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 October 30, 2021

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: 168,621,661 Common Shares were outstanding at November 19, 2021.

AMERICAN EAGLE OUTFITTERS, INC.

TABLE OF CONTENTS

		Page Number
PART I - FINANCIAL INFORMATION
	Forward Looking Statements	3
Item 1.	Financial Statements	7
	Consolidated Balance Sheets: October 30, 2021, January 30, 2021 and October 31, 2020	7
	Consolidated Statements of Operations: 13 and 39 weeks ended October 30, 2021 and October 31, 2020	8
	Consolidated Statements of Comprehensive Income: 13 and 39 weeks ended October 30, 2021 and October 31, 2020	9
	Consolidated Statements of Stockholders’ Equity: 13 and 39 weeks ended October 30, 2021 and October 31, 2020	10
	Consolidated Statements of Cash Flows: 39 weeks ended October 30, 2021 and October 31, 2020	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	40
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	N/A
Item 4.	Mine Safety Disclosures	N/A
Item 5.	Other Information	N/A
Item 6.	Exhibits	43

2

FORWARD LOOKING STATEMENTS

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

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

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

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

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

• the success of our business priorities and strategies;

• the continued validity of our trademarks;

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

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

• the payment of a dividend in future periods;

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

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

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

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

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

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

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

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

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

3

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

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

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

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

• the reduction of operating expenses; and

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

4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5

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

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

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

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

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

Any forward-looking statement speaks only as of the date on which such statement is made, and we do not intend to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

6

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

	October 30,			January 30,			October 31,
(In thousands, except per share amounts)	2021			2021			2020
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	740,668		$	850,477		$	692,356
Merchandise inventory		739,808			405,445			559,961
Accounts receivable, net		228,461			146,102			124,560
Prepaid expenses and other		66,593			120,619			130,909
Total current assets		1,775,530			1,522,643			1,507,786
Property and equipment, at cost, net of accumulated depreciation		665,408			623,808			650,397
Operating lease right-of-use assets		1,148,108			1,155,965			1,243,311
Intangible assets net, including goodwill		69,332			70,332			50,864
Non-current deferred income taxes		57,753			33,045			12,774
Other Assets		33,884			29,013			33,083
Total assets	$	3,750,015		$	3,434,806		$	3,498,215
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	314,561		$	255,912		$	304,552
Current portion of operating lease liabilities		299,693			328,624			346,321
Accrued compensation and payroll taxes		123,588			142,272			117,736
Other current liabilities and accrued expenses		56,090			55,343			47,587
Unredeemed gift cards and gift certificates		42,070			62,181			39,794
Accrued income and other taxes		33,570			14,150			15,503
Dividends payable		—			—			22,843
Total current liabilities		869,572			858,482			894,336
Non-current liabilities:
Non-current operating lease liabilities		1,123,681			1,148,742			1,196,755
Long-term debt, net		336,249			325,290			321,081
Other non-current liabilities		23,816			15,627			17,846
Total non-current liabilities		1,483,746			1,489,659			1,535,682
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; 168,622, 166,335, and 166,129 shares    outstanding, respectively		2,496			2,496			2,496
Contributed capital		627,264			663,718			655,891
Accumulated other comprehensive loss		(39,049	)		(40,748	)		(44,673	)
Retained earnings		2,185,393			1,868,613			1,865,370
Treasury stock at cost, 80,944, 83,231, and 83,437 shares, respectively		(1,379,407	)		(1,407,414	)		(1,410,887	)
Total stockholders’ equity		1,396,697			1,086,665			1,068,197
Total liabilities and stockholders’ equity	$	3,750,015		$	3,434,806		$	3,498,215

Refer to Notes to Consolidated Financial Statements

7

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	13 Weeks Ended						39 Weeks Ended
	October 30,			October 31,			October 30,			October 31,
(In thousands, except per share amounts)	2021			2020			2021			2020
Total net revenue	$	1,274,078		$	1,031,617		$	3,502,848		$	2,466,819
Cost of sales, including certain buying, occupancy and    warehousing expenses		709,554			616,840			1,999,743			1,758,537
Gross profit		564,524			414,777			1,503,105			708,282
Selling, general and administrative expenses		313,890			273,297			872,320			685,206
Impairment, restructuring and COVID-19 related charges		—			6,955			—			177,186
Depreciation and amortization expense		40,947			38,974			119,674			120,818
Operating income (loss)		209,687			95,551			511,111			(274,928	)
Interest expense, net		8,612			7,924			26,038			16,617
Other (income), net		(3,130	)		(2,223	)		(6,354	)		(793	)
Income (loss) before income taxes		204,205			89,850			491,427			(290,752	)
Provision (benefit) for income taxes		51,981			31,742			122,226			(77,943	)
Net income (loss)	$	152,224		$	58,108		$	369,201		$	(212,809	)
Net income (loss) per basic share	$	0.91		$	0.35		$	2.20		$	(1.28	)
Net income (loss) per diluted share	$	0.74		$	0.32		$	1.78		$	(1.28	)
Weighted average common shares outstanding - basic		167,637			166,185			168,062			166,385
Weighted average common shares outstanding - diluted		205,013			184,397			207,032			166,385

Refer to Notes to Consolidated Financial Statements

8

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	13 Weeks Ended					39 Weeks Ended
	October 30,			October 31,		October 30,		October 31,
(In thousands)	2021			2020		2021		2020
Net income (loss)	$	152,224		$	58,108	$	369,201	$	(212,809	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(2,155	)		3,318		1,699		(11,505	)
Other comprehensive (loss) income		(2,155	)		3,318		1,699		(11,505	)
Comprehensive income (loss)	$	150,069		$	61,426	$	370,900	$	(224,314	)

Refer to Notes to Consolidated Financial Statements

9

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

13 Weeks Ended October 30, 2021 and October 31, 2020
(In thousands, except per share amounts)	Shares Outstanding			Common Stock		Contributed Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss)			Stockholders' Equity
Balance at August 1, 2020		166,090		$	2,496	$	647,284		$	1,807,687		$	(1,411,576	)	$	(47,991	)	$	997,900
Stock awards		—			—		8,946			—			—			—			8,946
Repurchase of common stock from employees		(11	)		—		—			—			(142	)		—			(142	)
Reissuance of treasury stock		50			—		(536	)		(420	)		831			—			(125	)
Net income		—			—		—			58,108			—			—			58,108
Other comprehensive income		—			—		—			—			—			3,318			3,318
Cash dividends declared and dividend    equivalents ($0.1375 per share)		—			—		197			(5	)		—			—			192
Balance at October 31, 2020		166,129		$	2,496	$	655,891		$	1,865,370		$	(1,410,887	)	$	(44,673	)	$	1,068,197
Balance at July 31, 2021		168,454		$	2,496	$	630,506		$	2,058,448		$	(1,379,025	)	$	(36,894	)	$	1,275,531
Stock awards		—			—		7,791			—			—			—			7,791
Repurchase of common stock from employees		(188	)		—		—			—			(6,452	)		—			(6,452	)
Reissuance of treasury stock		356			—		(11,778	)		5,820			6,070			—			112
Net income		—			—		—			152,224			—			—			152,224
Other comprehensive (loss)		—			—		—			—			—			(2,155	)		(2,155	)
Cash dividends declared and dividend    equivalents ($0.1800 per share)		—			—		745			(31,099	)		—			—			(30,354	)
Balance at October 30, 2021		168,622		$	2,496	$	627,264		$	2,185,393		$	(1,379,407	)	$	(39,049	)	$	1,396,697
39 Weeks Ended October 30, 2021 and October 31, 2020
(In thousands, except per share amounts)	Shares Outstanding			Common Stock		Contributed Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss)			Stockholders' Equity
Balance at February 1, 2020		166,993		$	2,496	$	577,856		$	2,108,292		$	(1,407,623	)	$	(33,168	)	$	1,247,853
Stock awards		—			—		24,300			—			—			—			24,300
Repurchase of common stock as part of    publicly announced programs		(1,720	)		—		—			—			(20,000	)		—			(20,000	)
Repurchase of common stock from employees		(447	)		—		—			—			(5,357	)		—			(5,357	)
Convertible Senior Notes - Equity portion, net of tax		—			—		68,330			—			—			—			68,330
Reissuance of treasury stock		1,303			—		(15,324	)		(7,270	)		22,093			—			(501	)
Net loss		—			—		—			(212,809	)		—			—			(212,809	)
Other comprehensive (loss)		—			—		—			—			—			(11,505	)		(11,505	)
Cash dividends declared and dividend    equivalents ($0.1375 per share)		—			—		729			(22,843	)		—			—			(22,114	)
Balance at October 31, 2020		166,129		$	2,496	$	655,891		$	1,865,370		$	(1,410,887	)	$	(44,673	)	$	1,068,197
Balance at January 30, 2021		166,335		$	2,496	$	663,718		$	1,868,613		$	(1,407,414	)	$	(40,748	)	$	1,086,665
Stock awards		—			—		29,245			—			—			—			29,245
Repurchase of common stock from employees		(779	)		—		—			—			(23,963	)		—			(23,963	)
Reissuance of treasury stock		2,719			—		(58,063	)		26,417			46,071			—			14,425
Equity portion of partial extinguishment of Convertible Senior Notes, net of tax		347			—		(9,876	)		6,995			5,899			—			3,018
Net income		—			—		—			369,201			—			-			369,201
Other comprehensive income		—			—		—			—			—			1,699			1,699
Cash dividends declared and dividend    equivalents ($0.4975 per share)		—			—		2,240			(85,833	)		—			—			(83,593	)
Balance at October 30, 2021		168,622		$	2,496	$	627,264		$	2,185,393		$	(1,379,407	)	$	(39,049	)	$	1,396,697

Refer to Notes to Consolidated Financial Statements

10

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	39 Weeks Ended
	October 30,			October 31,
(In thousands)	2021			2020
Operating activities:
Net income (loss)	$	369,201		$	(212,809	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		122,906			123,094
Share-based compensation		29,435			24,685
Deferred income taxes		(28,261	)		12,013
Loss on impairment of assets		—			153,617
Changes in assets and liabilities:
Merchandise inventory		(333,871	)		(114,907	)
Operating lease assets		222,403			189,630
Operating lease liabilities		(269,153	)		(146,809	)
Other assets		(44,120	)		(86,501	)
Accounts payable		57,363			17,769
Accrued compensation and payroll taxes		(18,690	)		74,374
Accrued and other liabilities		26,488			(44,550	)
Net cash provided by (used for) operating activities		133,701			(10,394	)
Investing activities:
Capital expenditures for property and equipment		(144,405	)		(92,591	)
Purchase of available-for-sale investments		(75,000	)		(14,956	)
Sale of available-for-sale investments		75,000			69,956
Other investing activities		(4,372	)		(511	)
Net cash (used for) investing activities		(148,777	)		(38,102	)
Financing activities:
Repurchase of common stock as part of publicly announced programs		—			(20,000	)
Repurchase of common stock from employees		(23,963	)		(5,357	)
Proceeds from revolving line of credit and convertible senior notes		—			736,108
Principal payments on revolving line of credit		—			(330,000	)
Net proceeds from stock options exercised		13,065			—
Cash dividends paid		(83,593	)		—
Other financing activities		(329	)		(889	)
Net cash (used for) provided by financing activities		(94,820	)		379,862
Effect of exchange rates changes on cash		87			(940	)
Net change in cash and cash equivalents		(109,809	)		330,426
Cash and cash equivalents - beginning of period		850,477			361,930
Cash and cash equivalents - end of period	$	740,668		$	692,356

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,” ”us,” and “our”) at October 30, 2021 and October 31, 2020 and for the 13-and 39-week periods ended October 30, 2021 and October 31, 2020 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2021 (the “Fiscal 2020 Form 10-K”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the footnotes 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 on Form 10-Q.

Founded in 1977, the Company is a leading multi-brand, global specialty retailer that operates under the American Eagle^® (“AE” or “American Eagle”) and Aerie^® (“Aerie”) brands.  The Aerie brand includes OFFLINE^TM by Aerie, a new sub-brand offering a complete collection of active wear and accessories built for REAL movement and REAL comfort launched in Fiscal 2020 (as defined below). 

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

We offer a broad assortment of high quality, on-trend apparel, accessories, and personal care products at affordable prices for men and women under the AE brand, and intimates, apparel, active wear, and swim collections under the Aerie brand. We sell directly to consumers through our retail channel, which includes our stores and concession-based shop-within-shops. We operate stores in the U.S., Canada, Mexico, and Hong Kong. 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 operates more than 1,000 retail stores in the U.S. and internationally, online at www.ae.com and www.aerie.com, as well www.toddsnyder.com and www.unsubscribed.com (which e-commerce operations we collectively refer to as “AEO Direct”), and more than 200 international store locations managed by third-party operators.

In Fiscal 2021, we acquired AirTerra, a logistics and supply chain platform that solves ecommerce fulfillment and shipping challenges in a unique and innovative way for retailers and brands of all sizes. This acquisition represents the first step in building our supply chain platform, as part our ongoing supply chain transformation strategy of leveraging scale and innovation 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.  During Fiscal 2020, historic seasonal trends were impacted by consumer behavior due to the coronavirus (“COVID-19”) global pandemic.

COVID-19 Pandemic

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

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

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

2.  Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.  At October 30, 2021, 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 2021” refers to the 52-week period that will end on January 29, 2022.  “Fiscal 2020” refers to the 52-week period ended January 30, 2021.  “Fiscal 2019” refers to the 52-week period ended February 1, 2020.

Estimates

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

Recent Accounting Pronouncements             

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

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

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in 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 calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company will adopt ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective approach.

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

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

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

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

Cash and Cash Equivalents and Short-Term Investments

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

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

Receivables

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

Merchandise Inventory

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

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its current 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 - five years

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As of October 30, 2021, the weighted average remaining useful life of our assets was approximately 7.0 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, which have been open for a period sufficient to reach maturity.  The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts.  When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income under impairment, restructuring and COVID-19 related charges.

When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense.  Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and to Note 13 to the Consolidated Financial Statements for additional information regarding impairment charges for the 39 weeks ended October 31, 2020.  

Intangible Assets, including Goodwill

The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business, and other immaterial acquisitions.  In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment at least annually or more frequently if an impairment indicator exists, by comparing the estimated fair value of each reporting unit to its carrying value. As a result of the Company’s annual goodwill impairment test as of January 30, 2021, the Company concluded that its goodwill was not impaired.

Definite-lived intangible assets are recorded on the basis of cost 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 15 to 25 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 350 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 39 weeks ended October 30, 2021 and October 31, 2020.

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

Gift Cards

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

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

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

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

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

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

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

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

Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

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No operating lease ROU asset impairments were recorded for the 13 or 39 weeks ended October 30, 2021. There was no operating lease ROU impairment recorded for the 13 weeks ended October 31, 2020. During the 39 weeks ended October 31, 2020, the Company recorded impairment of operating lease ROU assets of $84.1 million.  Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

Leases Modifications and COVID-19

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

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

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

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

Co-branded Credit Card

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

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

Customer Loyalty Program

In June 2020, the Company launched 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. Prior to the Program’s launch in June 2020, we also offered additional rewards for key items such as jeans and bras under our previous program, AEO Connected™.  Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.  

Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).  The portion of the sales revenue attributed to the award points is deferred and recognized when the award 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.

Sales Return Reserve

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. 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.  

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The presentation on a gross basis consists of a separate right of return asset and liability.  These amounts are recorded within (i) prepaid expenses and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement 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.

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 unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption above.

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. 

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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”) and buying, occupancy and warehousing costs.

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 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. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, equipment leasing costs, and services purchased.

Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing, and importing teams, our buyers, and our distribution centers, as these amounts are recorded in cost of sales.  Additionally, selling, general and administrative 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.

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Notes and borrowings under the revolving credit facility, as well as interest income from cash, cash equivalents, and short-term investments.

Other (Income), Net

Other (income), net consists primarily of gains and losses resulting from foreign currency transactions.

Segment Information

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

3.  Cash and Cash Equivalents

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

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

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

Long-Term Debt

As of October 30, 2021, the Company had no outstanding borrowings under its revolving credit facilities and had repaid the outstanding borrowings of $330 million under its revolving credit facilities as of October 31, 2020.  

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

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

Non-Financial Assets

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

Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. There were no asset impairment charges recorded during the 13 or 39 weeks ended October 30, 2021. There were no asset impairment charges recorded during the 13 weeks ended October 31, 2020.  During the 39 weeks ended October 31, 2020, the Company recorded asset impairment charges of $153.6 million.  Included in this amount are retail store impairment charges of $109.6 million, of which $84.1 million relates to operating lease ROU assets and $25.5 million relates to store property and equipment (fixtures and equipment and leasehold improvements).  This impairment was primarily driven by store closures due to the COVID-19 pandemic.  We also recorded $26.0 million of impairment related charges to certain corporate property and equipment, as well as $18.0 million of impairment charges related to certain cost and equity method investments.  The assets were adjusted to their fair value and the loss on impairment was recorded within impairment, restructuring and COVID-19 related charges in the Consolidated Statements of Operations. The fair value of the impaired assets, after the recorded loss, was approximately $163.4 million.  

The fair value of the impaired assets was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest and a real estate market participant discount rate for the ROU assets. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located.

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5.  Earnings per Share

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

	13 Weeks Ended				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,637		166,185		168,062		166,385
Dilutive effect of convertible notes		33,687		16,382		34,616		—
Dilutive effect of stock options and non-vested    restricted stock		3,689		1,830		4,354		—
Diluted number of common shares outstanding		205,013		184,397		207,032		166,385
Anti-Dilutive Shares*		286		1,423		172		9,250

*For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes 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. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

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

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

6.  Property and Equipment

Property and equipment consists of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Property and equipment, at cost	$	2,394,148		$	2,250,974		$	2,255,676
Less:  Accumulated depreciation and impairment		(1,728,740	)		(1,627,166	)		(1,605,279	)
Property and equipment, net	$	665,408		$	623,808		$	650,397

7.  Intangible Assets, including Goodwill

Intangible assets consist of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Goodwill, gross	$	20,585		$	17,463		$	17,331
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	16,389		$	13,267		$	13,135
Trademarks, at cost	$	93,504		$	92,663		$	72,194
Accumulated amortization		(40,561	)		(35,598	)		(34,465	)
Trademarks, net	$	52,943		$	57,065		$	37,729
Intangible assets, net, including goodwill	$	69,332		$	70,332		$	50,864

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

8.  Long-Term Debt, Net

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

(In thousands)	October 30, 2021		January 30, 2021		October 31, 2020
Convertible senior notes principal	$	412,025	$	415,025	$	415,025
Less: unamortized discount		75,776		89,735		93,944
Total long-term debt, net	$	336,249	$	325,290	$	321,081
Convertible Senior Notes - Equity portion, net of tax		58,454		68,330		68,330

Convertible notes

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

The Company does not have the right to redeem the Notes prior to April 17, 2023. On or after April 17, 2023 and prior to the 40th scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the Notes, at its option, for cash, if the last reported sale price of the Company’s common stock has 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. Beginning January 2025, noteholders may convert their Notes for approximately 117.1 shares of common stock per $1,000 principal amount of the Notes, equivalent to a conversion price of approximately $8.54 per share.

The Company has the right to settle conversions in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the Notes in cash and any conversion value above the principal in common stock. Because of this repayment policy, only the conversion spread portion of the amount owed is reflected as dilutive in earnings per share.

The effective interest rate for the Notes is 10.0% and the Company calculated the effective yield using a market approach.  The remaining amortization period of the discount is 3.50 years as of October 30, 2021.

Interest expense for the Notes was:

	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Accrued interest for interest payments	$	3,863	$	3,848	$	11,611	$	7,966
Amortization of discount		4,569		4,113		13,953		8,308
Total interest expense	$	8,432	$	7,961	$	25,564	$	16,274

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

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

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Revolving credit facilities

In January 2019, the Company entered into an amended and restated Credit Agreement (the “Credit Agreement”) for five-year, syndicated, asset-based revolving credit facilities (the “Credit Facilities”). The Credit Agreement provides senior secured revolving credit for loans and letters of credit up to $400 million, subject to customary borrowing base limitations. The Credit Facilities expire on January 30, 2024.

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

As of October 30, 2021, the Company was in compliance with the terms of the Credit Agreement and had $7.9 million outstanding in stand-by letters of credit. No loans were outstanding under the Credit Agreement as of October 30, 2021.  As of October 31, 2020, the Company had repaid $330.0 million of outstanding loans under its Credit Facilities.  

9.  Share-Based Compensation

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

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

Stock Option Grants

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

				Weighted- Average		Weighted- Average Remaining Contractual		Aggregate
	Options			Exercise Price		Term		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 30, 2021		3,940		$	14.87
Granted		478		$	31.46
Exercised (1)		(771	)	$	16.33
Outstanding - October 30, 2021		3,647		$	16.74		4.5	$	29,226
Vested and expected to vest - October 30, 2021		2,503		$	16.59		3.2	$	14,678
Exercisable - October 30, 2021 (2)		1,788		$	16.28		1.7	$	13,345

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

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

Cash received from the exercise of stock options was $13.1 million for the 39 weeks ended October 30, 2021. The actual tax benefit realized from share-based payments totaled $4.3 million for the 39 weeks ended October 30, 2021. There were no stock options exercised during the 39 weeks ended October 31, 2020. 

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

	39 Weeks Ended	39 Weeks Ended
	October 30,	October 31,
Black-Scholes Option Valuation Assumptions	2021	2020
Risk-free interest rate (1)	0.9%	0.3 - 0.6%
Dividend yield	1.6%	3.5 - 6.0%
Volatility factor (2)	50.7%	43.1 - 48.7%
Weighted-average expected term (3)	4.5 years	4.4 years

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

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

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

Restricted Stock Grants

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

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

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

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

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	October 30, 2021					October 30, 2021
(Shares in thousands)	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Nonvested - January 30, 2021		3,698		$	12.42		1,868		$	17.44
Granted		699		$	32.47		337		$	39.54
Vested		(1,478	)	$	14.90		(418	)	$	22.22
Cancelled		(200	)	$	13.49		(324	)	$	17.72
Nonvested - October 30, 2021		2,719		$	16.15		1,463		$	21.10

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

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

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10.  Income Taxes

The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended October 30, 2021 was 25.5% compared to 35.3% for the 13 weeks ended October 31, 2020.  The effective income tax rate for the 39 weeks ended October 30, 2021 was 24.9% compared to the effective tax benefit rate of 26.8% for the 39 weeks ended October 31, 2020. The change in the effective tax rate, as compared to the prior period, is primarily due to benefits recognized as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which impacted the 13 weeks ended October 31, 2020.  The CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods in which the U.S. federal corporate income tax rate was 35%, as opposed to the current U.S. federal corporate income tax rate of 21%, which resulted in a higher rate applicable to the 13 weeks ended October 31, 2020.

The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended October 30, 2021.  Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $0.6 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 and Aerie) that also represent our reportable segments and reflect the Chief Operating Decision Maker’s (defined as our CEO) internal view of analyzing results and allocating resources. Historically, all operating segments were aggregated as permitted by ASC 280 as one reportable segment. In the fourth quarter of Fiscal 2020, we revised our reportable segment structure to have two reportable segments, American Eagle and Aerie.

Our CEO analyzes segment results and allocates resources based on adjusted operating income (loss), which is a non-GAAP measure. Adjusted operating income (loss) is defined as operating income (loss) excluding impairment, restructuring and COVID-19 related charges.  Adjusted operating income (loss) may not be comparable to similarly titled measures of other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We use this non-GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results and provides a higher degree of transparency. The following includes a reconciliation from consolidated operating income (loss), the most directly comparable GAAP operating performance measure presented on the Consolidated Financial Statements, to our non-GAAP adjusted operating income (loss) on a consolidated basis.

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(in thousands)	American Eagle		Aerie		Corporate(1)			Total(2)
13 weeks ended October 30, 2021
Total net revenue	$	940,992	$	315,049	$	18,037		$	1,274,078
Operating income (loss)	$	261,225	$	52,021	$	(103,559	)	$	209,687
Capital Expenditures	$	13,298	$	24,867	$	20,036		$	58,201
13 weeks ended October 31, 2020
Total net revenue	$	775,961	$	246,748	$	8,908		$	1,031,617
Operating income (loss)	$	155,259	$	35,738	$	(95,446	)	$	95,551
Impairment, restructuring, and COVID-19 related charges		—		—		6,955			6,955
Adjusted operating income (loss)	$	155,259	$	35,738	$	(88,491	)	$	102,506
Capital Expenditures	$	10,488	$	6,399	$	14,302		$	31,189
39 weeks ended October 30, 2021
Total net revenue	$	2,513,700	$	947,851	$	41,297		$	3,502,848
Operating income (loss)	$	611,650	$	191,341	$	(291,880	)	$	511,111
Capital Expenditures	$	36,093	$	48,164	$	60,148		$	144,405
39 weeks ended October 31, 2020
Total net revenue	$	1,791,042	$	653,240	$	22,537		$	2,466,819
Operating income (loss)	$	1,113	$	47,011	$	(323,052	)	$	(274,928	)
Impairment, restructuring, and COVID-19 related charges		90,926		18,215		68,045			177,186
Adjusted operating income (loss)	$	92,039	$	65,226	$	(255,007	)	$	(97,742	)
Capital Expenditures	$	25,361	$	23,807	$	43,423		$	92,591

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

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

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

The following table present summarized geographical information:

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	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total net revenue:
United States	$	1,104,441	$	898,241	$	3,044,407	$	2,167,145
Foreign (1)	$	169,637	$	133,376	$	458,441		299,674
Total net revenue	$	1,274,078	$	1,031,617	$	3,502,848	$	2,466,819

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

13. Impairment, Restructuring and COVID-19 Related Charges

The following table represents impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 31, 2020.  There were no impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 30, 2021.  All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations.

	13 Weeks Ended		39 Weeks Ended
	October 31,		October 31,
(In thousands)	2020		2020
Impairment charges (1)	$	—	$	153,617
Incremental COVID-19 related expenses (2)		5,951		19,836
Severance and related employee costs		1,004		3,733
Total impairment, restructuring and COVID-19 related charges	$	6,955	$	177,186

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

(2)   Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers.      

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

	39 Weeks Ended
	October 30,
(In thousands)	2021
Restructuring liability as of January 30, 2021	$	2,812
Add: Costs incurred, excluding non-cash charges		—
Less: Cash payments and adjustments		(2,421	)
Restructuring liability as of October 30, 2021	$	391

14. Subsequent Events

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

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

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

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations for Fiscal 2020, which can be found in our Fiscal 2020 Form 10-K filed with the Securities and Exchange Commission on March 11, 2021.

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.

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.

In the fourth quarter of Fiscal 2020, we revised our reportable segment structure to 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). See Note 12 to the Consolidated Financial Statements included herein for additional information.

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

•Record revenue of $1.27 billion increased 24%;

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

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

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

Key Performance Indicators

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

Comparable sales — Comparable sales and comparable sales changes provide a measure of sales growth for stores and channels open at least one year over the comparable prior year period.  In light of store closures and related disruptions from the COVID-19 pandemic, we have not disclosed comparable sales for Fiscal 2021 or Fiscal 2020.

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

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

• 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.

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

Buying, occupancy and warehousing costs 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 profit and consolidated results of operations.

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

Cash flow and liquidity — Our management evaluates cash flow from operations, 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 will be sufficient to fund anticipated capital expenditures, dividends, and working capital requirements for the next twelve months.

COVID-19

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

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

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

Results of Operations

Overview

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

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

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

As of October 30, 2021, we had approximately $740.7 million in cash and cash equivalents, which includes the proceeds from our Notes issuance, discussed in greater detail below and in Note 8 to the Consolidated Financial Statements. We expect to be able to fund our future cash requirements through current cash holdings and available liquidity.  

Absent the impacts of the COVID-19 pandemic, our business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.

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

	13 Weeks Ended								39 Weeks Ended
	October 30,				October 31,				October 30,				October 31,
	2021				2020				2021				2020
Total net revenue		100.0		%		100.0		%		100.0		%		100.0		%
Cost of sales, including certain buying, occupancy    and warehousing expenses		55.7				59.8				57.1				71.3
Gross profit		44.3				40.2				42.9				28.7
Selling, general and administrative expenses		24.6				26.5				24.9				27.8
Impairment, restructuring and COVID-19 related charges		—				0.6				—				7.1
Depreciation and amortization expense		3.2				3.8				3.4				4.9
Operating income (loss)		16.5				9.3				14.6				(11.1	)
Interest expense, net		0.7				0.8				0.7				0.7
Other (income) expense, net		(0.2	)			(0.2	)			(0.2	)			—
Income (loss) before income taxes		16.0				8.7				14.1				(11.8	)
Provision (benefit) for income taxes		4.1				3.1				3.6				(3.2	)
Net income (loss)		11.9		%		5.6		%		10.5		%		(8.6	)	%

The following table shows our consolidated store data:  

	13 Weeks Ended					39 Weeks Ended
	October 30,		October 31,			October 30,			October 31,
	2021		2020			2021			2020
Number of stores:
Beginning of period		1,090		1,098			1,078			1,095
Opened		31		10			62			29
Closed		—		(3	)		(19	)		(19	)
End of period		1,121		1,105			1,121			1,105
Total gross square feet at end of period (in '000)		6,924		6,858			6,924			6,858
International licensed/franchise stores at end of    period (1)		256		225			256			225

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

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

Non-GAAP Information

This results of operations section contains net income (loss) per diluted share presented on an adjusted or non GAAP basis, which is a non-GAAP financial measure (“non-GAAP” or “adjusted”). This financial measure is not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“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

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

	13 Weeks Ended
	October 30,		October 31,
	2021		2020
Net income per diluted share - GAAP Basis	$	0.74	$	0.32
Add: Incremental COVID-19 related expenses and Restructuring(1)		—		0.02
Add: Convertible Debt(2)		0.02		0.01
Net income per diluted share - Adjusted or Non-    GAAP Basis	$	0.76	$	0.35

(1) 13 weeks ended October 31, 2020: $6.0 million of Incremental COVID-19 related expenses consisting of personal protective equipment and supplies for our associates and customers and $1.0 million of corporate severance.

(2) Amortization of the non-cash discount on the Notes.

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

Total Net Revenue

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

American Eagle

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

Aerie

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

Gross Profit

Gross profit increased $149.7 million to $564.5 million compared to $414.8 million last year.  As a percentage of total net revenue, gross margin increased to 44.3%, compared to 40.2% last year. This quarter’s gross margin reflected higher merchandise margins, primarily due to inventory optimization, higher full-priced sales and markdown improvement, partially offset by higher freight costs related to the global supply chain disruptions.  Additionally, both rent and delivery expense improved, as a percent of total net revenue.

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

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

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

Selling, General and Administrative Expenses

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

The 13 weeks ended October 30, 2021 reflected increased SG&A expenses primarily related to increased store payroll, as a result of improved store traffic, as well as increased advertising, partially offset by lower incentive compensation.

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

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

Impairment, Restructuring and COVID-19 Related Charges

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

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

Depreciation and Amortization Expense

Depreciation and amortization expense increased 5%, or $2.0 million, to $40.9 million for the 13 weeks ended October 30, 2021, compared to $39.0 million for the 13 weeks ended October 31, 2020.  As a percentage of total net revenue, depreciation and amortization expense was 3.2% for the 13 weeks ended October 30, 2021 compared to 3.8% for the 13 weeks ended October 31, 2020.

Interest Expense, Net

Interest expense, net increased $0.7 million to $8.6 million for the 13 weeks ended October 30, 2021, compared to $7.9 million for the 13 weeks ended October 31, 2020. The increase in expense was primarily attributable to increased interest expense related to our Notes and lower interest income.

Other (Income), Net

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

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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 13 weeks ended October 30, 2021 was 25.5% compared to 35.3% for the 13 weeks ended October 31, 2020.  

The change in the effective tax rate, as compared to the prior period, is primarily due to benefits recognized as a result of the enactment of the CARES Act, which impacted the 13 weeks ended October 31, 2020.  The CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods in which the U.S. federal corporate income tax rate was 35%, as opposed to the current U.S. federal corporate income tax rate of 21%, which resulted in a higher rate applicable to the 13 weeks ended October 31, 2020.  

Net Income (Loss)

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

Net income per share increased to $0.74 per diluted share for the 13 weeks ended October 30, 2021, which included $0.02 of amortization of the non-cash discount on the Notes, compared to $0.32 per diluted share, including $0.02 of incremental COVID-19 related expenses and restructuring, and $0.01 of amortization of the non-cash discount on the Notes, for the 13 weeks ended October 31, 2020. The change in net income (loss) was attributable to the factors identified above.

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

Total Net Revenue

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

American Eagle

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

Aerie

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

Gross Profit

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

The 39 weeks ended October 31, 2020 were significantly impacted by disruptions related to COVID-19, which resulted in a decline in revenue from retail store closures, higher markdowns, and promotions to clear through spring and summer merchandise, and inventory provisions.  

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

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Our gross profit may not be comparable to that of other retailers, as some retailers include all costs related to their distribution network, as well as design costs in cost of sales and others may exclude a portion of these costs from cost of sales, including them in a line item such as selling, general and administrative 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 for the 39 weeks ending October 30, 2021 increased 27%, or $187.1 million, to $872.3 million from $685.2 million last year. As a percentage of total net revenue, SG&A expenses decreased 290 basis points to 24.9%, compared to 27.8% last year.

The 39 weeks ended October 30, 2021 reflected increased SG&A expenses primarily related to the reopening of our stores, including increased store payroll and variable selling expenses, as well as increased advertising, services and compensation costs.

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

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

Impairment, Restructuring and COVID-19 Related Charges

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

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

Depreciation and Amortization Expense

Depreciation and amortization expense decreased 1%, or $1.1 million, to $119.7 million for the 39 weeks ended October 30, 2021, compared to $120.8 million for the 39 weeks ended October 31, 2020.  As a percentage of total net revenue, depreciation and amortization expense was 3.4% for the 39 weeks ended October 30, 2021 compared to 4.9% for the 39 weeks ended October 31, 2020. The decrease in expense was primarily attributable to asset impairment recorded in Fiscal 2020.  

Interest Expense, Net

Interest expense, net increased $9.4 million to $26.0 million for the 39 weeks ended October 30, 2021, compared to $16.6 million for the 39 weeks ended October 31, 2020. The increase in expense was primarily attributable to increased interest expense related to our Notes and lower interest income, partially offset by no interest expense incurred for borrowings on our revolving credit facilities during the 39 weeks ended October 30, 2021.

Other (Income), Net

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

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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 39 weeks ended October 30, 2021 was 24.9% compared to the effective tax benefit rate of 26.8% for the 39 weeks ended October 31, 2020.  

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

Net Income (Loss)

Net income increased $582.0 million to $369.2 million for the 39 weeks ended October 30, 2021, or 10.5% as a percentage of total net revenue, as compared to a net loss of $212.8 million, or (8.6%) as a percentage of total net revenue, for the 39 weeks ended October 31, 2020. The change in net income (loss) was attributable to the factors identified above.

International Operations

We have agreements with multiple third-party operators to expand our brands internationally. Through these agreements, a series of franchised, licensed, or other brand-dedicated American Eagle stores have opened and will continue to open in Asia, Europe, India, Latin America, and the Middle East. These agreements do not involve a significant capital investment or operational involvement from us.  We continue to increase the number of countries in which we enter into these types of arrangements as part of our strategy to expand internationally.  As of October 30, 2021, we had 256 stores operated by our third-party operators in 30 countries. International third-party operated stores are not included in the consolidated store data or the total gross square feet calculation.

As of October 30, 2021, we had 96 Company-owned stores in Canada, 58 in Mexico, 12 in Hong Kong, and 7 in Puerto Rico.  

Fair Value Measurements

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

Financial Instruments

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.

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

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

	Fair Value Measurements at October 30, 2021
(In thousands)	Carrying Amount		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash    equivalents:
Cash	$	364,769	$	364,769	$	—	$	—
Interest bearing    deposits		375,899		375,899		—		—
Total cash and cash    equivalents	$	740,668	$	740,668		—		—

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

Liquidity and Capital Resources

Our uses of cash have historically been for working capital, the construction of new stores and remodeling of existing stores, information technology and e-commerce upgrades and investments, distribution center improvements and expansion, and the return of value to shareholders through the repurchase of common stock and the payment of dividends.  Additionally, our uses of cash have included the development of the Aerie brand, investments in 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 $400 million, which will expire in January 2024.  In April 2020, the Company issued $415 million aggregate principal amount of 3.75% convertible senior notes due in 2025 in a private placement to qualified institutional buyers.  Interest is payable semi-annually.  Refer to Note 8 to the Consolidated Financial Statements for additional information regarding our long-term debt.

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

The following sets forth certain measures of our liquidity:

	October 30,		January 30,		October 31,
	2021		2021		2020
Working Capital (in thousands)	$	905,958	$	664,161	$	613,450
Current Ratio		2.04		1.77		1.69

Working capital increased $241.8 million compared to January 30, 2021 and $292.5 million compared to October 31, 2020. The $292.5 million increase in our working capital, compared to October 31, 2020, is driven by a $179.8 million increase in inventory, a $103.9 million increase in accounts receivable, a $48.3 million increase in cash and short-term investments, a $46.6 million decrease in current operating lease liabilities, and a $22.8 million decrease due to dividends payable, offset by a $64.3 million decrease in prepaid expenses, a $18.1 million increase in accrued income and other taxes, and a $10.0 million increase in accounts payable.

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Cash Flows provided by (used for) Operating Activities

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

Cash Flows used for Investing Activities

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

Cash Flows (used for) provided by Financing Activities

Net cash used for financing activities totaled $94.8 million for the weeks ended October 30, 2021, compared to net cash provided by financing activities of $379.9 million for the 39 weeks ended October 31, 2020.  Cash used for financing activities for the 39 weeks ended October 30, 2021 consisted primarily of $83.6 million for cash dividends paid at quarterly rates of $0.1375 for the 13 weeks ended May 2, 2021 and $0.18 for the 13 weeks ended July 31, 2021 and October 30, 2021, and $24.0 million for the repurchase of common stock from employees for the payment of taxes in connection with vesting of share-based payments, partially offset by $13.1 million of proceeds from stock option exercises.

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

Credit Facilities

In January 2019, we entered into a Credit Agreement for five-year, syndicated, asset-based revolving Credit Facilities. The Credit Agreement provides senior secured revolving credit for loans and letters of credit up to $400 million, subject to customary borrowing base limitations. The Credit Facilities expire January 30, 2024.

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

As of October 30, 2021, the Company was in compliance with the terms of the Credit Agreement and had $7.9 million outstanding in stand-by letters of credit. No loans were outstanding under the Credit Agreement as of October 30, 2021.

Capital Expenditures for Property and Equipment

Capital expenditures for the 39 weeks ended October 30, 2021 were $144.4 million, and included $78.6 million related to investments in our stores, including 61 new AEO stores (14 American Eagle stores, 43 Aerie stand-alone stores (including 4 OFFLINE stores), three Unsubscribed stores and one Todd Snyder store), 13 remodeled and refurbished stores, and fixtures and visual investments. Additionally, we continued to support our infrastructure growth by investing in information technology initiatives ($46.0 million), e-commerce ($10.6 million), and other home office projects ($9.2 million).

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

Stock Repurchases

During Fiscal 2019, our Board authorized the repurchase of 30.0 million shares of common stock under a new share repurchase program, which expires on February 3, 2024, bringing our total share repurchases authorization to 30.0 million shares.  

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

During the 39 weeks ended October 30, 2021 and October 31, 2020, we repurchased approximately 0.8 million and 0.4 million shares, respectively, from certain employees at market prices totaling $24.0 million and $5.4 million, respectively.  These shares were repurchased for the payment of taxes, in connection with the vesting of share-based payments, as permitted under our equity incentive plans. The aforementioned repurchased shares have been recorded at cost in treasury stock in the Consolidated Balance Sheet.

Dividends

During the 13 weeks ended July 31, 2021, our Board of Directors (“Board”) raised our annual dividend rate from $0.55 per share ($0.1375 per share on a quarterly basis) to $0.72 per share ($0.18 per share on a quarterly basis), a 31% increase.  Additionally, our Board declared a quarterly cash dividend of $0.18 per share on September 9, 2021, which was paid on October 22, 2021.

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

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

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the Notes to our Consolidated Financial Statements for the year ended January 30, 2021 contained in our Fiscal 2020 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 the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.  The application of our critical accounting policies and estimates may require our management to make judgments and estimates about the amounts reflected in the Consolidated Financial Statements. Our management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

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

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

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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

Refer to Note 11 to the Consolidated Financial Statements included herein for additional information.

ITEM 1A. RISK FACTORS.

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

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

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

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

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

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

Issuer Purchases of Equity Securities

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

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	Total				Total Number of		Maximum Number of
	Number of		Average		Shares Purchased as		Shares that May
	Shares		Price Paid		Part of Publicly		Yet Be Purchased
Period	Purchased		Per Share		Announced Programs		Under the Program
	(1)		(2)		(1)		(1) (3)
Month #1 (August 1, 2021 through August 28, 2021)		170,770	$	34.46		—		30,000,000
Month #2 (August 29, 2021 through October 2, 2021)		9,527	$	26.30		—		30,000,000
Month #3 (October 3, 2021 through October 30, 2021)		12,580	$	24.89		—		30,000,000
Total		192,877	$	33.43		—		30,000,000

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

(2) Average price paid per share excludes any broker commissions paid.

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

42

ITEM 6. EXHIBITS.

2.1	Stock Purchase Agreement, dated November 1, 2021, by and among The Original Real Co., Quiet Holdings, LLC, Quiet Global Holdings, LLC, Quiet Logistics, Inc. and, solely for the purposes of guaranteeing certain obligations of Buyer, American Eagle Outfitters, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-33338), filed with the SEC on November 3, 2021).
10.1^*	Letter Agreement with Marisa Baldwin dated August 27, 2021
10.2^*	Change in Control Agreement between American Eagle Outfitters, Inc. and Marisa Baldwin, dated August 27, 2021
10.3^*	Form of 2021 Confidentiality, Non-Competition and Intellectual Property Agreement
* 31.1	Certification by Jay L. Schottenstein pursuant to Rule 13a-14(a) or Rule 15d-14(a)
* 31.2	Certification by Michael A. Mathias pursuant to Rule 13a-14(a) or Rule 15d-14(a)
** 32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
** 32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*  101	The following materials from the Company’s Annual Report on Form 10-Q for the quarter ended October 30, 2021, formatted as inline eXtensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets as of October 30, 2021, January 30, 2021 and October 31, 2020, (ii) Consolidated Statements of Operations for the 13 and 39 weeks ended October 30, 2021 and October 31, 2020, (iii) Consolidated Statements of Comprehensive Income for the 13 and 39 weeks ended October 30, 2021 and October 31, 2020, (iv) Consolidated Statements of Stockholders’ Equity for the 13 and 39 weeks ended October 30, 2021 and October 31, 2020, and (v) Consolidated Statements of Cash Flows for the 39 weeks ended October 30, 2021 and October 31, 2020
* 104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, formatted in inline XBRL

^ Management contract or compensatory plan or arrangement.

* Filed with this report.

** Furnished with this report.

43

SIGNATURES

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

Dated:  November 23, 2021

	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)

44

EX-10.1

Exhibit 10.1

August 27, 2021

Marisa Baldwin

Dear Marisa:

WearepleasedtoofferyouapositionwithAmericanEagleOutfitters,Inc.or oneofitssubsidiariesoraffiliates(collectively, the "Company") in New York, NY.This letter confirms the terms of the Company’s offer withrespectto your plannedemployment.

You will join the Company as Executive Vice President-Chief Human Resources Officer, reporting to JaySchottenstein,Chief Executive Officer.The details ofthe offerareoutlined below.

This offer letter and the terms of our offer are strictly confidential.To the fullest extent permitted by law, youagree to keep this offer and its terms confidential and you will not disclose the offer or its terms to any third party(excluding your spouse, lawyer, tax advisor or pursuant to court order or other law or legal obligation); however,you understand and acknowledge that the Company may have certain legal obligations which may requiredisclosure of your compensation and benefits and that nothing herein prevents the Company from complying withsuch obligations. You understand that if you breach this provision the offer will be automatically revoked and theCompanywillhave no obligation to you.

Anticipated Start Date (“Start Date”):The Company anticipates that your first day of employment will be onSeptember13,2021.

Salary:You will receive an annualized base salary of $525,000 payable every 2 weeks in accordance with theCompany’snormalpayrollpractices.

Annual Incentive Compensation Bonus:You will be eligible to earn an incentive compensation bonus of 60%(Target) of your salary with a maximum up to 120% of your salary. You will first be eligible to receive this bonusfor the Company’s FY2021 (to be paid in Spring, 2022). The Spring 2022 bonus will be based your actual wagespaid during our 2021 fiscal year.For each performance year, the value of the Bonus, if any, will be determined inthe sole discretion of management, based upon:[i] the achievement of the Company and Brand (whereapplicable) performance-based goals to be established by the Compensation Committee of the Board of Directors(the “Committee”); and [ii] your overall level of performance.In order to be eligible to receive an AnnualIncentive Compensation Bonus, you must remain continuously employed by the Company or any of itssubsidiaries or affiliates through the date the Bonus actually is paid.You also understand that the Companyreservesthe righttochangeoreliminate its bonusplanin the future.

Restricted Stock Units: Upon your hire, you will be eligible for a Restricted Stock Unit award (RSU).Theaward will have a grant value of $50,000. The grant price will be the closing price of AEO common stock on thegrant date. The number of units can fluctuate based on the stock price at the grant date, but the overall grant valuewill remain constant. This RSU grant will vest proportionally over three years from the grant date based solely onyourcontinued serviceto the Companyover thatperiod.

Performance Share Plan: Upon your hire, you will be granted a Performance Share Plan award under thecompany’s long-term restricted stock unit incentive plan. The target number of shares which you may earn underthis award is $125,000 divided by Fair Market Value of the Company’s common stock on the grant date asdetermined using an industry accepted pricing methodology.The vesting of the initial Performance Share Planaward will be contingent upon the achievement of Company performance goals for a given 3-year period. Basedupon Company performance, the Performance Share Plan award will vest at the time that the Committee certifiesthelevel ofachievement ofgoalsforthe3-yearperiod,subjecttoyourcontinuedemployment throughthevesting

date. The actual number of units vested will be based upon a sliding performance scale, varying between 0-150%ofthe targetaward. Unitswhich do not vestbasedon Companyperformancewillbeforfeited.

It is the parties’ intention that the Plan be adopted and administered in a manner that enables the Company todeduct for federal income tax purposes the full value of all RSU grants.Any award is subject to approval by theCompensationCommitteeandsubjecttothetermsandconditionsoftheapplicableplandocument andindividualRSUagreement, includingbutnot limitedto vestingandforfeitureprovisions.

Stock Option Grant: Upon your hire, you will be granted a stock option award with a grant date fair value, asdetermined by the Compensation Committee, of $75,000. Each option shall vest and be exercisable as to one thirdof the amount of the grant on each of the first three anniversaries of the grant date. The Option Award shall begranted by the Committee pursuant to and subject to all the terms and conditions set forth in the Company’s 2020StockAward and IncentivePlan(2020Plan) and an award agreement.

AnnualEquityAwards:InSpring2022,youwillberecommendedforconsiderationforanequityawardtotaling

$600,000 in grant value. The award will be comprised of 20% Restricted Units, 50% Performance Shares, and 30%Stock Options. The vesting and award terms will be in accordance with the respective descriptions in above paragraphs.The units granted, if any, will be a part of the ordinary course fiscal year grants made by the CompensationCommitteepursuanttoandsubjectto all terms andconditionsset forth inthe Company’sPlan.

The Company reserves the right in its sole discretion to change or modify the manner or mode of deliveringcompensationandbenefitsforaperformanceyearthattheCompany,initssolediscretion,deemsequivalent.

PerformanceReview:Annualperformanceappraisalsgenerallytakeplaceinthefirstfiscalquarter.Youwillreceiveyour firstevaluation for merit considerationinSpring,2022.

Benefits Plans and Other Programs:You will be eligible to participate in the Company’s benefit plans andprograms that the Company offers to its associates, subject to the provisions of those plans.¹These benefitsinclude a 401(k) plan, medical, dental, vision, and life insurance, and short and long term disability insurance.Someadditionalbenefits are outlined below:

• Employee Stock Purchase Plan:You will be eligible to start contributing on the first pay period ofthe month following your 60th day of employment.You can contribute any dollar amount up to $100per pay period (or more without the AEO match), and AEO will match 15% of your contribution, upto$15.00 per pay.This stockvestsimmediately!

• 401(k) Plan:You will be eligible to begin contributing on the first day of the month following a 30day waiting period.AE Associates are automatically enrolled at a three percent (3%) contributionrate.If you wish to decline enrollment or contribute at a different rate, you will need to contactFidelity or go towww.netbenefits.comany time after your first 10 days of employment.Automaticincreases will occur January 1st of every year after you are Company match eligible and will stopwhen you reach an elective deferral rate of six percent (6%). AE will match on the first 6% ofassociate contributions after one year of service with the following scale:1-3% Associatecontribution = 100% AE match; 4-6% Associate contribution = 25% AE match (you can contributeup to 6% and receive an AE match of 3.75%).In addition, AE Associates may contribute up to 50%oftheirannualearningsupto theIRSannual allowablemaximum.Associatesare100%vestedin

1 Receipt of this letter does not automatically entitle you to benefits offered by the Company.Rather, the letter provides an overview ofselect health and insurance benefits.If there is any discrepancy between this letter and the official benefits plan documents, the plandocuments always will govern.The Company reserves the right to amend or terminate any benefit plan in its sole discretion at any timeand for anyreason.TheCompanyalso retains thediscretiontointerpretanyterms or languageused inthis letter.

their employee contribution from day one and are 100% vested in the employer match after twoyears.

• Deferred Compensation Plan:Upon eligibility, you may elect to contribute a percent amount ofyour before-tax salary and, in future years, your bonus to the Deferred Compensation Plan. This planprovides you with an additional savings vehicle and allows scheduled withdrawals without earlywithdrawal penalties in accordance withitsterms.

• Health Insurance:Medical, dental and vision coverage (if you elect to participate) will begin thefirst day of the month following a 30 day waiting period.You can choose between 4 medical plans.Each medical plan option provides prescription drug coverage through Express Scripts.Dentalcoverageisavailablethrough Delta Dental andVisioncoverage available throughVSP.

• COBRA:If purchased, the Company will reimburse you for 70% of the cost of COBRA insuranceyoupurchaseduntilyouare eligibletobeginmedical coverageunderAEO’splan.Youmustprovide documentation of premiums (a copy of the endorsed check used for payment or an electronicpayment confirmationstatement)toour BenefitsDepartment within30 daysofpayment.

• Paid Time Off (PTO):You will be eligible for PTO in accordance with AEO’s PTO policy, as itmay be amended from time to time.Under the current policy you may accrue paid time off each payperiod (every two weeks) to earn a maximum of 28 PTO days in your first year of employment.Youmay use your PTO days 60 days after your Start Date.PTO is inclusive of all personal, sick andvacationdays. AEalso observes 9holidays throughouttheyear(holidaypaywillapply).

Payments Subject to Withholdings & Deductions:The amount of any payment made to you by the Companyunder the terms of this letter will be reduced by any required taxes, withholdings, and other authorized employeedeductions as may be required by law or as you have elected under the applicable benefit plans. Payments areintended to be exempt from, or compliant with, 409A, but there is no guarantee of tax treatment and the Companywillnotbe liablefor anytaxes or penalties.

Terms of Benefit Plans and Programs:This letter outlines a general description of the Company’s benefitplans, programs and policies (“Benefit Plans”) currently in effect.Your participation in all of the Company’sBenefitPlansissubjecttoandcontinentuponyoureligibilityandthetermsoutlinedineachBenefit Plan.TheCompanymay, in its discretion,amendorterminate anyBenefitPlanatanytime.

AssociateDiscount:YouwillbeeligiblefordiscountsonCompanymerchandise.Currently,employeesreceive40%offregular price merchandise and 25% off salemerchandise.

At Will Employment:The terms of this letter do not imply employment for any specific period of time.TheCompanyisan“at will”employer.Thismeansthat youcanterminateyouremployment at anytimeandforanyreasonandthe Companycan also terminate youremploymentatanytime and foranyreason.

All New York Candidates: If you primarily will work in the state of New York, enclosed are two copies of anotice that the Company is required to provide you under New York law.You must sign and return one copy tothe Company with your signed offer letter.If your primary language is Spanish, Chinese, Korean, Russian,Polish, or Haitian-Creole, please inform us of that fact.In such event, the Company will provide you the notice inbothEnglish and your primarylanguage.

Notice Period Obligations:By signing this letter, you represent to the Company that your acceptance of thisofferandagreementtoacceptemployment withtheCompanyunderthesetermswillnot conflictwith,violateor

constituteabreachofanyemployment orotheragreementtowhichyouareapartyandthatyouarenotrequiredtoobtaintheconsent ofanyperson,firm,corporationorotherentityinordertoacceptthisofferofemployment.

Non-Disclosure of Confidential, Business and Proprietary or Trade Secret Information: You furtherrepresent and agree that you will not knowingly use or otherwise disclose any confidential, business andproprietaryortradesecretinformationobtainedasaresult ofanyprioremployment,unlessspecificallyauthorizedto do so by your former employer(s).You should clearly understand that this provision of this letter should beregarded as this Company’s explicit instruction for you not to use or disclose this information in breach and / orviolationof your representations andagreement.

Contractual Severance Payment: You understand that your employment may be terminated by the Company atany time without notice or any payment in lieu thereof for “cause,” as determined by the Company. Cause will bedefined in the same manner as it is in the Change in Control Agreement in place and effective at the time of yourtermination. If your employment is involuntarily terminated by the Company, other than a termination for causeand in exchange for your execution and non-revocation of a general release of claims in the form provided by theCompany (the “General Release”), you will receive severance in the form of a series of equal installmentpaymentspayableeveryotherweek(“Biweekly”)inaccordancewiththeCompany’snormalpayrollpracticeasineffect on the date of termination in an amount equal to your then Biweekly base salary for a period of up to sixmonths or until you obtain other employment with the first installment to commence no later than the first payrolldate which occurs after the 55^th day following your separation from service.If the period during which theinstallments mustcommencecoverstwocalendar years,thefirstinstallmentwillcommencein thesecondcalendaryear.Thefirstinstallmentshall includea“catchup”payment consistingofanyamountsthatwouldhavebeenpaidearlier hadthepaymentscommenced onthefirstpayrolldatefollowingthelastdayofemployment.

Youwill not receiveanyseverancepaymentsifyouvoluntarilyresignorifyourterminationisaresultofyourdeathor disability.

Confidentiality, Non-competition and Intellectual Property Agreement: Your employment is conditionedupon your execution of the form of Confidentiality, Non-Competition and Intellectual Property Agreementattachedtothisletter.

Background Checks /I-9 Documentation: Any offer with the Company is contingent upon the satisfactorycompletion of various background investigations that may include reference checks, employment, salary andeducation verification, and a federal / national and county level criminal conviction investigation.   At or aroundthe time you receive this offer letter, you will be required to sign and return the Pre-Hire Authorization form andFair Credit Reporting Act forms.Your hiring and continued employment with the Company is contingent uponabove, including your agreeing to submit to the above background checks, as well as the successful completion ofyour references and your submission to and your ability to provide documentation sufficient to complete form I-9as required by law. If your reference check results are unacceptable, and/or if you refuse or fail to present truthfuland accurate information for any reason, or fail your background investigation requirement, the Company willrescindits offer, and/or yourcontingentemploymentwillbeterminated.

This letter and its attached documents which are incorporated herein by reference as if fully set forth, constitutethe complete understanding between you and the Company concerning the subject matters(s) addressed, and theysupersede any prior or written understanding regarding the terms and conditions of your employment with theCompany.No representations have been made to you other than those contained herein.No oral modifications tothe commitments made herein shall be valid.Any changes to these terms must be in writing and signed by youandanauthorized representative of the Company.

Wereallylookforwardto youbecomingamember ofour teamat AmericanEagleOutfitters. PleasereviewthisletterandreturnthesignedcopyonorbeforeSeptember3,2021asthisdaterepresentstheexpirationofthis

offer.Bysigningbelow,youacknowledgeandagreethat youhavereceivedandreviewedboththisletterandtheattachedand will abidebytheterms statedtherein.Pleaseletme knowif you haveanyquestions.

Sincerely,

/s/ Jay Schottenstein

JaySchottenstein

ChiefExecutiveOfficer

I have read and understand, andbymysignature belowagree tothe termsand conditionsofthisoffer letter:

/s/ Marisa Baldwin	8/30/2021
Marisa Baldwin	Date

EX-10.2

Exhibit 10.2

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, dated as of the 30th day of  August 2021, is made by and between American Eagle Outfitters, Inc., a Delaware corporation (the “Company”) and the executive listed on the signature page (the “Executive”).

WHEREAS, the Company desires to assure continuity of management and fair treatment of its executives in the event of a possible Change in Control (as defined below) transaction; and

WHEREAS, the Company recognizes that its executives may be involved in evaluating or negotiating any offers, proposals or other transactions which could result in a Change in Control of the Company and believes that it is in the best interest of the Company and its stockholders for such executives to be in a position to be able to assess objectively and pursue aggressively the interests of the Company’s stockholders in making these evaluations and carrying on such negotiations; and

WHEREAS, the Board of Directors (the “Board”) of the Company believes it is essential to provide Executive with compensation arrangements upon a Change in Control that provide Executive with some financial security and that are competitive with those of other corporations, and in order to accomplish these objectives, the Board has authorized the Company to enter into this Agreement.

NOW THEREFORE, the parties, for good and valuable consideration and intending to be legally bound, agree as follows:

1.             Operation and Term of Agreement.  This Agreement shall be effective as of the date first set forth above.  This Agreement may be terminated by the Company upon 12 months’ advance written notice to Executive; provided, however, that after a Change in Control Date during the term of this Agreement, including during the 12 month period following any notice of termination, this Agreement shall remain in effect until all of the obligations of the parties under the Agreement are satisfied and the Protection Period has expired.  Prior to a Change in Control Date, this Agreement shall immediately terminate upon termination of Executive’s employment or upon Executive’s ceasing to be an officer of the Company.

2.             Certain Definitions.  For purposes of this Agreement, the following words and phrases shall have the following meanings:

(a)           “Cause” shall mean: (i) the Executive’s willful and continued failure substantially to perform the duties of his or her position after notice and opportunity to cure; (ii) any willful act or omission by the Executive constituting dishonesty, fraud or other malfeasance, which in any such case is demonstrably injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates; (iii) an act that constitutes misconduct resulting in a restatement of the Company’s financial statements due to material non-compliance with any financial reporting requirement within the meaning of Section 304 of The Sarbanes-Oxley Act of 2002; or (iv) a plea of guilty or no contest to or the Executive’s conviction of a felony in a court of law under the laws of the United States or any state thereof or a law substantially similar to a felony in any other jurisdiction in which the Company or a subsidiary or affiliate conducts business which materially impairs the value of the Executive’s service to the Company or any of its subsidiaries or affiliates; provided, however, that for purposes of this definition, no act or failure to act shall be deemed “willful” unless effected by the Executive not in good faith and without a reasonable belief that such action or failure to act was in or not opposed to the Company’s best interests, and no act or failure to act shall be deemed “willful” if it results from any incapacity of the Executive due to physical or mental illness.

(b)           “Change in Control” shall mean and be deemed to have occurred if there shall occur any of the following:

(i)            The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, or successor provisions (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or successor provisions (“beneficial

ownership”)) of more than 50% or more of either (1) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(ii)           During the twelve (12) month period ending on the date of the most recent acquisition, the acquisition by a Person of beneficial ownership of 30% or more of the Outstanding Company Voting Securities; provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(iii)           During the twelve (12) month period ending on the date of the most recent acquisition, the acquisition by a Person of assets of the Company having a total gross fair value equal to or more than 40% of the total gross fair market value of the Company’s assets immediately before such acquisition; provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (B) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(iv)           A majority of the individuals who serve on the Board as of the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(v)          Consummation of a reorganization, merger, recapitalization, reverse stock split, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a “Parent”)) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination or Parent) beneficially owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock of the ultimate parent entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of more than 50% existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors or trustees of the entity resulting from such

Business Combination or a Parent were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(vi)          Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(c)           “Change in Control Date” shall be any date during the term of this Agreement on which a Change in Control occurs.  

(d)“409A Control Change” shall mean a Change in Control that constitutes a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Code Section 409A(a)(2)(A)(v).

(e)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f)           “Disability” shall mean a “permanent and total disability” within the meaning of Section 409A(a)(2)(c) of the Code and underlying regulations.  The Company reserves the right, in good faith, to make the determination of disability under this Agreement based upon information supplied by Executive and/or his medical personnel, as well as information from medical personnel (or others) selected by the Company or its insurers.

(g)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(h)“Good Reason” means the occurrence of any of the following after the applicable Change in Control: (i) a change in duties or responsibilities (including reporting responsibilities) that are inconsistent in any material and adverse respect with Executive’s position, duties or responsibilities; (ii) a reduction in Executive’s annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter, other than up to a 10% across the board reduction for all executives; (iii) relocation of more than 50 miles from office location on date of such Change in Control that also increases the commute from Executive’s principal residence by more than 50 miles; (iv) reduction of more than 5% in aggregate value of benefits under employee benefit plans, welfare benefit plans and fringe benefit plans in which the Executive is participating immediately prior to such Change in Control; or (v) the failure of a successor to the Company (in any transaction that constitutes a Change of Control) to assume in writing the Company’s obligations to Executive under this Agreement, if the same is not assumed by such successor by operation of law. In order to invoke a termination for Good Reason, the Executive shall provide written notice to the Company of the existence of one or more of the conditions described in clauses (i) through (v) within 90 days following the Executive’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and the Company shall have 30 days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition.  In the event that the Company fails to remedy the condition constituting Good Reason during the applicable Cure Period, the Executive’s “separation from service” within the meaning of Section 409A of the Code (“Separation from Service”) must occur, if at all, within 180 days following such Cure Period in order for such termination as a result of such condition to constitute a termination for Good Reason.  

(i)           “Protection Period” means the period beginning on the Change in Control Date and ending on the last day of the 18-month period following the Change in Control Date.

(j)           “Subsidiary” means an entity 50 percent or more of the voting securities or interests of which are owned, directly or indirectly, by the Company or which is otherwise controlled directly or indirectly by the Company.

3.             Vesting Upon Change in Control.  In the event of a Change in Control,  any and all equity-based compensation then held by Executive shall be treated in the manner specified in the applicable award agreements.

4.             Benefits Upon Termination Within a Protection Period.  During the Protection Period, if Executive’s employment is terminated by the Company other than for Cause, Disability or other than as a result of Executive’s death, or if Executive terminates his employment for Good Reason, then the Company shall, subject to Sections 7 and 8, make the following payments to Executive:

(a)           All earned and determinable, but unpaid, current salary (other than amounts previously deferred under the Company’s deferred compensation plans) and all earned and determinable, but unused, paid time off through the date of Executive’s termination shall be paid to Executive in a lump sum in cash within ten (10) business days after the termination of Executive’s employment;

(b)           A severance amount equal to the product of (i) one and one half times (ii) the sum of (x) Executive’s annual base salary from the Company and its Subsidiaries, annualized for any partial year, in effect immediately prior to the Change in Control Date plus (y) Executive’s annual incentive cash bonus amount at target in effect immediately prior to the Change in Control Date (the “Severance Amount”) shall be paid to Executive, subject to the immediately following sentence, in a lump sum within thirty (30) days after the termination of Executive’s employment.  Notwithstanding the foregoing, if the Change in Control that triggers the Protection Period is not a 409A Control Change, then any portion of the Severance Amount that would constitute a substitute payment for “nonqualified deferred compensation” within the meaning of Section 409A of the Code (e.g., severance provided under Executive’s employment agreement with the Company) shall be made in accordance with the payment schedule of the substituted “nonqualified deferred compensation” and not the payment schedule set forth herein.

(c)           A bonus amount equal to the amount of Executive’s then current annual incentive cash bonus at target prorated based on the portion of the Company’s fiscal year elapsed as of the Change in Control Date shall be paid to Executive within sixty (60) days after the termination of Executive’s employment;

(d)           Upon Executive’s timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay, on Executive’s behalf, the portion of premiums of Executive’s group health insurance, including coverage for eligible dependents, that the Company paid immediately prior to the date of termination (“COBRA Payments”) for the period that Executive is entitled to coverage under COBRA, but not to exceed twelve months (“COBRA Period”).  Upon becoming eligible to receive comparable coverage from a new employer, the Company will no longer be required to pay such COBRA Payments and Executive will promptly notify the Company.

5.             Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive, or other plans, practices, policies, or programs provided by the Company or any of its Subsidiaries and for which Executive may qualify, nor shall anything in this Agreement limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company or any of its Subsidiaries.  Amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan, practice, policy, or program of the Company or any of its Subsidiaries at or subsequent to the date of termination shall be payable in accordance with such plan, practice, policy, or program; provided, however, that Executive shall not be entitled to severance pay, salary continuation or benefits similar to severance pay or salary continuation above or in addition to that provided for in this Agreement under any offer letter or other individual agreement with the Company or any of its Subsidiaries, including a noncompetition agreement or plan, practice, policy, or program generally applicable to employees or group of employees of the Company or any of its Subsidiaries unless such offer letter, agreement, plan, practice, policy or program specifically references and overrides this Section 5.

6.             Full Settlement; No Obligation to Seek Other Employment; Legal Expenses.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations under this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right, or action that the Company may have against Executive or others.  Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement.  The Company agrees to pay, within five (5) business days following

timely written demand by Executive, all legal fees and expenses Executive may reasonably incur as a result of any dispute or contest, in which Executive prevails on at least one material item, by or with the Company or others regarding the validity or enforceability of, or liability under, any provision of this Agreement.  In any such action brought by Executive for damages or to enforce any provisions of this Agreement, Executive shall be entitled to seek both legal and equitable relief and remedies, including, without limitation, specific performance of the Company’s obligations under this Agreement, in Executive’s sole discretion.

7.             Tax-Related Adjustment.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that (i) any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Agreement) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), and (ii) the reduction of the amounts payable to Executive under this Agreement to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap.  If the Payments are required to be reduced, they shall be reduced in the following order: (1) cash payments that may not be valued under Treas. Reg. § 1.280G-1, Q&A-24(c) (“24(c)”), (ii) equity-based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits .  With respect to each category of the foregoing, such reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the determination of the Accounting Firm (as defined below).  If the reduction of the amounts payable hereunder would not result in a greater after-tax result to Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision.  Subject to the provisions of Section 7(b) below, all other determinations required to be made under this Section 7, including whether and when a reduction in Payments is required and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Board prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive.  If the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control Event, the Board shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.

(b)           Executive shall take any position reasonably requested by the Company on Executive’s federal income tax returns with respect to the treatment of the Payment from the Company, the payment of any Reimbursement Amount (as defined below), and the receipt of any refund or interest paid by the government to Executive as a result of a Contest (as defined below) (such position, a “Requested Position”), provided that: (i) the Company shall provide Executive with an opinion from nationally recognized accounting firm that there is “substantial authority” for the Requested Position within the meaning of Section 6662 of the Code, and (ii) the general long term or senior unsecured corporate credit rating of the Company or its successor is at least BBB- as rated by Standard & Poors and Baa3 as rated by Moody’s Investor Services at the time Executive would be required to take a Requested Position or the Company places in an escrow account or otherwise provides security reasonably requested by Executive to ensure payment to Executive of the indemnity amount that could become due to Executive pursuant to the following sentence.  The Company shall indemnify Executive for any tax, penalty and interest incurred by Executive as a result of taking the Requested Position.  The amount for which Executive is indemnified under the preceding sentence (the “Reimbursement Amount”) shall be computed on an after-tax basis, taking into account any income, Excise or other taxes, including interest and penalties.  Executive shall keep the Company informed of all developments in any audit with respect to a Requested Position.  Upon payment of the Reimbursement Amount, or (if the Reimbursement Amount is not yet payable) upon the Company’s written affirmation, in form and substance reasonably satisfactory to Executive, of the Company’s

obligation to indemnify Executive with respect to the Requested Position, and provided part (ii) of the first sentence of this Section 7(b) is satisfied at such time, the Company shall be entitled, at its sole expense, to control the contest of any disallowance or proposed disallowance of a Requested Position (a “Contest”), and Executive agrees to cooperate in connection with a Contest, including, without limitation, executing powers of attorney and other documents at the reasonable request of the Company.  The Reimbursement Amount shall be paid to Executive on or before the date that is ten (10) days prior to the date when Executive is legally required to remit such payment as a result of the disallowance of a Requested Position.  Following payment by the Company of the Reimbursement Amount, if the Requested Position is sustained by the Internal Revenue Service or the courts, the Company shall be entitled to any resulting receipt of interest or refund of taxes, interest and penalties that were properly attributable to the Reimbursement Amount.  If a Requested Position is sustained in whole or in part in a final resolution of a Contest, and if the Reimbursement Amount therefore exceeds the amount of taxes, penalties and interest payable by Executive as a result of the Requested Position (determined on an after-tax basis after taking into account payments made pursuant to the preceding sentence and this sentence), any such excess portion of the Reimbursement Amount shall be treated as a loan by the Company to Executive, which loan Executive must repay to the Company together with interest at the applicable federal rate under Section 7872(f)(2) of the Code; provided, however, that if at the time the Company is to make such payment, a loan to Executive would not be permitted under the Sarbanes-Oxley Act of 2002, as amended, because Executive continues to be an officer or director of the Company, the Company shall pursue such appeal in a manner that does not require Executive to make such excess payment to the applicable taxing authority.

(c)           To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by Executive (including, without limitation, Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code)), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.

8.             Section 409A of the Code.

(a)  The obligations under this Agreement are intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and shall in all respects be administered in accordance with Section 409A of the Code.  Any payments that qualify for the “short-term deferral” exception, the separation pay exception or another exception under Section 409A of the Code shall be paid under the applicable exception to the maximum extent permissible.  For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment under this Agreement.  All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A of the Code to the extent necessary in order to avoid the imposition of penalty taxes on the Executive pursuant to Section 409A of the Code.

(b)  Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits provided under this Agreement that constitute nonqualified deferred compensation subject to Section 409A of the Code shall be made in accordance with the requirements of Section 409A of the Code, including, without limitation, where applicable, the requirement that (i) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than the Executive’s remaining lifetime (or if longer, through the 20th anniversary of the date hereof; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible fees and expenses shall be made no later than the last day of the calendar year following the year in

which the applicable fees and expenses were incurred; provided that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.  

(c)Notwithstanding anything to the contrary in this Agreement, if the Executive is considered a “specified employee” for purposes of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination), any payment or benefit that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code that is otherwise due to the Executive under this Agreement during the six-month period immediately following such Executive’s separation from service (as determined in accordance with Section 409A of the Code) on account of such Executive’s separation from service shall be accumulated and paid to such Executive on the first business day of the seventh month following the Executive’s separation from service (the “Delayed Payment Date”), to the extent necessary to avoid penalty taxes or accelerated taxation pursuant to Section 409A of the Code.  If the Executive dies during the postponement period, the amounts and entitlements delayed on account of Section 409A of the Code shall be paid to the personal representative of the Executive’s estate on the first to occur of the Delayed Payment Date or thirty (30) calendar days after the date of the Executive’s death.

9.             Confidentiality Non-solicitation and Non-disparagement Provisions.

(a)           Confidentiality.  Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge, or data relating to the Company or any of its Subsidiaries, and their respective businesses, obtained by Executive during Executive’s employment by the Company or any of its Subsidiaries and that has not become public knowledge (other than by acts of Executive or Executive’s representatives in violation of this Agreement) (“Confidential Information”).  After the date of termination of Executive’s employment with the Company, Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it. Notwithstanding the foregoing, no provision of this Agreement shall prohibit Executive from using Confidential Information to the extent necessary to exercise any legally protected whistleblower rights (including pursuant to Rule 21F under the Exchange Act). In no event shall an asserted violation of the provisions of this Section constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.  

(b)           Non-Solicitation. Executive, for the eighteen (18) month  period immediately following the date of termination of Executive’s employment, shall not, either on his own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company any of its officers or employees or offer employment to any person who, on or during the six (6) months immediately preceding the date of such solicitation or offer, is or was an officer or employee of the Company; provided, however, that a general solicitation or advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 9(b).

(c)Non-Disparagement.  Executive agrees to not disparage or denigrate the Company or its directors, officers or employees orally or in writing.  The Company agrees to use its reasonable best efforts to cause its directors, officers and managers to not disparage Executive orally or in writing.  Notwithstanding this mutual, non-disparagement provision, it shall not be a violation of this provision for any person to make truthful statements when required by court order or as otherwise required by law.

(d)           Survival; Reformation. The provisions of this Section 9 shall survive the termination or expiration of this Agreement and Executive’s employment with the Company and shall be fully enforceable thereafter.  If it shall be finally determined that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of any state or jurisdiction, it is the intention of the parties that such restriction may be modified or amended to render it enforceable to the maximum extent permitted by the law of that state or jurisdiction.

(e)           Remedies; Equitable Relief.  Should Executive violate the non-solicitation provisions of Section 9(b), Executive will be obligated to pay back to the Company all payments received pursuant to this Agreement and the Company will have no further obligation to pay Executive any payments that may be remaining due under this Agreement.  In the event that Executive breaches or threatens to breach any of the provisions of this Section 9, in addition to and without limiting or waiving any other remedies available to the Company under this Agreement, in law or in equity, the Company shall be entitled to immediate injunctive relief in any court, domestic or foreign, having the capacity to grant such relief, to restrain such breach or threatened breach and to enforce the provisions of this Section 9.

10.           Successors.

(a)           This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives or successor(s) in interest.  Executive may designate a successor (or successors) in interest to receive any and all amounts due Executive in accordance with this Agreement should Executive be deceased at any time of payment.  Such designation of successor(s) in interest shall be made in writing and signed by Executive, and delivered to the Company pursuant to Section 15(b).  This Section 10(a) shall not supersede any designation of beneficiary or successor in interest made by Executive, or separately covered, under any other plan, practice, policy, or program of the Company.

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c)           The Company will require the ultimate parent of any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company or any successor and without regard to the form of transaction utilized to acquire the business or assets of the Company, to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or parentage had taken place, unless such succession occurs by operation of law.  As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid (and any Parent of the Company or any successor) that is required by this clause to assume and agree to perform this Agreement or which otherwise assumes and agrees to perform this Agreement.

11.           Notice of Termination.  Any termination of Executive’s employment by the Company or by Executive shall be communicated by Notice of Termination to the other party given in accordance with Section 15(b) of this Agreement.  For purposes of this Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice).

12.           Requirements and Benefits if Executive Is Employee of Subsidiary of Company.  If Executive is an employee of any Subsidiary of the Company, Executive shall be entitled to all of the rights and benefits of this Agreement as though Executive were an employee of the Company and the term “Company” shall be deemed to include the Subsidiary by whom Executive is employed.  The Company guarantees the performance of its Subsidiary under this Agreement.

13.           Release of Claims.  All payments under this Agreement, except for those pursuant to Section 4(a), will be contingent upon the execution of a General Release of Claims by and between Executive and the Company in the form attached as Appendix A to this Agreement.  Executive shall have twenty-one days (or such longer period, not to exceed forty-five (45) days, determined by the Company) after receipt of the form of General Release of Claims to consider whether to execute the General Release of Claims and Executive may revoke the Release within seven (7) days from its execution.

14.          Dispute Resolution.  All disputes, claims or controversies arising out of or in connection with this Agreement, Executive’s employment by the Company or its termination, including but not limited to those concerning workplace discrimination and all other statutory claims shall be submitted exclusively to and determined by final and binding arbitration before a single arbitrator (“Arbitrator”) of the American Arbitration Association (“AAA”) in accordance with the Association’s then current rules for the resolution of employment disputes.  The parties consent to the authority of the Arbitrator, if the Arbitrator so determines, to award fees and expenses (including reasonable attorneys’ fees) in the arbitration to the Executive if the Executive prevails on at least one material item.  Excluded from this agreement to arbitrate are claims Executive may have for workers’ compensation and unemployment compensation benefits, as well as claims the Company may have for injunctive relief to enforce Section 9 of this Agreement.

15.Miscellaneous.

(a)           This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  In the event of any conflict between this Agreement and the Company’s various equity and other incentive plans pursuant to which Executive has awards outstanding as of the date of this Agreement or any other equity or incentive plan that is adopted by the Company following the date of this Agreement, the agreement or plan with the more favorable terms to Executive shall control for purposes of such conflict.  This Agreement supersedes all prior oral or written promises or agreements between the parties related to the subject matter hereof.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties or their respective successors and legal representatives.

(b)           All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, in the case of the Company at 77 Hot Metal Street, Pittsburgh, PA 15203, Attention: CEO and in the case of the Executive to the last address of record at the Company for the Executive or to such other address as either party shall have furnished to the other in writing in accordance with this Section.  Notice and communications shall be effective when actually received by the addressee.

(c)           Whenever reference is made in this Agreement to any specific plan or program of the Company, to the extent that Executive is not a participant in the plan or program or has no benefit accrued under it, whether vested or contingent, as of the Change in Control Date, then such reference shall be null and void, and Executive shall acquire no additional benefit as a result of such reference.

(d)           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(e)           The Company may withhold from any amounts payable under this Agreement such Federal, state, or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(f)            Executive’s failure to insist upon strict compliance with any provision of this Agreement shall not be deemed to be a waiver of such provision or any other provision.

IN WITNESS WHEREOF, Executive has executed this Agreement and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed effective as of the day and year first above written.

AMERICAN EAGLE OUTFITTERS, INC.
By:	/s/ Stacy Siegal
Name: Stacy Siegal
Title: EVP & General Counsel

EXECUTIVE

/s/ Marisa Baldwin

Marisa Baldwin

APPENDIX A

FORM OF GENERAL RELEASE

I,________________ , for good and valuable consideration, including the performance by American Eagle Outfitters, Inc., a Delaware corporation and its successors (the “Company”), of certain obligations under that certain Change in Control Agreement dated as of ______, 20____  between myself and the Company (the “Change in Control Agreement”), do hereby release and forever discharge as of the date hereof, the Company and all present, future and former subsidiaries, affiliates, directors, officers, agents, attorneys, insurers, shareholders, representatives and employees of the Company (including all subsidiaries, affiliates, directors, officers, agents, attorneys, insurers, shareholders, partners, representatives and employees thereof), and the successors and assigns of each of them (collectively, the “Released Parties”) to the extent provided below.

1.             Except as provided in Section 2 below, I knowingly and voluntarily release and forever discharge the Company and the other Released Parties from any and all claims, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, damages (however styled, including compensatory, liquidated, punitive or exemplary damages), claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (from the beginning of the world through the date of this General Release) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators, representatives or assigns, have or may have, which arise out of or are connected with my employment or association with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993, as amended; the Civil Rights Act of 1866, as amended; the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.), as amended (“ADEA”), ; the Worker Adjustment Retraining and Notification Act, as amended; the Employee Retirement Income Security Act of 1974, as amended; any applicable Executive Order Programs; the Fair Labor Standards Act, as amended; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).  As part of the release set forth in this Section 1, I fully and forever covenant not to sue or cause to be sued the Company or any other Released Party with respect to any Claims.

2.             This General Release shall not relinquish, diminish, or in any way affect and the term “Claims” shall not include (i) any benefits under the terms of the Change in Control Agreement or any other plans or programs of the Company which are due to me, (ii) rights for indemnification as a director, officer or employee of the Company under applicable law, the Company’s certificate of incorporation or bylaws for duly approved acts taken prior to the date of this General Release, subject to the provisions thereof, (iii) rights under any director and officer insurance or similar insurance policies in effect prior to the date of this General Release or (iv) any claims that may not be waived or released.  Nothing in this General Release shall be construed to prohibit me from filing a charge with the Equal Employment Opportunity Commission (“EEOC”) or Securities and Exchange Commission (“SEC”) or participating in any investigation or proceeding conducted by the EEOC or SEC, provided that, I hereby waive any and all rights to recover monetary damages or injunctive relief in my favor resulting from the prosecution of such charge or investigation or proceeding other than as prohibited by law including an award under 21F of the Securities Exchange Act of 1934.

3.             I represent that I have made no assignment or transfer of any Claims, or any other matter covered by Section 1 above.  I agree that I will indemnify, defend and hold harmless the Company from any and all Claims so assigned and transferred.  

4.             In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied that are released by me.  I further acknowledge and agree that my separation from employment with the Company shall not serve as the basis for any Claim.  I agree that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.  I acknowledge and agree that this waiver is an essential and material term of this General Release.  I therefore agree that in the event a Claim is brought seeking damages against me in violation of the terms of this General Release, or in the event a party should seek to recover against the other in any Claim brought by a governmental agency on such party’s behalf, this General Release shall serve as a complete defense to such Claims.  I further agree that I am not aware of any pending or threatened charge or complaint of the type described above as of the execution of this General Release.

5.             I agree that, by my signature below, I hereby resign from all positions, including any board memberships, related to the Company and its subsidiaries contemporaneously with the execution of this General Release.

6.             I understand that this General Release embodies the complete agreement and understanding among the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

7.             Whenever possible, each provision of this General Release shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this General Release is held by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

8.             This General Release shall be binding in all respects upon, and shall inure to the benefit of, the heirs, successors and assigns of the parties hereto; provided that I acknowledge that I may not assign my rights under the this General Release without the prior written consent of the Company.  I agree, upon reasonable request of the Company, to execute, acknowledge and deliver any additional instrument or documents that may be reasonably required to carry out the intentions of this General Release.  This General Release may be executed in counterparts and facsimile signatures shall be originals for all purposes.

9.             I agree that this General Release shall be interpreted and construed in accordance with the laws of the Commonwealth of Pennsylvania and that any disputes arising under this General Release or by any asserted breach of it, or from the employment relationship between the Company and Executive, shall be litigated in the state or federal courts in Pennsylvania and I consent to such jurisdiction.

10.           I acknowledge that I have been informed of the following:

a.I represent and acknowledge that I am waiving any and all rights or claims that I may have arising under the ADEA;

b.I represent and acknowledge that I have been informed of my right to consult with an attorney before executing this General Release;

c.I know and understand that I am not waiving any rights or claims that may arise after the date this release is executed;

d.I know and understand that in exchange for the General Release, I am receiving consideration in addition to any consideration to which I am already entitled;

e.BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND ACKNOWLEDGE THAT I HAVE BEEN INVITED AND ADVISED TO CONSULT AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.  I acknowledge and understand that I have been given a period of at least twenty-one (21) days in which to consider the terms of the release provided to me; and

f.I understand that I have the right to revoke this General Release at any time within seven (7) days after signing this General Release, by providing written notice to the following address:  American Eagle Outfitters, Inc. 77 Hot Metal Street, Pittsburgh, PA 15203, Attention: General Counsel, and that, upon such revocation, this General Release will not have any further legal force and effect.  I further understand and agree that this General Release shall not become effective or enforceable until this seven day revocation period has expired provided that I have not revoked it during the revocation period.

By signing this General Release, I further represent and agree that:

(i)I have read it carefully;

(ii)I understand all of its terms and know that I am giving up important rights, including but not limited to, rights under ADEA, Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990, as amended; and the Employee Retirement Income Security Act of 1974, as amended;

(iii)I voluntarily consent to everything in this General Release;

(iv)I have been advised to consult with an attorney before executing this General Release and I have done so or, after careful reading and consideration I have chosen not to do so of my own volition;

(v)I have signed this General Release knowingly and voluntarily and with the advice of any counsel retained to advise me with respect to this General Release;

(vi)I agree that the provisions of this General Release may not be amended, waived, changed or modified except by an instrument in writing signed by an authorized representative of the Company and by me.

DATE:                                 , 20
	[Executive]

EX-10.3

Exhibit 10.3

AMERICAN EAGLE OUTFITTERS, INC.

Confidentiality, Non-Competition and Intellectual Property Agreement

As a new employee and/or officer, the undersigned will be placed or retained by American Eagle Outfitters, Inc., or one of its subsidiaries or affiliates (collectively, the Company), in a position of special trust and confidence, will be granted access to or may develop trade secrets, intellectual property, and/or other confidential or proprietary information (“Confidential Information”) of the Company, will be authorized to communicate with customers, vendors, employees and others to develop good will for the Company, and/or holds a position of specialized knowledge and training with the Company.

THEREFORE, in consideration of my employment, compensation consideration and/or promotion to an officer position with the Company, and in recognition of the highly competitive nature of the business conducted by the Company, I agree as follows:

1.I will at all times during and after my employment with the Company faithfully hold the Company's Confidential Information in the strictest confidence, and I will use my best efforts and diligence to guard against its disclosure to anyone other than as required in the performance of my duties to the Company.  I will not use Confidential Information for my own personal benefit or for the benefit of any competitor or other person. I acknowledge and agree that the use or duplication of the Confidential Information in any business or for any purpose other than the business conducted by the Company would constitute an unfair method of competition with the Company in violation of my obligations hereunder. Therefore, I will not use the Confidential Information in any manner not authorized in this agreement and will not disclose the Confidential Information to any party other than employees of the Company who need to know the Confidential Information to perform their job functions (including,  for the avoidance of doubt, members of my family). Additionally, I will, in addition to the procedures described herein, adopt and implement all reasonable procedures, including, without limitation, those prescribed by the Company, to prevent unauthorized use or disclosure of or access to the Confidential Information. I understand that Confidential Information includes all information and materials relating to Intellectual Property, as defined below, the Company’s trade secrets and all information relating to the Company that the Company does not make available to the public.  By way of example, Confidential Information includes information about the Company’s products, designs, processes, systems, marketing, promotional plans, technical procedures, strategies, costs, financial information.  Confidential Information shall not include, however, any information that is or becomes widely known outside the Company without any action by me.  Upon termination of my employment with the Company, regardless of the reason for such termination, I will return to the Company all computers, data storage devices, documents and other materials of any kind that contain Confidential Information.  I will not use any confidential information of any third party, including any prior employer, in breach of a legal obligation to that third party in the course of my work for the Company. Nothing in this Agreement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal, state or local law or regulation. I also understand that in accordance with the Defend Trade Secrets Act of 2016 that I will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding and that I do not disclose the trade secret, except pursuant to court order.

2.If I decide to resign my employment with the Company, I will provide the Company with thirty (30) days prior written notice.  After receipt of such notice, the Company, in its sole, absolute and unreviewable discretion, may (a) require me to continue working during the notice period, in which case I will be entitled to my normal compensation, (b) relieve me of some or all of my work responsibilities during the notice period, in which case my compensation will be adjusted accordingly, or (c) terminate my Employment immediately and then have

no obligation to compensate me during the notice period, except as may otherwise be required pursuant to paragraph 5 of this Agreement.

3.For a period of twelve (12) months after my separation from the Company (whether I resign or my employment is terminated), I will not directly or indirectly solicit, induce or attempt to influence any associate to leave the employment of the Company, nor will I in any way assist anyone else in doing so.

4.I agree that all inventions, designs and ideas conceived, produced, created, or reduced to practice, either solely or jointly with others, during my employment with the Company, including those developed on my own time, which relate to or are useful in the Company’s business, or which are developed or produced through the use of the Company’s property (“Intellectual Property”) shall be owned solely by the Company.  I understand that whether in preliminary or final form, such Intellectual Property includes, for example, all ideas, inventions, discoveries, designs, innovations, improvements, trade secrets, and other intellectual property.  All Intellectual Property is either work made for hire for the Company within the meaning of the U. S. Copyright Act, or, if such Intellectual Property is determined not to be work made for hire, then I irrevocably assign all right, title and interest in and to the Intellectual Property to the Company, including all copyrights, patents, and/or trademarks.  I will, without any additional consideration, execute all documents and take all other actions needed to convey my complete ownership of the Intellectual Property to the Company so that the Company may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it.  I agree that the Company may alter or modify the Intellectual Property at the Company’s sole discretion, and I waive all right to claim or disclaim authorship.  I represent and warrant that any Intellectual Property that I assign to the Company, except as otherwise disclosed in writing at the time of assignment, will be my sole, exclusive, original work.  I have not previously invented any Intellectual Property or I have advised the Company in writing of any prior inventions or ideas.

5.  For a period of twelve (12) months after my separation from the Company (whether I resign or my employment is terminated), I will not, directly or indirectly, engage in (either as an owner, investor, partner, employer, employee, consultant or director) or otherwise perform services for any Competitive Business.  The term “Competitive Business” means any business in competition with the retail, direct marketing and/or internet apparel and accessories business and any other business the Company is engaged in any material way as of the date of my separation from employment with the Company.  Such businesses include, but are not necessarily limited to the following: Gap, Old Navy, Abercrombie & Fitch, Hollister, Aeropostale, Urban Outfitters, Forever 21, Rue 21, Express, Buckle, Limited Brands, Victoria’s Secret, VS Pink, Ralph Lauren, Under Armour, Fossil Group, Inc., Ascena Retail Group, Pacific Sunwear, Guess, Charlotte Russe, J. Crew, Banana Republic, Inditex S.A., Fast Retailing Co., Ltd., and H&M Hennes & Mauritz AB, Chico’s FAS, and Coach, Inc. along with  compensation peer group companies disclosed in the Company’s most recently filed Proxy statement  as of the date of the notice of your termination.  I recognize that this non-compete agreement is solely for the benefit of the Company and I am not relying on any expectation of compensation during any non-compete period.  The Company may, in its sole discretion, pay me my base salary for the duration of the period that the Company, in its sole discretion, requires me not to work (i.e., I may be paid for the portion of non-compete period not waived by the Company) for a Competitive Business or until I have received and accepted other employment subject to the Company’s approval hereunder, whichever is sooner.  However, in no case is the Company obligated to pay me my base salary for any period of time should I resign from the Company, though I still recognize that I am bound by these non-compete obligations.   To the extent the Company authorizes any such release or waiver pursuant to this paragraph, such release must be in writing signed by the Chief Human Resources Officer, or his/her designee.  In no case will the Company pay me my base salary for any portion of the period that I am employed or work for someone other than a competitor and provided that payment of an equivalent or greater amount of severance by the Company shall be deemed payment of base salary hereunder.

6.I understand that the restrictions contained in this Agreement are necessary for the protection of the business and goodwill of the Company, and I consider them reasonable for such purpose.  Any breach of this Agreement is likely to cause the Company substantial and irrevocable damage and therefore, in addition to such

2 | Page

other remedies which may be available, I hereby CONSENT to the issuance of a restraining order or other injunctive relief, in addition to other remedies, to prevent any potential or actual violation of this Agreement.

7. In the event that I violate any provision of paragraphs 3 or 5 of this Agreement, the time periods set forth in those paragraphs shall be extended for the period of time I remain in violation of those provisions.

8.  In the event that any portion of this Agreement shall be determined to be unenforceable, the remainder of this Agreement shall be enforced to the fullest extent possible and the unenforceable portion shall be amended by a court of competent jurisdiction, or otherwise thereafter shall be interpreted, to reflect as nearly as possible the parties’ intent.  In the event that any portion of this Agreement is determined by any court of competent jurisdiction to be unenforceable by reason of excessive scope as to geographic, temporal, or functional coverage, such portion shall be deemed to extend only over the maximum geographic, temporal, and functional scope as to which it may be enforceable. If such amendment or interpretation is not possible, the unenforceable portion will be severed from the remainder of this Agreement and the remainder of this Agreement shall be enforced to the fullest extent.

9.Notwithstanding the foregoing, if I am a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Company determines that any amounts to be paid to me under this Agreement could be subject to penalty taxes under Section 409A of the Code, then the Company shall not commence payment of such amounts until the earlier of (a) the date that is six months after my Termination Date or (b) the date of my death.  Any amount that otherwise would have been payable but for the delay described above shall be aggregated and paid with the first payment under this Section.  For purposes of this Agreement, ‘Termination Date’ shall mean the date on which a ‘separation from service’ occurs, as defined in Treasury Regulation Section 1.409A-1(h) and the guidance promulgated there under.

10. This Agreement shall not be assignable or delegable by me.  The Company may, at its option and without my consent, assign its rights and duties hereunder to any other person or entity in connection with any form of corporate reorganization, any sale or merger of all or part of the Company, or any acquisition of the Company.

11.This Agreement constitutes the complete understanding between the Company and me concerning the subject matters(s) addressed, and it supersedes any prior or written understanding regarding the terms and conditions, including restrictive covenants, with the Company.  No representations have been made to me other than those contained herein.  No oral modifications to the commitments made herein shall be valid.  This Agreement cannot be changed in any way unless an authorized representative of the Company agrees in writing.  This Agreement will be governed by and interpreted in accordance with Pennsylvania law. Both parties agree that any action concerning this Agreement shall be commenced exclusively in the state or federal courts in Pennsylvania.  

Date:By: _________________________________

(American Eagle Outfitters, Inc. Representative)

Title: ________________________________

Date:

Print Name

____________________________________

Signature

3 | Page

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:  November 23, 2021

/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:  November 23, 2021

/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 October 30, 2021 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:  November 23, 2021

/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 October 30, 2021 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:  November 23, 2021

/s/ Michael A. Mathias 

Michael A. Mathias

Executive Vice President, Chief Financial Officer  

(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Oct. 30, 2021	Nov. 19, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Trading Symbol	AEO
Entity Registrant Name	American Eagle Outfitters, Inc.
Entity Central Index Key	0000919012
Current Fiscal Year End Date	--01-29
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		168,621,661
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 Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
Current assets:
Cash and cash equivalents	$ 740,668	$ 850,477	$ 692,356
Merchandise inventory	739,808	405,445	559,961
Accounts receivable, net	228,461	146,102	124,560
Prepaid expenses and other	66,593	120,619	130,909
Total current assets	1,775,530	1,522,643	1,507,786
Property and equipment, at cost, net of accumulated depreciation	665,408	623,808	650,397
Operating lease right-of-use assets	1,148,108	1,155,965	1,243,311
Intangible assets net, including goodwill	69,332	70,332	50,864
Non-current deferred income taxes	57,753	33,045	12,774
Other Assets	33,884	29,013	33,083
Total assets	3,750,015	3,434,806	3,498,215
Current liabilities:
Accounts payable	314,561	255,912	304,552
Current portion of operating lease liabilities	299,693	328,624	346,321
Accrued compensation and payroll taxes	123,588	142,272	117,736
Other current liabilities and accrued expenses	56,090	55,343	47,587
Unredeemed gift cards and gift certificates	42,070	62,181	39,794
Accrued income and other taxes	33,570	14,150	15,503
Dividends payable			22,843
Total current liabilities	869,572	858,482	894,336
Non-current liabilities:
Non-current operating lease liabilities	1,123,681	1,148,742	1,196,755
Long-term debt, net	336,249	325,290	321,081
Other non-current liabilities	23,816	15,627	17,846
Total non-current liabilities	1,483,746	1,489,659	1,535,682
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; 168,622, 166,335, and 166,129 shares outstanding, respectively	2,496	2,496	2,496
Contributed capital	627,264	663,718	655,891
Accumulated other comprehensive loss	(39,049)	(40,748)	(44,673)
Retained earnings	2,185,393	1,868,613	1,865,370
Treasury stock at cost, 80,944, 83,231, and 83,437 shares, respectively	(1,379,407)	(1,407,414)	(1,410,887)
Total stockholders’ equity	1,396,697	1,086,665	1,068,197
Total liabilities and stockholders’ equity	$ 3,750,015	$ 3,434,806	$ 3,498,215

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
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	168,622,000	166,335,000	166,129,000
Treasury stock, shares	80,944,000	83,231,000	83,437,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands		3 Months Ended			9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020		Oct. 30, 2021	Oct. 31, 2020
Income Statement [Abstract]
Total net revenue	[1]	$ 1,274,078	$ 1,031,617		$ 3,502,848	$ 2,466,819
Cost of sales, including certain buying, occupancy and warehousing expenses		709,554	616,840		1,999,743	1,758,537
Gross profit		564,524	414,777		1,503,105	708,282
Selling, general and administrative expenses		313,890	273,297		872,320	685,206
Impairment, restructuring and COVID-19 related charges		0	6,955	[1]	0	177,186	[1]
Depreciation and amortization expense		40,947	38,974		119,674	120,818
Operating income (loss)	[1]	209,687	95,551		511,111	(274,928)
Interest expense, net		8,612	7,924		26,038	16,617
Other (income), net		(3,130)	(2,223)		(6,354)	(793)
Income (loss) before income taxes		204,205	89,850		491,427	(290,752)
Provision (benefit) for income taxes		51,981	31,742		122,226	(77,943)
Net income (loss)		$ 152,224	$ 58,108		$ 369,201	$ (212,809)
Net income (loss) per basic share		$ 0.91	$ 0.35		$ 2.20	$ (1.28)
Net income (loss) per diluted share		$ 0.74	$ 0.32		$ 1.78	$ (1.28)
Weighted average common shares outstanding - basic		167,637	166,185		168,062	166,385
Weighted average common shares outstanding - diluted		205,013	184,397		207,032	166,385

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

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 152,224	$ 58,108	$ 369,201	$ (212,809)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(2,155)	3,318	1,699	(11,505)
Other comprehensive (loss) income	(2,155)	3,318	1,699	(11,505)
Comprehensive income (loss)	$ 150,069	$ 61,426	$ 370,900	$ (224,314)

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Contributed Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive (Loss)
Beginning Balance at Feb. 01, 2020	$ 1,247,853	$ 2,496	$ 577,856	$ 2,108,292	$ (1,407,623)	$ (33,168)
Beginning Balance (in shares) at Feb. 01, 2020		166,993,000
Stock awards	24,300		24,300
Repurchase of common stock as part of publicly announced programs	(20,000)				(20,000)
Repurchase of common stock as part of publicly announced programs (in shares)		(1,720,000)
Repurchase of common stock from employees	(5,357)				(5,357)
Repurchase of common stock from employees (in shares)		(447,000)
Convertible Notes - Equity portion, net of tax	68,330		68,330
Reissuance of treasury stock	(501)		(15,324)	(7,270)	22,093
Reissuance of treasury stock, (in shares)		1,303,000
Net income (loss)	(212,809)			(212,809)
Other comprehensive income (loss)	(11,505)					(11,505)
Cash dividends declared and dividend equivalents	(22,114)		729	(22,843)
Ending Balance at Oct. 31, 2020	$ 1,068,197	$ 2,496	655,891	1,865,370	(1,410,887)	(44,673)
Ending Balance (in shares) at Oct. 31, 2020	166,129,000	166,129,000
Beginning Balance at Aug. 01, 2020	$ 997,900	$ 2,496	647,284	1,807,687	(1,411,576)	(47,991)
Beginning Balance (in shares) at Aug. 01, 2020		166,090,000
Stock awards	8,946		8,946
Repurchase of common stock from employees	(142)				(142)
Repurchase of common stock from employees (in shares)		(11,000)
Reissuance of treasury stock	(125)		(536)	(420)	831
Reissuance of treasury stock, (in shares)		50,000
Net income (loss)	58,108			58,108
Other comprehensive income (loss)	3,318					3,318
Cash dividends declared and dividend equivalents	192		197	(5)
Ending Balance at Oct. 31, 2020	$ 1,068,197	$ 2,496	655,891	1,865,370	(1,410,887)	(44,673)
Ending Balance (in shares) at Oct. 31, 2020	166,129,000	166,129,000
Beginning Balance at Jan. 30, 2021	$ 1,086,665	$ 2,496	663,718	1,868,613	(1,407,414)	(40,748)
Beginning Balance (in shares) at Jan. 30, 2021	166,335,000	166,335,000
Stock awards	$ 29,245		29,245
Repurchase of common stock from employees	(23,963)				(23,963)
Repurchase of common stock from employees (in shares)		(779,000)
Reissuance of treasury stock	14,425		(58,063)	26,417	46,071
Reissuance of treasury stock, (in shares)		2,719,000
Equity portion of partial extinguishment of Convertible Senior Notes, net of tax	3,018		(9,876)	6,995	5,899
Equity portion of partial extinguishment of Convertible Senior Notes, net of tax, (in shares)		347,000
Net income (loss)	369,201			369,201
Other comprehensive income (loss)	1,699					1,699
Cash dividends declared and dividend equivalents	(83,593)		2,240	(85,833)
Ending Balance at Oct. 30, 2021	$ 1,396,697	$ 2,496	627,264	2,185,393	(1,379,407)	(39,049)
Ending Balance (in shares) at Oct. 30, 2021	168,622,000	168,622,000
Beginning Balance at Jul. 31, 2021	$ 1,275,531	$ 2,496	630,506	2,058,448	(1,379,025)	(36,894)
Beginning Balance (in shares) at Jul. 31, 2021		168,454,000
Stock awards	7,791		7,791
Repurchase of common stock from employees	(6,452)				(6,452)
Repurchase of common stock from employees (in shares)		(188,000)
Reissuance of treasury stock	112		(11,778)	5,820	6,070
Reissuance of treasury stock, (in shares)		356,000
Net income (loss)	152,224			152,224
Other comprehensive income (loss)	(2,155)					(2,155)
Cash dividends declared and dividend equivalents	(30,354)		745	(31,099)
Ending Balance at Oct. 30, 2021	$ 1,396,697	$ 2,496	$ 627,264	$ 2,185,393	$ (1,379,407)	$ (39,049)
Ending Balance (in shares) at Oct. 30, 2021	168,622,000	168,622,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Statement Of Stockholders Equity [Abstract]
Cash dividends declared and dividend equivalents, Per share	$ 0.1800	$ 0.1375	$ 0.4975	$ 0.1375

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020
Operating activities:
Net income (loss)	$ 369,201	$ (212,809)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization	122,906	123,094
Share-based compensation	29,435	24,685
Deferred income taxes	(28,261)	12,013
Loss on impairment of assets	0	153,617	[1]
Changes in assets and liabilities:
Merchandise inventory	(333,871)	(114,907)
Operating lease assets	222,403	189,630
Operating lease liabilities	(269,153)	(146,809)
Other assets	(44,120)	(86,501)
Accounts payable	57,363	17,769
Accrued compensation and payroll taxes	(18,690)	74,374
Accrued and other liabilities	26,488	(44,550)
Net cash provided by (used for) operating activities	133,701	(10,394)
Investing activities:
Capital expenditures for property and equipment	(144,405)	(92,591)
Purchase of available-for-sale investments	(75,000)	(14,956)
Sale of available-for-sale investments	75,000	69,956
Other investing activities	(4,372)	(511)
Net cash (used for) investing activities	(148,777)	(38,102)
Financing activities:
Repurchase of common stock as part of publicly announced programs		(20,000)
Repurchase of common stock from employees	(23,963)	(5,357)
Proceeds from revolving line of credit and convertible senior notes		736,108
Principal payments on revolving line of credit		(330,000)
Net proceeds from stock options exercised	13,065
Cash dividends paid	(83,593)
Other financing activities	(329)	(889)
Net cash (used for) provided by financing activities	(94,820)	379,862
Effect of exchange rates changes on cash	87	(940)
Net change in cash and cash equivalents	(109,809)	330,426
Cash and cash equivalents - beginning of period	850,477	361,930
Cash and cash equivalents - end of period	$ 740,668	$ 692,356

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

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Interim Financial Statements

9 Months Ended

Oct. 30, 2021

Accounting Policies [Abstract]

Interim Financial Statements

1.  Interim Financial Statements

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

Founded in 1977, the Company is a leading multi-brand, global specialty retailer that operates under the American Eagle^® (“AE” or “American Eagle”) and Aerie^® (“Aerie”) brands.  The Aerie brand includes OFFLINE^TM by Aerie, a new sub-brand offering a complete collection of active wear and accessories built for REAL movement and REAL comfort launched in Fiscal 2020 (as defined below). 

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

We offer a broad assortment of high quality, on-trend apparel, accessories, and personal care products at affordable prices for men and women under the AE brand, and intimates, apparel, active wear, and swim collections under the Aerie brand. We sell directly to consumers through our retail channel, which includes our stores and concession-based shop-within-shops. We operate stores in the U.S., Canada, Mexico, and Hong Kong. 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 operates more than 1,000 retail stores in the U.S. and internationally, online at www.ae.com and www.aerie.com, as well www.toddsnyder.com and www.unsubscribed.com (which e-commerce operations we collectively refer to as “AEO Direct”), and more than 200 international store locations managed by third-party operators.

In Fiscal 2021, we acquired AirTerra, a logistics and supply chain platform that solves ecommerce fulfillment and shipping challenges in a unique and innovative way for retailers and brands of all sizes. This acquisition represents the first step in building our supply chain platform, as part our ongoing supply chain transformation strategy of leveraging scale and innovation 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.  During Fiscal 2020, historic seasonal trends were impacted by consumer behavior due to the coronavirus (“COVID-19”) global pandemic.

COVID-19 Pandemic

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

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

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

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Summary of Significant Accounting Policies

9 Months Ended

Oct. 30, 2021

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. All intercompany transactions and balances have been eliminated in consolidation.  At October 30, 2021, 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 2021” refers to the 52-week period that will end on January 29, 2022.  “Fiscal 2020” refers to the 52-week period ended January 30, 2021.  “Fiscal 2019” refers to the 52-week period ended February 1, 2020.

Estimates

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

Recent Accounting Pronouncements             

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

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

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in 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 calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company will adopt ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective approach.

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

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

Foreign Currency Translation

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

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

Cash and Cash Equivalents and Short-Term Investments

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

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

Receivables

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

Merchandise Inventory

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

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its current 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 - five years

As of October 30, 2021, the weighted average remaining useful life of our assets was approximately 7.0 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, which have been open for a period sufficient to reach maturity.  The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts.  When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income under impairment, restructuring and COVID-19 related charges.

When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense.  Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and to Note 13 to the Consolidated Financial Statements for additional information regarding impairment charges for the 39 weeks ended October 31, 2020.  

Intangible Assets, including Goodwill

The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business, and other immaterial acquisitions.  In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment at least annually or more frequently if an impairment indicator exists, by comparing the estimated fair value of each reporting unit to its carrying value. As a result of the Company’s annual goodwill impairment test as of January 30, 2021, the Company concluded that its goodwill was not impaired.

Definite-lived intangible assets are recorded on the basis of cost 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 15 to 25 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 350 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 39 weeks ended October 30, 2021 and October 31, 2020.

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

Gift Cards

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

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

Construction Allowances

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

Self-Insurance Liability

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

Leases

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

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

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

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

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

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

Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

No operating lease ROU asset impairments were recorded for the 13 or 39 weeks ended October 30, 2021. There was no operating lease ROU impairment recorded for the 13 weeks ended October 31, 2020. During the 39 weeks ended October 31, 2020, the Company recorded impairment of operating lease ROU assets of $84.1 million.  Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

Leases Modifications and COVID-19

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

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

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

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

Co-branded Credit Card

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

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

Customer Loyalty Program

In June 2020, the Company launched 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. Prior to the Program’s launch in June 2020, we also offered additional rewards for key items such as jeans and bras under our previous program, AEO Connected™.  Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.  

Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).  The portion of the sales revenue attributed to the award points is deferred and recognized when the award 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.

Sales Return Reserve

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. 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 consists of a separate right of return asset and liability.  These amounts are recorded within (i) prepaid expenses and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement 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.

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 unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption above.

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. 

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

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

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 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. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, equipment leasing costs, and services purchased.

Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing, and importing teams, our buyers, and our distribution centers, as these amounts are recorded in cost of sales.  Additionally, selling, general and administrative 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.

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Notes and borrowings under the revolving credit facility, as well as interest income from cash, cash equivalents, and short-term investments.

Other (Income), Net

Other (income), net consists primarily of gains and losses resulting from foreign currency transactions.

Segment Information

The Company has identified two operating segments (American Eagle and Aerie) that also represent our reportable segments. 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

9 Months Ended

Oct. 30, 2021

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 on the Consolidated Balance Sheets:

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

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Fair Value Measurements

9 Months Ended

Oct. 30, 2021

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

Long-Term Debt

As of October 30, 2021, the Company had no outstanding borrowings under its revolving credit facilities and had repaid the outstanding borrowings of $330 million under its revolving credit facilities as of October 31, 2020.  

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

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

Non-Financial Assets

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

Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. There were no asset impairment charges recorded during the 13 or 39 weeks ended October 30, 2021. There were no asset impairment charges recorded during the 13 weeks ended October 31, 2020.  During the 39 weeks ended October 31, 2020, the Company recorded asset impairment charges of $153.6 million.  Included in this amount are retail store impairment charges of $109.6 million, of which $84.1 million relates to operating lease ROU assets and $25.5 million relates to store property and equipment (fixtures and equipment and leasehold improvements).  This impairment was primarily driven by store closures due to the COVID-19 pandemic.  We also recorded $26.0 million of impairment related charges to certain corporate property and equipment, as well as $18.0 million of impairment charges related to certain cost and equity method investments.  The assets were adjusted to their fair value and the loss on impairment was recorded within impairment, restructuring and COVID-19 related charges in the Consolidated Statements of Operations. The fair value of the impaired assets, after the recorded loss, was approximately $163.4 million.  

The fair value of the impaired assets was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest and a real estate market participant discount rate for the ROU assets. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located.

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Earnings per Share

9 Months Ended

Oct. 30, 2021

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				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,637		166,185		168,062		166,385
Dilutive effect of convertible notes		33,687		16,382		34,616		—
Dilutive effect of stock options and non-vested    restricted stock		3,689		1,830		4,354		—
Diluted number of common shares outstanding		205,013		184,397		207,032		166,385
Anti-Dilutive Shares*		286		1,423		172		9,250

*For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes 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. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

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

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

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Property and Equipment

9 Months Ended

Oct. 30, 2021

Property Plant And Equipment [Abstract]

Property and Equipment

6.  Property and Equipment

Property and equipment consists of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Property and equipment, at cost	$	2,394,148		$	2,250,974		$	2,255,676
Less:  Accumulated depreciation and impairment		(1,728,740	)		(1,627,166	)		(1,605,279	)
Property and equipment, net	$	665,408		$	623,808		$	650,397

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Intangible Assets, including Goodwill

9 Months Ended

Oct. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets, including Goodwill

7.  Intangible Assets, including Goodwill

Intangible assets consist of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Goodwill, gross	$	20,585		$	17,463		$	17,331
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	16,389		$	13,267		$	13,135
Trademarks, at cost	$	93,504		$	92,663		$	72,194
Accumulated amortization		(40,561	)		(35,598	)		(34,465	)
Trademarks, net	$	52,943		$	57,065		$	37,729
Intangible assets, net, including goodwill	$	69,332		$	70,332		$	50,864

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

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Long-Term Debt, Net

9 Months Ended

Oct. 30, 2021

Debt Disclosure [Abstract]

Long-Term Debt, Net

8.  Long-Term Debt, Net

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

(In thousands)	October 30, 2021		January 30, 2021		October 31, 2020
Convertible senior notes principal	$	412,025	$	415,025	$	415,025
Less: unamortized discount		75,776		89,735		93,944
Total long-term debt, net	$	336,249	$	325,290	$	321,081
Convertible Senior Notes - Equity portion, net of tax		58,454		68,330		68,330

Convertible notes

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

The Company does not have the right to redeem the Notes prior to April 17, 2023. On or after April 17, 2023 and prior to the 40th scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the Notes, at its option, for cash, if the last reported sale price of the Company’s common stock has 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. Beginning January 2025, noteholders may convert their Notes for approximately 117.1 shares of common stock per $1,000 principal amount of the Notes, equivalent to a conversion price of approximately $8.54 per share.

The Company has the right to settle conversions in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the Notes in cash and any conversion value above the principal in common stock. Because of this repayment policy, only the conversion spread portion of the amount owed is reflected as dilutive in earnings per share.

The effective interest rate for the Notes is 10.0% and the Company calculated the effective yield using a market approach.  The remaining amortization period of the discount is 3.50 years as of October 30, 2021.

Interest expense for the Notes was:

	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Accrued interest for interest payments	$	3,863	$	3,848	$	11,611	$	7,966
Amortization of discount		4,569		4,113		13,953		8,308
Total interest expense	$	8,432	$	7,961	$	25,564	$	16,274

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

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

Revolving credit facilities

In January 2019, the Company entered into an amended and restated Credit Agreement (the “Credit Agreement”) for five-year, syndicated, asset-based revolving credit facilities (the “Credit Facilities”). The Credit Agreement provides senior secured revolving credit for loans and letters of credit up to $400 million, subject to customary borrowing base limitations. The Credit Facilities expire on January 30, 2024.

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

As of October 30, 2021, the Company was in compliance with the terms of the Credit Agreement and had $7.9 million outstanding in stand-by letters of credit. No loans were outstanding under the Credit Agreement as of October 30, 2021.  As of October 31, 2020, the Company had repaid $330.0 million of outstanding loans under its Credit Facilities.  

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Share-Based Compensation

9 Months Ended

Oct. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

9.  Share-Based Compensation

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

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

Stock Option Grants

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

				Weighted- Average		Weighted- Average Remaining Contractual		Aggregate
	Options			Exercise Price		Term		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 30, 2021		3,940		$	14.87
Granted		478		$	31.46
Exercised (1)		(771	)	$	16.33
Outstanding - October 30, 2021		3,647		$	16.74		4.5	$	29,226
Vested and expected to vest - October 30, 2021		2,503		$	16.59		3.2	$	14,678
Exercisable - October 30, 2021 (2)		1,788		$	16.28		1.7	$	13,345

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

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

Cash received from the exercise of stock options was $13.1 million for the 39 weeks ended October 30, 2021. The actual tax benefit realized from share-based payments totaled $4.3 million for the 39 weeks ended October 30, 2021. There were no stock options exercised during the 39 weeks ended October 31, 2020. 

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

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

	39 Weeks Ended	39 Weeks Ended
	October 30,	October 31,
Black-Scholes Option Valuation Assumptions	2021	2020
Risk-free interest rate (1)	0.9%	0.3 - 0.6%
Dividend yield	1.6%	3.5 - 6.0%
Volatility factor (2)	50.7%	43.1 - 48.7%
Weighted-average expected term (3)	4.5 years	4.4 years

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

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

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

Restricted Stock Grants

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

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

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

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

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	October 30, 2021					October 30, 2021
(Shares in thousands)	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Nonvested - January 30, 2021		3,698		$	12.42		1,868		$	17.44
Granted		699		$	32.47		337		$	39.54
Vested		(1,478	)	$	14.90		(418	)	$	22.22
Cancelled		(200	)	$	13.49		(324	)	$	17.72
Nonvested - October 30, 2021		2,719		$	16.15		1,463		$	21.10

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

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

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Income Taxes

9 Months Ended

Oct. 30, 2021

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 October 30, 2021 was 25.5% compared to 35.3% for the 13 weeks ended October 31, 2020.  The effective income tax rate for the 39 weeks ended October 30, 2021 was 24.9% compared to the effective tax benefit rate of 26.8% for the 39 weeks ended October 31, 2020. The change in the effective tax rate, as compared to the prior period, is primarily due to benefits recognized as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which impacted the 13 weeks ended October 31, 2020.  The CARES Act allowed net operating losses generated within tax year 2020 to be carried back to periods in which the U.S. federal corporate income tax rate was 35%, as opposed to the current U.S. federal corporate income tax rate of 21%, which resulted in a higher rate applicable to the 13 weeks ended October 31, 2020.

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

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Legal Proceedings

9 Months Ended

Oct. 30, 2021

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

9 Months Ended

Oct. 30, 2021

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 and Aerie) that also represent our reportable segments and reflect the Chief Operating Decision Maker’s (defined as our CEO) internal view of analyzing results and allocating resources. Historically, all operating segments were aggregated as permitted by ASC 280 as one reportable segment. In the fourth quarter of Fiscal 2020, we revised our reportable segment structure to have two reportable segments, American Eagle and Aerie.

Our CEO analyzes segment results and allocates resources based on adjusted operating income (loss), which is a non-GAAP measure. Adjusted operating income (loss) is defined as operating income (loss) excluding impairment, restructuring and COVID-19 related charges.  Adjusted operating income (loss) may not be comparable to similarly titled measures of other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We use this non-GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results and provides a higher degree of transparency. The following includes a reconciliation from consolidated operating income (loss), the most directly comparable GAAP operating performance measure presented on the Consolidated Financial Statements, to our non-GAAP adjusted operating income (loss) on a consolidated basis.

(in thousands)	American Eagle		Aerie		Corporate(1)			Total(2)
13 weeks ended October 30, 2021
Total net revenue	$	940,992	$	315,049	$	18,037		$	1,274,078
Operating income (loss)	$	261,225	$	52,021	$	(103,559	)	$	209,687
Capital Expenditures	$	13,298	$	24,867	$	20,036		$	58,201
13 weeks ended October 31, 2020
Total net revenue	$	775,961	$	246,748	$	8,908		$	1,031,617
Operating income (loss)	$	155,259	$	35,738	$	(95,446	)	$	95,551
Impairment, restructuring, and COVID-19 related charges		—		—		6,955			6,955
Adjusted operating income (loss)	$	155,259	$	35,738	$	(88,491	)	$	102,506
Capital Expenditures	$	10,488	$	6,399	$	14,302		$	31,189
39 weeks ended October 30, 2021
Total net revenue	$	2,513,700	$	947,851	$	41,297		$	3,502,848
Operating income (loss)	$	611,650	$	191,341	$	(291,880	)	$	511,111
Capital Expenditures	$	36,093	$	48,164	$	60,148		$	144,405
39 weeks ended October 31, 2020
Total net revenue	$	1,791,042	$	653,240	$	22,537		$	2,466,819
Operating income (loss)	$	1,113	$	47,011	$	(323,052	)	$	(274,928	)
Impairment, restructuring, and COVID-19 related charges		90,926		18,215		68,045			177,186
Adjusted operating income (loss)	$	92,039	$	65,226	$	(255,007	)	$	(97,742	)
Capital Expenditures	$	25,361	$	23,807	$	43,423		$	92,591

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

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

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

The following table present summarized geographical information:

	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total net revenue:
United States	$	1,104,441	$	898,241	$	3,044,407	$	2,167,145
Foreign (1)	$	169,637	$	133,376	$	458,441		299,674
Total net revenue	$	1,274,078	$	1,031,617	$	3,502,848	$	2,466,819

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

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Impairment, Restructuring and COVID-19 Related Charges

9 Months Ended

Oct. 30, 2021

Restructuring And Related Activities [Abstract]

Impairment, Restructuring and COVID-19 Related Charges

13. Impairment, Restructuring and COVID-19 Related Charges

The following table represents impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 31, 2020.  There were no impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 30, 2021.  All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations.

	13 Weeks Ended		39 Weeks Ended
	October 31,		October 31,
(In thousands)	2020		2020
Impairment charges (1)	$	—	$	153,617
Incremental COVID-19 related expenses (2)		5,951		19,836
Severance and related employee costs		1,004		3,733
Total impairment, restructuring and COVID-19 related charges	$	6,955	$	177,186

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

(2)   Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers.      

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

	39 Weeks Ended
	October 30,
(In thousands)	2021
Restructuring liability as of January 30, 2021	$	2,812
Add: Costs incurred, excluding non-cash charges		—
Less: Cash payments and adjustments		(2,421	)
Restructuring liability as of October 30, 2021	$	391

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Subsequent Events

9 Months Ended

Oct. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

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

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

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Oct. 30, 2021

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.  At October 30, 2021, 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 2021” refers to the 52-week period that will end on January 29, 2022.  “Fiscal 2020” refers to the 52-week period ended January 30, 2021.  “Fiscal 2019” refers to the 52-week period ended February 1, 2020.

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

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

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in 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 calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company will adopt ASU 2020-06 at the beginning of Fiscal 2022 using the modified retrospective approach.

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

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

Foreign Currency Translation

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

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

Cash and Cash Equivalents and Short-Term Investments

Cash and Cash Equivalents and Short-Term Investments

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

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

Receivables

Receivables

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

Merchandise Inventory

Merchandise Inventory

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

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its current 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 - five years

As of October 30, 2021, the weighted average remaining useful life of our assets was approximately 7.0 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, which have been open for a period sufficient to reach maturity.  The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts.  When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income under impairment, restructuring and COVID-19 related charges.

When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense.  Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment and to Note 13 to the Consolidated Financial Statements for additional information regarding impairment charges for the 39 weeks ended October 31, 2020.  

Intangible Assets, including Goodwill

Intangible Assets, including Goodwill

The Company’s goodwill is primarily related to the acquisition of its importing operations, Canada business, and other immaterial acquisitions.  In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment at least annually or more frequently if an impairment indicator exists, by comparing the estimated fair value of each reporting unit to its carrying value. As a result of the Company’s annual goodwill impairment test as of January 30, 2021, the Company concluded that its goodwill was not impaired.

Definite-lived intangible assets are recorded on the basis of cost 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 15 to 25 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 350 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 39 weeks ended October 30, 2021 and October 31, 2020.

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

Gift Cards

Gift Cards

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

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

Construction Allowances

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

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

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

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

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

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

Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

No operating lease ROU asset impairments were recorded for the 13 or 39 weeks ended October 30, 2021. There was no operating lease ROU impairment recorded for the 13 weeks ended October 31, 2020. During the 39 weeks ended October 31, 2020, the Company recorded impairment of operating lease ROU assets of $84.1 million.  Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets.

Leases Modifications and COVID-19

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

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

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

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

Co-Branded Credit Card

Co-branded Credit Card

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

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

Customer Loyalty Program

Customer Loyalty Program

In June 2020, the Company launched 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. Prior to the Program’s launch in June 2020, we also offered additional rewards for key items such as jeans and bras under our previous program, AEO Connected™.  Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.  

Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).  The portion of the sales revenue attributed to the award points is deferred and recognized when the award 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.

Sales Return Reserve

Sales Return Reserve

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. 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 consists of a separate right of return asset and liability.  These amounts are recorded within (i) prepaid expenses and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets.

Income Taxes

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement 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.

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 unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption above.

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. 

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”) and buying, occupancy and warehousing costs.

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 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. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, equipment leasing costs, and services purchased.

Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing, and importing teams, our buyers, and our distribution centers, as these amounts are recorded in cost of sales.  Additionally, selling, general and administrative 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.

Interest Expense, Net

Interest Expense, Net

Interest expense, net primarily consists of interest expense related to the Notes and borrowings under the revolving credit facility, as well as interest income from cash, cash equivalents, and short-term investments.

Other (Income), Net

Other (Income), Net

Other (income), net consists primarily of gains and losses resulting from foreign currency transactions.

Segment Information

Segment Information

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

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.

Share-Based Compensation

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

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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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Oct. 30, 2021

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 - five years

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Cash and Cash Equivalents (Tables)

9 Months Ended

Oct. 30, 2021

Cash And Cash Equivalents [Abstract]

Fair Market Values for Cash and Cash Equivalents

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

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

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Earnings per Share (Tables)

9 Months Ended

Oct. 30, 2021

Earnings Per Share [Abstract]

Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding

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

	13 Weeks Ended				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,637		166,185		168,062		166,385
Dilutive effect of convertible notes		33,687		16,382		34,616		—
Dilutive effect of stock options and non-vested    restricted stock		3,689		1,830		4,354		—
Diluted number of common shares outstanding		205,013		184,397		207,032		166,385
Anti-Dilutive Shares*		286		1,423		172		9,250

*For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes 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. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

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Property and Equipment (Tables)

9 Months Ended

Oct. 30, 2021

Property Plant And Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Property and equipment, at cost	$	2,394,148		$	2,250,974		$	2,255,676
Less:  Accumulated depreciation and impairment		(1,728,740	)		(1,627,166	)		(1,605,279	)
Property and equipment, net	$	665,408		$	623,808		$	650,397

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Intangible Assets, including Goodwill (Tables)

9 Months Ended

Oct. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets, Including Goodwill

Intangible assets consist of the following:

	October 30,			January 30,			October 31,
(In thousands)	2021			2021			2020
Goodwill, gross	$	20,585		$	17,463		$	17,331
Accumulated impairment (1)		(4,196	)		(4,196	)		(4,196	)
Goodwill, net	$	16,389		$	13,267		$	13,135
Trademarks, at cost	$	93,504		$	92,663		$	72,194
Accumulated amortization		(40,561	)		(35,598	)		(34,465	)
Trademarks, net	$	52,943		$	57,065		$	37,729
Intangible assets, net, including goodwill	$	69,332		$	70,332		$	50,864

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

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Long-Term Debt, Net (Tables)

9 Months Ended

Oct. 30, 2021

Debt Disclosure [Abstract]

Components of Long-Term Debt

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

(In thousands)	October 30, 2021		January 30, 2021		October 31, 2020
Convertible senior notes principal	$	412,025	$	415,025	$	415,025
Less: unamortized discount		75,776		89,735		93,944
Total long-term debt, net	$	336,249	$	325,290	$	321,081
Convertible Senior Notes - Equity portion, net of tax		58,454		68,330		68,330

Schedule of Interest Expense for Notes

Interest expense for the Notes was:

	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Accrued interest for interest payments	$	3,863	$	3,848	$	11,611	$	7,966
Amortization of discount		4,569		4,113		13,953		8,308
Total interest expense	$	8,432	$	7,961	$	25,564	$	16,274

Schedule of Notes Conversion Amounts

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

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

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Share-Based Compensation (Tables)

9 Months Ended

Oct. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity

A summary of the Company’s stock option activity for the 39 weeks ended October 30, 2021 follows:

				Weighted- Average		Weighted- Average Remaining Contractual		Aggregate
	Options			Exercise Price		Term		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - January 30, 2021		3,940		$	14.87
Granted		478		$	31.46
Exercised (1)		(771	)	$	16.33
Outstanding - October 30, 2021		3,647		$	16.74		4.5	$	29,226
Vested and expected to vest - October 30, 2021		2,503		$	16.59		3.2	$	14,678
Exercisable - October 30, 2021 (2)		1,788		$	16.28		1.7	$	13,345

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

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

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:

	39 Weeks Ended	39 Weeks Ended
	October 30,	October 31,
Black-Scholes Option Valuation Assumptions	2021	2020
Risk-free interest rate (1)	0.9%	0.3 - 0.6%
Dividend yield	1.6%	3.5 - 6.0%
Volatility factor (2)	50.7%	43.1 - 48.7%
Weighted-average expected term (3)	4.5 years	4.4 years

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

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

(3) Represents the period of time that 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 tables:

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	October 30, 2021					October 30, 2021
(Shares in thousands)	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Nonvested - January 30, 2021		3,698		$	12.42		1,868		$	17.44
Granted		699		$	32.47		337		$	39.54
Vested		(1,478	)	$	14.90		(418	)	$	22.22
Cancelled		(200	)	$	13.49		(324	)	$	17.72
Nonvested - October 30, 2021		2,719		$	16.15		1,463		$	21.10

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Segment Reporting (Tables)

9 Months Ended

Oct. 30, 2021

Segment Reporting [Abstract]

Reconciliation from GAAP Operating Performance Measure to Non-GAAP Adjusted Operating Income (Loss) on Consolidated Basis

The following includes a reconciliation from consolidated operating income (loss), the most directly comparable GAAP operating performance measure presented on the Consolidated Financial Statements, to our non-GAAP adjusted operating income (loss) on a consolidated basis.

(in thousands)	American Eagle		Aerie		Corporate(1)			Total(2)
13 weeks ended October 30, 2021
Total net revenue	$	940,992	$	315,049	$	18,037		$	1,274,078
Operating income (loss)	$	261,225	$	52,021	$	(103,559	)	$	209,687
Capital Expenditures	$	13,298	$	24,867	$	20,036		$	58,201
13 weeks ended October 31, 2020
Total net revenue	$	775,961	$	246,748	$	8,908		$	1,031,617
Operating income (loss)	$	155,259	$	35,738	$	(95,446	)	$	95,551
Impairment, restructuring, and COVID-19 related charges		—		—		6,955			6,955
Adjusted operating income (loss)	$	155,259	$	35,738	$	(88,491	)	$	102,506
Capital Expenditures	$	10,488	$	6,399	$	14,302		$	31,189
39 weeks ended October 30, 2021
Total net revenue	$	2,513,700	$	947,851	$	41,297		$	3,502,848
Operating income (loss)	$	611,650	$	191,341	$	(291,880	)	$	511,111
Capital Expenditures	$	36,093	$	48,164	$	60,148		$	144,405
39 weeks ended October 31, 2020
Total net revenue	$	1,791,042	$	653,240	$	22,537		$	2,466,819
Operating income (loss)	$	1,113	$	47,011	$	(323,052	)	$	(274,928	)
Impairment, restructuring, and COVID-19 related charges		90,926		18,215		68,045			177,186
Adjusted operating income (loss)	$	92,039	$	65,226	$	(255,007	)	$	(97,742	)
Capital Expenditures	$	25,361	$	23,807	$	43,423		$	92,591

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

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

Summary of Geographical Information

The following table present summarized geographical information:

	13 Weeks Ended				39 Weeks Ended
(In thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total net revenue:
United States	$	1,104,441	$	898,241	$	3,044,407	$	2,167,145
Foreign (1)	$	169,637	$	133,376	$	458,441		299,674
Total net revenue	$	1,274,078	$	1,031,617	$	3,502,848	$	2,466,819

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

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Impairment, Restructuring and COVID-19 Related Charges (Tables)

9 Months Ended

Oct. 30, 2021

Restructuring And Related Activities [Abstract]

Summary of Impairment, Restructuring and COVID-19 Related Charges

The following table represents impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 31, 2020.  There were no impairment, restructuring and COVID-19 related charges for the 13 and 39 weeks ended October 30, 2021.  All amounts were recorded within impairment, restructuring and COVID-19 related charges on the Consolidated Statements of Operations.

	13 Weeks Ended		39 Weeks Ended
	October 31,		October 31,
(In thousands)	2020		2020
Impairment charges (1)	$	—	$	153,617
Incremental COVID-19 related expenses (2)		5,951		19,836
Severance and related employee costs		1,004		3,733
Total impairment, restructuring and COVID-19 related charges	$	6,955	$	177,186

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

(2)   Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers.      

Rollforward of Restructuring Liabilities Recognized in Accrued Compensation and Payroll Taxes and Other Current Liabilities and Accrued Expenses in Consolidated Balance Sheet

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

	39 Weeks Ended
	October 30,
(In thousands)	2021
Restructuring liability as of January 30, 2021	$	2,812
Add: Costs incurred, excluding non-cash charges		—
Less: Cash payments and adjustments		(2,421	)
Restructuring liability as of October 30, 2021	$	391

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Interim Financial Statements - Additional Information (Detail)	Oct. 30, 2021 Store
Accounting Policies [Abstract]
Number of retail stores	1,000
Number of international store locations	200

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Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands		1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Jan. 30, 2022 shares	Apr. 30, 2020 USD ($)	Oct. 30, 2021 USD ($) shares	Jan. 30, 2021 Segment	Oct. 31, 2020 USD ($) shares	Oct. 30, 2021 USD ($) Segment shares	Oct. 31, 2020 USD ($)	Jan. 30, 2021 USD ($)
Significant Accounting Policies [Line Items]
Number of reportable segments | Segment				2		2
Dilutive effect of convertible notes | shares			33,687		16,382	34,616
Unrealized (loss) gain included in accumulated other comprehensive (loss) income			$ (2,155,000)		$ 3,318,000	$ 1,699,000	$ (11,505,000)
Weighted average remaining useful life, assets						7 years
Goodwill impairment charge								$ 0
Definite-lived impairment charges			0		0	$ 0	0
Revenue related to gift card breakage			1,700,000		1,600,000	6,100,000	4,900,000
Impairment of operating lease ROU assets			$ 0		$ 0	$ 0	$ 84,100,000
Number of operating segments | Segment						2
Minimum
Significant Accounting Policies [Line Items]
Definite-lived intangibles, useful life						15 years
Maximum
Significant Accounting Policies [Line Items]
Definite-lived intangibles, useful life						25 years
Convertible Senior Notes Due 2025
Significant Accounting Policies [Line Items]
Aggregate principal amount of debt issued		$ 415,000,000
Debt instrument, maturity year		2025
Accounting Standards Update 2016-13
Significant Accounting Policies [Line Items]
Change in accounting principle, accounting standards update, adopted			true			true
Change in accounting principle, accounting standards update, adoption date			Feb. 02, 2020			Feb. 02, 2020
Change in accounting principle, accounting standards update, immaterial effect			true			true
Accounting Standards Update 2019-12
Significant Accounting Policies [Line Items]
Change in accounting principle, accounting standards update, adopted			true			true
Change in accounting principle, accounting standards update, adoption date			Jan. 31, 2021			Jan. 31, 2021
Change in accounting principle, accounting standards update, immaterial effect			true			true
ASU 2020-06
Significant Accounting Policies [Line Items]
Dilutive effect of convertible notes | shares						14,000
ASU 2020-06 | Forecast
Significant Accounting Policies [Line Items]
Dilutive effect of convertible notes | shares	48,000

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Useful Lives of Major Classes of Assets (Detail)	9 Months Ended
	Oct. 30, 2021
Buildings
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	25 years
Leasehold Improvements
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
Useful lives in asset class	Lesser of 10 years or the term of the lease
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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Useful Lives of Major Classes of Assets (Parenthetical) (Detail)	9 Months Ended
	Oct. 30, 2021
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 - Fair Market Values for Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
Cash and cash equivalents:
Cash and cash equivalents	$ 740,668	$ 850,477	$ 692,356
Cash
Cash and cash equivalents:
Cash and cash equivalents	364,769	524,970	317,027
Interest Bearing Deposits
Cash and cash equivalents:
Cash and cash equivalents	$ 375,899	275,507	325,319
Money Market Securities
Cash and cash equivalents:
Cash and cash equivalents			$ 50,010
Certificates of Deposit
Cash and cash equivalents:
Cash and cash equivalents		$ 50,000

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Fair Value Measurements - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Apr. 30, 2020	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Fair Value Measurements Disclosure [Line Items]
Repayment of outstanding borrowings					$ 330,000,000
Asset impairment charges		$ 0	$ 0	$ 0	153,617,000	[1]
Impairment of operating lease ROU assets		0	0	0	84,100,000
Retail Stores
Fair Value Measurements Disclosure [Line Items]
Asset impairment charges					109,600,000
Impairment of operating lease ROU assets					84,100,000
Impairment of certain cost and equity method investments					18,000,000.0
Fair value of impaired asset			$ 163,400,000		163,400,000
Store Property and Equipment (Fixtures and Equipment and Leasehold Improvements) | Retail Stores
Fair Value Measurements Disclosure [Line Items]
Asset impairment charges					25,500,000
Corporate Property and Equipment | Retail Stores
Fair Value Measurements Disclosure [Line Items]
Asset impairment charges					26,000,000.0
Convertible Senior Notes Due 2025
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		$ 0		$ 0
Repayment of outstanding borrowings					$ 330,000,000

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

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Earnings per Share - Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares shares in Thousands		3 Months Ended		9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,637	166,185	168,062	166,385
Dilutive effect of convertible notes		33,687	16,382	34,616
Dilutive effect of stock options and non-vested restricted stock		3,689	1,830	4,354
Diluted number of common shares outstanding		205,013	184,397	207,032	166,385
Anti-Dilutive Shares	[1]	286	1,423	172	9,250

[1] For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes 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. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

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Earnings per Share - Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Parenthetical) (Detail) - shares shares in Thousands		3 Months Ended		9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation	[1]	286	1,423	172	9,250
Equity Awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation					1,400
Convertible Senior Notes
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share calculation					7,800

[1] For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes 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. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

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Property and Equipment (Detail) - USD ($) $ in Thousands	Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
Property Plant And Equipment [Abstract]
Property and equipment, at cost	$ 2,394,148	$ 2,250,974	$ 2,255,676
Less: Accumulated depreciation and impairment	(1,728,740)	(1,627,166)	(1,605,279)
Property and equipment, net	$ 665,408	$ 623,808	$ 650,397

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Intangible Assets, Including Goodwill (Detail) - USD ($) $ in Thousands		Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
Intangible Assets Net Including Goodwill [Abstract]
Goodwill, gross		$ 20,585	$ 17,463	$ 17,331
Accumulated impairment	[1]	(4,196)	(4,196)	(4,196)
Goodwill, net		16,389	13,267	13,135
Trademarks, at cost		93,504	92,663	72,194
Accumulated amortization		(40,561)	(35,598)	(34,465)
Trademarks, net		52,943	57,065	37,729
Intangible assets, net, including goodwill		$ 69,332	$ 70,332	$ 50,864

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

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Intangible Assets, Including Goodwill (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) - Convertible Senior Notes Due 2025 - USD ($) $ in Thousands	Oct. 30, 2021	Jan. 30, 2021	Oct. 31, 2020
Debt Instrument [Line Items]
Convertible senior notes principal	$ 412,025	$ 415,025	$ 415,025
Less: unamortized discount	75,776	89,735	93,944
Total long-term debt, net	336,249	325,290	321,081
Convertible Senior Notes - Equity portion, net of tax	$ 58,454	$ 68,330	$ 68,330

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Long-Term Debt, Net - Additional Information (Detail)	1 Months Ended		9 Months Ended
	Apr. 30, 2020 USD ($) TradingDay $ / shares shares	Jan. 31, 2019 USD ($)	Oct. 30, 2021 USD ($) $ / shares	Oct. 31, 2020 USD ($)
Line Of Credit Facility [Line Items]
Repayment of outstanding borrowings				$ 330,000,000
Credit Facilities
Line Of Credit Facility [Line Items]
Repayment of outstanding borrowings				$ 330,000,000.0
Credit Agreement | Credit Facilities
Line Of Credit Facility [Line Items]
Line of credit facility, expiration period		5 years
Loans and letters of credit maximum borrowing capacity		$ 400,000,000
Line of credit facility, expiration date		Jan. 30, 2024
Credit Agreement | Credit Agreement Loans
Line Of Credit Facility [Line Items]
Outstanding borrowings			$ 0
Credit Agreement | Stand-by Letters of Credit
Line Of Credit Facility [Line Items]
Letters of credit outstanding amount			$ 7,900,000
Convertible Senior Notes Due 2025
Line Of Credit Facility [Line Items]
Aggregate principal amount of debt issued	$ 415,000,000
Debt instrument, maturity year	2025
Debt instrument, stated interest rate	3.75%
Debt instrument, interest terms	The Notes have a stated interest rate of 3.75%, payable semi-annually.
Debt instrument, frequency of periodic payment of interest	payable semi-annually
Debt instrument, redemption period beginning month and year	2023-04
Debt instrument, redemption earliest date	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
Debt instrument, conversion period beginning month and year	2025-01
Debt conversion, original debt, principal amount converted	$ 1,000
Debt instrument, conversion price per share | $ / shares	$ 8.54		$ 8.54
Debt instrument, effective interest rate	10.00%
Debt instrument, remaining amortization period of discount			3 years 6 months
Convertible Senior Notes Due 2025 | Common Stock
Line Of Credit Facility [Line Items]
Debt conversion, converted instruments, shares issued | shares	117.1

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Long-Term Debt, Net - Schedule of Interest Expense for Notes (Detail) - Convertible Senior Notes Due 2025 - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Debt Instrument [Line Items]
Accrued interest for interest payments	$ 3,863	$ 3,848	$ 11,611	$ 7,966
Amortization of discount	4,569	4,113	13,953	8,308
Total interest expense	$ 8,432	$ 7,961	$ 25,564	$ 16,274

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Long-Term Debt, Net - Schedule of Notes Conversion Amounts (Detail) - Convertible Senior Notes Due 2025 - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Oct. 30, 2021	Apr. 30, 2020
Debt Instrument [Line Items]
Number of shares convertible	48,258
Conversion price per share	$ 8.54	$ 8.54
Value in excess of principal if converted	$ 952,555

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Share-Based Compensation - Additional Information (Detail) - USD ($) shares in Millions	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 7,900,000	$ 9,000,000.0	$ 29,435,000	$ 24,685,000
Share-based compensation, net of tax	$ 5,900,000	$ 5,700,000	22,200,000	17,900,000
Net proceeds from stock options exercised			13,065,000
Stock options exercised				$ 0
Tax benefit realized from share-based payments			$ 4,300,000
Shares available for all equity grants	7.6		7.6
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 7,500,000		$ 7,500,000
Unrecognized compensation expense, weighted average period			2 years
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			1 year 10 months 24 days
Unrecognized compensation expense, restricted stock grants	30,800,000		$ 30,800,000
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Unrecognized compensation expense, restricted stock grants	$ 9,300,000		$ 9,300,000
Performance-Based Restricted Stock Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, weighted average period			1 year
Performance-Based Restricted Stock Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, weighted average period			3 years

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Share-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Oct. 30, 2021 USD ($) $ / shares shares
Options
Outstanding - beginning of period | shares	3,940
Granted | shares	478
Exercised | shares	(771)	[1]
Outstanding - end of period | shares	3,647
Vested and expected to vest - end of period | shares	2,503
Exercisable - end of period | shares	1,788	[2]
Weighted-Average Exercise Price
Outstanding - beginning of period | $ / shares	$ 14.87
Granted | $ / shares	31.46
Exercised | $ / shares	16.33	[1]
Outstanding - end of period | $ / shares	16.74
Vested and expected to vest - end of period | $ / shares	16.59
Exercisable - end of period | $ / shares	$ 16.28	[2]
Weighted-Average Remaining Contractual Term (In years)
Outstanding - end of period	4 years 6 months
Vested and expected to vest - end of period	3 years 2 months 12 days
Exercisable - end of period	1 year 8 months 12 days	[2]
Outstanding - end of period | $	$ 29,226
Vested and expected to vest - end of period | $	14,678
Exercisable - end of period | $	$ 13,345	[2]

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

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

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Share-Based Compensation - Summary of Stock Option Activity (Parenthetical) (Detail)	9 Months Ended
	Oct. 30, 2021 $ / shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options exercised, exercise price range, lower limit	$ 8.62
Options exercised, exercise price range, upper limit	$ 21.41

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Share-Based Compensation - Black-Scholes Option Valuation Assumptions (Detail)		9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	[1]	0.90%
Risk-free interest rates, minimum	[1]		0.30%
Risk-free interest rates, maximum	[1]		0.60%
Dividend yield		1.60%
Volatility factor	[2]	50.70%
Volatility factor, minimum	[2]		43.10%
Volatility factor, maximum	[2]		48.70%
Weighted-average expected term	[3]	4 years 6 months	4 years 4 months 24 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield			3.50%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield			6.00%

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

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

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

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Share-Based Compensation - Summary of Restricted Stock Activity (Detail) shares in Thousands	9 Months Ended
	Oct. 30, 2021 $ / shares shares
Time Based Restricted Stock Units
Shares
Nonvested - beginning of period | shares	3,698
Granted | shares	699
Vested | shares	(1,478)
Cancelled | shares	(200)
Nonvested - end of period | shares	2,719
Weighted-Average Grant Date Fair Value
Nonvested - beginning of period | $ / shares	$ 12.42
Granted | $ / shares	32.47
Vested | $ / shares	14.90
Cancelled | $ / shares	13.49
Nonvested - end of period | $ / shares	$ 16.15
Performance-Based Restricted Stock Units
Shares
Nonvested - beginning of period | shares	1,868
Granted | shares	337
Vested | shares	(418)
Cancelled | shares	(324)
Nonvested - end of period | shares	1,463
Weighted-Average Grant Date Fair Value
Nonvested - beginning of period | $ / shares	$ 17.44
Granted | $ / shares	39.54
Vested | $ / shares	22.22
Cancelled | $ / shares	17.72
Nonvested - end of period | $ / shares	$ 21.10

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020	Feb. 03, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	25.50%	35.30%	24.90%	26.80%
U.S. federal corporate tax rate			21.00%		35.00%
Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months	$ 0.6		$ 0.6

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Segment Reporting - Additional Information (Detail) - Segment	3 Months Ended	9 Months Ended
	Jan. 30, 2021	Oct. 30, 2021
Segment Reporting Information [Line Items]
Number of operating segments		2
Number of reportable segments	2	2
ASC 280
Segment Reporting Information [Line Items]
Number of reportable segments		1

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Segment Reporting - Reconciliation from GAAP Operating Performance Measure to Non-GAAP Adjusted Operating Income (Loss) on Consolidated Basis (Detail) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020		Oct. 30, 2021	Oct. 31, 2020
Segment Reporting Information [Line Items]
Total net revenue	[1]	$ 1,274,078	$ 1,031,617		$ 3,502,848	$ 2,466,819
Operating income (loss)	[1]	209,687	95,551		511,111	(274,928)
Impairment, restructuring and COVID-19 related charges		0	6,955	[1]	0	177,186	[1]
Adjusted operating income (loss)	[1]		102,506			(97,742)
Capital Expenditures	[1]	58,201	31,189		144,405	92,591
Operating Segments | American Eagle
Segment Reporting Information [Line Items]
Total net revenue		940,992	775,961		2,513,700	1,791,042
Operating income (loss)		261,225	155,259		611,650	1,113
Impairment, restructuring and COVID-19 related charges						90,926
Adjusted operating income (loss)			155,259			92,039
Capital Expenditures		13,298	10,488		36,093	25,361
Operating Segments | Aerie
Segment Reporting Information [Line Items]
Total net revenue		315,049	246,748		947,851	653,240
Operating income (loss)		52,021	35,738		191,341	47,011
Impairment, restructuring and COVID-19 related charges						18,215
Adjusted operating income (loss)			35,738			65,226
Capital Expenditures		24,867	6,399		48,164	23,807
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total net revenue	[2]	18,037	8,908		41,297	22,537
Operating income (loss)	[2]	(103,559)	(95,446)		(291,880)	(323,052)
Impairment, restructuring and COVID-19 related charges	[2]		6,955			68,045
Adjusted operating income (loss)	[2]		(88,491)			(255,007)
Capital Expenditures	[2]	$ 20,036	$ 14,302		$ 60,148	$ 43,423

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

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

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Segment Reporting - Reconciliation from GAAP Operating Performance Measure to Non-GAAP Adjusted Operating Income (Loss) on Consolidated Basis (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Segment Reporting [Abstract]
Interest expense, net	$ 8,600	$ 7,900	$ 26,000	$ 16,600
Other (income), net	$ (3,130)	$ (2,223)	$ (6,354)	$ (793)

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Segment Reporting - Summary of Geographical Information (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	[1]	$ 1,274,078	$ 1,031,617	$ 3,502,848	$ 2,466,819
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue		1,104,441	898,241	3,044,407	2,167,145
Foreign
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	[2]	$ 169,637	$ 133,376	$ 458,441	$ 299,674

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

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

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Impairment, Restructuring and COVID-19 Related Charges - Addition Information (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020		Oct. 30, 2021	Oct. 31, 2020
Restructuring And Related Activities [Abstract]
Impairment, restructuring and COVID-19 related charges	$ 0	$ 6,955	[1]	$ 0	$ 177,186	[1]

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

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Summary of Impairment, Restructuring and COVID-19 Related Charges (Detail) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
		Oct. 30, 2021	Oct. 31, 2020		Oct. 30, 2021	Oct. 31, 2020
Restructuring And Related Activities [Abstract]
Impairment charges		$ 0	$ 0		$ 0	$ 153,617	[1]
Incremental COVID-19 related expenses	[2]		5,951			19,836
Severance and related employee costs			1,004			3,733
Total impairment, restructuring and COVID-19 related charges		$ 0	$ 6,955	[3]	$ 0	$ 177,186	[3]

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

[2] Incremental COVID-19 related expenses consist of personal protective equipment and supplies for our associates and customers.

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

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Summary of Impairment, Restructuring and COVID-19 Related Charges (Parenthetical) (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Restructuring Cost And Reserve [Line Items]
Asset impairment charges	$ 0	$ 0	$ 0	$ 153,617,000	[1]
Impairment of operating lease ROU assets	$ 0	$ 0	$ 0	84,100,000
Retail Stores
Restructuring Cost And Reserve [Line Items]
Asset impairment charges				109,600,000
Impairment of operating lease ROU assets				84,100,000
Store Property and Equipment (Fixtures and Equipment and Leasehold Improvements) | Retail Stores
Restructuring Cost And Reserve [Line Items]
Asset impairment charges				25,500,000
Corporate Property and Equipment | Retail Stores
Restructuring Cost And Reserve [Line Items]
Asset impairment charges				26,000,000.0
Cost and Equity Method Investments | Retail Stores
Restructuring Cost And Reserve [Line Items]
Asset impairment charges				$ 18,000,000.0

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

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Rollforward of Restructuring Liabilities Recognized in Accrued Compensation and Payroll Taxes and Other Current Liabilities and Accrued Expenses in Consolidated Balance Sheet (Detail) $ in Thousands	9 Months Ended
	Oct. 30, 2021 USD ($)
Restructuring And Related Activities [Abstract]
Restructuring liability as of January 30, 2021	$ 2,812
Less: Cash payments and adjustments	(2,421)
Restructuring liability as of October 30, 2021	$ 391

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Subsequent Events - Additional Information (Detail) $ in Millions	Nov. 01, 2021 USD ($)
Subsequent Event | Stock Purchase Agreement | All Shares of Quiet Logistics Inc. and Certain Equity Interests in Locus Robotics Corp. and Axlehire, Inc.
Subsequent Event [Line Items]
Business acquisition, purchase price expected to finance with cash on hand	$ 350