American Eagle Outfitters (AEO) 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

American Eagle Outfitters
Reports Second Quarter 2010 Results
Initiates Third Quarter Guidance

Pittsburgh, August 25, 2010 — American Eagle Outfitters, Inc. (NYSE:AEO) today announced net income for the second quarter ended July 31, 2010 of $0.05 per diluted share, compared to $0.14 per diluted share last year. Due to the closure of the MARTIN+OSA business, its results of operations are presented as discontinued operations for all periods and are further discussed below. Income from continuing operations for the second quarter ended July 31, 2010 was $0.13 per diluted share compared to income from continuing operations for the second quarter ended August 1, 2009 of $0.18 per diluted share.

“The second quarter was a challenging period, resulting in a miss to our sales and profit plans,” said Jim O’Donnell, chief executive officer. “Given the inconsistencies in business trends and unpredictable consumer behavior, we have intensified our actions to improve efficiencies, streamline our process and strengthen profitability. We are committed to driving change across the organization and delivering sustainable long-term growth.”

Second Quarter Results — Continuing Operations

Total sales for the 2010 second quarter increased to $652 million, compared to $647 million last year. Comparable store sales decreased 1%.

Gross profit decreased 6% to $240 million, or 36.8% as a rate to sales, compared to $254 million or 39.3% last year. The merchandise margin decreased 210 basis points due to higher markdowns as a result of weaker sales performance within key categories of our summer assortment. As a rate to sales, buying, occupancy and warehousing costs increased 40 basis points primarily due to the opening of new stores and negative comparable store sales.

Selling, general and administrative expense was $165 million compared to $161 million last year, a 3% increase. The increase was due to the timing of contract-based equity grants and severance payments. Excluding these items, SG&A was down slightly to last year.

Operating income was $38 million, compared to $60 million last year. The second quarter operating margin was 5.9%, compared to 9.2% last year.

The company’s quarterly tax rate from continuing operations for the second quarter was 30.3%. This includes the favorable impact of tax incentives related to the company’s distribution center in Ottawa, Kansas.

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The company generated income from continuing operations of $26 million, compared to $37 million last year.

MARTIN+OSA Update — Discontinued Operations

On March 9, 2010, the company announced plans to close its MARTIN+OSA concept, including all 28 stores and the online business. The company completed the closure of MARTIN+OSA during the second quarter of fiscal 2010. The loss from discontinued operations for each period presented includes the operating results and closure charges for MARTIN+OSA.

Total cash outflow for the closure charges of MARTIN+OSA, net of associated tax benefits, is expected to be $14 million, which is at the low end of the company’s initial range of $10 million to $40 million. The total year-to-date pre-tax closure charges were $44 million, of which $18 million were recorded in the second quarter of fiscal 2010. Included in the year-to-date pre-tax charges are lease-related items of $16 million, severance and other employee-related charges of $8 million, inventory charges of $2 million and a non-cash asset impairment charge of $18 million.

AEO Direct

The company’s direct business includes ae.com, aerie.com and 77kids.com. In the second quarter, sales decreased 9%. This compares to a 17% sales increase last year which was promotionally driven.

Corporate Profit Initiative

The company’s corporate profit initiative, aimed at strengthening profitability, is comprehensive and affects every function and discipline across the organization. Key elements of the plan are as follows:

• Sales and merchandise margin optimization—includes strengthening merchandising strategies, a reduction in inventories, implementation of new merchandise allocation technology and refinement of store presentation models.

• Organizational streamlining—involves workforce reductions and process improvements to increase efficiencies and create a more productive environment.

• Expense reductions—entails the elimination of projects which were low-value to our customers and continued improvement of non-merchandise buying practices.

• Evaluation of stores and facilities—targets 50 to 100 closures of underperforming stores over the next two to five years.

Inventory

Total merchandise inventory at the end of the second quarter was $349 million compared to $353 million last year. Second quarter ending inventory per foot increased 1%, with clearance inventory down at the end of the quarter.

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Looking forward, third quarter average weekly inventory per square foot is planned down in the mid single-digits.

Capital Expenditures

For the second quarter, capital expenditures were $20 million compared to $38 million last year. The company continues to expect capital expenditures to be in the range of $90 to $110 million.

Real Estate

In the second quarter, the company opened one AE store, five aerie and five 77kids stores. In addition, 10 AE store remodels were completed. Store closings in the quarter included five AE stores and 28 MARTIN+OSA stores. For additional year-to-date and fiscal 2010 information, please refer to the accompanying real estate table.

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

The company ended the second quarter with total cash and cash equivalents of $426 million, as well as $172 million of investments in auction rate securities, net of impairment.

Share Repurchase

During the second quarter, the company repurchased 10 million shares, bringing the year-to-date total to 14 million shares for a total of $192 million.

Third Quarter 2010 Outlook

Month-to-date August comparable store sales are up approximately 1%, which is consistent with our plan for the back-to-school selling period. For the third quarter, the company expects comparable store sales to be flat to down in the low single-digits. This assumes a more conservative view of traffic following peak back-to-school shopping. Based upon this view, our third quarter 2010 earnings from continuing operations guidance is $0.23 to $0.26 per diluted share. This compares to earnings from continuing operations for the third quarter 2009 of $0.32 per diluted share, which included a tax benefit of $0.07 per diluted share associated with the repatriation of earnings from Canada. The third quarter 2010 guidance excludes potential investment security charges.

Conference Call Information

At 9:00 a.m. Eastern Time on August 25, 2010, the company’s management team will host a conference call to review the financial results. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 five to seven minutes prior to the scheduled start time. The conference call will also be simultaneously broadcast over the Internet atwww.ae.com. Anyone unable to listen to the call can access a replay beginning August 26, 2010 at 12:00 p.m. Eastern Time through September 16, 2010. To listen to the replay, dial 1-877-660-6853, or internationally dial 1-201-612-7415, and reference account 3055 and confirmation code 348836. An audio replay of the conference call will also be available atwww.ae.com.

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* * * *

American Eagle Outfitters, Inc., through its subsidiaries, (“AEO, Inc.”)offers high-quality, on-trend clothing, accessories and personal care products at affordable prices. The American Eagle Outfitters^® brand targets 15 to 25 year old girls and guys, with 934 stores in the U.S. and Canada and online at www.ae.com. aerie^® by american eagle offers Dormwear^® and intimates collections for the AE^® girl, with 144 standalone stores in the U.S. and Canada and online atwww.aerie.com. The latest brand, 77kids^® by american eagle^®, is available online at www.77kids.com, as well as at five stores across the nation. The 77kids brand offers “kid cool,” durable clothing and accessories for kids ages two to 10. AE.COM^®, the online home of the brands of AEO, Inc. ships to 76 countries worldwide.

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

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

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

	July 31,			January 30,			August 1,
	2010			2010			2009
	(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents	$	425,523		$	693,960		$	500,263
Short-term investments		5,800			4,675			29,525
Merchandise inventory		349,091			326,454			352,819
Accounts receivable		41,793			34,746			40,799
Prepaid expenses and other		99,475			47,039			62,432
Deferred income taxes		41,129			60,156			45,605
Total current assets		962,811			1,167,030			1,031,443
Property and equipment, net		657,131			713,142			745,086
Goodwill		11,364			11,210			11,181
Long-term investments		166,717			197,773			198,559
Non-current deferred income taxes		28,724			27,305			1,981
Other assets, net		22,956			21,688			22,064
Total Assets	$	1,849,703		$	2,138,148		$	2,010,314
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	144,929		$	158,526		$	151,978
Notes payable		—			30,000			75,000
Accrued compensation and payroll taxes		31,356			55,144			29,970
Accrued rent		83,617			68,866			66,637
Accrued income and other taxes		13,801			20,585			16,093
Unredeemed gift cards and gift certificates		21,201			39,389			20,920
Current portion of deferred lease credits		16,909			17,388			17,639
Other current liabilities and accrued expenses		19,413			19,057			18,845
Total current liabilities		331,226			408,955			397,082
Deferred lease credits		83,709			89,591			98,067
Non-current accrued income taxes		35,748			38,618			25,036
Other non-current liabilities		21,030			22,467			20,272
Total non-current liabilities		140,487			150,676			143,375
Commitments and contingencies		—			—			—
Preferred stock		—			—			—
Common stock		2,496			2,486			2,486
Contributed capital		540,326			554,399			526,487
Accumulated other comprehensive income		19,250			16,838			15,567
Retained earnings		1,735,503			1,764,049			1,692,990
Treasury stock		(919,585	)		(759,255	)		(767,673	)
Total stockholders’ equity		1,377,990			1,578,517			1,469,857
Total Liabilities and Stockholders’ Equity	$	1,849,703		$	2,138,148		$	2,010,314
Current Ratio		2.91			2.85			2.60

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

	13 Weeks Ended
	July 31,			% of			August 1,			% of
	2010			Sales			2009			Sales
Net sales	$	651,502			100.0	%	$	646,798			100.0	%
Cost of sales, including certain buying, occupancy and warehousing expenses		411,794			63.2	%		392,900			60.7	%
Gross profit		239,708			36.8	%		253,898			39.3	%
Selling, general and administrative expenses		165,493			25.4	%		160,858			24.9	%
Depreciation and amortization		36,049			5.5	%		33,431			5.2	%
Operating income		38,166			5.9	%		59,609			9.2	%
Other income (expense)		138			0.0	%		(3,926	)		-0.6	%
Other-than-temporary impairment charge		(1,248	)		-0.2	%		(225	)		0.0	%
Income before income taxes		37,056			5.7	%		55,458			8.6	%
Provision for income taxes		11,213			1.7	%		18,701			2.9	%
Income from continuing operations		25,843			4.0	%		36,757			5.7	%
Loss from discontinued operations, net of tax		(16,180	)		-2.5	%		(8,185	)		-1.3	%
Net income	$	9,663			1.5	%	$	28,572			4.4	%
Basic income per common share:
Income from continuing operations	$	0.13					$	0.18
Loss from discontinued operations		(0.08	)					(0.04	)
Net income per basic share	$	0.05					$	0.14
Diluted income per common share:
Income from continuing operations	$	0.13					$	0.18
Loss from discontinued operations		(0.08	)					(0.04	)
Net income per diluted share	$	0.05					$	0.14
Weighted average common shares outstanding — basic		201,764						206,010
Weighted average common shares outstanding — diluted		203,153						209,015

	26 Weeks Ended
	July 31,			% of			August 1,			% of
	2010			Sales			2009			Sales
Net sales	$	1,299,964			100.0	%	$	1,248,477			100.0	%
Cost of sales, including certain buying, occupancy and warehousing expenses		802,560			61.7	%		770,976			61.8	%
Gross profit		497,404			38.3	%		477,501			38.2	%
Selling, general and administrative expenses		334,138			25.7	%		312,646			25.0	%
Depreciation and amortization		71,574			5.5	%		66,419			5.3	%
Operating income		91,692			7.1	%		98,436			7.9	%
Other income (expense)		259			0.0	%		(6,237	)		-0.5	%
Other-than-temporary impairment charge		(1,248	)		-0.1	%		(225	)		0.0	%
Income before income taxes		90,703			7.0	%		91,974			7.4	%
Provision for income taxes		28,998			2.2	%		26,141			2.1	%
Income from continuing operations	$	61,705			4.8	%	$	65,833			5.3	%
Loss from discontinued operations, net of tax		(41,120	)		-3.2	%		(15,294	)		-1.2	%
Net income	$	20,585			1.6	%	$	50,539			4.1	%
Basic income per common share:
Income from continuing operations	$	0.30					$	0.32
Loss from discontinued operations		(0.20	)					(0.07	)
Net income per basic share	$	0.10					$	0.25
Diluted income per common share:
Income from continuing operations	$	0.30					$	0.31
Loss from discontinued operations		(0.20	)					(0.07	)
Net income per diluted share	$	0.10					$	0.24
Weighted average common shares outstanding — basic		204,238						205,742
Weighted average common shares outstanding — diluted		206,430						207,974

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AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)

	For the 26 Weeks Ended
	July 31,			August 1,
	2010			2009
Operating activities:
Net income	$	20,585		$	50,539
Loss from discontinued operations		41,120			15,294
Income from continuing operations		61,705			65,833
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		73,660			67,452
Share-based compensation		18,380			9,224
Provision for deferred income taxes		17,933			5,980
Tax benefit from share-based payments		13,039			7,258
Excess tax benefit from share-based payments		(4,100	)		(1,405	)
Foreign currency transaction loss		1,159			5,685
Net impairment loss recognized in earnings		1,248			225
Realized loss on sale of investment securities		225			2,749
Changes in assets and liabilities:
Merchandise inventory		(29,870	)		(56,716	)
Accounts receivable		(8,690	)		(279	)
Prepaid expenses and other		(53,574	)		(1,442	)
Other assets, net		180			(187	)
Accounts payable		(11,134	)		2,887
Unredeemed gift cards and gift certificates		(17,964	)		(21,693	)
Deferred lease credits		(2,805	)		13,095
Accrued compensation and payroll taxes		(26,183	)		473
Accrued income and other taxes		(10,117	)		(5,353	)
Accrued liabilities		(1,187	)		(2,949	)
Total adjustments		(39,800	)		25,004
Net cash provided by operating activities from continuing operations	$	21,905		$	90,837
Investing activities:
Capital expenditures		(39,344	)		(72,674	)
Sale of investments		27,875			49,914
Other investing activities		(1,530	)		(685	)
Net cash used for investing activities from continuing operations	$	(12,999	)	$	(23,445	)
Financing activities:
Payments on capital leases		(1,145	)		(971	)
Repayment of notes payable		(30,000	)		—
Repurchase of common stock from employees		(17,986	)		(195	)
Repurchase of common stock as part of publicly announced programs		(192,268	)		—
Net proceeds from stock options exercised		4,475			4,763
Excess tax benefit from share-based payments		4,100			1,405
Cash used to net settle equity awards		(6,434	)		—
Cash dividends paid		(43,148	)		(41,360	)
Net cash used for financing activities from continuing operations	$	(282,406	)	$	(36,358	)
Effect of exchange rates on cash		88			6,111
Cash flows of discontinued operations
Net cash provided by (used for) operating activities		4,981			(9,931	)
Net cash used for investing activities		(6	)		(293	)
Net cash provided by financing activities		—			—
Effect of exchange rate on cash		—			—
Net cash provided by (used for) discontinued operations	$	4,975			(10,224	)
Net (decrease) increase in cash and cash equivalents	$	(268,437	)	$	26,921
Cash and cash equivalents — beginning of period		693,960			473,342
Cash and cash equivalents — end of period	$	425,523		$	500,263

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AMERICAN EAGLE OUTFITTERS, INC.
REAL ESTATE INFORMATION
(unaudited)

	Second Quarter			Year-to-date			Fiscal 2010
	Fiscal 2010			Fiscal 2010			Guidance
Consolidated stores at beginning of period		1,105			1,103			1,103
Consolidated stores opened during the period
AE Brand		1			6			14
aerie		5			7			11
77kids		5			5			9
Consolidated stores closed during the period
AE Brand		(5	)		(10	)		(15) - (25	)
MARTIN+OSA		(28	)		(28	)		(28	)
Total consolidated stores at end of period		1,083			1,083			1084 - 1094
Stores remodeled during the period		10			13			25 - 35
Total gross square footage at end of period		6,279,510			6,279,510

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