~Simplifying the Accounting for Income Taxes~~). This amendment removes certain exceptions to the general principles of ASC 740, and clarifies and amends the existing guidance to improve consistent application. The Company adopted the guidance effective January 31, 2021. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

~~In August 2020, the FASB issued ASU~~ 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies the accounting for convertible debt instruments. The new guidance eliminates two of the three models in ~~ASC~~Accounting Standards Codification (“ASC”) 470-20,Debt with Conversion and Other Options that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share (“EPS”) calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company ~~will adopt~~adopted ASU 2020-06 ~~at the beginning of Fiscal~~effective January 30, 2022 ~~using~~ under the modified retrospective ~~approach.~~method.

~~In April 2020,~~Refer to Note 5 and Note 8 to the ~~Company issued $415 million aggregate principal amount of convertible senior notes due 2025 (the “Notes”). The Notes are currently accounted~~Consolidated Financial Statements for ~~under the cash conversion model, which is one of the models being eliminated. The adoption of ASU 2020-06 will result in the Notes being accounted for as a single balance in~~additional information regarding EPS and long-term debt, ~~rather than being accounted for as separate debt and equity components.~~respectively.

Subsequently, the adoption of ASU 2020-06 is expected to reduce reported interest expense and, correspondingly, increase reported net income. Additionally, the dilutive effect of the Notes will increase to approximately 48 million dilutive shares, or an incremental 14 million shares compared to the dilutive effect of the Notes as of October 30, 2021, which will reflect the assumed conversion of all outstanding Notes. We do not anticipate a material impact to diluted earnings per share, as a result of a reduction in interest expense offset by the increase in diluted shares from the adoption of ASU 2020-06.

Foreign Currency Translation

In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into ~~U.S.~~United States dollars (“USD”) (the ~~Company’s~~ reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income.

We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended October ~~30, 2021,~~29, 2022, an unrealized loss of ~~$2.2~~$1.3 million iswas included in ~~accumulated~~ other comprehensive ~~(loss)~~ income ~~primarily due to the decline in the US dollar to Canadian dollar.~~(loss). During the 39 weeks ended, October ~~30, 2021,~~29, 2022, an unrealized ~~gain~~loss of ~~$1.7~~$0.4 million iswas included in ~~accumulated~~ other comprehensive income (loss), primarily related to the ~~rise in~~fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates.

Cash and Cash Equivalents ~~and Short-Term Investments~~

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents.

Receivables

~~Receivables~~

The Company maintains an allowance for doubtful accounts for estimated losses from the failure of certain of our customers to make required payments for products or services delivered. The Company estimates this allowance based on the age of the related receivable, knowledge of the financial condition of customers, review of historical and expected future receivables and reserve trends and other pertinent information. If the financial condition of customers deteriorates or an unfavorable trend in receivable collections is experienced in the future, additional allowances may be required. Historically, the Company’s reserves have approximated actual experience.

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company.

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its ~~current~~currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected.

The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends.

Property and Equipment

Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows:


Buildings		25 years
Leasehold improvements		Lesser of 10 years or the term of the lease
Fixtures and equipment Information technology		Five ~~years~~years Three - five ~~years~~years

As of October ~~30, 2021,~~29, 2022, the weighted average remaining useful life of our assets was approximately ~~7.0~~6 years.

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ~~(“ROU”~~("ROU") assets associated with retail ~~stores, which have been open for a period sufficient to reach maturity.~~stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income ~~under~~within the Consolidated Statements of Operations. No asset impairment ~~restructuring and COVID-19 related charges.~~charges were recorded during the 13 or 39 weeks ended October 29, 2022 or October 30, 2021.

When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and ~~equipment~~equipment.

Goodwill and ~~to Note 13 to the Consolidated Financial Statements for additional information regarding impairment charges for the 39 weeks ended October 31, 2020.~~

Intangible Assets, ~~including Goodwill~~net

The Company’s goodwill is primarily related to the acquisition of Quiet Logistics in Fiscal 2021, as well as its importing operations ~~Canada~~and Canadian business, and ~~other immaterial acquisitions.~~represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other ~~(“ASC 350”)~~, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or ~~more frequently if an impairment indicator exists, by comparing~~substantive changes in circumstances that indicate that the ~~estimated~~ fair value of ~~each~~a reporting unit tomay be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. As a result of the ~~Company’s~~Company's annual goodwill impairment test as of January ~~30, 2021,~~29, 2022, the Company concluded

that its goodwill was 0tnot impaired. No indicators of impairment were present during the 13 or 39 weeks ended October 29, 2022 or October 30, 2021.

Definite-lived intangible assets are initially recorded ~~on the basis of cost~~at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 1510 to 2515 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC ~~350~~360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. ~~NaN~~No definite-lived intangible asset impairment charges were recorded during the 13 or 39 weeks ended October 29, 2022 or October 30, ~~2021 and October 31, 2020.~~2021.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible ~~assets, including goodwill.~~assets.

~~Gift Cards~~

Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage (as defined below) and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue.

The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. During the 13 weeks ended October 30, 2021 and October 31, 2020, the Company recorded approximately $1.7 million and $1.6 million, respectively, of revenue related to gift card breakage. During the 39 weeks ending October 30, 2021 and October 31, 2020, the Company recorded $6.1 million and $4.9 million, respectively, of revenue related to gift card breakage.

Construction Allowances

As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor.

Self-Insurance Liability

The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability.

Leases

~~Leases~~

~~The Company adopted ASC Topic 842,~~ ~~Leases~~ (“ASC 842”), in Fiscal 2019. The standard establishes a ROU model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

The Company leases all store premises, regional distribution facilities, some of its office space, and certain information technology and office equipment. These leases are generally classified as operating leases.

Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses.

~~Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s discretion and is not reasonably certain at lease commencement.~~ When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed.

Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities.

When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset.

For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

NaN operating lease ROU asset impairments were recorded for the 13 or 39 weeks ended October 30, 2021. There was 0 operating lease ROU impairment recorded for the 13 weeks ended October 31, 2020. During the 39 weeks ended October 31, 2020, the Company recorded impairment of operating lease ROU assets of $84.1 million. Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

~~Leases Modifications and COVID-19~~

The FASB staff issued a Q&A document in April 2020 providing guidance on how to apply the lease modification guidance in ASC 842 to rent concessions arising from COVID-19, allowing companies to elect accounting for the concessions as if enforceable rights and obligations existed, regardless of whether they are explicitly stated in the lease contract. Per the FASB staff Q&A guidance, entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

•

For concessions in the form of rent forgiveness, the Company invoked the accounting elections provided by the FASB staff; savings were recorded as a credit to variable rent in the period the amendments became fully executed.

•

For concessions in the form of deferred payments, the Company did not apply the FASB accounting elections; rent expense was recorded in accordance with ASC 842 and the unpaid amount remained accrued as part of the current operating lease liability.

•

~~All other forms of rent concessions followed our normal accounting policy for lease modifications, adhering to the guidance set forth in ASC 842.~~

Co-branded Credit Card

The Company offers a co-branded credit card and a private label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations.

For further information on the Company’s loyalty program, refer to the Customer Loyalty Program caption below.

Customer Loyalty Program

~~In June 2020, the~~The Company ~~launched~~offers a ~~highly-digitized~~highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). ~~The~~This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. ~~Prior to the Program’s launch in June 2020, we also offered additional rewards for key items such as jeans and bras under our previous program, AEO Connected™.~~ Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.

Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“(“ASC 606”). The portion of the sales revenue attributed to the ~~award~~reward points is deferred and recognized when the ~~award~~reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue.

The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606.

Long-Term Debt

~~Sales Return Reserve~~In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due 2025 (the "2025 Notes"). Prior to the adoption of ASU 2020-06 in Fiscal 2022, the 2025 Notes were accounted for under the cash conversion model, which is one of the models eliminated by ASU 2020-06. The adoption of ASU 2020-06 resulted in the 2025 Notes being accounted for as a single balance in long-term debt, rather than being accounted for as separate debt and equity components. As of October 29, 2022, approximately $69.6 million aggregate principal of the 2025 Notes remain outstanding.

~~Revenue is recorded net~~In June 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides senior secured asset based revolving credit for loans and letters of ~~estimated and actual sales returns and deductions for coupon redemptions and other promotions.~~credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The ~~Company records the impact of adjustments~~Credit Facility expires on June 24, 2027.

Refer to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages.

The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and (ii) other current liabilities and accrued expenses, respectively, onNote 8 to the Consolidated ~~Balance Sheets.~~Financial Statements for additional information regarding Long-Term Debt.

Income Taxes

~~Income Taxes~~

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“(“ASC 740”), which requires the use of the ~~asset and~~ liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial ~~Statement~~Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the Company’s effective income tax rate.

The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits.

The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance, requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss).

Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes.

Revenue Recognition

The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is

excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets.

Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. The presentation on a gross basis of the sales return reserve consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and other and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets.

Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on gift card breakage, determined through historical redemption trends. Revenue on unredeemed gift cards, based on an estimate of the amounts that will not be redeemed ~~(“gift~~"gift card ~~breakage”~~breakage"), ~~determined through historical redemption trends. Gift card breakage revenue~~ is recognized in proportion to actual gift card redemptions as a component of total net revenue. ~~For further information on the Company’s~~The Company determines an estimated gift card ~~program, refer~~breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded approximately $1.7 million of revenue related to gift card breakage during both the ~~Gift Cards caption above.~~13 weeks ended October 29, 2022 and October 30, 2021. During the 39 weeks ended October 29, 2022 and October 30, 2021, the Company recorded $6.6 million and $6.1 million, respectively, of revenue related to gift card breakage.

The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable.

The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to the Customer Loyalty Program caption above for additional information.

18Revenue associated with Quiet Platforms is recognized as the services are performed.

Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses

Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”) and buying, occupancy and warehousing ~~costs.~~costs and services.

Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold.

Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. ~~Selling, general and administrative~~SG&A expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, ~~equipment~~ leasing costs and services purchased.

~~Selling, general and administrative~~SG&A expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, ~~selling, general and administrative~~SG&A expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales.

Debt Related Charges

Debt related charges consists primarily of a $55.7 million induced conversion expense on the exchange of the 2025 Notes, along with certain other costs related to actions we took to strengthen our capital structure during the 26 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the 2025 Notes.

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under ~~the revolving credit facility, as well as~~our Credit Facility, partially offset by interest income from cash and cash ~~equivalents, and short-term investments.~~equivalents.

Other Expense (Income), Net

Other expense (income), net consists ~~primarily~~ of ~~gains and losses resulting from~~allowances for uncollectible receivables, foreign currency ~~transactions.~~fluctuations and changes in other non-operating items. Net loss attributable to non-controlling interests was not material for any period presented and is included within other expense (income), net.

Segment Information

~~The Company has identified 2 operating segments~~We have two (reportable segments: American Eagle and ~~Aerie) that also represent our reportable segments.~~Aerie. For additional information regarding the Company’s ~~segment~~segments and geographic information, refer to Note 12 to the Consolidated Financial Statements.

3. Cash and Cash Equivalents

The following table summarizes the fair market values for the Company’s cash and cash equivalents, which are recorded onin the Consolidated Balance Sheets:


(In thousands)	October 29, 2022		January 29, 2022		October 30, 2021
Cash and cash equivalents:
Cash	$	82,029	$	138,758	$	364,769
Interest bearing deposits		104		296,012		375,899
Total cash and cash equivalents	$	82,133	$	434,770	$	740,668

(In thousands)

October 30,
2021

January 30,
2021

October 31,
2020

Cash and cash equivalents:

Cash

$
364,769

$
524,970

$
317,027

Interest bearing deposits

375,899

275,507

325,319

Money market securities

—

—

50,010

Certificates of deposit

—

50,000

—

Total cash and cash equivalents

$
740,668

$
850,477

$
692,356

4. Fair Value Measurements

ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.

Financial Instruments

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

•

Level 1 — Quoted prices in active markets.

•

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

•

~~Level 1 — Quoted prices in active markets.~~

•	~~Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly.~~

•	~~Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

The Company’s cash equivalents are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents.

~~Long-Term Debt~~


	Fair Value Measurements at October 29, 2022
(In thousands)	Carrying Amount		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents:
Cash	$	82,029	$	82,029	$	—	$	—
Interest bearing deposits		104		104		—		—
Total cash and cash equivalents	$	82,133	$	82,133	$	—	$	—

Long-Term Debt

As of October 29, 2022, the fair value of the Company's $343.0 million in outstanding borrowings under its Credit Facility approximated the carrying value. As of October 30, 2021, the Company had 0no outstanding borrowings under its ~~revolving~~previous credit ~~facilities and~~agreement.

The Company had ~~repaid the outstanding borrowings of $330 million under its revolving credit facilities as of October 31, 2020.~~approximately $69.6

~~In April 2020, the Company issued $415~~ million aggregate principal ~~amount~~ of ~~convertible senior notes due in 2025.~~the 2025 Notes outstanding at October 29, 2022. The fair value of the Company's 2025 Notes is not required to be measured at fair value on a recurring basis. Upon issuance, the fair value of the 2025 Notes was measured using two approaches that consider market related conditions, including market benchmark rates and a secondary market quoted price, and is therefore within Level 2 of the fair value hierarchy.

Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements.

Non-Financial Assets

The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value.

~~Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820.~~ There were 0no asset impairment charges recorded during the 13 or 39 weeks ended October 29, 2022 or October 30, 2021. ~~There~~

The Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. The Company last performed an annual goodwill impairment test using Level 3 inputs as defined in ASC 820 as of January 29, 2022. As a result of the Company's annual goodwill impairment test, the Company concluded that its goodwill was not impaired. No indicators of impairment were ~~0 asset impairment charges recorded~~present during the 13 or 39 weeks ended

October ~~31, 2020.~~ 29, 2022 or October 30, 2021. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets.

5. Earnings per Share

The following is a reconciliation between the amounts used in the calculation of basic and diluted earnings per share:


	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Numerator:
Net income and numerator for basic EPS	$	81,272	$	152,224	$	70,547	$	369,201
Add: Interest expense, net of tax, related to the 2025 Notes (1)		529		—		4,897		—
Numerator for diluted EPS	$	81,801	$	152,224	$	75,444	$	369,201

Denominator:
Denominator for basic EPS - weighted average shares		186,305		167,637		178,637		168,062
Add: Dilutive effect of the 2025 Notes (1)		8,418		33,687		27,280		34,616
Add: Dilutive effect of stock options and non-vested restricted stock		1,053		3,689		1,582		4,354
Denominator for diluted EPS - adjusted weighted average shares		195,776		205,013		207,499		207,032
Anti-dilutive shares (2)		4,221		286		2,390		172

(1)

During the 39 weeks ended October ~~31, 2020,~~29, 2022, the Company ~~recorded asset impairment charges~~adopted ASU 2020-06 under the modified retrospective method, which requires the Company to utilize the "if-converted" method of $153.6 million. Included in this amount are retail store impairment charges of $109.6 million, of which $84.1 million relates to operating lease ROU assets and $25.5 million relates to store property and equipment (fixtures and equipment and leasehold improvements).This impairment was primarily driven by store closures due to the COVID-19 pandemic. We also recorded $26.0 million of impairment related charges to certain corporate property and equipment, as well as $18.0 million of impairment charges related to certain cost and equity method investments. The assets were adjusted to their fair value and the loss on impairment was recorded within impairment, restructuring and COVID-19 related charges in the Consolidated Statements of Operations. The fair value of the impaired assets, after the recorded loss, was approximately $163.4 million.

The fair value of the impaired assets was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest and a real estate market participant discount ratecalculated diluted EPS. Accordingly, we did not restate financial information for ~~the ROU assets. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located.~~

~~5. Earnings per Share~~

~~The following is a reconciliation between basic and diluted weighted average shares outstanding:~~

13 Weeks Ended

39 Weeks Ended

October 30,

October 31,

October 30,

October 31,

(In thousands)

2021

2020

2021

2020

Weighted average common shares outstanding:

Basic number of common shares outstanding

167,637

166,185

168,062

166,385

Dilutive effect of convertible notes

33,687

16,382

34,616

—

Dilutive effect of stock options and non-vested
restricted stock

3,689

1,830

4,354

—

Diluted number of common shares outstanding

205,013

184,397

207,032

166,385

Anti-Dilutive Shares*

286

1,423

172

9,250

*For the 39 weeks ended October ~~31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from~~30, 2021. Refer to Note 2 to the ~~Company’s convertible senior notes that were excluded from~~Consolidated Financial Statements for additional information regarding the ~~diluted earnings per share calculation because~~impact of the ~~Company incurred a net loss for this period and their inclusion would be anti-dilutive.~~ adoption of ASU 2020-06.

(2)

For all ~~other~~ periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

The Company has the right to settle the Notes in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the Notes in cash and any conversion value above the principal in common stock. Because of this repayment policy election, only the conversion spread portion of the amount owed is reflected as dilutive in our weighted average diluted shares outstanding. The Company uses the average of the daily closing prices of its common stock (NYSE: AEO) as reported on the New York Stock Exchange to calculate the conversion spread. The Notes could have a potential dilutive effect in future periods.

Refer to Notes 8 and 9 to the Consolidated Financial Statements for additional information regarding the 2025 Notes and share-based compensation, respectively.

On June 3, 2022, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with JPMorgan Chase Bank (“JPM”). Pursuant to the terms of the ASR Agreement, on June 3, 2022, the Company paid $200.0 million in cash and received an initial delivery of 13.4 million shares of its common stock on June 3, 2022. At final settlement, on July 28, 2022, an additional 3.7 million shares were received. The cumulative repurchase under the ASR Agreement was 17.0 million shares repurchased at an average price per share of $11.75. The aforementioned shares have been recorded as treasury stock.

6. Property and Equipment

Property and equipment consists of the following:


	October 30,			January 30,			October 31,			October 29,			January 29,			October 30,
(In thousands)	2021			2021			2020			2022			2022			2021
Property and equipment, at cost	$	2,394,148		$	2,250,974		$	2,255,676		$	2,657,167		$	2,480,438		$	2,394,148
Less: Accumulated depreciation and impairment		(1,728,740	)		(1,627,166	)		(1,605,279	)		(1,867,358	)		(1,752,166	)		(1,728,740	)
Property and equipment, net	$	665,408		$	623,808		$	650,397		$	789,809		$	728,272		$	665,408

7. Goodwill and Intangible Assets, ~~including~~ net

Goodwill

~~Intangible~~ and definite-lived intangible assets, net consist of the following:


(In thousands)	October 29, 2022			January 29, 2022			October 30, 2021
Goodwill, gross	$	275,405		$	275,612		$	20,585
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	271,209		$	271,416		$	16,389

October 30,

January 30,

October 31,

(In thousands)

2021

2021

2020

Goodwill, gross

$
20,585

$
17,463

$
17,331

Accumulated impairment ⁽¹⁾

(4,196
)

(4,196
)

(4,196
)
Goodwill, net

$
16,389

$
13,267

$
13,135

Trademarks, at cost

$
93,504

$
92,663

$
72,194

Accumulated amortization

(40,561
)

(35,598
)

(34,465
)
Trademarks, net

$
52,943

$
57,065

$
37,729

Intangible assets, net, including goodwill

$
69,332

$
70,332

$
50,864

(1)

Accumulated impairment includes $1.7 million recorded in Fiscal 2019 and $2.5 million recorded in Fiscal 2016.

2120


(In thousands)	October 29, 2022			January 29, 2022			October 30, 2021
Intangible assets, at cost	$	145,935		$	145,243		$	93,504
Accumulated amortization		(49,405	)		(42,542	)		(40,561	)
Intangible assets, net	$	96,530		$	102,701		$	52,943

~~(1)~~

~~Accumulated impairment includes $1.7 million recorded in Fiscal 2019 and $2.5 million recorded in Fiscal 2016.~~

8. Long-Term Debt, Net

Our long-term debt consisted of the ~~following at each of October 30, 2021, January 30, 2021, and October 31, 2020:~~

(In thousands)
October 30,
2021

January 30,
2021

October 31,
2020

Convertible senior notes principal
$
412,025

$
415,025

$
415,025

Less: unamortized discount

75,776

89,735

93,944

Total long-term debt, net
$
336,249

$
325,290

$
321,081

Convertible Senior Notes - Equity portion, net of tax

58,454

68,330

68,330

following:

~~Convertible notes~~


(In thousands)	October 29, 2022		January 29, 2022		October 30, 2021
2025 Notes principal	$	69,601	$	412,025	$	412,025
Less: unamortized discount		690		71,023		75,776
2025 Notes, net	$	68,911	$	341,002	$	336,249
Credit Facility borrowings		343,000		—		—
Total long-term debt, net	$	411,911	$	341,002	$	336,249

2025 Notes - equity portion, net of tax		—		58,454		58,454

2025 Notes

In April 2020, the Company issued ~~$415~~$415 million aggregate principal amount of ~~convertible senior notes due in~~ 2025 Notes in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities ~~Act of 1933, as amended.~~ Act. The 2025 Notes have a stated interest rate of ~~3.75%~~3.75%, payable ~~semi-annually.~~semi-annually. The Company may redeem the 2025 Notes, in whole or in part, at any time beginning in April ~~2023.~~17, 2023. The Company used the net proceeds from the ~~offering~~issuance for general corporate purposes.

The Company does not have the right to redeem the 2025 Notes prior to April 17, ~~2023.~~2023. On or after April 17, 2023 and prior to the ~~40th~~fortieth scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the 2025 Notes, at its option, for cash, if the last reported sale price of the ~~Company’s~~Company's common stock has been at least ~~130%~~130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any ~~30-consecutive-trading-day~~30 consecutive trading day period. Beginning January 2025, noteholders may convert their ~~Notes~~notes for approximately ~~117.1~~120.9 shares of the Company's common stock per ~~$1,000~~$1,000 principal amount of the ~~Notes,~~notes, equivalent to a conversion price of approximately ~~$8.54~~$8.27 per share.

Note Exchange

~~The~~In June 2022, the Company ~~has~~entered into separate privately negotiated exchange agreements with certain holders of the ~~right~~2025 Notes, to ~~settle conversions~~exchange $342.4 million in ~~any~~aggregate principal amount of the 2025 Notes for a combination of cash and shares of the Company's common stock, plus payment of accrued and unpaid interest (the "Note Exchange").

The Companypaid cash of $136.1 million to redeem a principal amount of the 2025 Notes with a carrying value of $339.2 million and issued approximately 34.7 million shares of the Company's common stock. ~~However,~~In connection with these transactions, the Company ~~intends to settle~~recognized a pre-tax inducement charge of approximately $55.7 million during the ~~original~~13 weeks ended July 30, 2022, which was recorded within debt related charges on the Consolidated Statements of Operations. Following the Note Exchange, approximately $69.6 million aggregate principal ~~portion~~amount of the 2025 Notes in cash and any conversion value above the principal in common stock. Because of this repayment policy, only the conversion spread portion of the amount owed is reflected as dilutive in earnings per share.remained outstanding at October 29, 2022.

The effective interest rate for the 2025 Notes is ~~10.0%~~4.3% and ~~the Company~~we calculated the effective yield using a market approach. The remaining amortization period of the discount ~~is 3.50~~was 2.50 years as of October ~~30, 2021.~~29, 2022.

Interest expense for the 2025 Notes was:


	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Accrued interest for interest payments	$	645	$	3,863	$	6,559	$	11,611
Amortization of discount		89		4,569		872		13,953
Total interest expense	$	734	$	8,432	$	7,431	$	25,564

Refer to Note 2 and Note 5 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06.

13 Weeks Ended

39 Weeks Ended

(In thousands)
October 30,
2021

October 31,
2020

October 30,
2021

October 31,
2020

Accrued interest for interest payments
$
3,863

$
3,848

$
11,611

$
7,966

Amortization of discount

4,569

4,113

13,953

8,308

Total interest expense
$
8,432

$
7,961

$
25,564

$
16,274

The following table discloses conversion amounts if the 2025 Notes were all converted as of the end of the period:

~~(In thousands, except per share amounts)~~	~~October 30,~~ ~~2021~~
~~Number of shares convertible~~		~~48,258~~
~~Conversion price per share~~		~~8.54~~
~~Value in excess of principal if converted~~		~~952,555~~


(In thousands, except per share amounts)	October 29, 2022
Number of shares convertible		8,418
Conversion price per share	$	8.27
Value in excess of principal if converted	$	24,722

Revolving ~~credit facilities~~Credit Facility

In ~~January 2019,~~June 2022, the Company entered into anthe amended and restated Credit Agreement ~~(the “Credit Agreement”) for~~ ~~five-year, syndicated, asset-based revolving credit facilities (the “Credit Facilities”). The Credit Agreement~~which provides senior secured asset-based revolving credit for loans and letters of credit up to ~~$400~~$700 million, subject to customary borrowing base ~~limitations.~~limitations pursuant to the Credit Facility. The Credit ~~Facilities~~Facility expires on June 24, 2027. Before amendment and restatement, the Company's previous credit agreement provided senior secured asset-based revolving credit for loans and letters of credit up to $400 million and was scheduled to expire on January 30, ~~2024.~~2024.

All obligations under the Credit ~~Facilities~~Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by ~~a first-priority security interest in~~ certain ~~working capital~~ assets of the ~~borrowers and guarantors, consisting primarily of cash, receivables, inventory,~~Company and certain ~~other assets and have been further secured by first-priority mortgages on certain real property.~~subsidiaries.

As of October ~~30, 2021,~~29, 2022, the Company was in compliance with the terms of the Credit Agreement and had ~~$7.9~~$343.0 million in outstanding borrowings and $7.9 million outstanding in stand-by letters of credit. ~~NaN~~No loans were outstanding under the ~~Credit Agreement~~Company's previous credit agreement as of October 30, 2021. As

Borrowings under the Credit Facility accrue interest at the election of ~~October 31, 2020,~~ the Company ~~had repaid $330.0~~at an adjusted secured overnight financing rate ("SOFR") rate of SOFR plus 0.10% plus an applicable margin (ranging from 1.125% to 1.375%) or an alternate base rate plus an applicable margin (ranging from 0.125% to 0.375%), with each such applicable margin being based on average borrowing availability under the Credit Facility. Interest is payable quarterly and at the end of each applicable interest period. The weighted average interest rate for borrowings during the 13 and 39 weeks ended October 29, 2022 was 3.8% and 3.5%, respectively. The total interest expense related to the Credit Facility for the 13 and 39 weeks ended October 29, 2022 was $2.9 million ~~of outstanding loans under its Credit Facilities.~~ and $3.9 million, respectively.

9. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation ~~(“ASC 718”)~~, which requires the Company to measure and recognize compensation expense for all share-based payments at fair value.

Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 and 39 weeks ended October ~~30, 2021~~29, 2022 was ~~$7.9~~$6.8 million ($~~5.9~~4.9 million, net of tax) and ~~$29.4~~$30.0 million ($~~22.2~~19.7 million, net of tax), respectively, and for the 13 and 39 weeks ended October ~~31, 2020~~30, 2021 was ~~$9.0~~$7.9 million ($~~5.7~~5.9 million, net of tax) and ~~$24.7~~$29.4 million ($~~17.9~~22.2 million, net of tax), respectively.

Stock Option Grants

The Company has granted time-based stock option ~~awards. Time-based stock option~~ awards, which vest over the requisite service period of the award or toat an employee’s eligible retirement ~~eligible~~ date, if earlier. A summary of the Company’s stock option activity for the 39 weeks ended October ~~30, 2021~~29, 2022 follows:

Weighted-
Average

Weighted-
Average
Remaining
Contractual

Aggregate

Options

Exercise Price

Term

Intrinsic Value

(In thousands)

(In years)

(In thousands)

Outstanding - January 30, 2021

3,940

$
14.87

Granted

478

$
31.46

Exercised (1)

(771
)

$
16.33

Outstanding - October 30, 2021

3,647

$
16.74

4.5

$
29,226

Vested and expected to vest - October 30, 2021

2,503

$
16.59

3.2

$
14,678

Exercisable - October 30, 2021 (2)

1,788

$
16.28

1.7

$
13,345


				Weighted- Average		Weighted- Average Remaining Contractual		Aggregate
	Options			Exercise Price		Term		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 29, 2022		3,647		$	16.74
Granted		1,094		$	17.24
Exercised		(108	)	$	8.62
Cancelled		(617	)	$	16.87
Outstanding - October 29, 2022		4,016		$	17.07		4.1		1,708
Vested and expected to vest - October 29, 2022		2,856		$	17.01		2.9		550
Exercisable - October 29, 2022 (1)		433		$	9.91		4.4		1,139

(1)

Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on October 29, 2022.

~~(1)~~

~~Options exercised during the 39 weeks ended October 30, 2021 ranged in price from $8.62 to $21.41.~~

~~(2)~~

~~Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on October 30, 2021.~~

Cash received from the exercise of stock options and the actual tax benefit realized from share-based payments was ~~$13.1~~$1.8 million and $0.3 million, respectively, for the 39 weeks ended October 29, 2022. Cash received from the exercise of stock options and the actual tax benefit realized from share-based payments was $13.1 million and $4.3 million, respectively, for the 39 weeks ended October 30, 2021. ~~The actual tax benefit realized from share-based payments totaled $4.3 million for the 39 weeks ended October 30, 2021. There were 0 stock options exercised during the 39 weeks ended October 31, 2020.~~

As of October ~~30, 2021,~~29, 2022, there was ~~$7.5~~$7.6 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.0 years.

The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	39 Weeks Ended			39 Weeks Ended
	October 29,			October 30,
Black-Scholes Option Valuation Assumptions	2022			2021
Risk-free interest rate (1)		2.5	%		0.9	%
Dividend yield		3.8	%		1.6	%
Volatility factor (2)		52.2	%		50.7	%
Weighted-average expected term (3)	4.5 years			4.5 years

39 Weeks Ended

39 Weeks Ended

October 30,

October 31,
Black-Scholes Option Valuation Assumptions

2021

2020
Risk-free interest rate (1)

0.9%

0.3 - 0.6%
Dividend yield

1.6%

3.5 - 6.0%
Volatility factor (2)

50.7%

43.1 - 48.7%
Weighted-average expected term (3)

4.5 years

4.4 years
(1)

Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.

(2)

Based on historical volatility of the Company’s common stock.

(3)

Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience.

~~(1)~~

~~Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.~~

~~(2)~~

~~Based on historical volatility of the Company’s common stock.~~

~~(3)~~

~~Represents the period of time that options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience.~~

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three ~~years.~~years. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

The grant date fair value of time-based restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant. A Monte-Carlo simulation was utilized ~~to determine the fair value~~ for performance-based restricted stock awards.

A summary of the Company’s restricted stock activity is presented in the following ~~tables:~~table:


	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units					Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	October 30, 2021					October 30, 2021					October 29, 2022					October 29, 2022
(Shares in thousands)	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Nonvested - January 30, 2021		3,698		$	12.42		1,868		$	17.44
Non-vested - January 29, 2022												2,702		$	16.25		1,462		$	20.95
Granted		699		$	32.47		337		$	39.54		1,598		$	16.51		549		$	19.16
Vested		(1,478	)	$	14.90		(418	)	$	22.22		(1,228	)	$	15.01		(257	)	$	21.28
Cancelled		(200	)	$	13.49		(324	)	$	17.72		(314	)	$	15.57		(180	)	$	22.39
Nonvested - October 30, 2021		2,719		$	16.15		1,463		$	21.10
Non-vested - October 29, 2022												2,758		$	17.03		1,574		$	20.11

As of October ~~30, 2021,~~29, 2022, there was ~~$30.8~~$31.6 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of ~~1.9~~2.0 years. ~~Based on current probable performance, there is $9.3~~There was $8.3 million of unrecognized compensation expense related to performance-based restricted stock unit awards for which ~~will~~a Monte-Carlo simulation was performed that is expected to be recognized ~~as achievement of performance goals is probable~~ over a weighted period of ~~one- to three-year~~2.1 ~~period.~~ years.

As of October ~~30, 2021,~~29, 2022, the Company had ~~7.6~~4.8 million shares available for all equity grants.

2423

10. Income Taxes

The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended October ~~30, 2021~~29, 2022 was ~~25.5%~~28.0% compared to ~~35.3%~~25.5% for the 13 weeks ended October ~~31, 2020.~~30, 2021. The effective income tax rate for the 39 weeks ended October ~~30, 2021~~29, 2022 was ~~24.9%~~34.1% compared to ~~the effective tax benefit rate of 26.8%~~24.9% for the 39 weeks ended October ~~31, 2020.~~30, 2021. The change in the effective tax rate as compared to the prior period, is primarily due to benefits recognized as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which impactedfor the 13 weeks ended October ~~31, 2020.~~29, 2022 is primarily due to international tax provisions of the Tax Cuts and Jobs Act (the "Tax Act"), the impact of tax guidance related to foreign taxes, and overall geographic mix of earnings in jurisdictions with different tax rates. The ~~CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods~~change in ~~which~~ the ~~U.S. federal corporate income~~effective tax rate ~~was 35%, as opposed to~~for the ~~current U.S. federal corporate income tax rate of 21%, which resulted in a higher rate applicable to the 13~~39 weeks ended October ~~31, 2020.~~29, 2022 is primarily due to the Note Exchange as a portion of the inducement charge was not deductible, lower excess tax benefits on share-based payments, and state legislative changes.

The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended October ~~30, 2021.~~ 29, 2022. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately ~~$0.6~~$0.8 million due to settlements, expiration of statute of limitations, or other changes in unrecognized tax benefits.

11. Legal Proceedings

The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or consolidated cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.

12. Segment Reporting

In accordance with ASC 280, Segment Reporting (“(“ASC 280”), the Company has identified 2two operating segments (American Eagle brand and ~~Aerie)~~Aerie brand) that also represent our reportable segments and reflect the Chief Operating Decision Maker’s (defined as our CEO) internal view of analyzing results and allocating resources. ~~Historically, all~~Additionally, our Todd Snyder brand, Unsubscribed brand, and Quiet Platforms have been identified as separate operating ~~segments were aggregated~~segments; however, as they do not meet the quantitative thresholds for separate disclosure, they have been included in the Corporate and Other category, as permitted by ASC ~~280 as 1 reportable segment. In the fourth quarter of Fiscal 2020, we revised our reportable segment structure to have 2 reportable segments, American Eagle and Aerie.~~280.

Our CEO analyzes segment results and allocates resources between segments based on the adjusted operating income (loss), ~~which is a non-GAAP measure.~~or the operating income (loss) in periods where there are no adjustments, of each segment. Adjusted operating income (loss) is a non-GAAP financial measure ("non-GAAP" or "adjusted") that is defined by the Company as operating income ~~(loss)~~ excluding impairment, restructuring and COVID-19 related charges. Adjusted operating income (loss) ~~may~~is not bebased on any standardized methodology prescribed by GAAP and is not necessarily comparable to ~~similarly titled~~similar measures ofpresented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We ~~use~~believe that this non-GAAP information ~~internally~~is useful as an additional means for investors to ~~make~~evaluate our operating ~~decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of~~performance, when reviewed in conjunction with our ~~ongoing operating results~~GAAP consolidated financial statements and provides a higher degree of transparency. ~~The following includes a reconciliation from consolidated~~These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. There were no adjustments to operating income ~~(loss),~~in either the ~~most directly comparable GAAP operating performance measure presented on the Consolidated Financial Statements, to our non-GAAP~~13 or 39 weeks ended October 29, 2022 or October 30, 2021 for any segment, therefore adjusted operating income (loss) ~~on a consolidated basis.~~is not presented in the table below.

2524

(in thousands)
American Eagle

Aerie

Corporate⁽¹⁾

Total⁽²⁾

13 weeks ended October 30, 2021

Total net revenue
$
940,992

$
315,049

$
18,037

$
1,274,078

Operating income (loss)
$
261,225

$
52,021

$
(103,559
)

$
209,687

Capital Expenditures
$
13,298

$
24,867

$
20,036

$
58,201

13 weeks ended October 31, 2020

Total net revenue
$
775,961

$
246,748

$
8,908

$
1,031,617

Operating income (loss)
$
155,259

$
35,738

$
(95,446
)

$
95,551

Impairment, restructuring, and COVID-19 related charges

—

—

6,955

6,955

Adjusted operating income (loss)
$
155,259

$
35,738

$
(88,491
)

$
102,506

Capital Expenditures
$
10,488

$
6,399

$
14,302

$
31,189

39 weeks ended October 30, 2021

Total net revenue
$
2,513,700

$
947,851

$
41,297

$
3,502,848

Operating income (loss)
$
611,650

$
191,341

$
(291,880
)

$
511,111

Capital Expenditures
$
36,093

$
48,164

$
60,148

$
144,405

39 weeks ended October 31, 2020

Total net revenue
$
1,791,042

$
653,240

$
22,537

$
2,466,819

Operating income (loss)
$
1,113

$
47,011

$
(323,052
)

$
(274,928
)
Impairment, restructuring, and COVID-19 related charges

90,926

18,215

68,045

177,186

Adjusted operating income (loss)
$
92,039

$
65,226

$
(255,007
)

$
(97,742
)

Capital Expenditures
$
25,361

$
23,807

$
43,423

$
92,591

Reportable segment information is presented in the following table:


(in thousands)	American Eagle		Aerie		Corporate and Other (1)			Total (2)
13 weeks ended October 29, 2022
Total net revenue	$	837,575	$	349,712	$	53,296		$	1,240,583
Operating income (loss)	$	174,129	$	56,487	$	(113,068	)	$	117,548
Capital expenditures	$	20,477	$	24,404	$	26,626		$	71,507

13 weeks ended October 30, 2021
Total net revenue	$	940,992	$	315,049	$	18,037		$	1,274,078
Operating income (loss)	$	261,225	$	52,021	$	(103,559	)	$	209,687
Capital expenditures	$	13,298	$	24,867	$	20,036		$	58,201

(in thousands)	American Eagle		Aerie		Corporate and Other (1)			Total (2)
39 weeks ended October 29, 2022
Total net revenue	$	2,301,051	$	1,043,129	$	149,565		$	3,493,745
Operating income (loss)	$	387,213	$	111,414	$	(325,162	)	$	173,465
Capital expenditures	$	55,000	$	85,663	$	58,701		$	199,364

39 weeks ended October 30, 2021
Total net revenue	$	2,513,700	$	947,851	$	41,297		$	3,502,848
Operating income (loss)	$	611,650	$	191,341	$	(291,880	)	$	511,111
Capital expenditures	$	36,093	$	48,164	$	60,148		$	144,405

(1)

Corporate and Other includes revenue and operating results of the Todd Snyder brand, Unsubscribed brand, and Quiet Platforms (net of intersegment eliminations), which have been identified as separate operating segments, but are not material to disclose as separate reportable segments. Corporate operating costs represent certain costs that are not directly attributable to another reportable segment.

(2)

The difference between operating income (loss) and income before income taxes includes the following, which are not allocated to our reportable segments:

- For the 13 weeks ended October 29, 2022: interest expense, net of $3.9 million; and other expense (income), net of $0.8 million. For the 39 weeks ended October 29, 2022: debt related charges of $60.1 million; interest expense, net of $11.9 million; and other expense (income), net of ($5.5) million.

- For the 13 weeks ended October 30, 2021: interest expense, net of $8.6 million and other expense (income), net of ($3.1) million. For the 39 weeks ended October 30, 2021: interest expense, net of $26.0 million and other expense (income), net of ($6.4) million.

~~(1)~~

Corporate includes revenue and operating results of the Todd Snyder and Unsubscribed brands, and AirTerra, which are not material to disclose as separate reportable segments. Corporate operating costs represents certain costs that are not directly attributable to another reportable segment.

~~(2)~~

The difference between Operating income (loss) and Income (loss) before income taxes includes the following items, which are not allocated to our reportable segments:
- For the 13 weeks ended October 30, 2021, interest expense, net of $8.6 million and other (income), net of ($3.1)million. For the 39 weeks ended October 30, 2021, interest expense, net of $26.0 million and other (income), net of ($6.4) million.
- For the 13 weeks ended October 31, 2020, interest expense, net of $7.9 million and other (income), net of ($2.2) million. For the 39 weeks ended October 31, 2020, interest expense, net of $16.6 million and other (income), net of ($0.8)~~million.~~

We do not allocate assets toat the reportable segment level and therefore our CEO does not use segment asset information to make decisions.

The following table ~~present~~presents summarized geographical information:

13 Weeks Ended

39 Weeks Ended

(In thousands)

October 30,
2021

October 31,
2020

October 30,
2021

October 31,
2020

Total net revenue:

United States

$
1,104,441

$
898,241

$
3,044,407

$
2,167,145

Foreign ⁽¹⁾

$
169,637

$
133,376

$
458,441

299,674

Total net revenue

$
1,274,078

$
1,031,617

$
3,502,848

$
2,466,819

~~(1)~~

~~Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed and/or shipped to foreign countries, and international license royalty revenue.~~

~~13. Impairment, Restructuring and COVID-19 Related Charges~~

The following table represents impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 31, 2020. There were 0 impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 30, 2021. All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations.

13 Weeks Ended

39 Weeks Ended

October 31,

October 31,

(In thousands)

2020

2020

Impairment charges ⁽¹⁾

$
—

$
153,617

Incremental COVID-19 related expenses⁽²⁾

5,951

19,836

Severance and related employee costs

1,004

3,733

Total impairment, restructuring and COVID-19 related charges

$
6,955

$
177,186

(1) During the 39 weeks ended October 31, 2020, the Company recorded asset impairment charges of $153.6 million. Included in this amount are retail store impairment charges of $109.6 million, of which $84.1 million relates to operating lease ROU assets and $25.5 million relates to store property and equipment (fixtures and equipment and leasehold improvements). We also recorded $26.0 million of impairment related charges to certain corporate property and equipment, as well as $18.0 million of impairment charges related to certain cost and equity method investments.

~~(2) Incremental COVID-19 related expenses consist of personal protective equipment~~


	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Total net revenue:
United States	$	1,076,096	$	1,104,441	$	3,011,419	$	3,044,407
Foreign (1)		164,487		169,637		482,326		458,441
Total net revenue	$	1,240,583	$	1,274,078	$	3,493,745	$	3,502,848

(1)

Amounts represent sales from American Eagle and ~~supplies for our associates~~Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries, and ~~customers.~~international franchise royalty revenue.

~~A roll-forward of restructuring liabilities recognized in accrued compensation and payroll taxes and other current liabilities and accrued expenses in the Consolidated Balance Sheet is as follows:~~

39 Weeks Ended

October 30,

(In thousands)

2021

Restructuring liability as of January 30, 2021

$
2,812

Add: Costs incurred, excluding non-cash charges

—

Less: Cash payments and adjustments

(2,421
)

Restructuring liability as of October 30, 2021

$
391

~~14. Subsequent Events~~

Subsequent to October 30, 2021, the Company entered into a stock purchase agreement to acquire all of the issued and outstanding shares of capital stock of Quiet Logistics, Inc. (“Quiet Logistics”) and certain equity interests in Locus Robotics Corp. and Axlehire, Inc., for $350 million in cash, subject to certain adjustments. The Company expects to finance the purchase price with cash on hand. The closing is subject to customary closing conditions and is expected to occur in the fourth quarter of Fiscal 2021. Quiet Logistics will be a wholly-owned subsidiary of the Company.

Quiet Logistics is a supply chain platform that utilizes state-of-the-art technology and robotics and has provided cost-effective in-market fulfillment services for the Company, as well as for numerous other leading consumer brands.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following ~~discussion and analysis of financial condition and results of operations should be read in conjunction with our Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Company, our operations and our present business environment. The following MD&A is provided as a supplement to — and should be read in conjunction with — our MD&A for Fiscal ~~2020,~~2021 which can be found in our Fiscal ~~2020~~2021 Form ~~10-K filed with the Securities and Exchange Commission on March 11, 2021.~~10-K.

In addition, the following discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements and should be read in conjunction with these statements and notes thereto.

Introduction

This MD&A is organized as follows:


Executive Overview	General description of the Company’s business and certain segment information.
Key Performance Indicators	Overview of key performance indicators reviewed by management to gauge the Company’s results.
Current Trends and Outlook	Discussion of trends and uncertainties facing the Company, including those related to the COVID-19 pandemic’s impact on the Company’s business, recent acquisitions and the Company’s long-term plans for growth. In addition, this section also provides a summary of the Company’s performance over the 13 and 39 weeks ended October 29, 2022 and the 13 and 39 weeks ended October 30, 2021.
Non-GAAP Information	Discussion of certain financial measures that have been determined to not be in accordance with GAAP. This section includes certain reconciliations from GAAP to non-GAAP financial measures and additional details on these financial non-GAAP measures, including information as to why the Company believes the non-GAAP financial measures provided within MD&A are useful to investors.
Results of Operations	Provides an analysis of certain components of the Company’s Consolidated Statements of Operations for the 13 and 39 weeks ended October 29, 2022 and the 13 and 39 weeks ended October 30, 2021.
Liquidity and Capital Resources	Discussion of the Company’s financial condition and changes in financial condition and liquidity for the 13 and 39 weeks ended October 29, 2022 and the 13 and 39 weeks ended October 30, 2021.
Critical Accounting Policies and Estimates	Discusses where information may be found about accounting policies and estimates considered to be important to the Company’s results of operations and financial condition, which typically require significant judgment and estimation on the part of the Company’s management in their application.

Recent accounting pronouncements the Company has adopted or is currently evaluating prior to adoption, including the dates of adoption or expected dates of adoption, as applicable, and anticipated effects on the Company’s audited Consolidated Financial Statements, are included in Note 2. “Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included herein.

Executive Overview

We are a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under our American Eagle®, Aerie® and ~~Aerie®~~other brands.

~~In the fourth quarter of Fiscal 2020, we revised our reportable segment structure to~~We have two reportable segments, American Eagle and Aerie. Our Chief Operating Decision Maker (defined as our CEO) analyzes segment results and allocates resources between segments based on adjusted operating income (loss)., or the operating income (loss) in periods where there are no adjustments, of each segment. See Note 1212. “Segment Reporting,” of the Notes to the Consolidated Financial Statements included herein for additional information.

~~Financial highlights for the thirteen weeks ended October 30, 2021 include comparisons to the third quarter of Fiscal 2020:~~26

•~~Record revenue of $1.27 billion increased 24%;~~

•~~Operating income reached an all-time third quarter high of $210 million;~~

•~~Revenue for Aerie~~ ~~increased 28%, with operating income up 46%; and~~

•~~American Eagle revenue increased 21%, with operating income up 68%.~~

Key Performance Indicators

Our management evaluates the following items, which are considered key performance indicators, in assessing our performance:

Comparable sales — Comparable sales and comparable sales changes provide a measure of sales growth for stores and channels open at least one year over the comparable prior year period. In ~~light~~fiscal years following those with 53 weeks, the prior year period is shifted by one week to compare similar calendar weeks. A store is included in comparable sales in the thirteenth month of ~~store closures and related disruptions~~operation. However, stores that have a gross square footage change of 25% or greater due to a remodel are removed from the ~~COVID-19 pandemic, we have not disclosed~~ comparable sales ~~for Fiscal 2021 or Fiscal 2020.~~base, but are included in total sales. These stores are returned to the comparable sales base in the thirteenth month following the remodel. Sales from American Eagle, Aerie, Todd Snyder, and Unsubscribed stores, as well as sales from AEO Direct and other digital channels, are included in total comparable sales. Sales from licensed stores are not included in comparable sales. Individual American Eagle and Aerie brand comparable sales disclosures include sales from stores and AEO Direct.

Omni-channel Sales Performance – Our management utilizes the following quality of sales metrics in evaluating our omni-channel sales performance: comparable sales, average unit retail price, total transactions, units per transaction, and consolidated comparable traffic. We include these metrics in our discussion within this ~~Management’s Discussion and Analysis (“~~MD~~&A”)~~&A when we believe they enhance the understanding of the matter being discussed. Investors may find them useful as such. Each of these metrics is defined as follows (except comparable sales, which is defined separately above):

•	~~Average unit retail price~~ ~~represents the selling price of our goods. It is the cumulative net sales divided by the net units sold for a period of time.~~

•

Average unit retail price represents the selling price of our goods. It is the cumulative net sales divided by the net units sold for a period of time.

•	~~Total transactions~~ ~~represents the count of customer transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).~~

•

Total transactions represents the count of customer transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).

•	~~Units per transaction~~ ~~represents the number of units sold divided by total transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).~~

•

Units per transaction represents the number of units sold divided by total transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).

•	Consolidated comparable traffic represents visits to our Company-owned stores, limited to those stores that qualify to be included in comparable sales as defined above, including AEO Direct, over a period of time.

Gross profit — Gross profit measures whether we are optimizing the profitability of our sales. Gross profit is the difference between total net revenue and cost of sales. Cost of sales consists of merchandise costs, including design, sourcing, importing, and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs ~~(collectively, “merchandise costs”)~~ and buying, occupancy and warehousing ~~costs.~~costs and services. Design costs consist of compensation, rent, depreciation, travel, supplies, and samples.

Buying, occupancy and warehousing costs and services consist of: compensation, employee benefit expenses and travel for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operations.

The inability to obtain acceptable levels of sales, initial markups or any significant increase in our use of markdowns could have an adverse effect on our gross consolidated profit and ~~consolidated~~ results of operations.

Operating income — Our management views operating income as a key indicator of our performance. The key drivers of operating income are net revenue, gross profit, our ability to control ~~selling, general, and administrative~~SG&A expenses, and our level of capital ~~expenditures for a reasonable period of time. In light of store closures and disruptions from the COVID-19 pandemic, our operating income may not be comparable for Fiscal 2021 versus Fiscal 2020.~~expenditures.

Cash flow and liquidity — Our management evaluates cash flow from operations and investing and financing activities in determining the sufficiency of our cash position and capital allocation strategies. Cash flow has historically been sufficient to cover our uses of cash. Our management believes that cash flow and liquidity will be sufficient to fund anticipated capital expenditures ~~dividends,~~ and working capital requirements for the next twelve ~~months.~~months and beyond.

Current Trends and Outlook

~~COVID-19~~Inflation

During the third quarter of Fiscal 2022, our quarterly results were negatively impacted by macro-economic challenges and global inflationary pressures impacting consumer spending behavior, which constrained revenue and increased margin pressure to clear through excess inventory. Given ongoing external uncertainties, we have taken additional actions to improve financial performance, including more extensive expense and capital expenditure reductions. For further

information about the risks associated with global economic conditions and the effect of economic pressures on our business, see “Risk Factors” in Part I, Item 1A of our Fiscal 2021 Form 10-K.

COVID-19

The ongoing COVID-19 pandemic remains highly volatile and continues to evolve on a daily basis, and we continue to see disruptions and volatility in our business caused by the COVID-19 pandemic.

As of October 30, 2021, all our stores have reopened and remain open. Our stores are operating with restrictive and precautionary measures in place, such as reduced operating hours, physical distancing, enhanced cleaning and sanitation, and limited occupancy levels. We do not believe that our results for the third quarter of Fiscal 2021 are directly comparable to the same period in Fiscal 2020.

The unpredictability of the trajectory of the COVID-19 pandemic has significantly diminished visibility into the future operating environment, and we believe that the Company may continue to experience degrees of volatility and business disruptions and remain at risk for periods of closure of our stores, distribution centers, and corporate ~~facilities through~~facilities. While trends in new cases of COVID-19 in the ~~remainder of Fiscal 2021. While trends~~United States improved during the ~~first~~ nine months ended October 29, 2022 compared to the final quarter of Fiscal 2021, we cannot reasonably estimate the extent to which our business will continue to be affected by the COVID-19 ~~pandemic and to what extent the recent improved trends will continue.~~pandemic. Past and future impacts of the COVID-19 ~~also have the ability to~~pandemic may disrupt the operations of our partners, suppliers, and vendors, which could lead to or exacerbate existing supply chain ~~disruption,~~disruptions, shipping delays, ~~and~~ freight cost ~~increases.~~increases, and labor shortages. We are monitoring ~~the~~ ongoing developments, ~~as the COVID-19 vaccines are being distributed and administered,~~ and we will take further actions that we believe are in the best interests of our associates and customers, as needed. For further information about the risks associated with the COVID-19 pandemic, see “Risk Factors” in Part I, Item 1A of our Fiscal ~~2020~~2021 Form ~~10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q.~~10-K.

~~Results of Operations~~Quiet Platforms

~~Overview~~

~~Our third quarter~~In Fiscal 2021, ~~results reflected another quarter~~the Company completed the acquisition of ~~record revenue~~AirTerra and profitability. The work on our value creation plan drove meaningful improvements to our profitability through real estate and inventory optimization, omnichannel and customer focus, and our supply chain initiatives.

~~Additionally, during~~Quiet Logistics. With these acquisitions, the 13 and 39 weeks ended October 31, 2020, our consolidated results of operations were materially impacted by the effects of COVID-19. Commencing in March 2020, we experienced a significant reduction in customer traffic and demand resulting from the continued spread of COVID-19 and government actions to combat it. In response, we closed our stores to the public after the close of business on March 17, 2020; however, we continued to operate our digital business. Subsequent to May 1, 2020, we began to reopen our stores, and as of October 31, 2020, nearly all of our stores

~~had reopened; however, we continued to experience reduced customer traffic in reopened store locations. Accordingly, our results for the third quarter of Fiscal 2020 were significantly impacted.~~

As of October 30, 2021, we had approximately $740.7 million in cash and cash equivalents, which includes the proceeds from our Notes issuance, discussed in greater detail below and in Note 8 to the Consolidated Financial Statements. We expectCompany expects to be able to ~~fund~~execute on operational efficiencies to create a supply chain platform, which we refer to as Quiet Platforms, with significant long-term growth potential.

Omni-Channel and Digital Capabilities

We sell merchandise through our ~~future cash requirements through current cash holdings~~digital channels, www.ae.com, www.aerie.com, www.toddsnyder.com, www.unsubscribed.com, and ~~available liquidity.~~ our AEO apps, both domestically and internationally in 81 countries. We also sell merchandise on various international online marketplaces. The digital channels reinforce each particular brand and are designed to complement the in-store experience.

~~Absent~~Over the ~~impacts of~~past several years, we have invested in building our technologies and digital capabilities. We focused our investments in three key areas: making significant advances in mobile technology, investing in digital marketing and improving the COVID-19 pandemic, our business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.digital customer experience.

~~The following table shows the percentage relationship to total net revenue of the listed line items included in our Consolidated Statements of Operations:~~

13 Weeks Ended

39 Weeks Ended

October 30,

October 31,

October 30,

October 31,

2021

2020

2021

2020

Total net revenue

100.0

%

100.0

%

100.0

%

100.0

%
Cost of sales, including certain buying, occupancy
and warehousing expenses

55.7

59.8

57.1

71.3

Gross profit

44.3

40.2

42.9

28.7

Selling, general and administrative expenses

24.6

26.5

24.9

27.8

Impairment, restructuring and COVID-19 related charges

—

0.6

—

7.1

Depreciation and amortization expense

3.2

3.8

3.4

4.9

Operating income (loss)

16.5

9.3

14.6

(11.1
)

Interest expense, net

0.7

0.8

0.7

0.7

Other (income) expense, net

(0.2
)

(0.2
)

(0.2
)

—

Income (loss) before income taxes

16.0

8.7

14.1

(11.8
)

Provision (benefit) for income taxes

4.1

3.1

3.6

(3.2
)

Net income (loss)

11.9

%

5.6

%

10.5

%

(8.6
)
%

~~The following table shows our consolidated store data:~~

13 Weeks Ended

39 Weeks Ended

October 30,

October 31,

October 30,

October 31,

2021

2020

2021

2020

Number of stores:

Beginning of period

1,090

1,098

1,078

1,095

Opened

31

10

62

29

Closed

—

(3
)

(19
)

(19
)
End of period

1,121

1,105

1,121

1,105

Total gross square feet at end of period (in '000)

6,924

6,858

6,924

6,858

International licensed/franchise stores at end of
period (1)

256

225

256

225

~~(1)~~

~~International licensed/franchise stores are not included in the consolidated store data or the total gross square feet calculation.~~

Our operations consist of 897 American Eagle retail stores, which include 181 Aerie side-by-side locations and 1 OFFLINE side-by-side locations; 216 Aerie stand-alone locations (including 8 OFFLINE stand-alone locations and 5 OFFLINE side-by-side location); and AEO Direct. Additionally, there are three Todd Snyder stand-alone locations and four Unsubscribed locations.

Non-GAAP Information

~~This~~The results of operations section below contains net income (loss) per diluted share presented on an adjusted or ~~non GAAP~~non-GAAP basis, which is a non-GAAP financial ~~measure (“non-GAAP” or “adjusted”).~~measure. This financial measure is not based on any standardized methodology prescribed by ~~U.S. generally accepted accounting principles (“GAAP”)~~GAAP and is not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance when reviewed in conjunction with our GAAP ~~consolidated financial statements,~~Consolidated Financial Statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating

our business and operations. The table below reconciles the GAAP financial measure to the non-GAAP financial measure discussed above.


	13 Weeks Ended
	October 29,		October 30,
	2022		2021
Net income per diluted share - GAAP Basis	$	0.42	$	0.74
Add: Convertible Debt (2)		—		0.02
Net income per diluted share - Adjusted or Non- GAAP Basis	$	0.42	$	0.76


	39 Weeks Ended
	October 29,		October 30,
	2022		2021
Net income per diluted share - GAAP Basis	$	0.36	$	1.78
Add: Debt related charges (1)		0.24		—
Add: Convertible Debt (2)		—		0.05
Net income per diluted share - Adjusted or Non- GAAP Basis	$	0.60	$	1.83

13 Weeks Ended

October 30,

October 31,

2021

2020

Net income per diluted share - GAAP Basis

$
0.74

$
0.32

Add: Incremental COVID-19 related expenses and Restructuring⁽¹⁾

—

0.02

Add: Convertible Debt⁽²⁾

0.02

0.01

Net income per diluted share - Adjusted or Non-
GAAP Basis

$
0.76

$
0.35

(1)

$60.1 million of pre-tax debt related charges related primarily to the induced conversion expense relating to the Note Exchange, along with certain other costs related to actions we took to strengthen our capital structure, recorded during the 26 weeks ended July 30, 2022.

(2)

Amortization of the non-cash discount on the 2025 Notes included in interest expense, net on the Consolidated Statements of Operations prior to the adoption of ASU 2020-06.

Results of Operations

Overview

Demand in the third quarter was soft, reflecting the impact of inflationary pressure and a related shift in consumer spending patterns. In this environment, margin pressure was more amplified as we worked to clear through excess spring and summer goods. Given ongoing uncertainties in the macroeconomic environment, we have taken additional steps to position the business for improved financial performance. This includes further resetting inventory plans for the back half of the year, expanding the scope of expense and capital expenditure reductions.

The following table shows the percentage relationship to total net revenue of the listed line items included in our Consolidated Statements of Operations:


	13 Weeks Ended							39 Weeks Ended
	October 29,			October 30,				October 29,				October 30,
	2022			2021				2022				2021
Total net revenue		100.0	%		100.0		%		100.0		%		100.0		%
Cost of sales, including certain buying, occupancy and warehousing expenses		61.3			55.7				64.5				57.1
Gross profit		38.7			44.3				35.5				42.9
Selling, general and administrative expenses		25.1			24.6				26.3				24.9
Depreciation and amortization expense		4.1			3.2				4.2				3.4
Operating income		9.5			16.5				5.0				14.6
Debt related charges		-			-				1.7				-
Interest expense, net		0.3			0.7				0.3				0.7
Other expense (income), net		0.1			(0.2	)			(0.2	)			(0.2	)
Income before income taxes		9.1			16.0				3.2				14.1
Provision for income taxes		2.5			4.1				1.2				3.6
Net income		6.6	%		11.9		%		2.0		%		10.5		%

The following table shows our consolidated store data:


	13 Weeks Ended					39 Weeks Ended
	October 29,			October 30,		October 29,			October 30,
	2022			2021		2022			2021
Number of stores:
Beginning of period		1,160			1,090		1,133			1,078
Opened		24			31		72			62
Closed		(5	)		-		(26	)		(19	)
End of period		1,179			1,121		1,179			1,121
Total gross square feet at end of period (in '000)		7,309			6,924		7,309			6,924
International licensed/franchise stores at end of period (1)		261			256		261			256

(1)

International licensed/franchise stores are not included in the consolidated store data or the total gross square feet calculation.

As of October 29, 2022, we operated 876 American Eagle retail stores, which include 189 Aerie side-by-side locations and two OFFLINE™ side-by-side locations, 292 Aerie stand-alone stores (including 33 OFFLINE™ stand-alone stores and 26 OFFLINE™ side-by-side locations), and AEO Direct. Additionally, there were six Todd Snyder stand-alone locations and five Unsubscribed locations.

~~(1)~~

13 weeks ended October 31, 2020: $6.0 million of Incremental COVID-19 related expenses consisting of personal protective equipment and supplies for our associates and customers and $1.0 million of corporate severance.

~~(2)~~

~~Amortization of the non-cash discount on the Notes.~~

Comparison of the 13 weeks ended October ~~30, 2021~~29, 2022 to the 13 weeks ended October ~~31, 2020~~30, 2021

Total Net Revenue

Total net revenue ~~increased 24%, or $242.5~~decreased $33.5 million, to $1.241 billion compared to $1.274 billion ~~compared to $1.032 billion~~ last year. As discussed above, the COVID-19 pandemic negatively affected our financial results for the 13 weeks ended October 31, 2020; however, all our stores have reopened and we experienced increased store traffic, transactions, and transaction value, driving a 29% increase in store revenue and 10% increase in AEO Direct revenue for the third quarter of Fiscal 2021.

American Eagle

Total net revenue for the 13 weeks ended October ~~30, 2021~~29, 2022 for the American Eagle brand ~~increased 21% to $941.0~~was $837.6 million compared to ~~$776.0~~$941.0 million for the 13 weeks ended October ~~31, 2020.~~30, 2021.

Aerie

Total net revenue for the 13 weeks ended October ~~30, 2021~~29, 2022 for the Aerie brand ~~increased 28% to $315.0~~was $349.7 million compared to ~~$246.7~~$315.0 million for the 13 weeks ended October ~~31, 2020.~~30, 2021.

Gross Profit

Gross profit ~~increased $149.7~~decreased 15% or $84.7 million to $479.8 million compared to $564.5 million ~~compared to $414.8 million~~ last year. ~~As a percentage of total net revenue,~~Our gross margin ~~increased~~percentage decreased to 38.7% of revenue from 44.3%~~, compared to 40.2%~~ of revenue last year. ~~This quarter’s gross margin reflected higher merchandise margins, primarily due to inventory optimization, higher full-priced sales~~Higher markdowns and ~~markdown improvement,~~increased product
costs drove approximately 400 basis points of the decline. Rent and warehousing also deleveraged, partially offset ~~by higher freight costs related to the global supply chain disruptions. Additionally, both rent and delivery expense improved, as a percent of total net revenue.~~

For the 13 weeks ended October 31, 2020, gross margin was significantly impacted by disruptions related to COVID-19, which reflected a reduction in store revenue and higher delivery and distribution center costs primarily due to a strong digital business, partly offset
by lower ~~rent expenses.~~compensation costs.

There was ~~$3.5~~$3.7 million and ~~$4.5~~$3.5 million of share-based payment expense included in gross profit for the ~~13-week~~13 week periods ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, respectively, comprised of both ~~time-~~time and performance-based awards.

Our gross profit may not be comparable to that of other retailers, as some retailers include all costs related to their distribution network as well as design costs in cost of sales and others may exclude a portion of these costs from cost of sales, including them in a line item such as ~~selling, general and administrative~~SG&A expenses. Refer to Note 2 to the Consolidated Financial Statements for a description of our accounting policy regarding cost of sales, including certain buying, occupancy and warehousing expenses.

Selling, General and Administrative Expenses

~~Selling, general and administrative (“~~SG~~&A”)~~&A expenses ~~increased 15%,~~decreased 1% or ~~$40.6~~$2.8 million to ~~$313.9~~$311.1 million from ~~$273.3~~$313.9 million last year. As a percentage of total net revenue, SG&A expenses ~~decreased 190~~increased 50 basis points to ~~24.6%~~25.1%, compared to ~~26.5%~~24.6% last year.

The ~~13 weeks ended October 30, 2021 reflected increased SG&A~~decrease in expenses was primarily related to ~~increased store payroll, as a result of improved store traffic, as well as increased advertising, partially offset by~~ lower
incentive ~~compensation.~~accruals and expense actions announced earlier this year.

~~The 13 weeks ended October 31, 2020 were significantly impacted by disruptions related to COVID-19, resulting in lower operating expenses due to store closures and other cost reductions.~~

There was ~~$4.4~~$3.1 million and ~~$4.5~~$4.4 million of share-based payment expense included in SG&A expenses for the ~~13-week~~13 week periods ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, respectively, comprised of both ~~time-~~time and performance-based awards.

~~Impairment, Restructuring~~Depreciation and ~~COVID-19 Related Charges~~Amortization Expense

~~There were no impairment, restructuring~~Depreciation and ~~COVID-19 related charges recorded~~amortization expense increased 25% or $10.2 million, to $51.1 million for the 13 weeks ended October 30, 2021. For the 13 weeks ended October 31, 2020, impairment, restructuring and COVID-19 related charges were $7.0 million, or 0.6% as a percentage of total net revenue. These charges consisted of $6.0 million of incremental COVID-19 related expenses, including personal protective equipment and supplies for our associates and customers and $1.0 million of severance costs. For further information, refer to Note 13 to the Consolidated Financial Statements.

Based on the uncertainty of the COVID-19 pandemic, we are unable to accurately predict the ultimate impact that COVID-19 will have on our consolidated operations going forward, including, among other things, the length of time that such disruptions will continue and the impact of governmental regulations that may be imposed in response to the COVID-19 pandemic. Accordingly, we may be required to record further impairment and/or restructuring charges in future periods.

~~Depreciation and Amortization Expense~~

~~Depreciation and amortization expense increased 5%, or $2.0 million,~~29, 2022, compared to $40.9 million for the 13 weeks ended October 30, 2021, ~~compared to $39.0 million for~~which was primarily driven by increased capital spending and the ~~13 weeks ended October 31, 2020.~~acquisition of Quiet Logistics that occurred on December 29, 2021. As a percentage of total net revenue, depreciation and amortization expense was 4.1% for the 13 weeks ended October 29, 2022 compared to 3.2% for the 13 weeks ended October 30, ~~2021 compared~~2021.

Interest Expense, net

Interest expense, net decreased $4.7 million, to ~~3.8%~~$3.9 million, for the 13 weeks ended October ~~31, 2020.~~

~~Interest Expense, Net~~

~~Interest expense, net increased $0.7 million~~29, 2022, compared to $8.6 million for the 13 weeks ended October 30, ~~2021, compared~~2021. The decrease in expense was primarily attributable to ~~$7.9~~the adoption of ASU 2020-06 on January 30, 2022 which reduced non-cash interest expense related to amortization of the non-cash discount on our 2025 Notes and the Note Exchange that occurred in June 2022 which reduced the aggregate principal amount of the 2025 Notes, partially offset by $2.9 million of interest expense from borrowings under our Credit Facility this year.

Other Expense (Income), net

Other expense (income), net was $0.8 million for the 13 weeks ended October ~~31, 2020. The increase in~~29, 2022, compared to other expense ~~was primarily attributable to increased interest expense related to our Notes and lower interest income.~~

~~Other (Income)~~(income), ~~Net~~

~~Other income,~~ net ~~was $3.1~~of ($3.1) million for the 13 weeks ended October 30, ~~2021, compared to $2.2 million for the 13 weeks ended October 31, 2020. The increase was primarily attributable to foreign currency fluctuations and changes in other non-operating items.~~2021.

Provision for Income Taxes

30, 2021. The change in the effective tax rate ~~as compared to the prior period, is primarily due to benefits recognized as a result of the enactment of the CARES Act, which impacted~~for the 13 weeks ended October ~~31, 2020. The CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods in which the U.S. federal corporate income tax rate was 35%, as opposed~~29, 2022 is primarily due to the ~~current U.S. federal corporate income~~international tax ~~rate~~provisions of ~~21%, which resulted~~the Tax Act, the impact of tax guidance related to foreign taxes, and overall geographic mix of earnings in ~~a higher rate applicable to the 13 weeks ended October 31, 2020.~~ jurisdictions with different tax rates.

Net Income ~~(Loss)~~

Net income ~~increased $94.1~~decreased $70.9 million, to ~~$152.2~~$81.3 million for the 13 weeks ended October ~~30, 2021,~~29, 2022, or ~~11.9%~~6.6% as a percentage of total net revenue, as compared to ~~$58.1~~net income of $152.2 million, or ~~5.6%~~11.9% as a percentage of total net revenue for the 13 weeks ended October ~~31, 2020.~~30, 2021.

Net income per share ~~increased~~decreased to $0.42 per diluted share, compared to $0.74 per diluted share, which included $0.02 of the amortization of the non-cash discount on the 2025 Notes for the 13 weeks ended October 30, 2021, which included $0.02 of amortization of the non-cash discount on the Notes, compared to $0.32 per diluted share, including $0.02 of incremental COVID-19 related expenses and restructuring, and $0.01 of amortization of the non-cash discount on the Notes, for the 13 weeks ended October 31, 2020.2021. The change in net income ~~(loss)~~ was attributable to the factors ~~identified~~noted above.

Comparison of the 39 weeks ended October ~~30, 2021~~29, 2022 to the 39 weeks ended October ~~31, 2020~~30, 2021

Total Net Revenue

Total net revenue ~~increased 42%, or $1.036~~decreased by $9.1 million, to $3.494 billion compared to $3.503 billion ~~compared to $2.467 billion~~ last year. ~~The COVID-19 pandemic and the associated closures of our retail stores beginning March 17, 2020 negatively affected our financial results for the 39 weeks ended October 31, 2020.~~

American Eagle

Total net revenue for the 39 weeks ended October ~~30, 2021~~29, 2022 for the American Eagle brand was ~~$2.514~~$2.301 billion compared to ~~$1.791~~$2.514 billion for the 39 weeks ended October ~~31, 2020.~~30, 2021.

Aerie

Total net revenue for the 39 weeks ended October ~~30, 2021~~29, 2022 for the Aerie brand was ~~$947.9 million~~$1.043 billion compared to ~~$653.2~~$947.9 million for the 39 weeks ended October ~~31, 2020.~~30, 2021.

Gross Profit

Gross profit ~~increased $794.8~~decreased 18% or $265.3 million, to $1.238 billion compared to $1.503 billion ~~compared to $708.3 million~~ last year. Our gross margin percentage ~~increased~~decreased to ~~42.9%~~35.5% of revenue from ~~28.7%~~42.9% of revenue last year. The ~~increase in~~ gross margin ~~reflected higher merchandise margins across brands, primarily due to higher full-priced sales and lower promotions, as well as improved rent and delivery expense, as~~decline was driven by a ~~percent of total net revenue.~~

~~The 39 weeks ended October 31, 2020 were significantly impacted by disruptions related to COVID-19, which resulted in a decline in revenue~~370 basis point impact from ~~retail store closures,~~ higher markdowns, ~~and promotions~~largely reflecting initiatives to clear ~~through spring~~excess inventory. Delivery, warehousing costs and ~~summer merchandise, and inventory provisions.~~ rent also increased, offset by lower incentive compensation accruals.

There was $13.1 million and $11.6 million of share-based payment expense included in gross profit for ~~both of~~ the ~~39-week~~39 week periods ended October 29, 2022 and October 30, 2021, ~~and October 31, 2020,~~respectively, comprised of both ~~time-~~time and performance-based awards.

Selling, General and Administrative Expenses

SG&A expenses ~~for the 39 weeks ending October 30, 2021~~ increased ~~27%,~~5% or ~~$187.1~~$45.4 million to ~~$872.3~~$917.7 million from ~~$685.2~~$872.3 million last year. As a percentage of total net revenue, SG&A expenses ~~decreased 290~~increased 140 basis points to ~~24.9%~~26.3%, compared to ~~27.8%~~24.9% last year.

The ~~39 weeks ended October 30, 2021 reflected increased SG&A~~increase in expenses was primarily related to ~~the reopening of our stores, including~~ increased store ~~payroll~~wages and ~~variable selling expenses, as well as increased advertising,~~corporate compensation, professional services and advertising, partially offset by lower incentive compensation ~~costs.~~accruals.

The 39 weeks ended October 31, 2020 were significantly impacted by the disruption related to COVID-19, including the impact of lower store salaries from furloughs that took effect in early April 2020 related to the retail store closures.

There was ~~$17.8~~$16.9 million and ~~$13.0~~$17.8 million of share-based payment expense included in SG&A expenses for the 39 week periods ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, respectively, comprised of both ~~time-~~time and performance-based awards.

~~Impairment, Restructuring~~31

Depreciation and ~~COVID-19 Related Charges~~Amortization Expense

~~There were no impairment, restructuring~~Depreciation and ~~COVID-19 related charges recorded~~amortization expense increased 23% or $27.0 million, to $146.7 million for the 39 weeks ended October 30, 2021. Impairment, restructuring and COVID-19 related charges were $177.2 million, or 7.1% as a percentage of total net revenue, for the 39 weeks ended October 31, 2020. During the 39 weeks ended October 31, 2020, the Company recorded asset impairment charges of $153.6 million. Included in this amount are retail store impairment charges of $109.6 million, of which $84.1 million relates to operating lease ROU assets and $25.5 million relates to store property and equipment (fixtures and equipment and leasehold improvements). We also recorded $26.0 million of impairment related charges to certain corporate property and equipment, as well as $18.0 million of impairment charges related to certain cost and equity method investments. Additionally, there was $19.8 million of incremental COVID-19 related expenses and $3.7 million of severance costs. For further information, refer to Note 13 to the Consolidated Financial Statements.

~~Depreciation and Amortization Expense~~

~~Depreciation and amortization expense decreased 1%, or $1.1 million,~~29, 2022, compared to $119.7 million for the 39 weeks ended October 30, 2021, ~~compared to $120.8 million for~~which was primarily driven by increased capital spending and the ~~39 weeks ended October 31, 2020.~~acquisition of Quiet Logistics on December 29, 2021. As a percentage of total net revenue, depreciation and amortization expense was 4.2% this year compared to 3.4% last year.

Debt Related Charges

Debt related charges of $60.1 million for the 39 weeks ended October ~~30, 2021 compared~~29, 2022 consists primarily of a $55.7 million induced conversion expense related to ~~4.9%~~the Note Exchange, along with certain other costs related to actions we took to strengthen our capital structure.

Interest Expense, net

Interest expense, net decreased $14.1 million, to $11.9 million, for the 39 weeks ended October ~~31, 2020. The decrease in expense was primarily attributable to asset impairment recorded in Fiscal 2020.~~

~~Interest Expense, Net~~

~~Interest expense, net increased $9.4 million~~29, 2022, compared to $26.0 million for the 39 weeks ended October 30, ~~2021, compared~~2021. The decrease in expense was primarily attributable to ~~$16.6~~the adoption of ASU 2020-06 on January 30, 2022 which reduced non-cash interest expense related to amortization of the non-cash discount on our 2025 Notes and the Note Exchange that occurred in June 2022 which reduced the aggregate principal amount of the 2025 Notes, partially offset by $3.9 million of interest expense from borrowings under our Credit Facility.

Other Expense (Income), net

Other expense (income), net was ($5.5) million for the 39 weeks ended October ~~31, 2020. The increase in expense was primarily attributable~~29, 2022, compared to increased interest expense related to our Notes and lower interest income, partially offset by no interest expense incurred for borrowings on our revolving credit facilities during the 39 weeks ended October 30, 2021.

~~Other (Income), Net~~

~~Other income, net was $6.4~~($6.4) million for the 39 weeks ended October 30, 2021. ~~Other income, net was $0.8 million for the 39 weeks ended October 31, 2020. The increase was primarily attributable to foreign currency fluctuations and changes in other non-operating items.~~

Provision for Income Taxes

30, 2021. The change in the effective tax rate, as compared to the prior period, is primarily due to ~~benefits recognized~~the Note Exchange as a ~~result~~portion of the enactment of the CARES Act, which impacted the 39 weeks ended October 31, 2020. The CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods in which the U.S. federal corporate income tax rateinducement charge was 35%, as opposed to the current U.S. federal corporate income tax rate of 21%, which resulted in a higher benefit rate applicable to the 39 weeks ended October 31, 2020. The effective tax rate for the 39 weeks ended October 30, 2021 was also impacted by highernot deductible, lower excess tax benefits on share-based ~~payments.~~payments, and state legislative changes.

Net Income ~~(Loss)~~

Net income ~~increased $582.0~~decreased $298.7 million to ~~$369.2~~$70.5 million for the 39 weeks ended October ~~30, 2021,~~29, 2022, or ~~10.5%~~2.0% as a percentage of total net revenue, as compared to ~~a net loss of $212.8~~$369.2 million, or ~~(8.6%)~~10.5% as a percentage of total net revenue for the 39 weeks ended October ~~31, 2020.~~30, 2021.

Net income per share decreased to $0.36 per diluted share, including $0.24 of debt related charges for the 39 weeks ended October 29, 2022, compared to net income of $1.78 per diluted share, including $0.05 of the amortization of the non-cash discount on the 2025 Notes for the 39 weeks ended October 30, 2021. The change in net income ~~(loss)~~ was attributable to the factors ~~identified~~noted above.

International Operations

We have agreements with multiple third-party operators to expand our brands internationally. ~~Through these agreements,~~Our international licensing partners acquire the right to sell, promote, market, and/or distribute various categories of our products in a ~~series of franchised, licensed, or other brand-dedicated American Eagle stores have opened~~given geographic area and ~~will continue~~ to ~~open in Asia, Europe, India, Latin America, and the Middle East. These agreements do not involve a significant capital investment or operational involvement~~source products from us. ~~We continue~~International licensees' rights include the right to ~~increase the number of countries~~own and operate retail stores and may include rights to sell in ~~which we enter into these types of arrangements as part of our strategy to expand internationally.~~wholesale markets, shop-in-shop concessions and operate online marketplace businesses. As of October ~~30, 2021, we had 256~~29, 2022, our international licensing partners operated in more than 260 licensed retail stores ~~operated by our third-party operators~~and concessions, as well as wholesale markets, online brand sites, and online marketplaces in 3026 countries. ~~International third-party operated stores are not included in the consolidated store data or the total gross square feet calculation.~~

As of October ~~30, 2021,~~29, 2022, we had ~~96 Company-owned~~103 company-owned stores in Canada, 5867 in Mexico, 1218 in Hong Kong, ~~and~~ 7 in Puerto ~~Rico.~~ Rico and 2 in Japan.

~~Fair Value Measurements~~

ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.

~~Financial Instruments~~

32•	~~Level 1 — Quoted prices in active markets.~~

•	~~Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly.~~

•	~~Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

~~As of October 30, 2021, we held certain assets that are required to be measured at fair value on a recurring basis. These include cash and cash equivalents.~~

~~In accordance with ASC 820, the following table represents the fair value hierarchy of our financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of:~~

Fair Value Measurements at October 30, 2021

(In thousands)

Carrying Amount

Quoted Market
Prices in Active
Markets for
Identical
Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Cash and cash
   equivalents:

Cash

$
364,769

$
364,769

$
—

$
—

Interest bearing
   deposits

375,899

375,899

—

—

Total cash and cash
   equivalents

$
740,668

$
740,668

—

—

The fair value of the Notes is not required to be measured at fair value on a recurring basis. Upon issuance, the fair value of the Notes was measured using two approaches that consider market related conditions, including market benchmark rates and a secondary market quoted price, and is therefore within Level 2 of the fair value hierarchy.

Liquidity and Capital Resources

Our uses of cash have historically been for working capital, the construction of new stores and remodeling of existing stores, information technology and e-commerce upgrades and investments, distribution center improvements and expansion, and the return of value to shareholders through the repurchase of common stock and the payment of dividends. Additionally, our uses of cash have included the development of the Aerie brand, investments in supply chain technology and omni-channel capabilities, and our international expansion efforts.

Historically, our uses of cash have been funded with cash flow from operations and existing cash on hand. We also maintain ~~an asset-based revolving credit facility~~a Credit Facility that allows us to borrow up to ~~$400~~$700 million, which will expire in ~~January 2024. In April 2020,~~June 2027. As of October 29, 2022, we had borrowings under the ~~Company issued $415~~Credit Facility of $343.0 million. Additionally, approximately $69.6 million aggregate principal amount of ~~3.75% convertible senior notes due in~~the 2025 in a private placement to qualified institutional buyers. Interest is payable semi-annually. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding our long-term debt.Notes remain outstanding at October 29, 2022.

As of October ~~30, 2021,~~29, 2022, we had approximately ~~$740.7~~$82.1 million in cash and cash ~~equivalents, which includes the proceeds from the Notes.~~equivalents. We expect to be able to fund our ~~future~~current and long-term cash requirements through current cash holdings and available liquidity. Subsequent to October 30, 2021, we entered into an agreement to acquire Quiet Logistics, Inc. and strategic equity investments for $350 million in cash, subject to certain adjustments. This transaction is expected to close in the fourth quarter of Fiscal 2021. Refer to Note 14 to the Consolidated Financial Statements for information regarding the subsequent event.

The following sets forth certain measures of our liquidity:


	October 30,		January 30,		October 31,		October 29,		January 29,		October 30,
	2021		2021		2020		2022		2022		2021
Working Capital (in thousands)	$	905,958	$	664,161	$	613,450	$	591,675	$	554,053	$	905,958
Current Ratio		2.04		1.77		1.69		1.86		1.66		2.04

Working capital increased ~~$241.8~~$37.6 million compared to January ~~30, 2021~~29, 2022 and ~~$292.5~~decreased $314.3 million compared to ~~October 31, 2020.~~last year. The ~~$292.5~~$314.3 million ~~increase~~decrease in our working capital compared to October ~~31, 2020,~~30, 2021, is driven by a ~~$179.8~~$658.5 million decrease in cash and cash equivalents. This decrease is primarily related to our acquisition of Quiet Logistics in the fourth quarter of Fiscal 2021 totaling $358.1 million (net of cash acquired), as well as $200.0 million in share repurchases under our ASR Agreement and $136.1 million in cash paid to holders of the 2025 Notes pursuant to the Note Exchange during the 39 weeks ended October 29, 2022. This decrease in working capital was partially offset by a $126.1 million decrease in accounts payable, an $87.2 million decrease in accrued compensation, a $79.8 million increase in ~~inventory,~~prepaid expenses and other,
and a ~~$103.9~~$57.9 million increase in ~~accounts receivable, a $48.3 million increase in cash and short-term investments,a $46.6 milliondecrease in current operating lease liabilities, and a $22.8 million decrease due to dividends payable, offset bya $64.3 million decrease in prepaid expenses, a $18.1 million increase in accrued income and other taxes, and a $10.0 million increase in accounts payable.~~inventory.

Cash Flows ~~provided~~(Used for) Provided by ~~(used for)~~ Operating Activities

Net cash used for operating activities totaled $86.7 million for the 39 weeks ended October 30, 2022, compared to net cash provided by operating activities ~~totaled~~of $133.7 million for the 39 weeks ended October 30, ~~2021, compared to net cash used for operating activities of $10.4 million for the 39 weeks ended October 31, 2020.~~2021. For the 39 weeks ended October 30, 2021, our major source of cash from operations was merchandise sales and our primary outflow was for the payment of operational costs. For the period ended October 31, 2020,both periods, our major source of cash from operations was merchandise sales and our primary outflow of cash ~~for~~from operations was for the payment of operational costs.

Cash Flows ~~used~~Used for Investing Activities

Net cash used for investing activities totaled ~~$148.8~~$200.1 million for the 39 weeks ended October ~~30, 2021,~~29, 2022, compared to net cash used for investing activities of ~~$38.1~~$148.8 million for the 39 weeks ended October ~~31, 2020.~~30, 2021. Investing activities for the 39 weeks ended October 29, 2022 primarily consisted of $199.4 million of capital expenditures for property and equipment. Investing activities for the 39 weeks ended October 30, 2021 primarily consisted of $144.4 million of capital expenditures for property and equipment. Investing activities for 39 the weeks ended October 31, 2020 primarily included $92.6 million of capital expenditures for property and equipment, offset by $55.0 million of net short-term investment sales.

Cash Flows ~~(used for) provided by~~Used for Financing Activities

Net cash used for financing activities totaled ~~$94.8 million for the weeks ended October 30, 2021, compared to net cash provided by financing activities of $379.9~~$64.1 million for the 39 weeks ended October ~~31, 2020.~~ 29, 2022, compared to net cash used for financing activities of $94.8 million for the 39 weeks ended October 30, 2021. Cash used for financing activities for the 39 weeks ended October 29, 2022 consisted primarily of $200.0 million used to repurchase the Company's common stock under the ASR Agreement, $136.1 million used for the principal paid in connection with the Note Exchange, $64.8 million used for cash dividends paid at a quarterly rate of $0.18 per share during the 26 weeks ended July 30, 2022 and $9.8 million used for the repurchase of common stock from employees for the payment of taxes in connection with vesting of share-based payments, partially offset by $343.0 million of proceeds from borrowings under our Credit Facility.

Cash used for financing activities for the 39 weeks ended October 30, 2021 consisted primarily of $83.6 million for cash dividends paid at quarterly rates of $0.1375 for the 13 weeks ended May 2, 2021 and $0.18 per share for the 13 weeks ended July 31, 2021 and October 30, 2021, and $24.0 million for the repurchase of common stock from employees for the payment of taxes in connection with vesting of share-based payments, partially offset by $13.1 million of proceeds from stock option exercises.

Cash provided by financing activities for the 39 weeks ended October 31, 2020 consisted primarily of $406.1 million of net proceeds from the issuance of convertible senior notes. This was partially offset by $20.0 million used for purchases of 1.7 million shares of common stock under publicly-announced programs in early March 2020, and $5.4 million for the repurchase of common stock from employees for the payment of taxes in connection with the vesting of share-based payments.33

Credit ~~Facilities~~Facility

In ~~January 2019,~~June 2022, we entered into athe Credit Agreement, ~~for five-year, syndicated, asset-based revolving Credit Facilities. The Credit Agreement~~which provides senior secured asset-based revolving credit for loans and letters of credit up to ~~$400~~$700 million pursuant to the Credit Facility, subject to customary borrowing base limitations. The Credit ~~Facilities expire January 30, 2024.~~Facility expires on June 24, 2027.

As of October ~~30, 2021,~~29, 2022, the Company was in compliance with the terms of the Credit Agreement and had $343.0 million in borrowings and $7.9 million outstanding in stand-by letters of credit. No loans were outstanding under the ~~Credit Agreement~~Company's previous credit agreement as of October 30, 2021.

Capital Expenditures for Property and Equipment

Capital expenditures for the 39 weeks ended October ~~30, 2021~~29, 2022 were ~~$144.4~~$199.4 million, and included ~~$78.6~~$119.0 million related to investments in our stores, including 6172 new ~~AEO~~ stores ~~(14~~(19 American Eagle stores, 4351 combined Aerie stand-alone stores ~~(including 4 OFFLINE stores), three Unsubscribed~~and OFFLINE™ stand-alone stores, ~~and~~ one Todd Snyder store, and one Unsubscribed store), ~~13 remodeled and refurbished stores,~~ and fixtures and visual investments. Additionally, we continued to support our infrastructure growth by investing in information technology initiatives ($~~46.0~~56.4 million), ~~e-commerce~~Quiet Platforms ($~~10.6~~21.2 million), and other home office projects ($~~9.2~~2.8 million).

For Fiscal ~~2021,~~2022, we expect total capital expenditures to be ~~in the range of~~approximately $250 ~~million to $275~~ million, related to the continued support of our expansion efforts, ~~investments in our~~ stores, information technology upgrades to support growth, and investments in ~~e-commerce.~~e-commerce, as well as to support and enhance our supply chain. We expect to be able to fund our capital expenditures through current cash holdings and ~~cash generated from operations.~~available liquidity.

~~Stock~~Share Repurchases

During Fiscal 2019, our Board of Directors (“Board”) authorized the repurchase of 30.0 million shares under a share repurchase program.

On June 3, 2022, the Company entered into an ASR Agreement with JPMorgan Chase Bank (“JPM”) to repurchase an aggregate of $200.0 million of the Company’s common stock.

Pursuant to the terms of the ASR Agreement, on June 3, 2022, the Company paid to JPM $200.0 million in cash and received an initial delivery of 13.4 million shares of its common stock on June 3, 2022. At final settlement, on July 28, 2022, an additional 3.7 million shares were received. The cumulative repurchase under ~~a new~~the ASR Agreement was 17.0 million shares repurchased at an average price per share of $11.75.

As of October 29, 2022, our total remaining share repurchase ~~program, which expires on February 3, 2024, bringing our total share repurchases~~ authorization ~~to 30.0~~was approximately 13.0 million shares.

In Fiscal 2020, to preserve cash liquidity in response to the uncertainty created by COVID-19, the Company suspended its publicly-announced share repurchase program. The Company unsuspended its share repurchase program at the beginning of Fiscal 2021, but did not repurchase any shares under this program during the 39 weeks ended October 30, 2021. In early 2020, prior to the suspension of our share repurchase program, we repurchased 1.7 million shares for $20.0 million, at a weighted average price of $11.63 per share.

During the 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, we repurchased approximately ~~0.8~~0.6 million and ~~0.4~~0.8 million shares, respectively, from certain employees at market prices totaling ~~$24.0~~$9.8 million and ~~$5.4~~$24.0 million, respectively. These shares were repurchased for the payment of taxes, in connection with the vesting of share-based payments, as permitted under our equity incentive plans.

The aforementioned repurchased shares have been recorded ~~at cost in~~as treasury ~~stock in the Consolidated Balance Sheet.~~stock.

Dividends

During the 13 weeks ended ~~July 31, 2021, our Board of Directors (“Board”) raised our annual dividend rate from $0.55 per share ($0.1375 per share on a quarterly basis)~~October 29, 2022, the Company announced that, given ongoing external uncertainties, in order to ~~$0.72 per share ($0.18 per share on a quarterly basis), a 31% increase. Additionally, our Board declared a~~increase financial flexibility it is temporarily suspending its quarterly cash ~~dividend of $0.18 per share on September 9, 2021, which was paid on October 22, 2021.~~dividends.

Subsequent to the third quarter of Fiscal 2021, our Board declared a $0.18 per share dividend, payable on December 29, 2021, to the stockholders of record at the close of business on December 10, 2021.

The Company maintains the right to defer the record and payment dates of ~~its~~any declared dividends, depending upon, among other factors, the progression of the COVID-19 ~~pandemic,~~outbreak, business performance, and the macroeconomic environment. The payment of future dividends is at the discretion of our Board and is based on future earnings, cash flow, financial condition, capital requirements, changes in U.S. taxation, and other relevant factors.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the Notes to our Consolidated Financial Statements for the year ended January ~~30, 2021~~29, 2022 contained in our Fiscal ~~2020~~2021 Form 10-K. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been discussed in the ~~Notes~~notes to ~~the~~our Consolidated Financial Statements in this Quarterly ~~Report on Form 10-Q.~~Report. The application of our critical accounting policies and estimates may require our management to make judgments and estimates about the amounts reflected in the Consolidated Financial Statements. Our management

uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are primarily exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. An unrealized loss of ~~$2.2~~$1.3 million and ~~an unrealized gain of $1.7~~$0.4 million iswas included in other comprehensive ~~(loss)~~ income during the 13 and 39 weeks ended October ~~30, 2021,~~29, 2022, respectively. Our market risk profile as of January ~~30, 2021~~29, 2022, is disclosed in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our Fiscal ~~2020~~2021 Form 10-K, ~~which~~and is unchanged as of October ~~30, 2021.~~29, 2022.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the ~~Company’s~~ management of American Eagle Outfitters, Inc. (the “Management”), including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In connection with the preparation of this Quarterly Report, ~~on Form 10-Q,~~ as of October ~~30, 2021,~~29, 2022, the Company performed an evaluation under the supervision and with the participation of our Management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this Quarterly Report, ~~on Form 10-Q,~~ our disclosure controls and procedures were effective in the timely and accurate recording, processing, summarizing, and reporting of material financial and non-financial information within the time periods specified within the SEC’s rules and forms. Our principal executive officer and principal financial officer also concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our Management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during ~~the~~our most recently completed fiscal quarter ~~covered by this Quarterly Report on Form 10-Q~~ that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements.~~

4035

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are involved, from time to time, in actions associated with or incidental to our business, including, among other things, matters involving consumer privacy, trademark and other intellectual property, licensing, importation of products, taxation, and employee relations. ~~As of the date hereof, we~~We believe at present that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial position or results of operations. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact that are not in accord with management's evaluation of the possible liability or outcome of such litigation or claims. Consistent with Item 103 of Regulation S-K, we have elected to disclose those environmental proceedings with a governmental entity as a party where the company reasonably believes such proceeding would result in monetary sanctions, exclusive of interest and costs, of $1.0 million or more. Applying this threshold, there are no environmental matters to disclose for this period.

Refer to Note 1111. “Legal Proceedings” of the notes to the Consolidated Financial Statements included herein for additional information.

ITEM 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed within Part 1,I, Item 1A of our Fiscal ~~2020~~2021 Form 10-K. ~~Except as set forth below, there~~There have been no material changes to our risk factors as disclosed in the Fiscal ~~2020~~2021 Form ~~10-K and in our subsequent filings with the SEC.~~

Vaccine mandates and other governmental regulations relating to the ongoing COVID-19 pandemic could have a material adverse impact on our business, financial conditions, results of operations, and prospects.

On September 9, 2021, President Biden announced a proposed new rule requiring that all employers with at least 100 employees require that their employees be fully vaccinated or tested weekly. The U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an emergency temporary standard (“ETS”) regulation to carry out this mandate. On November 6, 2021, the Unites States Court of Appeals for the Fifth Circuit granted a stay of the ETS, and on November 12, 2021 the Court upheld its stay and barred OSHA from enforcing the mandate “pending adequate judicial review” of a motion for permanent injunction. As a result, OSHA has suspended activities related to the implementation and enforcement of the ETS pending future developments. At this time, it remains unclear whether the ETS will go into effect, and if it does, whether it will apply to all employees or only to employees who work in the office, as well as how compliance will be documented.

As a company with over 35,000 employees globally, it is anticipated that, should the ETS or similar regulations go into effect, we would be subject to COVID-19 vaccination and/or testing mandates. Should the mandates apply to us, we may be required to implement a requirement that all of our employees get vaccinated or be frequently tested, subject to limited exceptions. At this time, it is not possible to predict the impact that a vaccine and testing mandate, or a vaccine requirement should we adopt one, will have on us or on our workforce. Any vaccine requirement or vaccine mandate, if implemented, may result in disruptions to our retail store operations, distribution operations, employee attrition and increased labor costs, which could materially and adversely affect our business and results of operations.

Although we cannot predict with certainty the impact that the vaccine mandate and any other related measures will have on our workforce and operations, these requirements and any future requirements may result in attrition and impede our ability to recruit and retain our workforce. These measures also may further disrupt the national supply chain, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Issuer Purchases of Equity Securities

The following table provides information regarding our repurchases of our common stock during the 13 weeks ended October ~~30, 2021.~~29, 2022:


	Total				Total Number of		Maximum Number of
	Number of		Average		Shares Purchased as		Shares that May
	Shares		Price Paid		Part of Publicly		Yet Be Purchased
Period	Purchased		Per Share		Announced Programs		Under the Program
	(1)		(2)		(1)		(1) (3)
Month #1 (July 31, 2022 through August 27, 2022)		2,950	$	12.31		—		12,977,130
Month #2 (August 28, 2022 through October 1, 2022)		2,390	$	10.41		—		12,977,130
Month #3 (October 2, 2022 through October 29, 2022)		12,608	$	10.50		—		12,977,130
Total		17,948	$	10.78		—		12,977,130

(1)

There were no shares repurchased as part of our publicly-announced share repurchase program during the 13 weeks ended October 29, 2022 and there were 17,948 shares repurchased for the payment of taxes in connection with the vesting of share-based payments.

(2)

Average price paid per share excludes any broker commissions paid.

(3)

During Fiscal 2019 our Board authorized the public repurchase of 30.0 million shares under a share repurchase program which expires on February 3, 2024.

Total

Total Number of

Maximum Number of

Number of

Average

Shares Purchased as

Shares that May

Shares

Price Paid

Part of Publicly

Yet Be Purchased

Period

Purchased

Per Share

Announced Programs

Under the Program

(1)

(2)

(1)

(1) (3)

Month #1 (August 1, 2021 through August 28, 2021)

170,770

$
34.46

—

30,000,000

Month #2 (August 29, 2021 through October 2, 2021)

9,527

$
26.30

—

30,000,000

Month #3 (October 3, 2021 through October 30, 2021)

12,580

$
24.89

—

30,000,000

Total

192,877

$
33.43

—

30,000,000

~~(1)~~

There were no shares repurchased as part of our publicly-announced share repurchase program during the 13 weeks ended October 30, 2021 and there were 0.2 million shares repurchased for the payment of taxes in connection with the vesting of share-based payments.

~~(2)~~

~~Average price paid per share excludes any broker commissions paid.~~

~~(3)~~

~~During Fiscal 2019, our Board authorized the public repurchase of 30.0 million shares under a new share repurchase program, which expires on February 3, 2024.~~

ITEM 6. EXHIBITS.

~~2.1~~		Stock Purchase Agreement, dated November 1, 2021, by and among The Original Real Co., Quiet Holdings, LLC, Quiet Global Holdings, LLC, Quiet Logistics, Inc. and, solely for the purposes of guaranteeing certain obligations of Buyer, American Eagle Outfitters, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-33338), filed with the SEC on November 3, 2021).
~~10.1^~~* 31.1		~~Letter Agreement with Marisa Baldwin dated August 27, 2021~~
10.2^*		~~Change in Control Agreement between American Eagle Outfitters, Inc. and Marisa Baldwin, dated August 27, 2021~~
10.3^*		~~Form of 2021 Confidentiality, Non-Competition and Intellectual Property Agreement~~
* 31.1		Certification by Jay L. Schottenstein pursuant to Rule 13a-14(a) or Rule 15d-14(a)

* 31.2		Certification by Michael A. Mathias pursuant to Rule 13a-14(a) or Rule 15d-14(a)

** 32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

** 32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* 101		The following materials from the Company’s ~~Annual~~Quarterly Report on Form 10-Q for the quarter ended October ~~30, 2021,~~29, 2022, formatted as inline eXtensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets as of October ~~30, 2021,~~29, 2022, January ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, (ii) Consolidated Statements of Operations for the 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, (iii) Consolidated Statements of Comprehensive Income for the 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, (iv) Consolidated Statements of Stockholders’ Equity for the 13 and 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020,~~30, 2021, and (v) Consolidated Statements of Cash Flows for the 39 weeks ended October ~~30, 2021~~29, 2022 and October ~~31, 2020~~30, 2021
* 104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October ~~30, 2021,~~29, 2022, formatted in inline XBRL

^	~~Management contract or compensatory plan or arrangement.~~

*	~~Filed with this report.~~

**	~~Furnished with this report.~~

* Filed with this report.

43** Furnished with this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 23, ~~2021~~2022


		American Eagle Outfitters, Inc. (Registrant)

By:		~~/s/~~ /s/ Jay L. Schottenstein
		Jay L. Schottenstein
		Chief Executive Officer
		(Principal Executive Officer)

By:		~~/s/~~ /s/ Michael A. Mathias
		Michael A. Mathias
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

4438

(In thousands)	October 30, 2021		January 30, 2021		October 31, 2020
Cash and cash equivalents:
Cash	$	364,769	$	524,970	$	317,027
Interest bearing deposits		375,899		275,507		325,319
Money market securities		—		—		50,010
Certificates of deposit		—		50,000		—
Total cash and cash equivalents	$	740,668	$	850,477	$	692,356