10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 29, 2023

OR

☐ 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) 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: 197,483,532 shares of Common Stock were outstanding at September 1, 2023.

AMERICAN EAGLE OUTFITTERS, INC.

TABLE OF CONTENTS

		Page Number
	PART I - FINANCIAL INFORMATION
	Forward Looking Statements	3
Item 1.	Financial Statements	6
	Consolidated Balance Sheets: July 29, 2023, January 28, 2023 and July 30, 2022	6
	Consolidated Statements of Operations: 13 and 26 weeks ended July 29, 2023 and July 30, 2022	7
	Consolidated Statements of Comprehensive Income: 13 and 26 weeks ended July 29, 2023 and July 30, 2022	8
	Consolidated Statements of Stockholders' Equity: 13 and 26 weeks ended July 29, 2023 and July 30, 2022	9
	Consolidated Statements of Cash Flows: 26 weeks ended July 29, 2023 and July 30, 2022	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	38
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	N/A
Item 4.	Mine Safety Disclosures	N/A
Item 5.	Other Information	N/A
Item 6.	Exhibits	40

2

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. 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 contained in this Quarterly Report and in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023 filed with the Securities and Exchange Commission (the "SEC") on March 13, 2023 (the "Fiscal 2022 Form 10-K") 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 five to 15 American Eagle stores and approximately 20 to 30 Aerie locations, including approximately 15 OFFLINETM stores, which will be a mix of stand-alone and Aerie side-by-side locations, during Fiscal 2023;

•the anticipated selection of approximately 15 to 30 American Eagle and Aerie stores in the U.S. and Canada for remodeling during Fiscal 2023;

•the potential closure of approximately 20 to 40 American Eagle stores at the expiration of their lease terms, primarily in North America, during Fiscal 2023;

•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 Quiet Platforms;

•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 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 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;

•the effect of inflation on our business;

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

•the impact of any global pandemic on general economic conditions; and

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

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 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;

3

•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 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 the impact of inflation;

•the risk that seasonality may cause sales to fluctuate in a manner inconsistent with our expectations 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 ongoing war in Ukraine, or other catastrophic events;

•the risk that adverse public health developments have had, and may continue to have, an adverse effect on our business and results of operations;

•the risks associated with climate change and other corporate responsibility issues, and legislative and regulatory responses to climate change, which may adversely impact our business;

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

•the risk that our current international operations and efforts to further expand internationally expose us to risks inherent in operating in other countries;

•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 systems;

•the risk that the loss or disruption of information technology systems 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 regulatory action or investigation, liability, damage our reputation, and have a material adverse effect on our business;

•the risk that remote working measures may negatively impact our operations or increase our risk exposures;

•the risks that our international merchandise sourcing strategy subjects 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 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 that 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;

4

•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 risk that failure to properly manage and allocate our inventory could have an adverse effect on our business, sales, margins, financial condition, and 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 risk that we cannot provide assurance that we will pay dividends, or if paid, that dividend payments will be consistent with historical levels;

•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 the combined company's future results;

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

•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 the increases in labor costs, including wages, which could adversely impact our operational results, financial condition and results of operations;

•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 risks relating to foreign laws and regulations 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 we may be unable to protect our trademarks and other intellectual property rights;

•the risk 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.

5

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

	July 29,			January 28,			July 30,
(In thousands, except per share amounts)	2023			2023			2022
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	175,315		$	170,209		$	98,214
Merchandise inventory		636,972			585,083			687,046
Accounts receivable, net		271,333			242,386			220,803
Prepaid expenses and other		117,871			102,563			171,326
Total current assets		1,201,491			1,100,241			1,177,389
Operating lease right-of-use assets		1,038,505			1,086,999			1,210,285
Property and equipment, at cost, net of accumulated depreciation		758,736			781,514			775,969
Goodwill		264,964			264,945			271,406
Intangible assets, net		90,312			94,536			98,651
Non-current deferred income taxes		21,990			36,483			37,017
Other assets		55,909			56,238			58,500
Total assets	$	3,431,907		$	3,420,956		$	3,629,217
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	238,660		$	234,340		$	198,645
Current portion of operating lease liabilities		309,517			337,258			328,348
Unredeemed gift cards and gift certificates		51,156			67,618			51,111
Accrued compensation and payroll taxes		74,509			51,912			50,788
Accrued income and other taxes		17,372			10,919			16,708
Other current liabilities and accrued expenses		71,262			66,901			72,461
Total current liabilities		762,476			768,948			718,061
Non-current liabilities:
Non-current operating lease liabilities		970,862			1,021,200			1,137,656
Long-term debt, net		3,225			8,911			376,522
Other non-current liabilities		22,345			22,734			24,055
Total non-current liabilities		996,432			1,052,845			1,538,233
Commitments and contingencies		-			—			—
Stockholders’ equity:
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; 197,481, 195,064, and 187,312 shares    outstanding, respectively		2,496			2,496			2,496
Contributed capital		334,447			341,775			380,959
Accumulated other comprehensive loss		(11,566	)		(32,630	)		(40,017	)
Retained earnings		2,158,294			2,137,126			2,000,021
Treasury stock, at cost, 52,085, 54,502, and 62,254 shares, respectively		(810,672	)		(849,604	)		(970,536	)
Total stockholders’ equity		1,672,999			1,599,163			1,372,923
Total liabilities and stockholders’ equity	$	3,431,907		$	3,420,956		$	3,629,217

Refer to Notes to Consolidated Financial Statements

6

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	13 Weeks Ended						26 Weeks Ended
	July 29,			July 30,			July 29,			July 30,
(In thousands, except per share amounts)	2023			2022			2023			2022
Total net revenue	$	1,200,879		$	1,198,124		$	2,281,805		$	2,253,161
Cost of sales, including certain buying, occupancy and    warehousing expenses		747,863			828,107			1,415,610			1,495,118
Gross profit		453,016			370,017			866,195			758,043
Selling, general and administrative expenses		331,872			307,832			644,217			606,587
Impairment, restructuring and other charges		—			—			21,275			—
Depreciation and amortization expense		55,854			48,171			112,582			95,540
Operating income		65,290			14,014			88,121			55,916
Debt related charges		—			60,066			—			60,066
Interest expense, net		951			3,421			1,642			8,009
Other income, net		(2,150	)		(1,839	)		(5,461	)		(6,283	)
Income (loss) before income taxes		66,489			(47,634	)		91,940			(5,876	)
Provision (benefit) for income taxes		17,919			(5,168	)		24,918			4,850
Net income (loss)	$	48,570		$	(42,466	)	$	67,022		$	(10,726	)
Basic net income (loss) per common share	$	0.25		$	(0.24	)	$	0.34		$	(0.06	)
Diluted net income (loss) per common share	$	0.25		$	(0.24	)	$	0.34		$	(0.06	)
Weighted average common shares outstanding - basic		195,329			180,189			195,214			174,544
Weighted average common shares outstanding - diluted		196,103			180,189			196,822			174,544

Refer to Notes to Consolidated Financial Statements

7

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	13 Weeks Ended					26 Weeks Ended
	July 29,		July 30,			July 29,		July 30,
(In thousands)	2023		2022			2023		2022
Net income (loss)	$	48,570	$	(42,466	)	$	67,022	$	(10,726	)
Other comprehensive income:
Foreign currency translation adjustments		15,211		298			21,064		828
Other comprehensive income:		15,211		298			21,064		828
Comprehensive income (loss)	$	63,781	$	(42,168	)	$	88,086	$	(9,898	)

Refer to Notes to Consolidated Financial Statements

8

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

13 Weeks Ended July 29, 2023 and July 30, 2022

(In thousands, except per share amounts)	Shares Outstanding			Common Stock		Contributed Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Stockholders' Equity
Balance at April 30, 2022		169,421		$	2,496	$	562,973		$	2,224,113		$	(1,366,261	)	$	(40,315	)	$	1,383,006
Stock awards		—			—		8,504			—			—			—			8,504
Repurchase of common stock from employees		(113	)		—		—			—			(1,408	)		—			(1,408	)
Reissuance of treasury stock		348			—		(3,452	)		(1,915	)		5,955			—			588
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 loss		—			—		—			(42,466	)		—			—			(42,466	)
Other comprehensive income		—			—		—			—			—			298			298
Cash dividends declared and dividend equivalents ($0.18 per share)		—			—		828			(35,204	)		—			—			(34,376	)
Balance at July 30, 2022		187,312		$	2,496	$	380,959		$	2,000,021		$	(970,536	)	$	(40,017	)	$	1,372,923
Balance at April 29, 2023		197,450		$	2,496	$	324,396		$	2,130,108		$	(811,207	)	$	(26,777	)	$	1,619,016
Stock awards		—			—		10,334			—			—			—			10,334
Repurchase of common stock from employees		(8	)		—		—			—			(83	)		—			(83	)
Reissuance of treasury stock		39			—		(287	)		(148	)		618			—			183
Net income		—			—		—			48,570			—			—			48,570
Other comprehensive income		—			—		—			—			—			15,211			15,211
Cash dividends declared and dividend equivalents ($0.10 per share)		—			—		490			(20,236	)		—			—			(19,746	)
Contributions from non-controlling interests		—			—		(486	)		—			—			—			(486	)
Balance at July 29, 2023		197,481		$	2,496	$	334,447		$	2,158,294		$	(810,672	)	$	(11,566	)	$	1,672,999

9

26 Weeks Ended July 29, 2023 and July 30, 2022

(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 29, 2022		168,699		$	2,496	$	636,355		$	2,203,772		$	(1,378,106	)	$	(40,845	)	$	1,423,672
Stock awards		—			—		22,658			—			—			—			22,658
Repurchase of common stock from employees		(566	)		—		—			—			(9,579	)		—			(9,579	)
Reissuance of treasury stock		1,523			—		(23,958	)		(1,097	)		25,971			—			916
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 loss		—			—		—			(10,726	)		—			—			(10,726	)
Other comprehensive income		—			—		—			—			—			828			828
Cash dividends declared and dividend equivalents ($0.36 per share)		—			—		1,484			(66,251	)		—			—			(64,767	)
Balance at July 30, 2022		187,312		$	2,496	$	380,959		$	2,000,021		$	(970,536	)	$	(40,017	)	$	1,372,923
Balance at January 28, 2023		195,064		$	2,496	$	341,775		$	2,137,126		$	(849,604	)	$	(32,630	)	$	1,599,163
Stock awards		—			—		24,984			—			—			—			24,984
Repurchase of common stock from employees		(748	)		—		—			—			(10,396	)		—			(10,396	)
Reissuance of treasury stock		2,066			—		(27,481	)		(3,330	)		32,220			—			1,409
Redemption of Convertible Senior Notes		1,099			—		(6,281	)		(2,137	)		17,108			—			8,690
Net income		—			—		—			67,022			—			—			67,022
Other comprehensive income		—			—		—			—			—			21,064			21,064
Cash dividends declared and dividend equivalents ($0.20 per share)		—			—		1,016			(40,387	)		—			—			(39,371	)
Contributions from non-controlling interests		—			—		434			—			—			—			434
Balance at July 29, 2023		197,481		$	2,496	$	334,447		$	2,158,294		$	(810,672	)	$	(11,566	)	$	1,672,999

Refer to Notes to Consolidated Financial Statements

10

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	26 Weeks Ended
	July 29,			July 30,
(In thousands)	2023			2022
Operating activities:
Net income (loss)	$	67,022		$	(10,726	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		115,296			98,057
Share-based compensation		25,355			22,946
Deferred income taxes		14,492			22,533
Loss on impairment of assets		10,759			—
Loss on exchange of Convertible Senior Notes		—			55,687
Changes in assets and liabilities:
Merchandise inventory		(62,702	)		(133,689	)
Accounts Receivable		(29,143	)		65,928
Operating lease assets		124,825			142,446
Operating lease liabilities		(160,051	)		(159,272	)
Other assets		20,509			(68,966	)
Accounts payable		3,899			(33,226	)
Accrued compensation and payroll taxes		22,389			(91,141	)
Accrued and other liabilities		(4,759	)		(15,874	)
Net cash provided by (used for) operating activities		147,891			(105,297	)
Investing activities:
Capital expenditures for property and equipment		(91,959	)		(127,858	)
Other investing activities		(6,492	)		(529	)
Net cash used for investing activities		(98,451	)		(128,387	)
Financing activities:
Proceeds from revolving line of credit		30,000			307,700
Principal payments on revolving line of credit		(27,000	)		—
Net proceeds from stock options exercised		1,095			1,369
Repurchase of common stock from employees		(10,396	)		(9,579	)
Cash dividends paid		(39,371	)		(64,767	)
Principal paid in connection with exchange of Convertible Senior Notes due 2025		—			(136,077	)
Accelerated share repurchase		—			(200,000	)
Other financing activities		(742	)		(739	)
Net cash used for financing activities		(46,414	)		(102,093	)
Effect of exchange rates changes on cash		2,080			(779	)
Net change in cash and cash equivalents		5,106			(336,556	)
Cash and cash equivalents - beginning of period		170,209			434,770
Cash and cash equivalents - end of period	$	175,315		$	98,214

Refer to Notes to Consolidated Financial Statements

11

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”, and “our”), a Delaware corporation, at July 29, 2023 and July 30, 2022 and for the 13 and 26 week periods ended July 29, 2023 and July 30, 2022 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 Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and 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. Therefore, these Consolidated Financial Statements should be read in conjunction with our Fiscal 2022 Form 10-K. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the 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.

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 consciously made slow fashion.

Founded in 1977, the Company is a leading multi-brand specialty retailer that operates more than 1,000 retail stores in the U.S. and internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.com and more than 200 international store locations managed by third-party operators. Through its portfolio of brands, the Company offers high quality, on-trend clothing, accessories, and personal care products at affordable prices. 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 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 approximately 80 countries worldwide.

Quiet Platforms is a logistics company that operates a network of in-market fulfillment centers, locating products closer to need, creating inventory efficiencies, cost benefits and affordable same-day and next-day delivery options for customers and stores to help us manage costs and improve service.

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.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned 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 Consolidated Statements of Stockholders' Equity and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At July 29, 2023, the Company operated in two 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 2023” refers to the 53-week period that will end on February 3, 2024. “Fiscal 2022” refers to the 52-week period ended January 28, 2023.

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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 August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“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 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 adopted ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective method.

Refer to Note 5 and Note 8 to the Consolidated Financial Statements for additional information regarding EPS and long-term debt, respectively.

Foreign Currency Translation

In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars (“USD”) (the 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 and 26 weeks ended July 29, 2023, an unrealized gain of $15.2 million and $21.1 million, respectively, was included in other comprehensive income, which were primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates.

Cash and Cash Equivalents

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.

Accounts Receivable

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, 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

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determined that the inventory in stock will not sell at its 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 Three to five years

As of July 29, 2023, the weighted average remaining useful life of our assets was approximately six 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") assets associated with retail 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 within the Consolidated Statements of Operations.

Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected.

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.

There were no long-lived asset impairment charges recorded during the 13 weeks ended July 29, 2023 or July 30, 2022. During the 26 weeks ended July 29, 2023, the Company recorded impairment of property and equipment of $10.8 million. No long-lived asset impairment charges were recorded during the 26 weeks ended July 30, 2022. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

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Goodwill and Intangible Assets

The Company’s goodwill is primarily related to the acquisition of Quiet Logistics, in Fiscal 2021, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, 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. 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 annual goodwill impairment test as of January 28, 2023, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 29, 2023 and July 30, 2022.

Definite-lived intangible assets are initially recorded 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 10 to 15 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 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. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended July 29, 2023 or July 30, 2022.

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

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

The Company leases all store premises, the Canadian distribution center in Mississauga, Ontario, 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. 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.

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Co-branded and Private Label Credit Cards

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.

Customer Loyalty Program

The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). The 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. 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 AE 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 reward points is deferred and recognized when the 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

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.

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 credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027.

Refer to Note 8 to the Consolidated Financial Statements for additional information regarding Long-Term Debt.

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Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial 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 card breakage"), is recorded in proportion to actual gift cards 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 July 29, 2023 and July 30, 2022, the Company recorded approximately $1.8 million and $2.2 million, respectively, of revenue related to gift card breakage. During the 26 weeks ended July 29, 2023 and July 30, 2022, the Company recorded $4.2 million and $4.9 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.

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

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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”), Quiet Platforms' costs to service its customers and buying, occupancy and warehousing 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 consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. SG&A expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased.

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, 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 consist 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 13 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the Company's 2025 Notes.

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under our five-year, syndicated, asset-based revolving credit facilities, partially offset by interest income from cash and cash equivalents.

Other Income, Net

Other income, net consists primarily of foreign currency fluctuations and changes in other non-operating items. Non-controlling interest was not material for any period presented and is included within other income, net.

Segment Information

The Company has identified two operating segments (American Eagle and 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. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption. For additional information regarding the Company’s segment and geographic information, refer to Note 12 to the Consolidated Financial Statements.

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3. Cash and Cash Equivalents

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

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
Cash and cash equivalents:
Cash	$	174,927	$	84,960	$	98,111
Interest bearing deposits		388		85,249		103
Total cash and cash equivalents	$	175,315	$	170,209	$	98,214

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.

The Company’s cash equivalents and short-term investments 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.

	Fair Value Measurements at July 29, 2023
(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	$	174,927	$	174,927	$	—	$	—
Interest bearing deposits		388		388		—		—
Total cash and cash equivalents	$	175,315	$	175,315	$	—	$	—

Long-Term Debt

As of July 29, 2023 and July 30, 2022, the fair value of the Company's outstanding borrowings under its Credit Facility, of $3.0 million and $307.7 million, respectively, in outstanding borrowings under its Credit Facility approximated the carrying value.

In April 2020, the Company issued $415 million aggregate principal amount of 2025 Notes. As of July 29, 2023, the Company's 2025 Notes have been fully redeemed. The fair value of the Company's 2025 Notes was 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.

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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. The fair value is determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. There were no long-lived asset impairment charges recorded during the 13 weeks ended July 29, 2023 or July 30, 2022. During the 26 weeks ended July 29, 2023, the Company recorded impairment of property and equipment of $10.8 million. No long-lived asset impairment charges were recorded during the 26 weeks ended July 30, 2022. Refer to Note 13 to the Consolidated Financial Statements for additional information on impairment, restructuring and other charges.

The fair value of the Company's ROU assets was based upon market rent assumptions.

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 28, 2023. 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 present during the 13 or 26 weeks ended July 29, 2023 and July 30, 2022.

5. Earnings per Share

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

	13 Weeks Ended					26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022			July 29, 2023		July 30, 2022
Numerator:
Net income (loss) and numerator for basic EPS	$	48,570	$	(42,466	)	$	67,022	$	(10,726	)
Add: Interest expense, net of tax, related to the 2025 Notes (1)		-		—			58		—
Numerator for diluted EPS	$	48,570	$	(42,466	)	$	67,080	$	(10,726	)
Denominator:
Denominator for basic EPS - weighted average shares		195,329		180,189			195,214		174,544
Add: Dilutive effect of the 2025 Notes (1) (2)		—		—			417		—
Add: Dilutive effect of stock options and non-vested restricted stock (3)		774		—			1,191		—
Denominator for diluted EPS - adjusted weighted average shares		196,103		180,189			196,822		174,544
Anti-dilutive shares (4)		509		29,221			397		38,763

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(1)During the 26 weeks ended July 30, 2022, the Company adopted ASU 2020-06. The Company utilizes the "if-converted" method of calculated diluted EPS. Refer to Note 2 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06.

(2)For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company's 2025 Notes, respectively, that were excluded from the dilutive earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(3)For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(4)For both periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

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:

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Property and equipment, at cost	$	2,772,496		$	2,707,061		$	2,603,212
Less: Accumulated depreciation and impairment		(2,013,760	)		(1,925,547	)		(1,827,243	)
Property and equipment, net	$	758,736		$	781,514		$	775,969

7. Goodwill and Intangible Assets, net

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Goodwill, gross	$	269,160		$	269,141		$	275,602
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	264,964		$	264,945		$	271,406

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Intangible assets, at cost	$	146,577		$	146,228		$	145,765
Accumulated amortization		(56,265	)		(51,692	)		(47,114	)
Intangible assets, net	$	90,312		$	94,536		$	98,651

8. Long-Term Debt, Net

Our long-term debt consisted of the following at July 29, 2023, January 28, 2023, and July 30, 2022:

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
2025 Notes principal	$	—	$	8,791	$	69,601
Less: unamortized discount		—		105		779
2025 Notes, net	$	—	$	8,686	$	68,822
Credit Facility borrowings	$	3,000	$	—	$	307,700

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2025 Notes

In April 2020, the Company issued $415 million aggregate principal amount of 2025 Notes in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The 2025 Notes had a stated interest rate of 3.75%, payable semi-annually. The Company used the net proceeds from the issuance for general corporate purposes. The Company redeemed all of the remaining 2025 Notes during the 13 weeks ended April 29, 2023. See "-Note Exchanges" and "-Early Redemption" below.

The Company did not have the right to redeem the 2025 Notes prior to April 17, 2023. On or after April 17, 2023 and prior to the fortieth scheduled trading day immediately preceding the maturity date, the Company could redeem all or any portion of the 2025 Notes, at its option, for cash, if the last reported sale price of our common stock had been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

Note Exchanges

In June and December 2022, the Company entered into separate privately negotiated exchange agreements with certain holders of the 2025 Notes, to exchange $403.2 million in 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 (together, the "Note Exchanges").

In June 2022, the Company exchanged $342.4 million in aggregate principal amount of the 2025 Notes. The Company paid 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. In connection with these transactions, the Company recognized a pre-tax inducement charge of approximately $55.7 million during the 13 weeks ended July 30, 2022, which was recorded within debt-related charges on the Consolidated Statements of Operations.

In December 2022, the Company exchanged $60.8 million in aggregate principal amount of the 2025 Notes for shares of the Company's common stock, plus payment of accrued and unpaid interest. The Company issued approximately 7.6 million shares of the Company's common stock with a carrying value of $60.4 million. In connection with these transactions, the Company recognized a pre-tax inducement charge of approximately $4.7 million during the 13 weeks ended January 28, 2023, which was recorded within debt-related charges on the Consolidated Statements of Operations.

Early Redemption

On February 10, 2023, the Company issued a notice of optional redemption for all of its remaining outstanding 2025 Notes, notifying holders that, among other things, it had elected to exercise its right to redeem any and all of the outstanding 2025 Notes on April 17, 2023 (the "Early Redemption"). Subsequent to this notice, and prior to April 17, 2023, the 2025 Note holders redeemed a total of $8.8 million aggregate principal amount for a combined 1.1 million shares of the Company's common stock.

Following the Note Exchanges and Early Redemption, the aggregate principal amount of the 2025 Notes had been fully redeemed.

Interest expense for the 2025 Notes was:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Accrued interest for interest payments	$	—	$	2,008	$	70	$	5,914
Amortization of discount		—		255		10		782
Total interest expense	$	—	$	2,263	$	80	$	6,696

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.

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Revolving Credit Facility

In June 2022, the Company entered into an amended and restated Credit Agreement. The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations. The Credit 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.

All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries.

As of July 29, 2023, the Company was in compliance with the terms of the Credit Agreement and had $3.0 million in outstanding borrowings and $7.7 million outstanding in stand-by letters of credit. As of July 30, 2022, the Company had $307.7 million in outstanding borrowings under the Credit Agreement.

Borrowings under the Credit Facility accrue interest at the election of the Company 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 26 weeks ended July 29, 2023 was 6.2% and 6.0%, respectively. The total interest expense related to the Credit Facility borrowings for the 13 and 26 weeks ended July 29, 2023 was $0.5 million and $1.1 million respectively. The total interest expense related to the Credit Facility for both the 13 and 26 weeks ended July 30, 2022 was $1.0 million.

9. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation, 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 26 weeks ended July 29, 2023 was $10.5 million ($7.7 million, net of tax) and $25.4 million ($18.4 million, net of tax), respectively, and for the 13 and 26 weeks ended July 30, 2022 was $8.6 million ($7.7 million, net of tax) and $22.9 million ($20.4 million, net of tax), respectively.

Stock Option Grants

The Company has granted time-based stock option awards, which vest over the requisite service period of the award. A summary of the Company’s stock option activity for the 26 weeks ended July 29, 2023 follows:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 28, 2023		3,950		$	17.01
Granted		1,051			13.17
Exercised		(70	)		15.72
Cancelled		(275	)		16.75
Outstanding - July 29, 2023		4,656			16.18		4.4		5,217
Vested and expected to vest - July 29, 2023		3,694			16.35		3.1		733
Exercisable - July 29, 2023 (1)		1,199			10.32		3.7		4,376

(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 July 29, 2023.

As of July 29, 2023, there was $9.1 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.1 years.

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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:

	26 Weeks Ended			26 Weeks Ended
	July 29,			July 30,
Black-Scholes Option Valuation Assumptions	2023			2022
Risk-free interest rate (1)		3.4	%		2.5	%
Dividend yield		2.8	%		3.8	%
Volatility factor (2)		55.7	%		52.2	%
Weighted-average expected term (3)	4.5 years			4.5 years

(1)Based on the United States 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.

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three 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 for performance-based restricted stock awards.

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

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	July 29, 2023					July 29, 2023
(Shares in thousands)	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Non-vested - January 28, 2023		2,749		$	17.00		1,574		$	20.11
Granted		1,846		$	13.03		927		$	14.90
Vested		(1,551	)	$	14.88		(421	)	$	15.95
Cancelled		(158	)	$	15.68		(74	)	$	23.93
Non-vested - July 29, 2023		2,886		$	15.67		2,006		$	18.43

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As of July 29, 2023, there was $37.1 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 2.2 years. There is $7.4 million of unrecognized compensation expense related to performance-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 1.8 years.

As of July 29, 2023, the Company had 12.0 million shares available for all equity grants.

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 July 29, 2023 was 27.0% compared to an effective income tax benefit rate of 10.9% for the 13 weeks ended July 30, 2022. The effective income tax rate for the 26 weeks ended July 29, 2023 was 27.1% compared to (82.5)% for the 26 weeks ended July 30, 2022. The change in the effective tax rate, as compared to the prior period, is primarily due to the 2022 Note Exchange in Fiscal 2022 as a portion of the inducement charge was not deductible and state legislative changes that occurred in Fiscal 2022.

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 July 29, 2023 due to income tax settlements. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $1.1 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 two operating segments (American Eagle brand and 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. Additionally, our Todd Snyder brand, Unsubscribed brand, and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption, as permitted by ASC 280.

General corporate expenses are comprised of general and administrative costs that management does not attribute to any of our operating segments. These costs primarily relate to corporate administration, information and technology resources, finance and human resources functional and organizational costs, depreciation and amortization of corporate assets, and other general and administrative expenses resulting from corporate-level activities and projects.

Our CEO analyzes segment results and allocates resources between segments based on the adjusted operating income , or the operating income in periods where there are no adjustments, of each segment. Adjusted operating income is a non-GAAP financial measure ("non-GAAP" or "adjusted") that is defined by the Company as operating income excluding impairment, restructuring and other charges. Adjusted operating income is not based on any standardized methodology prescribed by 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 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. Adjusted operating income on a

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consolidated basis is presented in the following table to reconcile the segment operating performance measure to operating income as presented on the Consolidated Financial Statements.

Reportable segment information is presented in the following table:

	For the 13 weeks ended						For the 26 weeks ended
	July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022
Net Revenue:
American Eagle	$	767,018		$	777,828		$	1,438,110		$	1,463,407
Aerie	$	380,413		$	371,683		$	739,495		$	693,395
Total Segment Net Revenue	$	1,147,431		$	1,149,511		$	2,177,605		$	2,156,802
Other	$	108,318		$	110,393		$	217,675		$	200,077
Intersegment Elimination	$	(54,870	)	$	(61,780	)	$	(113,475	)	$	(103,718	)
Total Net Revenue	$	1,200,879		$	1,198,124		$	2,281,805		$	2,253,161
Adjusted Operating Income:
American Eagle	$	128,664		$	109,110		$	234,203		$	213,015
Aerie	$	57,253		$	11,830		$	112,922		$	54,903
Total Segment Adjusted Operating Income	$	185,917		$	120,940		$	347,125		$	267,918
Other	$	(10,341	)	$	(11,507	)	$	(26,648	)	$	(27,732	)
Intersegment Elimination	$	-		$	-		$	-		$	-
General corporate expenses	$	(110,286	)	$	(95,419	)	$	(211,081	)	$	(184,270	)
Total Adjusted Operating Income	$	65,290		$	14,014		$	109,396		$	55,916
Less: Impairment, restructuring and other charges	$	-		$	-		$	(21,275	)	$	-
Total Operating Income	$	65,290		$	14,014		$	88,121		$	55,916
Debt related charges	$	-		$	60,066		$	-		$	60,066
Interest expense, net	$	951		$	3,421		$	1,642		$	8,009
Other income, net	$	(2,150	)	$	(1,839	)	$	(5,461	)	$	(6,283	)
Income before income taxes	$	66,489		$	(47,634	)	$	91,940		$	(5,876	)
Capital Expenditures
American Eagle	$	16,249		$	18,754		$	31,192		$	34,524
Aerie	$	10,889		$	30,244		$	22,077		$	61,259
Other	$	6,154		$	4,107		$	11,730		$	5,132
General corporate expenditures	$	12,810		$	16,359		$	26,960		$	26,943
Total Capital Expenditures	$	46,102		$	69,464		$	91,959		$	127,858

The following table presents summarized geographical information:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Total net revenue:
United States	$	1,005,197	$	1,027,158	$	1,919,588	$	1,935,323
Foreign (1)		195,682		170,966		362,217		317,838
Total net revenue	$	1,200,879	$	1,198,124	$	2,281,805	$	2,253,161

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

13. Impairment, Restructuring and Other Charges

The following table represents impairment, restructuring and other charges related to Quiet Platforms. All amounts were recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations during the 26

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weeks ended July 29, 2023. There were no impairment, restructuring and other charges recorded for the 13 weeks ended July 29, 2023.

	26 Weeks Ended
	July 29,
(In thousands)	2023
Long-lived asset impairment charges(1)	$	10,759
Employee related costs(2)		5,592
Other commercial related charges(3)		4,924
Total impairment, restructuring and other charges	$	21,275

(1) $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

(2) $5.6 million of severance costs

(3) $4.9 million of contract related charges, resulting from the restructuring of Quiet Platforms

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

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") is intended to help the reader understand the Company, our operations and our present business environment. This MD&A is provided as a supplement to — and should be read in conjunction with — our MD&A for Fiscal 2022 which can be found in our Fiscal 2022 Form 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 inflation, recent acquisitions and the Company's long-term plans for growth. In addition, this section also provides a summary of the Company's performance for the 13 and 26 weeks ended July 29, 2023 and the 13 and 26 weeks ended July 30, 2022.
Results of Operations	Provides an analysis of certain components of the Company’s Consolidated Statements of Operations for the 13 and 26 weeks ended July 29, 2023 and the 13 and 26 weeks ended July 30, 2022.
Liquidity and Capital Resources	Discussion of the Company’s financial condition and changes in financial condition and liquidity for the 13 and 26 weeks ended July 29, 2023 and the 13 and 26 weeks ended July 30, 2022.
Critical Accounting Estimates	Discusses where information may be found about accounting policies and estimates considered to be important to the Company’s consolidated 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® and Aerie® brands.

We have two reportable segments, American Eagle and Aerie. Our Chief Operating Decision Maker (defined as our CEO) analyzes segment results and allocates resources based on adjusted operating income (loss), which is a non-GAAP financial measure. See Note 12. “Segment Reporting,” of the notes to the Consolidated Financial Statements included herein for additional information.

Key Performance Indicators

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

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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 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 13th month of operation. However, stores that have a gross square footage change of 25% or greater due to a remodel are removed from the comparable sales base but are included in total sales. These stores are returned to the comparable sales base in the 13th 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 MD&A when we believe that 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.

•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).

•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, Quiet Platforms costs to service its customers and buying, occupancy and warehousing 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 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 SG&A expenses, and our level of capital 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 and working capital requirements for the next twelve months and beyond.

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Current Trends and Outlook

Inflation

During Fiscal 2022 and the 26 weeks ended July 29, 2023, 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. 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 2022 Form 10-K.

Results of Operations

During the second quarter, we saw customer demand accelerate during June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. Momentum across brands and channels has continued into third quarter. For the second half of 2023, we will continue to leverage our dominant brand positioning and industry-leading creative and operational expertise to deliver exciting innovation, marketing and shopping experiences to our customers. We have also launched a formal, multi-year profit-improvement program designed to drive a more agile, strategic and profitable organization in the long-run.

Overview

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								26 Weeks Ended
	July 29,				July 30,				July 29,				July 30,
	2023				2022				2023				2022
Total net revenue		100.0		%		100.0		%		100.0		%		100.0		%
Cost of sales, including certain buying, occupancy    and warehousing expenses		62.3				69.1				62.0				66.4
Gross profit		37.7				30.9				38.0				33.6
Selling, general and administrative expenses		27.6				25.7				28.2				26.9
Impairment, restructuring and other charges		—				—				1.0				—
Depreciation and amortization expense		4.7				4.0				4.9				4.2
Operating income		5.4				1.2				3.9				2.5
Debt related charges		—				5.1				—				2.7
Interest expense, net		0.1				0.3				0.1				0.4
Other income, net		(0.2	)			(0.2	)			(0.2	)			(0.3	)
Income (loss) before income taxes		5.5				(4.0	)			4.0				(0.3	)
Provision (benefit) for income taxes		1.5				(0.5	)			1.1				0.2
Net income (loss)		4.0		%		(3.5	)	%		2.9		%		(0.5	)	%

The following table shows our consolidated store data:

	13 Weeks Ended						26 Weeks Ended
	July 29,			July 30,			July 29,			July 30,
	2023			2022			2023			2022
Number of stores:
Beginning of period		1,180			1,141			1,175			1,133
Opened		7			29			14			48
Closed		(3	)		(10	)		(5	)		(21	)
End of period		1,184			1,160			1,184			1,160
Total gross square feet at end of period (in '000)		7,293			7,205			7,293			7,205
International licensed/franchise stores at end of    period (1)		297			260			297			260

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

As of July 29, 2023, we operated 866 American Eagle retail stores, which includes 185 Aerie side-by-side locations, five locations with AE brand, Aerie brand and OFFLINE™ connected as one store, and 2 OFFLINE™ side-by-side locations, 300 Aerie stand-alone stores (including 34 OFFLINE™ stand-alone stores and 30 OFFLINE™ side-by-side locations), and AEO Direct. Additionally, there were 13 Todd Snyder stand-alone locations and five Unsubscribed locations.

Comparison of the 13 weeks ended July 29, 2023 to the 13 weeks ended July 30, 2022

Total Net Revenue

Total net revenue was relatively flat for the 13 weeks ended July 29, 2023 at $1.201 billion, compared to $1.198 billion last year. Store revenue increased 4% and digital revenue declined 7%, as digital demand continued to normalize from the impact of COVID-19 pandemic. Last year included $24 million of revenue from excess end-of-season selloffs, which we did not anniversary this year, impacting revenue growth across brands and channels for the current year [and offsetting overall store revenue increases]. Total comparable sales decreased 1% year-over-year, primarily due to a decline is digital units per transaction and conversion, partially offset by increased traffic.

American Eagle

Total net revenue for the 13 weeks ended July 29, 2023 for the American Eagle brand was $767.0 million, a slight decline compared to $777.8 million for the 13 weeks ended July 30, 2022. Last year included $10 million of revenue from excess end-of-season selloffs, which we did not anniversary this year. Total comparable sales decreased 2% year-over-year, primarily due to average unit retail price decreased in the mid-single digits year-over-year, partially offset by increased units per transaction.

Aerie

Total net revenue for the 13 weeks ended July 29, 2023 for the Aerie brand was $380.4 million, an approximately 2% increase compared to $371.7 million for the 13 weeks ended July 30, 2022. The increase was primarily due to 46 net new store openings since the first quarter of Fiscal 2022, partially offset by a decline in Swimwear performance compared to last year. Last year included $12 million of revenue from excess end-of-season selloffs, which we did not anniversary this year. Average unit retail price was up in the mid-single digits year-over-year, partially offset by units per transaction. Total comparable sales were flat to last year.

Other

Total net revenue for the 13 weeks ended July 29, 2023 for our Todd Snyder and Unsubscribed brands, as well as Quiet Platforms declined slightly to $108.3 million compared to $110.4 million for the 13 weeks ended July 30, 2022. The decrease is attributable due to lower revenue from Quiet Platforms, partially offset by an increase in Todd Snyder brand revenue.

Gross Profit

Gross profit increased by $83.0 million, or approximately 22% to $453.0 million for the 13 weeks ended July 29, 2023 compared to $370.0 million for the 13 weeks ended July 30, 2022. Our gross margin percentage increased to 37.7% of revenue for the 13 weeks ended July 29, 2023 from 30.9% of revenue for the 13 weeks ended July 30, 2022. The increase in gross profit was primarily driven by lower markdowns reflecting inventory control, as well as lower transportation and product costs. Distribution, warehousing and delivery costs also decreased during the quarter compared to last year.

There was $5.0 million and $4.0 million of share-based payment expense included in gross profit for the periods ended July 29, 2023 and July 30, 2022, respectively, comprised of both 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 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.

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Selling, General and Administrative Expenses

SG&A expenses increased 8% or $24.1 million to $331.9 million for the 13 weeks ended July 29, 2023 from $307.8 million for the 13 weeks ended July 30, 2022. As a percentage of total net revenue, SG&A expenses increased 190 basis points to 27.6% for the 13 weeks ended July 29, 2023, compared to 25.7% for the 13 weeks ended July 30, 2022. The increase in expenses was primarily related to increased incentive and store compensation, partially offset by lower advertising and professional service expenses.

There was $5.5 million and $4.6 million of share-based payment expense included in SG&A expenses for the 13 weeks ended July 29, 2023 and July 30, 2022, comprised of both time and performance-based awards.

Depreciation and Amortization Expense

Depreciation and amortization expense increased 16% or $7.7 million, to $55.9 million for the 13 weeks ended July 29, 2023, compared to $48.2 million for the 13 weeks ended July 30, 2022, which was primarily driven by investments in new stores. As a percentage of total net revenue, depreciation and amortization expense was 4.7% for the 13 weeks ended July 29, 2023 compared to 4.0% for the 13 weeks ended July 30, 2022.

Operating Income (Loss)

Operating income increased 366% or $51.3 million, to $65.3 million, or 5.4% as a percentage of total net revenue, for the 13 weeks ended July 29, 2023, compared to $14.0 million, or 1.2% as a percentage of total net revenue, for the 13 weeks ended July 30, 2022. The increase was primarily driven by higher gross profit, partially offset by higher SG&A and depreciation and amortization expenses.

American Eagle

Operating income for the 13 weeks ended July 29, 2023 for the American Eagle brand was $128.7 million, or 16.8% as a percentage of American Eagle total net revenue, compared to $109.1 million, or 14.0% as a percentage of American Eagle total net revenue, for the 13 weeks ended July 30, 2022. The increase was primarily the result of increased gross profit from lower markdowns reflecting inventory control, partially offset by higher SG&A costs and higher depreciation and amortization expenses.

Aerie

Operating income for the 13 weeks ended July 29, 2023 for the Aerie brand was $57.3 million, or 15.1% as a percentage of Aerie total net revenue, compared to $11.8 million, or 3.2% as a percentage of Aerie total net revenue, for the 13 weeks ended July 30, 2022. The increase was primarily the result of increased gross profit from improved markup and lower markdowns reflecting inventory control, partially offset by higher SG&A costs and higher depreciation and amortization expenses.

Other

Operating loss for the 13 weeks ended July 29, 2023 for our other operations was ($10.4) million compared to ($11.5) million for the 13 weeks ended July 30, 2022. The increase was primarily the result of increased gross profit in the Todd Snyder brand, driven by eight incremental stores this year, partially offset by increased expenses.

General Corporate Expenses

General corporate expenses increased $14.9 million due to increased corporate compensation and incentives and professional fees.

Debt Related Charges

Debt related charges of $60.1 million for the 13 weeks ended July 30, 2022 consists primarily of a $55.7 million induced conversion expense related to the Note Exchange, along with certain other costs related to actions taken to strengthen our capital structure.

Interest Expense, net

Interest expense decreased $2.5 million, to $0.9 million, for the 13 weeks ended July 29, 2023, compared to $3.4 million for the 13 weeks ended July 30, 2022. The decrease was primarily attributable to the elimination of convertible note cash interest expense on the 2025 Notes due to their Early Redemption this year.

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Other Income, net

Other income, net was $2.2 million for the 13 weeks ended July 29, 2023, compared to $1.8 million for the 13 weeks ended July 30, 2022. The increase was primarily attributable to foreign currency fluctuations and changes in other non-operating items.

Provision (Benefit) for 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 July 29, 2023 was 27.0% compared to the effective income tax benefit rate of 10.9% for the 13 weeks ended July 30, 2022. The change in the effective tax rate, as compared to the prior period, is primarily due to the Note Exchange in June 2022 as a portion of the inducement charge was not deductible and state legislative changes that occurred in Fiscal 2022.

Net Income (Loss)

Net income (loss) increased $91.0 million, to $48.6 million for the 13 weeks ended July 29, 2023, or 4.0% as a percentage of total net revenue, compared to a net loss of $42.5 million, or (3.5)% as a percentage of total net revenue for the 13 weeks ended July 30, 2022.

Net income per share increased to $0.25 per diluted share for the 13 weeks ended July 29, 2023, compared to net loss of $0.24 per diluted share, including $0.28 of debt related charges for the 13 weeks ended July 30, 2022. The change in net income was attributable to the factors noted above.

Comparison of the 26 weeks ended July 29, 2023 to the 26 weeks ended July 30, 2022

Total Net Revenue

Total net revenue increased 1%, or $28.6 million, to $2.282 billion for the 26 weeks ended July 29, 2023 compared to $2.253 billion for the 26 weeks ended July 30, 2022. Store revenue increased 4% and digital revenue declined 5%. Last year included $24 million of revenue from excess end-of-season selloffs, which we did not anniversary this year, impacting revenue growth across brands and channels. Total comparable sales decreased 1%.

American Eagle

Total net revenue for the 26 weeks ended July 29, 2023 for the American Eagle brand was $1.438 billion which was nearly flat compared to $1.463 billion for the 26 weeks ended July 30, 2022. This increase was primarily attributable to store revenue, which increased by 4% year over year, which was partially offset by a 5% decline in digital revenue. As described above, this period last year included $10 million of revenue from excess end-of-season selloffs, which we did not anniversary this year and which partially offset increases in store revenues. For the 26 weeks ended July 29, 2023, total comparable sales decreased 3%.

Aerie

Total net revenue for the 26 weeks ended July 29, 2023 for the Aerie brand was $739.5 million, an approximately 6% increase compared to $693.4 million for the 26 weeks ended July 30, 2022. The increase was primarily due to 46 net new store openings since the first quarter of Fiscal 2022. Last year included $12 million of revenue from excess end-of-season selloffs, which we did not anniversary this year. For the 26 weeks ended July 29, 2023, total comparable sales increased 1%.

Other

Total net revenue for the 26 weeks ended July 29, 2023 for our Todd Snyder and Unsubscribed brands, as well as Quiet Platforms, was $217.7 million compared to $200.1 million for the 26 weeks ended July 30, 2022. The increase was primarily due to an increase in Todd Snyder brand revenue.

Gross Profit

Gross profit increased by $108.2 million, or approximately 14%, to $866.2 million compared to $758.0 million last year. Our gross margin percentage increased to 38.0% of revenue from 33.6% of revenue last year. The increase in gross profit was driven by lower inbound transportation costs and lower markdowns. Distribution, warehousing and delivery costs also decreased, partially offset by increased rent related to new store openings.

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There was $10.8 million and $9.4 million of share-based payment expense included in gross profit for the periods ended July 29, 2023 and July 30, 2022, respectively, comprised of both 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 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

SG&A expenses increased by 6%, or $37.6 million to $644.2 million from $606.6 million last year. As a percentage of total net revenue, SG&A expenses increased 130 basis points to 28.2%, compared to 26.9% last year. The increase in expenses was primarily related to increased corporate compensation and incentives and professional service expenses.

There was $14.5 million and $13.5 million of share-based payment expense included in SG&A expenses for the 26 weeks ended July 29, 2023 and July 30, 2022, comprised of both time and performance-based awards.

Impairment, Restructuring and Other Charges

During the 26 weeks ended July 29, 2023, the Company recorded $21.3 million of impairment, restructuring and other charges related to Quiet Platforms, including $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value resulting from the restructuring of Quiet Platforms, $5.6 million of employee severance, and $4.9 million of contract related costs related charges, resulting from the restructuring of Quiet Platforms. There were no impairment, restructuring and other charges for the 26 weeks ended July 30, 2022.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by 18% or $17.1 million, to $112.6 million for the 26 weeks ended July 29, 2023, compared to $95.5 million for the 26 weeks ended July 30, 2022, which was primarily driven by investments in new stores. As a percentage of total net revenue, depreciation and amortization expense was 4.9% for the 26 weeks ended July 29, 2023 compared to 4.2% for the 26 weeks ended July 30, 2022.

Operating income (Loss)

Operating income increased 58%, or $32.2 million, to $88.1 million, or 3.9% as a percentage of total net revenue, for the 26 weeks ended July 29, 2023, compared to $55.9 million, or 2.5% as a percentage of total net revenue, for the 26 weeks ended July 30, 2022. The increase was primarily driven by higher gross profit, partially offset by higher SG&A and depreciation and amortization expenses, as well as $21.3 million of impairment, restructuring and other charges incurred this year.

American Eagle

Operating income for the 26 weeks ended July 29, 2023 for the American Eagle brand was $234.2 million, or 16.3% as a percentage of American Eagle total net revenue, compared to $213.0 million, or 14.6% as a percentage of American Eagle total net revenue, for the 26 weeks ended July 30, 2022. The increase was primarily the result of increased gross profit from lower markdowns reflecting inventory control, partially offset by higher SG&A costs and higher depreciation and amortization expenses.

Aerie

Operating income for the 26 weeks ended July 29, 2023 for the Aerie brand was $112.9 million, or 15.3% as a percentage of Aerie total net revenue, compared to $54.9 million, or 7.9% as a percentage of Aerie total net revenue, for the 26 weeks ended July 30, 2022. The increase was primarily the result of increased gross profit from lower markdowns reflecting

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inventory control and higher revenue, partially offset by higher SG&A costs and higher depreciation and amortization expenses.

Other

Operating loss for the 26 weeks ended July 29, 2023 for our other operations was ($26.6) million compared to ($27.7) million for the 26 weeks ended July 30, 2022.

General Corporate Expenses

General corporate expenses increased $26.8 million due to increased corporate compensation and incentives, general corporate expenses and depreciation.

Debt Related Charges

Debt related charges of $60.1 million for the 26 weeks ended July 30, 2022 consists primarily of a $55.7 million induced conversion expense related to the June 2022 Note Exchange, along with certain other costs related to actions taken to strengthen our capital structure. There were no debt related charges for the 26 weeks ended July 29, 2023.

Interest Expense, net

Interest expense decreased $6.4 million, to $1.6 million, for the 26 weeks ended July 29, 2023, compared to $8.0 million for the 26 weeks ended July 30, 2022. The decrease was primarily attributable to lower interest expense on the 2025 Notes as a result of the Note Exchanges and Early Redemption.

Other Income, net

Other income, net was $5.5 million for the 26 weeks ended July 29, 2023, compared to $6.3 million for the 26 weeks ended July 30, 2022. The decrease was primarily attributable to foreign currency fluctuations and changes in other non-operating items.

Provision for 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 26 weeks ended July 29, 2023 was 27.1% compared to (82.5)% for the 26 weeks ended July 30, 2022. The change in the effective tax rate, as compared to the prior period, is primarily due to the 2022 Note Exchange in June 2022 as a portion of the inducement charge was not deductible and state legislative changes that occurred in Fiscal 2022.

Net Income (Loss)

Net income increased by $77.7 million, to $67.0 million for the 26 weeks ended July 29, 2023, or 2.9% as a percentage of total net revenue, compared to a net loss of $10.7 million, or (0.5)% as a percentage of total net revenue for the 26 weeks ended July 30, 2022.

Net income (loss) per share increased to $0.34 per diluted share, including $0.08 of impairment, restructuring and other charges for the 26 weeks ended July 29, 2023, compared to net loss of $0.06 per diluted share, including $0.26 of debt related charges for the 26 weeks ended July 30, 2022. The change in net income was attributable to the factors noted above.

International Operations

We have agreements with multiple third-party operators to expand our brands internationally. Our international licensing partners acquire the right to sell, promote, market, and/or distribute various categories of our products in a given geographic area and to source products from us. International licensees' rights include the right to own and operate retail stores and may include rights to sell in wholesale markets, shop-in-shop concessions and operate online marketplace businesses. As of July 29, 2023, our international licensing partners operated in 297 licensed retail stores and concessions, as well as wholesale markets, online brand sites, and online marketplaces in approximately 30 countries.

As of July 29, 2023, we had 105 company-owned stores in Canada, 74 in Mexico, 18 in Hong Kong, seven in Puerto Rico and two in Japan.

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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 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 that allows us to borrow up to $700 million, which will expire in June 2027. As of July 29, 2023, we had borrowings under the Credit Facility of $3.0 million. In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due in 2025. As of July 29, 2023, the Company's 2025 Notes have been fully redeemed. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding our long-term debt.

As of July 29, 2023, we had approximately $175.3 million in cash and cash equivalents. We expect to be able to fund our future cash requirements through current cash holdings and available liquidity.

The following sets forth certain measures of our liquidity:

	July 29, 2023		January 28, 2023		July 30, 2022
Working Capital (in thousands)	$	439,015	$	331,293	$	459,328
Current Ratio		1.58		1.43		1.64

Working capital increased $107.7 million compared to January 28, 2023 and decreased $20.3 million compared to last year. The $20.3 million decrease in our working capital compared to July 30, 2022, is driven by a $50.1 million decrease in merchandise inventory, a $40.0 million increase in accounts payable, and a $23.7 increase in accrued compensation and payroll taxes, partially offset by a $77.1 million increase in cash and cash equivalents and a $50.5 million increase in accounts receivable.

Cash Flows Provided by (Used For) Operating Activities

Net cash provided by operating activities totaled $147.9 million for the 26 weeks ended July 29, 2023, compared to net cash used for operating activities of $105.3 million for the 26 weeks ended July 30, 2022. For both periods, our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs.

Cash Flows Used for Investing Activities

Net cash used for investing activities totaled $98.5 million for the 26 weeks ended July 29, 2023, compared to net cash used for investing activities of $128.4 million for the 26 weeks ended July 30, 2022. Investing activities for the 26 weeks ended July 29, 2023 and July 30, 2022 primarily consisted of $92.0 million and $127.9 million, respectively, of capital expenditures for property and equipment.

Cash Flows Used for Financing Activities

Net cash used for financing activities totaled $46.4 million for the 26 weeks ended July 29, 2023, compared to net cash used for financing activities of $102.1 million for the 26 weeks ended July 30, 2022. Cash used for financing activities for the 26 weeks ended July 29, 2023 consisted primarily of $39.4 million used for cash dividends paid at a quarterly rate of $0.10 per share, and $10.4 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 $3.0 million of net borrowings under our Credit Facility.

Cash used for financing activities for the 26 weeks ended July 30, 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 and $9.6 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 $307.7 million of proceeds from borrowings under our Credit Facility.

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Revolving Credit Facility

In June 2022, we entered into an amended and restated Credit Agreement, which provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations. The Credit 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.

All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries.

As of July 29, 2023, the Company was in compliance with the terms of the Credit Agreement and had $3.0 million in borrowings and $7.7 million outstanding in stand-by letters of credit. As of July 30, 2022, the Company had $307.7 million in outstanding borrowings under the Credit Agreement.

Capital Expenditures for Property and Equipment

Capital expenditures for the 26 weeks ended July 29, 2023 were $92.0 million, and included $44.1 million related to investments in our stores, including 14 new stores (6 American Eagle stores, 5 combined Aerie stand-alone stores and OFFLINE™ stand-alone stores, and 3 Todd Snyder stores), and fixtures and visual investments. Additionally, we continued to support our infrastructure growth by investing in information technology initiatives ($31.6 million), Quiet Platforms ($11.5 million), our supply chain infrastructure ($2.9 million), and other home office projects ($1.9 million).

For Fiscal 2023, we expect capital expenditures to be in the range of approximately $150 million to $175 million related to the continued support of our expansion efforts, stores, information technology upgrades to support growth, and investments in e-commerce, as well as to support and enhance our supply chain and Quiet Platforms. We expect to be able to fund our capital expenditures through current cash holdings and cash generated from operations.

Share Repurchases

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

During the 26 weeks ended July 29, 2023, we did not repurchase any shares under our publicly announced share repurchase program. As of July 29, 2023, our total remaining share repurchase authorization was 13.0 million shares.

During the 26 weeks ended July 29, 2023 and July 30, 2022, we repurchased approximately 0.7 million and 0.6 million shares, respectively, from certain employees at market prices totaling $10.4 million and $9.6 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 as treasury stock.

Dividends

During the 13 weeks ended July 29, 2023, our Board declared a quarterly cash dividend of $0.10 per share on June 7, 2023, which was paid on July 21, 2023.

The Company maintains the right to defer the record and payment dates of any declared dividends, depending upon, among other factors, 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 United States taxation, and other relevant factors.

Critical Accounting 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 28, 2023 contained in our Fiscal 2022 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 to our Consolidated Financial Statements in this Quarterly 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.

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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 gain of $15.2 million and $21.1 million is included in accumulated other comprehensive income during the 13 and 26 weeks ended July 29, 2023, respectively. Our market risk profile as of January 28, 2023 is disclosed in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our Fiscal 2022 Form 10-K, which is unchanged as of July 29, 2023.

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 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, as of July 29, 2023, 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, 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 our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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. 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 consolidated 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 SEC Regulation S-K Item 103, 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 11. “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 I, Item 1A of our Fiscal 2022 Form 10-K. There have been no material changes to our risk factors as disclosed in the Fiscal 2022 Form 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 July 29, 2023:

	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 (April 30, 2023 through May 27, 2023)		1,258	$	12.48		—		12,977,130
Month #2 (May 28, 2023 through July 1, 2023)		5,096	$	11.50		—		12,977,130
Month #3 (July 2, 2023 through July 29, 2023)		1,241	$	12.63		—		12,977,130
Total		7,595	$	11.85		—		12,977,130

(1)There were no shares repurchased as part of our publicly announced share repurchase program and an aggregate of 7,595 million shares were repurchased for the payment of taxes in connection with the vesting of share-based payments during the 13 weeks ended July 29, 2023.

(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 5: OTHER INFORMATION

(c) During the 13 weeks ended July 29, 2023, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
 

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ITEM 6. EXHIBITS.

* Exhibit 31.1	Certification by Jay L. Schottenstein pursuant to Rule 13a-14(a) or Rule 15d-14(a)
* Exhibit 31.2	Certification by Michael A. Mathias pursuant to Rule 13a-14(a) or Rule 15d-14(a)
** Exhibit 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
** Exhibit 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
Exhibit 10.1	American Eagle Outfitters, Inc. 2023 Stock Award and Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on June 30, 2023)
* Exhibit 101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2023, formatted as inline eXtensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets as of July 29, 2023, January 28, 2023 and July 30, 2022, (ii) Consolidated Statements of Operations for the 13 and 26 weeks ended July 29, 2023 and July 30, 2022, (iii) Consolidated Statements of Comprehensive Income for the 13 and 26 weeks ended July 29, 2023 and July 30, 2022, (iv) Consolidated Statements of Stockholders’ Equity for the 13 and 26 weeks ended July 29, 2023 and July 30, 2022, and (v) Consolidated Statements of Cash Flows for the 26 weeks ended July 29, 2023 and July 30, 2022
* Exhibit 104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2023, formatted in inline XBRL

* Filed with this report.

** Furnished with this report.

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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: September 6, 2023

	American Eagle Outfitters, Inc. (Registrant)
By:	/s/ Jay L. Schottenstein
	Jay L. Schottenstein
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Michael A. Mathias
	Michael A. Mathias
	Executive Vice President, Chief Financial Officer
	(Principal Financial Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Jay L. Schottenstein, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Eagle Outfitters, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 6, 2023

/s/ Jay L. Schottenstein

Jay L. Schottenstein

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Michael A. Mathias, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Eagle Outfitters, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 6, 2023

/s/ Michael A. Mathias

Michael A. Mathias

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of American Eagle Outfitters, Inc. (the “Company”) on Form 10-Q for the period ended July 29, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay L. Schottenstein, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 6, 2023

/s/ Jay L. Schottenstein

Jay L. Schottenstein

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of American Eagle Outfitters, Inc. (the “Company”) on Form 10-Q for the period ended July 29, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael A. Mathias, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 6, 2023

/s/ Michael A. Mathias

Michael A. Mathias

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jul. 29, 2023	Sep. 01, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 29, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Trading Symbol	AEO
Entity Registrant Name	American Eagle Outfitters, Inc.
Entity Central Index Key	0000919012
Current Fiscal Year End Date	--01-28
Document Quarterly Report	true
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		197,483,532
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.01 par value
Security Exchange Name	NYSE
Entity File Number	1-33338
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-2721761
Entity Address, Address Line One	77 Hot Metal Street
Entity Address, City or Town	Pittsburgh
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15203-2329
City Area Code	412
Local Phone Number	432-3300
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Current assets:
Cash and cash equivalents	$ 175,315	$ 170,209	$ 98,214
Merchandise inventory	636,972	585,083	687,046
Accounts receivable, net	271,333	242,386	220,803
Prepaid expenses and other	117,871	102,563	171,326
Total current assets	1,201,491	1,100,241	1,177,389
Operating lease right-of-use assets	1,038,505	1,086,999	1,210,285
Property and equipment, at cost, net of accumulated depreciation	758,736	781,514	775,969
Goodwill	264,964	264,945	271,406
Intangible assets,net	90,312	94,536	98,651
Non-current deferred income taxes	21,990	36,483	37,017
Other assets	55,909	56,238	58,500
Total assets	3,431,907	3,420,956	3,629,217
Current liabilities:
Accounts payable	238,660	234,340	198,645
Current portion of operating lease liabilities	309,517	337,258	328,348
Unredeemed gift cards and gift certificates	51,156	67,618	51,111
Accrued compensation and payroll taxes	74,509	51,912	50,788
Accrued income and other taxes	17,372	10,919	16,708
Other current liabilities and accrued expenses	71,262	66,901	72,461
Total current liabilities	762,476	768,948	718,061
Non-current liabilities:
Non-current operating lease liabilities	970,862	1,021,200	1,137,656
Long-term debt, net	3,225	8,911	376,522
Other non-current liabilities	22,345	22,734	24,055
Total non-current liabilities	996,432	1,052,845	1,538,233
Commitments and contingencies
Stockholders’ equity:
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; 197,481, 195,064, and 187,312 shares outstanding, respectively	2,496	2,496	2,496
Contributed capital	334,447	341,775	380,959
Accumulated other comprehensive loss	(11,566)	(32,630)	(40,017)
Retained earnings	2,158,294	2,137,126	2,000,021
Treasury stock, at cost, 52,085, 54,502, and 62,254 shares, respectively	(810,672)	(849,604)	(970,536)
Total stockholders' equity	1,672,999	1,599,163	1,372,923
Total liabilities and stockholders’ equity	$ 3,431,907	$ 3,420,956	$ 3,629,217

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000	5,000,000
Preferred stock, issued	0	0	0
Preferred stock, outstanding	0	0	0
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	600,000,000	600,000,000	600,000,000
Common stock, shares issued	249,566,000	249,566,000	249,566,000
Common stock, shares outstanding	197,481,000	195,064,000	187,312,000
Treasury stock, shares	52,085,000	54,502,000	62,254,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Income Statement [Abstract]
Total net revenue	$ 1,200,879	$ 1,198,124	$ 2,281,805	$ 2,253,161
Cost of sales, including certain buying, occupancy and warehousing expenses	747,863	828,107	1,415,610	1,495,118
Gross profit	453,016	370,017	866,195	758,043
Selling, general and administrative expenses	331,872	307,832	644,217	606,587
Impairment, restructuring and other charges	0		21,275
Depreciation and amortization expense	55,854	48,171	112,582	95,540
Operating income	65,290	14,014	88,121	55,916
Debt related charges		60,066		60,066
Interest expense, net	951	3,421	1,642	8,009
Other income, net	(2,150)	(1,839)	(5,461)	(6,283)
Income (loss) before income taxes	66,489	(47,634)	91,940	(5,876)
Provision (benefit) for income taxes	17,919	(5,168)	24,918	4,850
Net income (loss)	$ 48,570	$ (42,466)	$ 67,022	$ (10,726)
Basic net income (loss) per common share	$ 0.25	$ (0.24)	$ 0.34	$ (0.06)
Diluted net income (loss) per common share	$ 0.25	$ (0.24)	$ 0.34	$ (0.06)
Weighted average common shares outstanding - basic	195,329	180,189	195,214	174,544
Weighted average common shares outstanding - diluted	196,103	180,189	196,822	174,544

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Statement of Comprehensive Income [Abstract]
Net Income (Loss)	$ 48,570	$ (42,466)	$ 67,022	$ (10,726)
Other comprehensive income:
Foreign currency translation adjustments	15,211	298	21,064	828
Other comprehensive income	15,211	298	21,064	828
Comprehensive income (loss)	$ 63,781	$ (42,168)	$ 88,086	$ (9,898)

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Contributed Capital	Contributed Capital Cumulative Effect, Period of Adoption, Adjustment	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Accumulated Other Comprehensive Loss
Beginning Balance at Jan. 29, 2022	$ 1,423,672	$ (48,856)	$ 2,496	$ 636,355	$ (67,686)	$ 2,203,772	$ 18,830	$ (1,378,106)	$ (40,845)
Beginning Balance (in shares) at Jan. 29, 2022			168,699
Stock awards	22,658			22,658
Repurchase of common stock from employees	(9,579)							(9,579)
Repurchase of common stock from employees (in shares)			(566)
Reissuance of treasury stock	916			(23,958)		(1,097)		25,971
Reissuance of treasury stock (in shares)			1,523
Accelerated share repurchase	(200,000)							(200,000)
Accelerated share repurchase, (in shares)			(17,023)
Exchange of Convertible Senior Notes	258,777			(187,894)		(144,507)		591,178
Exchange of Convertible Senior Notes (in shares)			34,679
Net income (loss)	(10,726)					(10,726)
Other comprehensive income	828								828
Cash dividends declared and dividend equivalents	(64,767)			1,484		(66,251)
Ending Balance at Jul. 30, 2022	$ 1,372,923		$ 2,496	380,959		2,000,021		(970,536)	(40,017)
Ending Balance (in shares) at Jul. 30, 2022	187,312,000		187,312
Beginning Balance at Apr. 30, 2022	$ 1,383,006		$ 2,496	562,973		2,224,113		(1,366,261)	(40,315)
Beginning Balance (in shares) at Apr. 30, 2022			169,421
Stock awards	8,504			8,504
Repurchase of common stock from employees	(1,408)							(1,408)
Repurchase of common stock from employees (in shares)			113
Reissuance of treasury stock	588			(3,452)		(1,915)		5,955
Reissuance of treasury stock (in shares)			348
Accelerated share repurchase	(200,000)							(200,000)
Accelerated share repurchase, (in shares)			(17,023)
Exchange of Convertible Senior Notes	258,777			(187,894)		(144,507)		591,178
Exchange of Convertible Senior Notes (in shares)			34,679
Net income (loss)	(42,466)					(42,466)
Other comprehensive income	298								298
Cash dividends declared and dividend equivalents	(34,376)			828		(35,204)
Ending Balance at Jul. 30, 2022	$ 1,372,923		$ 2,496	380,959		2,000,021		(970,536)	(40,017)
Ending Balance (in shares) at Jul. 30, 2022	187,312,000		187,312
Beginning Balance at Jan. 28, 2023	$ 1,599,163		$ 2,496	341,775		2,137,126		(849,604)	(32,630)
Beginning Balance (in shares) at Jan. 28, 2023	195,064,000		195,064
Stock awards	$ 24,984			24,984
Repurchase of common stock from employees	(10,396)							(10,396)
Repurchase of common stock from employees (in shares)			(748)
Reissuance of treasury stock	1,409			(27,481)		(3,330)		32,220
Reissuance of treasury stock (in shares)			2,066
Exchange of Convertible Senior Notes	8,690			(6,281)		(2,137)		17,108
Exchange of Convertible Senior Notes (in shares)			1,099
Net income (loss)	67,022					67,022
Other comprehensive income	21,064								21,064
Cash dividends declared and dividend equivalents	(39,371)			1,016		(40,387)
Contributions from non-controlling interests	434			434
Ending Balance at Jul. 29, 2023	$ 1,672,999		$ 2,496	334,447		2,158,294		(810,672)	(11,566)
Ending Balance (in shares) at Jul. 29, 2023	197,481,000		197,481
Beginning Balance at Apr. 29, 2023	$ 1,619,016		$ 2,496	324,396		2,130,108		(811,207)	(26,777)
Beginning Balance (in shares) at Apr. 29, 2023			197,450
Stock awards	10,334			10,334
Repurchase of common stock from employees	(83)							(83)
Repurchase of common stock from employees (in shares)			(8)
Reissuance of treasury stock	183			(287)		(148)		618
Reissuance of treasury stock (in shares)			39
Net income (loss)	48,570					48,570
Other comprehensive income	15,211								15,211
Cash dividends declared and dividend equivalents	(19,746)			490		(20,236)
Contributions from non-controlling interests	(486)			(486)
Ending Balance at Jul. 29, 2023	$ 1,672,999		$ 2,496	$ 334,447		$ 2,158,294		$ (810,672)	$ (11,566)
Ending Balance (in shares) at Jul. 29, 2023	197,481,000		197,481

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Statement of Stockholders' Equity [Abstract]
Cash dividends declared and dividend equivalents, Per share	$ 0.1	$ 0.18	$ 0.2	$ 0.36

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jul. 29, 2023		Jul. 30, 2022
Operating activities:
Net income (loss)	$ 67,022		$ (10,726)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization	115,296		98,057
Share-based compensation	25,355		22,946
Deferred income taxes	14,492		22,533
Loss on impairment of assets	10,759	[1]	0
Loss on exchange of Convertible Senior Notes			55,687
Changes in assets and liabilities:
Merchandise inventory	(62,702)		(133,689)
Accounts Receivable	(29,143)		65,928
Operating lease assets	124,825		142,446
Operating lease liabilities	(160,051)		(159,272)
Other assets	20,509		(68,966)
Accounts payable	3,899		(33,226)
Accrued compensation and payroll taxes	22,389		(91,141)
Accrued and other liabilities	(4,759)		(15,874)
Net cash provided by (used for) operating activities	147,891		(102,093)
Investing activities:
Capital expenditures for property and equipment	(91,959)		(127,858)
Other investing activities	(6,492)		(529)
Net cash used for investing activities	(98,451)		(128,387)
Financing activities:
Proceeds from revolving line of credit	30,000		307,700
Principal payments on revolving line of credit	(27,000)
Net proceeds from stock options exercised	1,095		1,369
Repurchase of common stock from employees	(10,396)		(9,579)
Cash dividends paid	(39,371)		(64,767)
Principal paid in connection with exchange of Convertible Senior Notes due 2025			(136,077)
Accelerated share repurchase			(200,000)
Other financing activities	(742)		(739)
Net cash used for financing activities	(46,414)		(105,297)
Effect of exchange rates changes on cash	2,080		(779)
Net change in cash and cash equivalents	5,106		(336,556)
Cash and cash equivalents - beginning of period	170,209		434,770
Cash and cash equivalents - end of period	$ 175,315		$ 98,214

[1] $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 48,570	$ (42,466)	$ 67,022	$ (10,726)

XML

Insider Trading Arrangements

6 Months Ended

Jul. 29, 2023

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

(c) During the 13 weeks ended July 29, 2023, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
 

Rule 10b5-1 Arrangement Adopted

false

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

XML

Interim Financial Statements

6 Months Ended

Jul. 29, 2023

Accounting Policies [Abstract]

Interim Financial Statements

1. Interim Financial Statements

The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company", “we”, and “our”), a Delaware corporation, at July 29, 2023 and July 30, 2022 and for the 13 and 26 week periods ended July 29, 2023 and July 30, 2022 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 Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and 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. Therefore, these Consolidated Financial Statements should be read in conjunction with our Fiscal 2022 Form 10-K. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the 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.

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 consciously made slow fashion.

Founded in 1977, the Company is a leading multi-brand specialty retailer that operates more than 1,000 retail stores in the U.S. and internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.com and more than 200 international store locations managed by third-party operators. Through its portfolio of brands, the Company offers high quality, on-trend clothing, accessories, and personal care products at affordable prices. 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 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 approximately 80 countries worldwide.

Quiet Platforms is a logistics company that operates a network of in-market fulfillment centers, locating products closer to need, creating inventory efficiencies, cost benefits and affordable same-day and next-day delivery options for customers and stores to help us manage costs and improve service.

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.

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Summary of Significant Accounting Policies

6 Months Ended

Jul. 29, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned 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 Consolidated Statements of Stockholders' Equity and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At July 29, 2023, the Company operated in two 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 2023” refers to the 53-week period that will end on February 3, 2024. “Fiscal 2022” refers to the 52-week period ended January 28, 2023.

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 August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“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 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 adopted ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective method.

Refer to Note 5 and Note 8 to the Consolidated Financial Statements for additional information regarding EPS and long-term debt, respectively.

Foreign Currency Translation

In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars (“USD”) (the 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 and 26 weeks ended July 29, 2023, an unrealized gain of $15.2 million and $21.1 million, respectively, was included in other comprehensive income, which were primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates.

Cash and Cash Equivalents

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.

Accounts Receivable

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, 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 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 Three to five years

As of July 29, 2023, the weighted average remaining useful life of our assets was approximately six 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") assets associated with retail 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 within the Consolidated Statements of Operations.

Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected.

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.

There were no long-lived asset impairment charges recorded during the 13 weeks ended July 29, 2023 or July 30, 2022. During the 26 weeks ended July 29, 2023, the Company recorded impairment of property and equipment of $10.8 million. No long-lived asset impairment charges were recorded during the 26 weeks ended July 30, 2022. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

Goodwill and Intangible Assets

The Company’s goodwill is primarily related to the acquisition of Quiet Logistics, in Fiscal 2021, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, 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. 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 annual goodwill impairment test as of January 28, 2023, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 29, 2023 and July 30, 2022.

Definite-lived intangible assets are initially recorded 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 10 to 15 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 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. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended July 29, 2023 or July 30, 2022.

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

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

The Company leases all store premises, the Canadian distribution center in Mississauga, Ontario, 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. 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.

Co-branded and Private Label Credit Cards

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.

Customer Loyalty Program

The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). The 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. 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 AE 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 reward points is deferred and recognized when the 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

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.

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 credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027.

Refer to Note 8 to the Consolidated Financial Statements for additional information regarding Long-Term Debt.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial 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 card breakage"), is recorded in proportion to actual gift cards 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 July 29, 2023 and July 30, 2022, the Company recorded approximately $1.8 million and $2.2 million, respectively, of revenue related to gift card breakage. During the 26 weeks ended July 29, 2023 and July 30, 2022, the Company recorded $4.2 million and $4.9 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.

Revenue 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”), Quiet Platforms' costs to service its customers and buying, occupancy and warehousing 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 consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. SG&A expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased.

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, 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 consist 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 13 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the Company's 2025 Notes.

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under our five-year, syndicated, asset-based revolving credit facilities, partially offset by interest income from cash and cash equivalents.

Other Income, Net

Other income, net consists primarily of foreign currency fluctuations and changes in other non-operating items. Non-controlling interest was not material for any period presented and is included within other income, net.

Segment Information

The Company has identified two operating segments (American Eagle and 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. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption. For additional information regarding the Company’s segment and geographic information, refer to Note 12 to the Consolidated Financial Statements.

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Cash and Cash Equivalents

6 Months Ended

Jul. 29, 2023

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

3. Cash and Cash Equivalents

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

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
Cash and cash equivalents:
Cash	$	174,927	$	84,960	$	98,111
Interest bearing deposits		388		85,249		103
Total cash and cash equivalents	$	175,315	$	170,209	$	98,214

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Fair Value Measurements

6 Months Ended

Jul. 29, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

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.

The Company’s cash equivalents and short-term investments 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.

	Fair Value Measurements at July 29, 2023
(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	$	174,927	$	174,927	$	—	$	—
Interest bearing deposits		388		388		—		—
Total cash and cash equivalents	$	175,315	$	175,315	$	—	$	—

Long-Term Debt

As of July 29, 2023 and July 30, 2022, the fair value of the Company's outstanding borrowings under its Credit Facility, of $3.0 million and $307.7 million, respectively, in outstanding borrowings under its Credit Facility approximated the carrying value.

In April 2020, the Company issued $415 million aggregate principal amount of 2025 Notes. As of July 29, 2023, the Company's 2025 Notes have been fully redeemed. The fair value of the Company's 2025 Notes was 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. The fair value is determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. There were no long-lived asset impairment charges recorded during the 13 weeks ended July 29, 2023 or July 30, 2022. During the 26 weeks ended July 29, 2023, the Company recorded impairment of property and equipment of $10.8 million. No long-lived asset impairment charges were recorded during the 26 weeks ended July 30, 2022. Refer to Note 13 to the Consolidated Financial Statements for additional information on impairment, restructuring and other charges.

The fair value of the Company's ROU assets was based upon market rent assumptions.

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 28, 2023. 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 present during the 13 or 26 weeks ended July 29, 2023 and July 30, 2022.

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Earnings per Share

6 Months Ended

Jul. 29, 2023

Earnings Per Share [Abstract]

Earnings per Share

5. Earnings per Share

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

	13 Weeks Ended					26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022			July 29, 2023		July 30, 2022
Numerator:
Net income (loss) and numerator for basic EPS	$	48,570	$	(42,466	)	$	67,022	$	(10,726	)
Add: Interest expense, net of tax, related to the 2025 Notes (1)		-		—			58		—
Numerator for diluted EPS	$	48,570	$	(42,466	)	$	67,080	$	(10,726	)
Denominator:
Denominator for basic EPS - weighted average shares		195,329		180,189			195,214		174,544
Add: Dilutive effect of the 2025 Notes (1) (2)		—		—			417		—
Add: Dilutive effect of stock options and non-vested restricted stock (3)		774		—			1,191		—
Denominator for diluted EPS - adjusted weighted average shares		196,103		180,189			196,822		174,544
Anti-dilutive shares (4)		509		29,221			397		38,763

(1)During the 26 weeks ended July 30, 2022, the Company adopted ASU 2020-06. The Company utilizes the "if-converted" method of calculated diluted EPS. Refer to Note 2 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06.

(2)For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company's 2025 Notes, respectively, that were excluded from the dilutive earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(3)For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(4)For both periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

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.

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Property and Equipment

6 Months Ended

Jul. 29, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

6. Property and Equipment

Property and equipment consists of the following:

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Property and equipment, at cost	$	2,772,496		$	2,707,061		$	2,603,212
Less: Accumulated depreciation and impairment		(2,013,760	)		(1,925,547	)		(1,827,243	)
Property and equipment, net	$	758,736		$	781,514		$	775,969

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Goodwill and Intangible Assets, net

6 Months Ended

Jul. 29, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, net

7. Goodwill and Intangible Assets, net

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Goodwill, gross	$	269,160		$	269,141		$	275,602
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	264,964		$	264,945		$	271,406

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Intangible assets, at cost	$	146,577		$	146,228		$	145,765
Accumulated amortization		(56,265	)		(51,692	)		(47,114	)
Intangible assets, net	$	90,312		$	94,536		$	98,651

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Long-Term Debt, Net

6 Months Ended

Jul. 29, 2023

Debt Disclosure [Abstract]

Long-Term Debt, Net

8. Long-Term Debt, Net

Our long-term debt consisted of the following at July 29, 2023, January 28, 2023, and July 30, 2022:

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
2025 Notes principal	$	—	$	8,791	$	69,601
Less: unamortized discount		—		105		779
2025 Notes, net	$	—	$	8,686	$	68,822
Credit Facility borrowings	$	3,000	$	—	$	307,700

2025 Notes

In April 2020, the Company issued $415 million aggregate principal amount of 2025 Notes in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The 2025 Notes had a stated interest rate of 3.75%, payable semi-annually. The Company used the net proceeds from the issuance for general corporate purposes. The Company redeemed all of the remaining 2025 Notes during the 13 weeks ended April 29, 2023. See "-Note Exchanges" and "-Early Redemption" below.

The Company did not have the right to redeem the 2025 Notes prior to April 17, 2023. On or after April 17, 2023 and prior to the fortieth scheduled trading day immediately preceding the maturity date, the Company could redeem all or any portion of the 2025 Notes, at its option, for cash, if the last reported sale price of our common stock had been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

Note Exchanges

In June and December 2022, the Company entered into separate privately negotiated exchange agreements with certain holders of the 2025 Notes, to exchange $403.2 million in 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 (together, the "Note Exchanges").

In June 2022, the Company exchanged $342.4 million in aggregate principal amount of the 2025 Notes. The Company paid 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. In connection with these transactions, the Company recognized a pre-tax inducement charge of approximately $55.7 million during the 13 weeks ended July 30, 2022, which was recorded within debt-related charges on the Consolidated Statements of Operations.

In December 2022, the Company exchanged $60.8 million in aggregate principal amount of the 2025 Notes for shares of the Company's common stock, plus payment of accrued and unpaid interest. The Company issued approximately 7.6 million shares of the Company's common stock with a carrying value of $60.4 million. In connection with these transactions, the Company recognized a pre-tax inducement charge of approximately $4.7 million during the 13 weeks ended January 28, 2023, which was recorded within debt-related charges on the Consolidated Statements of Operations.

Early Redemption

On February 10, 2023, the Company issued a notice of optional redemption for all of its remaining outstanding 2025 Notes, notifying holders that, among other things, it had elected to exercise its right to redeem any and all of the outstanding 2025 Notes on April 17, 2023 (the "Early Redemption"). Subsequent to this notice, and prior to April 17, 2023, the 2025 Note holders redeemed a total of $8.8 million aggregate principal amount for a combined 1.1 million shares of the Company's common stock.

Following the Note Exchanges and Early Redemption, the aggregate principal amount of the 2025 Notes had been fully redeemed.

Interest expense for the 2025 Notes was:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Accrued interest for interest payments	$	—	$	2,008	$	70	$	5,914
Amortization of discount		—		255		10		782
Total interest expense	$	—	$	2,263	$	80	$	6,696

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.

Revolving Credit Facility

In June 2022, the Company entered into an amended and restated Credit Agreement. The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations. The Credit 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.

All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries.

As of July 29, 2023, the Company was in compliance with the terms of the Credit Agreement and had $3.0 million in outstanding borrowings and $7.7 million outstanding in stand-by letters of credit. As of July 30, 2022, the Company had $307.7 million in outstanding borrowings under the Credit Agreement.

Borrowings under the Credit Facility accrue interest at the election of the Company 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 26 weeks ended July 29, 2023 was 6.2% and 6.0%, respectively. The total interest expense related to the Credit Facility borrowings for the 13 and 26 weeks ended July 29, 2023 was $0.5 million and $1.1 million respectively. The total interest expense related to the Credit Facility for both the 13 and 26 weeks ended July 30, 2022 was $1.0 million.

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Share-Based Compensation

6 Months Ended

Jul. 29, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

9. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation, 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 26 weeks ended July 29, 2023 was $10.5 million ($7.7 million, net of tax) and $25.4 million ($18.4 million, net of tax), respectively, and for the 13 and 26 weeks ended July 30, 2022 was $8.6 million ($7.7 million, net of tax) and $22.9 million ($20.4 million, net of tax), respectively.

Stock Option Grants

The Company has granted time-based stock option awards, which vest over the requisite service period of the award. A summary of the Company’s stock option activity for the 26 weeks ended July 29, 2023 follows:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 28, 2023		3,950		$	17.01
Granted		1,051			13.17
Exercised		(70	)		15.72
Cancelled		(275	)		16.75
Outstanding - July 29, 2023		4,656			16.18		4.4		5,217
Vested and expected to vest - July 29, 2023		3,694			16.35		3.1		733
Exercisable - July 29, 2023 (1)		1,199			10.32		3.7		4,376

(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 July 29, 2023.

As of July 29, 2023, there was $9.1 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.1 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:

	26 Weeks Ended			26 Weeks Ended
	July 29,			July 30,
Black-Scholes Option Valuation Assumptions	2023			2022
Risk-free interest rate (1)		3.4	%		2.5	%
Dividend yield		2.8	%		3.8	%
Volatility factor (2)		55.7	%		52.2	%
Weighted-average expected term (3)	4.5 years			4.5 years

(1)Based on the United States 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.

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three 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 for performance-based restricted stock awards.

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

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	July 29, 2023					July 29, 2023
(Shares in thousands)	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Non-vested - January 28, 2023		2,749		$	17.00		1,574		$	20.11
Granted		1,846		$	13.03		927		$	14.90
Vested		(1,551	)	$	14.88		(421	)	$	15.95
Cancelled		(158	)	$	15.68		(74	)	$	23.93
Non-vested - July 29, 2023		2,886		$	15.67		2,006		$	18.43

As of July 29, 2023, there was $37.1 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 2.2 years. There is $7.4 million of unrecognized compensation expense related to performance-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 1.8 years.

As of July 29, 2023, the Company had 12.0 million shares available for all equity grants.

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Income Taxes

6 Months Ended

Jul. 29, 2023

Income Tax Disclosure [Abstract]

Income Taxes

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 July 29, 2023 was 27.0% compared to an effective income tax benefit rate of 10.9% for the 13 weeks ended July 30, 2022. The effective income tax rate for the 26 weeks ended July 29, 2023 was 27.1% compared to (82.5)% for the 26 weeks ended July 30, 2022. The change in the effective tax rate, as compared to the prior period, is primarily due to the 2022 Note Exchange in Fiscal 2022 as a portion of the inducement charge was not deductible and state legislative changes that occurred in Fiscal 2022.

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 July 29, 2023 due to income tax settlements. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $1.1 million due to settlements, expiration of statute of limitations, or other changes in unrecognized tax benefits.

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Legal Proceedings

6 Months Ended

Jul. 29, 2023

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

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.

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Segment Reporting

6 Months Ended

Jul. 29, 2023

Segment Reporting [Abstract]

Segment Reporting

12. Segment Reporting

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified two operating segments (American Eagle brand and 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. Additionally, our Todd Snyder brand, Unsubscribed brand, and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption, as permitted by ASC 280.

General corporate expenses are comprised of general and administrative costs that management does not attribute to any of our operating segments. These costs primarily relate to corporate administration, information and technology resources, finance and human resources functional and organizational costs, depreciation and amortization of corporate assets, and other general and administrative expenses resulting from corporate-level activities and projects.

Our CEO analyzes segment results and allocates resources between segments based on the adjusted operating income , or the operating income in periods where there are no adjustments, of each segment. Adjusted operating income is a non-GAAP financial measure ("non-GAAP" or "adjusted") that is defined by the Company as operating income excluding impairment, restructuring and other charges. Adjusted operating income is not based on any standardized methodology prescribed by 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 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. Adjusted operating income on a

consolidated basis is presented in the following table to reconcile the segment operating performance measure to operating income as presented on the Consolidated Financial Statements.

Reportable segment information is presented in the following table:

	For the 13 weeks ended						For the 26 weeks ended
	July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022
Net Revenue:
American Eagle	$	767,018		$	777,828		$	1,438,110		$	1,463,407
Aerie	$	380,413		$	371,683		$	739,495		$	693,395
Total Segment Net Revenue	$	1,147,431		$	1,149,511		$	2,177,605		$	2,156,802
Other	$	108,318		$	110,393		$	217,675		$	200,077
Intersegment Elimination	$	(54,870	)	$	(61,780	)	$	(113,475	)	$	(103,718	)
Total Net Revenue	$	1,200,879		$	1,198,124		$	2,281,805		$	2,253,161
Adjusted Operating Income:
American Eagle	$	128,664		$	109,110		$	234,203		$	213,015
Aerie	$	57,253		$	11,830		$	112,922		$	54,903
Total Segment Adjusted Operating Income	$	185,917		$	120,940		$	347,125		$	267,918
Other	$	(10,341	)	$	(11,507	)	$	(26,648	)	$	(27,732	)
Intersegment Elimination	$	-		$	-		$	-		$	-
General corporate expenses	$	(110,286	)	$	(95,419	)	$	(211,081	)	$	(184,270	)
Total Adjusted Operating Income	$	65,290		$	14,014		$	109,396		$	55,916
Less: Impairment, restructuring and other charges	$	-		$	-		$	(21,275	)	$	-
Total Operating Income	$	65,290		$	14,014		$	88,121		$	55,916
Debt related charges	$	-		$	60,066		$	-		$	60,066
Interest expense, net	$	951		$	3,421		$	1,642		$	8,009
Other income, net	$	(2,150	)	$	(1,839	)	$	(5,461	)	$	(6,283	)
Income before income taxes	$	66,489		$	(47,634	)	$	91,940		$	(5,876	)
Capital Expenditures
American Eagle	$	16,249		$	18,754		$	31,192		$	34,524
Aerie	$	10,889		$	30,244		$	22,077		$	61,259
Other	$	6,154		$	4,107		$	11,730		$	5,132
General corporate expenditures	$	12,810		$	16,359		$	26,960		$	26,943
Total Capital Expenditures	$	46,102		$	69,464		$	91,959		$	127,858

The following table presents summarized geographical information:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Total net revenue:
United States	$	1,005,197	$	1,027,158	$	1,919,588	$	1,935,323
Foreign (1)		195,682		170,966		362,217		317,838
Total net revenue	$	1,200,879	$	1,198,124	$	2,281,805	$	2,253,161

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

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Impairment, Restructuring and Other Charges

6 Months Ended

Jul. 29, 2023

Restructuring and Related Activities [Abstract]

Impairment, Restructuring and Other Charges

13. Impairment, Restructuring and Other Charges

The following table represents impairment, restructuring and other charges related to Quiet Platforms. All amounts were recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations during the 26

weeks ended July 29, 2023. There were no impairment, restructuring and other charges recorded for the 13 weeks ended July 29, 2023.

	26 Weeks Ended
	July 29,
(In thousands)	2023
Long-lived asset impairment charges(1)	$	10,759
Employee related costs(2)		5,592
Other commercial related charges(3)		4,924
Total impairment, restructuring and other charges	$	21,275

(1) $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

(2) $5.6 million of severance costs

(3) $4.9 million of contract related charges, resulting from the restructuring of Quiet Platforms

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jul. 29, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned 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 Consolidated Statements of Stockholders' Equity and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At July 29, 2023, the Company operated in two reportable segments, American Eagle and Aerie.

Fiscal Year

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 2023” refers to the 53-week period that will end on February 3, 2024. “Fiscal 2022” refers to the 52-week period ended January 28, 2023.

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

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“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 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 adopted ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective method.

Refer to Note 5 and Note 8 to the Consolidated Financial Statements for additional information regarding EPS and long-term debt, respectively.

Foreign Currency Translation

Foreign Currency Translation

In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars (“USD”) (the 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 and 26 weeks ended July 29, 2023, an unrealized gain of $15.2 million and $21.1 million, respectively, was included in other comprehensive income, which were primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates.

Cash and Cash Equivalents

Cash and Cash Equivalents

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.

Accounts Receivable

Accounts Receivable

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, 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

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 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

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 Three to five years

As of July 29, 2023, the weighted average remaining useful life of our assets was approximately six 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") assets associated with retail 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 within the Consolidated Statements of Operations.

Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected.

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.

There were no long-lived asset impairment charges recorded during the 13 weeks ended July 29, 2023 or July 30, 2022. During the 26 weeks ended July 29, 2023, the Company recorded impairment of property and equipment of $10.8 million. No long-lived asset impairment charges were recorded during the 26 weeks ended July 30, 2022. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

Goodwill and Intangible Assets, net

Goodwill and Intangible Assets

The Company’s goodwill is primarily related to the acquisition of Quiet Logistics, in Fiscal 2021, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, 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. 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 annual goodwill impairment test as of January 28, 2023, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 29, 2023 and July 30, 2022.

Definite-lived intangible assets are initially recorded 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 10 to 15 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 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. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended July 29, 2023 or July 30, 2022.

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

Construction Allowances

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

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 leases all store premises, the Canadian distribution center in Mississauga, Ontario, 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. 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.

Co-Branded and Private Label Credit Cards

Co-branded and Private Label Credit Cards

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.

Customer Loyalty Program

Customer Loyalty Program

The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). The 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. 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 AE 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 reward points is deferred and recognized when the 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

Long-Term Debt

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.

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 credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027.

Refer to Note 8 to the Consolidated 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 liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial 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

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 card breakage"), is recorded in proportion to actual gift cards 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 July 29, 2023 and July 30, 2022, the Company recorded approximately $1.8 million and $2.2 million, respectively, of revenue related to gift card breakage. During the 26 weeks ended July 29, 2023 and July 30, 2022, the Company recorded $4.2 million and $4.9 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.

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

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

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”), Quiet Platforms' costs to service its customers and buying, occupancy and warehousing 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

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

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, 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

Debt related charges consist 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 13 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the Company's 2025 Notes.

Interest Expense, Net

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under our five-year, syndicated, asset-based revolving credit facilities, partially offset by interest income from cash and cash equivalents.

Other Income, Net

Other Income, Net

Other income, net consists primarily of foreign currency fluctuations and changes in other non-operating items. Non-controlling interest was not material for any period presented and is included within other income, net.

Segment Information

Segment Information

The Company has identified two operating segments (American Eagle and 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. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption. For additional information regarding the Company’s segment and geographic information, refer to Note 12 to the Consolidated Financial Statements.

Legal Proceedings and Claims

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.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jul. 29, 2023

Accounting Policies [Abstract]

Useful Lives of Major Classes of Assets

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 Three to five years

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Cash and Cash Equivalents (Tables)

6 Months Ended

Jul. 29, 2023

Cash and Cash Equivalents [Abstract]

Fair Market Value of Cash and Cash Equivalents

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

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
Cash and cash equivalents:
Cash	$	174,927	$	84,960	$	98,111
Interest bearing deposits		388		85,249		103
Total cash and cash equivalents	$	175,315	$	170,209	$	98,214

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Fair Value Measurements (Tables)

6 Months Ended

Jul. 29, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Assets Measured at Fair Value on a Recurring Basis

The Company’s cash equivalents and short-term investments 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.

	Fair Value Measurements at July 29, 2023
(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	$	174,927	$	174,927	$	—	$	—
Interest bearing deposits		388		388		—		—
Total cash and cash equivalents	$	175,315	$	175,315	$	—	$	—

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Earnings per Share (Tables)

6 Months Ended

Jul. 29, 2023

Earnings Per Share [Abstract]

Reconciliation Between Basic and Diluted Earnings per Share

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

	13 Weeks Ended					26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022			July 29, 2023		July 30, 2022
Numerator:
Net income (loss) and numerator for basic EPS	$	48,570	$	(42,466	)	$	67,022	$	(10,726	)
Add: Interest expense, net of tax, related to the 2025 Notes (1)		-		—			58		—
Numerator for diluted EPS	$	48,570	$	(42,466	)	$	67,080	$	(10,726	)
Denominator:
Denominator for basic EPS - weighted average shares		195,329		180,189			195,214		174,544
Add: Dilutive effect of the 2025 Notes (1) (2)		—		—			417		—
Add: Dilutive effect of stock options and non-vested restricted stock (3)		774		—			1,191		—
Denominator for diluted EPS - adjusted weighted average shares		196,103		180,189			196,822		174,544
Anti-dilutive shares (4)		509		29,221			397		38,763

(1)During the 26 weeks ended July 30, 2022, the Company adopted ASU 2020-06. The Company utilizes the "if-converted" method of calculated diluted EPS. Refer to Note 2 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06.

(2)For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company's 2025 Notes, respectively, that were excluded from the dilutive earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(3)For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

(4)For both periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

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Property and Equipment (Tables)

6 Months Ended

Jul. 29, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following:

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Property and equipment, at cost	$	2,772,496		$	2,707,061		$	2,603,212
Less: Accumulated depreciation and impairment		(2,013,760	)		(1,925,547	)		(1,827,243	)
Property and equipment, net	$	758,736		$	781,514		$	775,969

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Goodwill and Intangible Assets, net (Tables)

6 Months Ended

Jul. 29, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Definite-lived intangible assets, net

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Goodwill, gross	$	269,160		$	269,141		$	275,602
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	264,964		$	264,945		$	271,406

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

	July 29,			January 28,			July 30,
(In thousands)	2023			2023			2022
Intangible assets, at cost	$	146,577		$	146,228		$	145,765
Accumulated amortization		(56,265	)		(51,692	)		(47,114	)
Intangible assets, net	$	90,312		$	94,536		$	98,651

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Long-Term Debt, Net (Tables)

6 Months Ended

Jul. 29, 2023

Debt Disclosure [Abstract]

Components of Long-Term Debt

Our long-term debt consisted of the following at July 29, 2023, January 28, 2023, and July 30, 2022:

(In thousands)	July 29, 2023		January 28, 2023		July 30, 2022
2025 Notes principal	$	—	$	8,791	$	69,601
Less: unamortized discount		—		105		779
2025 Notes, net	$	—	$	8,686	$	68,822
Credit Facility borrowings	$	3,000	$	—	$	307,700

Schedule of Interest Expense for Notes

Interest expense for the 2025 Notes was:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Accrued interest for interest payments	$	—	$	2,008	$	70	$	5,914
Amortization of discount		—		255		10		782
Total interest expense	$	—	$	2,263	$	80	$	6,696

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Share-Based Compensation (Tables)

6 Months Ended

Jul. 29, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Stock Option Activity

A summary of the Company’s stock option activity for the 26 weeks ended July 29, 2023 follows:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 28, 2023		3,950		$	17.01
Granted		1,051			13.17
Exercised		(70	)		15.72
Cancelled		(275	)		16.75
Outstanding - July 29, 2023		4,656			16.18		4.4		5,217
Vested and expected to vest - July 29, 2023		3,694			16.35		3.1		733
Exercisable - July 29, 2023 (1)		1,199			10.32		3.7		4,376

(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 July 29, 2023.

Black-Scholes Option Valuation Assumptions

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:

	26 Weeks Ended			26 Weeks Ended
	July 29,			July 30,
Black-Scholes Option Valuation Assumptions	2023			2022
Risk-free interest rate (1)		3.4	%		2.5	%
Dividend yield		2.8	%		3.8	%
Volatility factor (2)		55.7	%		52.2	%
Weighted-average expected term (3)	4.5 years			4.5 years

(1)Based on the United States 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.

Summary of Restricted Stock Activity

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

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	July 29, 2023					July 29, 2023
(Shares in thousands)	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Non-vested - January 28, 2023		2,749		$	17.00		1,574		$	20.11
Granted		1,846		$	13.03		927		$	14.90
Vested		(1,551	)	$	14.88		(421	)	$	15.95
Cancelled		(158	)	$	15.68		(74	)	$	23.93
Non-vested - July 29, 2023		2,886		$	15.67		2,006		$	18.43

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Segment Reporting (Tables)

6 Months Ended

Jul. 29, 2023

Segment Reporting [Abstract]

Summary of Reportable Segment Information

Reportable segment information is presented in the following table:

	For the 13 weeks ended						For the 26 weeks ended
	July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022
Net Revenue:
American Eagle	$	767,018		$	777,828		$	1,438,110		$	1,463,407
Aerie	$	380,413		$	371,683		$	739,495		$	693,395
Total Segment Net Revenue	$	1,147,431		$	1,149,511		$	2,177,605		$	2,156,802
Other	$	108,318		$	110,393		$	217,675		$	200,077
Intersegment Elimination	$	(54,870	)	$	(61,780	)	$	(113,475	)	$	(103,718	)
Total Net Revenue	$	1,200,879		$	1,198,124		$	2,281,805		$	2,253,161
Adjusted Operating Income:
American Eagle	$	128,664		$	109,110		$	234,203		$	213,015
Aerie	$	57,253		$	11,830		$	112,922		$	54,903
Total Segment Adjusted Operating Income	$	185,917		$	120,940		$	347,125		$	267,918
Other	$	(10,341	)	$	(11,507	)	$	(26,648	)	$	(27,732	)
Intersegment Elimination	$	-		$	-		$	-		$	-
General corporate expenses	$	(110,286	)	$	(95,419	)	$	(211,081	)	$	(184,270	)
Total Adjusted Operating Income	$	65,290		$	14,014		$	109,396		$	55,916
Less: Impairment, restructuring and other charges	$	-		$	-		$	(21,275	)	$	-
Total Operating Income	$	65,290		$	14,014		$	88,121		$	55,916
Debt related charges	$	-		$	60,066		$	-		$	60,066
Interest expense, net	$	951		$	3,421		$	1,642		$	8,009
Other income, net	$	(2,150	)	$	(1,839	)	$	(5,461	)	$	(6,283	)
Income before income taxes	$	66,489		$	(47,634	)	$	91,940		$	(5,876	)
Capital Expenditures
American Eagle	$	16,249		$	18,754		$	31,192		$	34,524
Aerie	$	10,889		$	30,244		$	22,077		$	61,259
Other	$	6,154		$	4,107		$	11,730		$	5,132
General corporate expenditures	$	12,810		$	16,359		$	26,960		$	26,943
Total Capital Expenditures	$	46,102		$	69,464		$	91,959		$	127,858

Summary of Geographical Information

The following table presents summarized geographical information:

	13 Weeks Ended				26 Weeks Ended
(In thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Total net revenue:
United States	$	1,005,197	$	1,027,158	$	1,919,588	$	1,935,323
Foreign (1)		195,682		170,966		362,217		317,838
Total net revenue	$	1,200,879	$	1,198,124	$	2,281,805	$	2,253,161

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

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Impairment, Restructuring and Other Charges (Tables)

6 Months Ended

Jul. 29, 2023

Restructuring and Related Activities [Abstract]

Schedule of Impairment, Restructuring and Other Charges

The following table represents impairment, restructuring and other charges related to Quiet Platforms. All amounts were recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations during the 26

weeks ended July 29, 2023. There were no impairment, restructuring and other charges recorded for the 13 weeks ended July 29, 2023.

	26 Weeks Ended
	July 29,
(In thousands)	2023
Long-lived asset impairment charges(1)	$	10,759
Employee related costs(2)		5,592
Other commercial related charges(3)		4,924
Total impairment, restructuring and other charges	$	21,275

(1) $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

(2) $5.6 million of severance costs

(3) $4.9 million of contract related charges, resulting from the restructuring of Quiet Platforms

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Interim Financial Statements - Additional Information (Details)	Jul. 29, 2023 Country Store
Accounting Policies [Abstract]
Number of retail stores	1,000
Number of international store locations	200
Number of countries company operates in | Country	80

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Summary of Significant Accounting Policies - Additional Information (Detail)	1 Months Ended		3 Months Ended		6 Months Ended
	Apr. 30, 2020 USD ($)	Jan. 31, 2019 USD ($)	Jul. 29, 2023 USD ($)	Jul. 30, 2022 USD ($)	Jul. 29, 2023 USD ($) Segment	Jul. 28, 2023	Jul. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)
Significant Accounting Policies [Line Items]
Maximum ownership percentage in consolidated entities and subsidiaries			100.00%		100.00%
Number of reportable segments | Segment					2
Unrealized gain included in other comprehensive (loss) income			$ 15,211,000	$ 298,000	$ 21,064,000		$ 828,000
Weighted average remaining useful life, assets						6 years
Asset impairment charges			0	0	0		0
Goodwill impairment charge					0
Definite-lived impairment charges			0	0	0		0
Revenue related to gift card breakage			1,800,000	2,200,000	$ 4,200,000		4,900,000
Credit Card Reward Program Description					The 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. 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.
Debt related charges				60,066,000			60,066,000
Credit Agreement | Credit Facilities
Significant Accounting Policies [Line Items]
Loans and letters of credit maximum borrowing capacity		$ 400,000,000	700,000,000		$ 700,000,000			$ 700,000,000
Line of credit facility, expiration date		Jan. 30, 2024			Jun. 24, 2027
Property, and Equipment
Significant Accounting Policies [Line Items]
Asset impairment charges			$ 0	0	$ 10,800,000		$ 0
2025 Notes
Significant Accounting Policies [Line Items]
Aggregate principal amount of debt issued	$ 415,000,000
Debt instrument, maturity year	2025
Debt related charges				$ 55,700,000
Minimum
Significant Accounting Policies [Line Items]
Definite-lived intangibles, useful life			10 years		10 years
Maximum
Significant Accounting Policies [Line Items]
Definite-lived intangibles, useful life			15 years		15 years
ASU 2020-06
Significant Accounting Policies [Line Items]
Change in accounting principle, accounting standards update, adopted			true		true

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Summary of Significant Accounting Policies - Useful Lives of Major Classes of Assets (Detail)	Jul. 29, 2023
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration]	Leasehold Improvements
Buildings
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	25 years
Leasehold Improvements | Maximum
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	10 years
Fixtures and Equipment
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	5 years
Information Technology | Minimum
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	3 years
Information Technology | Maximum
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	5 years

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Summary of Significant Accounting Policies - Useful Lives of Major Classes of Assets (Parenthetical) (Detail)	Jul. 29, 2023
Maximum | Leasehold Improvements
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	10 years

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Cash and Cash Equivalents and Short-Term Investments - Fair Market Values for Cash and Short-term Investments (Detail) - USD ($) $ in Thousands	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Cash and cash equivalents:
Cash and cash equivalents	$ 175,315	$ 170,209	$ 98,214
Cash
Cash and cash equivalents:
Cash and cash equivalents	174,927	84,960	98,111
Interest Bearing Deposits
Cash and cash equivalents:
Cash and cash equivalents	$ 388	$ 85,249	$ 103

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Fair Value Measurements - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2020	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023		Jul. 30, 2022
Fair Value Measurements Disclosure [Line Items]
Impairment charges		$ 0	$ 0	$ 10,759,000	[1]	$ 0
2025 Notes
Fair Value Measurements Disclosure [Line Items]
Aggregate principal amount of debt issued	$ 415,000,000
Debt instrument, maturity year	2025
Revolving Credit Facility
Fair Value Measurements Disclosure [Line Items]
Outstanding borrowings		$ 3,000,000	$ 307,700,000	$ 3,000,000		$ 307,700,000

[1] $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

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Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 175,315	$ 170,209	$ 98,214
Fair Value Measurements, Recurring | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	175,315
Fair Value Measurements, Recurring | Cash | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	174,927
Fair Value Measurements, Recurring | Interest Bearing Deposits | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	388
Fair Value Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	175,315
Fair Value Measurements, Recurring | Level 1 | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	174,927
Fair Value Measurements, Recurring | Level 1 | Interest Bearing Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 388

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Earnings per Share - Reconciliation Between Basic and Diluted Earnings per Share (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Numerator:
Net Income (Loss)		$ 48,570	$ (42,466)	$ 67,022	$ (10,726)
Add: Interest expense, net of tax, related to the 2025 Notes	[1]			58
Numerator for diluted EPS		$ 48,570	$ (42,466)	$ 67,080	$ (10,726)
Denominator:
Denominator for basic EPS - weighted average shares		195,329	180,189	195,214	174,544
Add: Dilutive effect of the 2025 Notes	[1],[2]			417
Add: Dilutive effect of stock options and non-vested restricted stock	[3]	774		1,191
Denominator for diluted EPS - adjusted weighted average shares		196,103	180,189	196,822	174,544
Anti-dilutive shares	[4]	509	29,221	397	38,763

[1] During the 26 weeks ended July 30, 2022, the Company adopted ASU 2020-06. The Company utilizes the "if-converted" method of calculated diluted EPS. Refer to Note 2 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06.

[2] For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company's 2025 Notes, respectively, that were excluded from the dilutive earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

[3] For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

[4] For both periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

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Earnings per Share - Reconciliation Between Basic and Diluted Earnings per Share (Parenthetical) (Details) - shares		3 Months Ended		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation	[1]	509	29,221	397	38,763
Equity Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation			3,900,000		1,900,000
Convertible Senior Notes Due 2025
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation			25,300,000		36,800,000

[1] For both periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

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Earnings per Share (Additional Information) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	Jul. 28, 2022	Jun. 03, 2022	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Cumulative treasury stock, shares			52,085	54,502	62,254
ASR Agreement | JPM
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Payments for accelerated share repurchase		$ 200
Number of shares repurchased	3,700	13,400
Cumulative treasury stock, shares	17,000
Shares repurchased price per share	$ 11.75

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Property and Equipment (Detail) - USD ($) $ in Thousands	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Property, Plant and Equipment [Abstract]
Property and equipment, at cost	$ 2,772,496	$ 2,707,061	$ 2,603,212
Less: Accumulated depreciation and impairment	(2,013,760)	(1,925,547)	(1,827,243)
Property and equipment, net	$ 758,736	$ 781,514	$ 775,969

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Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net (Detail) - USD ($) $ in Thousands		Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Goodwill [Line Items]
Goodwill, gross		$ 269,160	$ 269,141	$ 275,602
Accumulated impairment	[1]	(4,196)	(4,196)	(4,196)
Goodwill, net		264,964	264,945	271,406
Intangible assets, at cost		146,577	146,228	145,765
Accumulated amortization		(56,265)	(51,692)	(47,114)
Intangible assets, net		$ 90,312	$ 94,536	$ 98,651

[1] Accumulated impairment includes $1.7 million recorded in Fiscal 2019 and $2.5 million recorded in Fiscal 2016

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Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net, (Parenthetical) (Detail) - USD ($) $ in Millions	12 Months Ended
	Feb. 01, 2020	Jan. 28, 2017
Intangible Assets, Net (Including Goodwill) [Abstract]
Accumulated impairment	$ 1.7	$ 2.5

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Long-Term Debt, Net - Components of Long-Term Debt (Detail) - USD ($) $ in Thousands	Jul. 29, 2023	Jan. 28, 2023	Jul. 30, 2022
Credit Facility
Debt Instrument [Line Items]
Credit Facility borrowings	$ 3,000		$ 307,700
2025 Notes
Debt Instrument [Line Items]
2025 Notes principal		$ 8,791	69,601
Less: unamortized discount		105	779
2025 Notes, net		$ 8,686	$ 68,822

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Long-Term Debt, Net - Additional Information (Detail)		1 Months Ended				3 Months Ended				6 Months Ended		7 Months Ended
	Feb. 10, 2023 USD ($) shares	Dec. 31, 2022 USD ($) shares	Jun. 30, 2022 USD ($) shares	Apr. 30, 2020 USD ($) TradingDay	Jan. 31, 2019 USD ($)	Jul. 29, 2023 USD ($)	Jan. 28, 2023 USD ($)	Jul. 30, 2022 USD ($)	Jul. 30, 2022 USD ($) shares	Jul. 29, 2023 USD ($) shares	Jul. 30, 2022 USD ($) shares	Dec. 31, 2022 USD ($)
Credit Facilities
Line Of Credit Facility [Line Items]
Credit facility interest rate										0.10
Weighted average interest rate for borrowings						6.20%				6.00%
Interest expense						$ 500,000			$ 1,000,000	$ 1,100,000	$ 1,000,000
Outstanding borrowings						3,000,000		$ 307,700,000	307,700,000	$ 3,000,000	307,700,000
Credit Facilities | SOFR | Minimum
Line Of Credit Facility [Line Items]
Accrued interest margin rate										1.125%
Credit Facilities | SOFR | Maximum
Line Of Credit Facility [Line Items]
Accrued interest margin rate										1.375%
Credit Facilities | Alternate Base Rate | Minimum
Line Of Credit Facility [Line Items]
Accrued interest margin rate										0.125%
Credit Facilities | Alternate Base Rate | Maximum
Line Of Credit Facility [Line Items]
Accrued interest margin rate										0.375%
Credit Agreement | Credit Facilities
Line Of Credit Facility [Line Items]
Loans and letters of credit maximum borrowing capacity			$ 700,000,000		$ 400,000,000	700,000,000				$ 700,000,000
Line of credit facility, expiration date					Jan. 30, 2024					Jun. 24, 2027
Credit Agreement | Stand-by Letters of Credit
Line Of Credit Facility [Line Items]
Letters of credit outstanding amount						7,700,000				$ 7,700,000
Credit Agreement | Credit Agreement Loans
Line Of Credit Facility [Line Items]
Letters of credit outstanding amount						$ 3,000,000				$ 3,000,000
Outstanding borrowings								307,700,000	$ 307,700,000		$ 307,700,000
Common Stock
Line Of Credit Facility [Line Items]
Exchange of Convertible Senior Notes (in shares) | shares									34,679	1,099	34,679
2025 Notes
Line Of Credit Facility [Line Items]
Aggregate principal amount of debt issued				$ 415,000,000
Debt instrument, stated interest rate				3.75%
Debt instrument, maturity year				2025
Debt instrument, interest terms				The 2025 Notes had a stated interest rate of 3.75%, payable semi-annually.
Debt instrument, frequency of periodic payment of interest				payable semi-annually
Debt instrument, redemption earliest date	Apr. 17, 2023			Apr. 17, 2023
Debt instrument, redemption, scheduled trading day immediately preceding maturity date | TradingDay				40
Debt instrument, redemption percentage of common stock price to conversion price				130.00%
Debt instrument, redemption, effect for trading days | TradingDay				20
Debt instrument, redemption, consecutive trading day period | TradingDay				30
Notes exchange aggregate principal amount	$ 8,800,000	$ 60,800,000	342,400,000									$ 403,200,000
Cash paid to noteholders			136,100,000
Carrying value of notes		$ 60,400,000	$ 339,200,000									$ 60,400,000
Pre-tax inducement charge							$ 4,700,000	$ 55,700,000
2025 Notes | Common Stock
Line Of Credit Facility [Line Items]
Exchange of Convertible Senior Notes (in shares) | shares	1,100,000	7,600,000	34,700,000

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Long-Term Debt, Net - Schedule of Interest Expense for Notes (Detail) - 2025 Notes - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Debt Instrument [Line Items]
Accrued interest for interest payments	$ 2,008	$ 70	$ 5,914
Amortization of discount	255	10	782
Total interest expense	$ 2,263	$ 80	$ 6,696

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Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 10,500	$ 8,600	$ 25,355	$ 22,946
Share-based compensation, net of tax	$ 7,700	$ 7,700	18,400	20,400
Net proceeds from stock options exercised			$ 1,095	$ 1,369
Shares available for all equity grants	12.0		12.0
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Unrecognized compensation expense, weighted average period			1 year 9 months 18 days
Unrecognized compensation expense, restricted stock grants	$ 7,400		$ 7,400
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	9,100		$ 9,100
Unrecognized compensation expense, weighted average period			2 years 1 month 6 days
Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Unrecognized compensation expense, weighted average period			2 years 2 months 12 days
Unrecognized compensation expense, restricted stock grants	$ 37,100		$ 37,100

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Share-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Jul. 29, 2023 USD ($) $ / shares shares
Options
Outstanding - beginning of period | shares	3,950
Granted | shares	1,051
Exercised | shares	(70)
Cancelled | shares	(275)
Outstanding - end of period | shares	4,656
Vested and expected to vest - end of period | shares	3,694
Exercisable - end of period | shares	1,199	[1]
Weighted-Average Exercise Price
Outstanding - beginning of period | $ / shares	$ 17.01
Granted | $ / shares	13.17
Exercised | $ / shares	15.72
Cancelled | $ / shares	16.75
Outstanding - end of period | $ / shares	16.18
Vested and expected to vest - end of period | $ / shares	16.35
Exercisable - end of period | $ / shares	$ 10.32	[1]
Weighted-Average Remaining Contractual Term (In years)
Outstanding - end of period	4 years 4 months 24 days
Vested and expected to vest - end of period	3 years 1 month 6 days
Exercisable - end of period	3 years 8 months 12 days	[1]
Aggregate Intrinsic Value
Outstanding - end of period | $	$ 5,217
Vested and expected to vest - end of period | $	733
Exercisable - end of period | $	$ 4,376	[1]

[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 July 29, 2023.

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Share-Based Compensation - Black-Scholes Option Valuation Assumptions (Detail)		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	[1]	3.40%	2.50%
Dividend yield		2.80%	3.80%
Volatility factor	[2]	55.70%	52.20%
Weighted-average expected term	[3]	4 years 6 months	4 years 6 months

[1] Based on the United States 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.

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Share-Based Compensation - Summary of Restricted Stock Activity (Detail) shares in Thousands	6 Months Ended
	Jul. 29, 2023 $ / shares shares
Time Based Restricted Stock Units
Shares
Nonvested - beginning of period | shares	2,749
Granted | shares	1,846
Vested | shares	(1,551)
Cancelled | shares	(158)
Nonvested - end of period | shares	2,886
Weighted-Average Grant Date Fair Value
Nonvested - beginning of period | $ / shares	$ 17
Granted | $ / shares	13.03
Vested | $ / shares	14.88
Cancelled | $ / shares	15.68
Nonvested - end of period | $ / shares	$ 15.67
Performance-Based Restricted Stock Units
Shares
Nonvested - beginning of period | shares	1,574
Granted | shares	927
Vested | shares	(421)
Cancelled | shares	(74)
Nonvested - end of period | shares	2,006
Weighted-Average Grant Date Fair Value
Nonvested - beginning of period | $ / shares	$ 20.11
Granted | $ / shares	14.9
Vested | $ / shares	15.95
Cancelled | $ / shares	23.93
Nonvested - end of period | $ / shares	$ 18.43

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Income Tax Disclosure [Abstract]
Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months	$ 1.1		$ 1.1
Effective income tax benefit rate	27.00%	10.90%	27.10%	(82.50%)

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Segment Reporting - Additional Information (Detail)	6 Months Ended
	Jul. 29, 2023 Segment
Segment Reporting Information [Line Items]
Number of operating segments	2
Number of reportable segments	2

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Segment Reporting - Summary of Reportable Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Segment Reporting Information [Line Items]
Total net revenue	$ 1,200,879	$ 1,198,124	$ 2,281,805	$ 2,253,161
Adjusted operating income	65,290	14,014	109,396	55,916
Less: Impairment, restructuring and other charges			(21,275)
Operating income	65,290	14,014	88,121	55,916
Debt related charges		60,066		60,066
Interest expense, net	951	3,421	1,642	8,009
Other income, net	(2,150)	(1,839)	(5,461)	(6,283)
Income (loss) before income taxes	66,489	(47,634)	91,940	(5,876)
Capital expenditures	46,102	69,464	91,959	127,858
General Corporate Expenses
Segment Reporting Information [Line Items]
Adjusted operating income	(110,286)	(95,419)	(211,081)	(184,270)
Capital expenditures	12,810	16,359	26,960	26,943
Operating Segments
Segment Reporting Information [Line Items]
Total net revenue	1,147,431	1,149,511	2,177,605	2,156,802
Adjusted operating income	185,917	120,940	347,125	267,918
Operating Segments | American Eagle
Segment Reporting Information [Line Items]
Total net revenue	767,018	777,828	1,438,110	1,463,407
Adjusted operating income	128,664	109,110	234,203	213,015
Capital expenditures	16,249	18,754	31,192	34,524
Operating Segments | Aerie
Segment Reporting Information [Line Items]
Total net revenue	380,413	371,683	739,495	693,395
Adjusted operating income	57,253	11,830	112,922	54,903
Capital expenditures	10,889	30,244	22,077	61,259
Other
Segment Reporting Information [Line Items]
Total net revenue	108,318	110,393	217,675	200,077
Adjusted operating income	(10,341)	(11,507)	(26,648)	(27,732)
Capital expenditures	6,154	4,107	11,730	5,132
Intersegment Elimination
Segment Reporting Information [Line Items]
Total net revenue	$ (54,870)	$ (61,780)	$ (113,475)	$ (103,718)

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Segment Reporting - Summary of Geographical Information (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023	Jul. 30, 2022
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue		$ 1,200,879	$ 1,198,124	$ 2,281,805	$ 2,253,161
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue		1,005,197	1,027,158	1,919,588	1,935,323
Foreign
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	[1]	$ 195,682	$ 170,966	$ 362,217	$ 317,838

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

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Impairment, Restructuring and Other Charges - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 29, 2023	Jul. 29, 2023
Restructuring and Related Activities [Abstract]
Impairment and restructuring charges	$ 0	$ 21,275

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Impairment, Restructuring and Other Charges - Schedule of Impairment and Restructuring Charges (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023		Jul. 30, 2022
Restructuring and Related Activities [Abstract]
Long-lived asset impairment charges		$ 0	$ 0	$ 10,759	[1]	$ 0
Employee related costs	[2]			5,592
Other commercial related charges	[3]			4,924
Total impairment, restructuring and other charges		$ 0		$ 21,275

[1] $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.

[2] $5.6 million of severance costs

[3] $4.9 million of contract related charges, resulting from the restructuring of Quiet Platforms

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Impairment, Restructuring and Other Charges - Schedule of Impairment and Restructuring Charges (Parenthetical) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 29, 2023	Jul. 30, 2022	Jul. 29, 2023		Jul. 30, 2022
Restructuring Cost and Reserve [Line Items]
Severance Costs				$ 5,600
Contract related charges	[1]			4,924
Impairment charges		$ 0	$ 0	10,759	[2]	$ 0
Quiet Platforms
Restructuring Cost and Reserve [Line Items]
Contract related charges				4,900
Impairment charges				$ 10,800

[1] $4.9 million of contract related charges, resulting from the restructuring of Quiet Platforms

[2] $10.8 million of impairment of supply chain technology assets due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms.