##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    November 3, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number:
    001-31314
  Aéropostale,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

31-1443880(State of
    incorporation)

(I.R.S. Employer Identification
    No.)112 W. 34th Street, New York, NY

10120(Address of Principal Executive
    Offices)

(Zip Code)   (646) 485-5410
 (Registrants Telephone
    Number, Including Area Code)
   þ o
  non-accelerated Rule 12b-2
  þ o o
  Rule 12b-2).  Yes o þ




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##### 



AÉROPOSTALE,
    INC.
  TABLE OF
    CONTENTS
  PART I  FINANCIAL
    INFORMATIONItem 1.


Financial Statements (unaudited)


3Condensed Consolidated Balance Sheets


3Condensed Consolidated Statements of Income


4Condensed Consolidated Statements of Cash
    Flows


5Notes to Unaudited Condensed Consolidated
    Financial Statements


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


14Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


21Item 4.


Controls and Procedures


21PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


21Item 1A.


Risk Factors


22Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


27Item 3.


Defaults Upon Senior Securities


27Item 4.


Submission of Matters to a Vote of Security
    Holders


27Item 5.


Other Information


27Item 6.


Exhibits


28SIGNATURES


29EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION
  Item 1.
    Financial
    Statements (unaudited)  AÉROPOSTALE,
    INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
  November 3,


February 3,


October 28,2007


2007


2006(Unaudited)(In thousands)ASSETSCurrent Assets:Cash and cash equivalents

$
122,553


$
200,064


$
148,141Short-term investments






76,223



55,202Merchandise inventory


192,301



101,476



167,527Tenant allowances receivable


7,481



4,523



9,647Prepaid expenses


13,368



12,175



14,635Deferred income taxes


8,129



1,185



Other current assets


4,979



3,147



2,894Total current assets


348,811



398,793



398,046Fixtures, equipment and improvements, net


225,364



175,591



179,885Intangible assets


1,400



1,400



2,455Deferred income taxes


6,448



3,784



Other assets


1,384



1,596



1,600TOTAL ASSETS

$
583,407


$
581,164


$
581,986LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
133,475


$
63,918


$
117,854Accrued compensation


19,007



15,553



11,498Deferred income taxes










5,195Income taxes payable


9,445



37,802



17,715Accrued expenses


48,554



47,525



37,235Total current liabilities


210,481



164,798



189,497Deferred rent and tenant allowances


96,996



88,344



89,526Retirement benefit plan liabilities


17,185



15,906



10,321Uncertain tax contingency liabilities


3,929







Deferred income taxes










1,605Commitments and contingent liabilities (See note 11)Stockholders Equity:Preferred stock, $0.01 par value; 5,000 shares
    authorized, no shares issued or outstanding










Common stock, $0.01 par value; 200,000 shares
    authorized; 89,786, 88,998 and 88,890 shares issued and
    outstanding, respectively


898



890



889Additional paid-in capital


120,139



101,132



98,216Accumulated other comprehensive loss


(3,459
)


(5,274
)


(1,557
)Retained earnings


479,174



414,916



357,625Treasury stock, 18,437, 11,531 and 10,032 shares,
    respectively at cost


(341,936
)


(199,548
)


(164,136
)Total stockholders equity


254,816



312,116



291,037TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
583,407


$
581,164


$
581,986    3




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##### Table of Contents



AÉROPOSTALE,
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006(Unaudited)(In thousands, except per share data)Net sales

$
412,576


$
385,455


$
999,594


$
906,371Cost of sales (includes certain buying, occupancy and
    warehousing expenses)


268,732



261,856



670,169



639,718Gross profit


143,844



123,599



329,425



266,653Selling, general and administrative expenses


86,261



71,840



229,013



192,327Other income














2,085Income from operations


57,583



51,759



100,412



76,411Interest income


1,989



1,632



5,963



4,500Income before income taxes


59,572



53,391



106,375



80,911Income taxes


23,564



20,821



41,913



31,555Net income

$
36,008


$
32,570


$
64,462


$
49,356Basic earnings per share

$
0.48


$
0.41


$
0.84


$
0.61Diluted earnings per share

$
0.48


$
0.41


$
0.84


$
0.61Weighted average basic shares


74,659



79,115



76,590



80,388Weighted average diluted shares


75,016



79,784



77,130



81,120    4




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##### Table of Contents



AÉROPOSTALE,
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  39 Weeks EndedNovember 3,


October 28,2007


2006(Unaudited)(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
64,462


$
49,356Adjustments to reconcile net income to net cash used in
    operating activities:Depreciation and amortization


25,575



21,227Stock-based compensation


6,675



4,465Excess tax benefits from stock-based compensation


(4,647
)


(6,968
)Other


(5,471
)


(3,932
)Changes in operating assets and liabilities:Merchandise inventory


(90,815
)


(75,619
)Accounts payable


69,557



60,689Other assets and liabilities


(17,793
)


15,876Net cash provided by operating activities


47,543



65,094CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures


(71,963
)


(39,452
)Purchase of short-term investments


(313,572
)


(294,510
)Proceeds from sale of short-term investments


389,795



259,345Net cash provided by (used in) investing activities


4,260



(74,617
)CASH FLOWS FROM FINANCING ACTIVITIES:Purchase of treasury stock


(141,692
)


(55,992
)Proceeds from exercise of stock options


7,692



1,453Excess tax benefits from stock-based compensation


4,647



6,968Net cash used in financing activities


(129,353
)


(47,571
)Effect of exchange rate changes


39



Net decrease in cash and cash equivalents


(77,511
)


(57,094
)Cash and cash equivalents, beginning of year


200,064



205,235Cash and cash equivalents, end of period

$
122,553


$
148,141Supplemental Disclosure of Cash Flow Information:Non-cash operating and investing activities

$
3,385


$
2,973    5




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Basis of
    Presentation  e-commerce www.aeropostale.com Form 10-Q Form 10-Q).
  Rule 10-01 Regulation S-X
  Form 10-K
  rd
  2.
    Common
    Stock Split    3.
    Revenue
    Recognition  e-commerce
 6




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.  Cost
    of Sales and Selling, General and Administrative
    Expenses
      5.
    Other
    Comprehensive Income    13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006(In thousands)Net income

$
36,008


$
32,570


$
64,462


$
49,356Minimum pension liability, net of tax of $48 and $144,
    respectively


75







225



Foreign currency translation
    adjustment 1


1,543







1,590



Other comprehensive income

$
37,626


$
32,570


$
66,277


$
49,356     1
    
    Foreign currency translation adjustments are not adjusted for
    income taxes as they relate to a permanent investment in the
    Companys subsidiary in Canada.  6.
    Earnings
    Per Share    13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006(In thousands, except per share data)Net income

$
36,008


$
32,570


$
64,462


$
49,356Weighted average basic shares


74,659



79,115



76,590



80,388Impact of dilutive securities


357



669



540



732Weighted average diluted shares


75,016



79,784



77,130



81,120Earnings per basic share

$
0.48


$
0.41


$
0.84


$
0.61Earnings per diluted share

$
0.48


$
0.41


$
0.84


$
0.61    7




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    7.
    Revolving
    Credit Facility              
    incur additional debt or encumber assets of the Company;
    merge with or acquire other companies, liquidate or dissolve;
    sell, transfer, lease or dispose of assets; and
    make loans or guarantees.     8




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    8.
    Retirement
    Benefit Plans        13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006(In thousands)Service cost

$
134


$
123


$
402


$
369Interest cost


225



233



675



699Amortization of prior experience cost


19



19



57



57Amortization of net loss


105



142



315



426Net periodic pension benefit cost

$
483


$
517


$
1,449


$
1,551       9.
    Stock
    Repurchase Program     9




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          10.
    Stock-Based
    Compensation  Share-Based Payment, a revision of
    SFAS No. 123, Accounting for Stock-Based
    Compensation Accounting for Stock Issued to
    Employees
     10




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006Expected volatility


45%



50%Expected term


5.25 years



5.25 yearsRisk-free interest rate


4.50%



4.86%Expected dividend yield


0%



0%Expected forfeiture rate


20%



20%           Number ofShares(In thousands)Options outstanding as of February 3, 2007


2,062Granted


581Exercised


(684
)Cancelled/Forfeited


(177
)Options outstanding as of November 3, 2007


1,782       Number ofShares(In thousands)Non-vested stock as of February 3, 2007


457Granted


308Vested


(103
)Cancelled


(41
)Non-vested stock as of November 3, 2007


621  11




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Commitments
    and Contingent Liabilities    12.
    Income
    Taxes  Accounting for
    Uncertainty in Income Taxes
        13.
    Recent
    Accounting Developments  The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115.
  Fair Value Measurements.
 12




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Subsequent
    Event  Form 10-K
 13




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##### Table of Contents



Item 2.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
  Cautionary
    Note Regarding Forward-Looking Statements
  Form 10-Q
  Introduction
  e-commerce www.aeropostale.com Form 10-Q Form 10-Q).
  Form 10-K
      Results
    of Operations
  Overview
   14




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##### Table of Contents



e-commerce
        13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006Net sales


100.0
%


100.0
%


100.0
%


100.0
%Gross profit


34.9
%


32.1
%


33.0
%


29.4
%Selling, general and administrative expenses


20.9
%


18.6
%


23.0
%


21.2
%Other income














0.2
%Income from operations


14.0
%


13.5
%


10.0
%


8.4
%Interest income, net


0.4
%


0.4
%


0.6
%


0.5
%Income before income taxes


14.4
%


13.9
%


10.6
%


8.9
%Income taxes


5.7
%


5.4
%


4.2
%


3.5
%Net income


8.7
%


8.5
%


6.4
%


5.4
%  15




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##### Table of Contents



Key
    Performance Indicators
    13 Weeks Ended


39 Weeks EndedNovember 3,


October 28,


November 3,


October 28,2007


2006


2007


2006Net sales (in millions)

$
412.6


$
385.5


$
999.6


$
906.4Total store count at end of period


823



738



823



738Comparable store count at end of period


720



620



720



620Net sales growth


7.0
%


18.7
%


10.3
%


17.8
%Comparable store sales change


1.9
%


5.6
%


0.1
%


1.8
%Comparable average unit retail change


(5.3
)%


5.0
%


(4.1
)%


4.3
%Comparable units per sales transaction change


3.6
%


(0.1
)%


2.0
%


(1.9
)%Comparable sales transaction change


3.9
%


0.6
%


2.3
%


(0.5
)%Net sales per average square foot

$
138


$
146


$
352


$
353Gross profit (in millions)

$
143.8


$
123.6


$
329.4


$
266.7Income from operations (in millions)

$
57.6


$
51.8


$
100.4


$
76.4Diluted earnings per share

$
0.48


$
0.41


$
0.84


$
0.61Average square footage growth over comparable period


11
%


12
%


10
%


16
%Change in total inventory over comparable period


14.8
%


5
%


14.8
%


5
%Change in inventory per square foot over comparable period


3
%


(5
)%


3
%


(5
)%Percentages of net sales by category:Young Womens


64
%


65
%


62
%


60
%Young Mens


25
%


24
%


24
%


25
%Accessories


11
%


11
%


14
%


15
%   Comparison
    of the 13 weeks ended November 3, 2007 to the
    13 weeks ended October 28, 2006
  Net Sales
  Gross Profit
   16




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SG&A
  e-commerce
  Interest income and income taxes
    Net income
    Comparison
    of the 39 weeks ended November 3, 2007 to the
    39 weeks ended October 28, 2006
  Net Sales
  Gross Profit
  SG&A e-commerce
  Interest income and income taxes
   17




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##### Table of Contents



Net income
    Liquidity
    and Capital Resources
      39 Weeks EndedNovember 3,


October 28,2007


2006(In thousands)Net cash provided by operating activities

$
47,543


$
65,094Net cash provided by (used in) investing activities


4,260



(74,617
)Net cash used in financing activities


(129,353
)


(47,571
)Effect of exchange rate changes


39



Net decrease in cash and cash equivalents

$
(77,511
)

$
(57,094
)   Operating activities
    Capital requirements
 18




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##### Table of Contents



Financing activities and capital
    resources
  Form 8-K
       19




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##### Table of Contents



Form 8-K
  Contractual
    Obligations
    Payments DueBalance of


In 2008


In 2010


AfterTotal


2007


and 2009


and 2011


2011(In thousands)Contractual ObligationsOperating leases

$
598,529


$
28,008


$
170,722


$
156,967


$
242,832Liabilities for uncertain tax positions


7,621



7,621











Employment agreements


5,549



726



4,735



88



Sponsorship and advertising contracts


2,971



675



2,296







Total contractual obligations

$
614,670


$
37,030


$
177,753


$
157,055


$
242,832             Off-Balance
    Sheet Arrangements
    Critical
    Accounting Policies and Estimates
     20




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##### Table of Contents



Form 10-K
  Form 10-K
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk      Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures: Rule 13a-15(b) Rule 13a-15(e)
  Changes in internal controls:
  PART II 
    OTHER INFORMATION
  Item 1.
    Legal
    Proceedings   21




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##### Table of Contents



Item 1A.
    Risk
    factors  Cautionary
    Note Regarding Forward-Looking Statements
  Form 10-Q
  Fluctuations
    in comparable store sales and quarterly results of operations
    may cause the price of our common stock to decline
    substantially.
    
    fashion trends;
    changes in our merchandise mix;
    the effectiveness of our inventory management;
    actions of competitors or mall anchor tenants;
    calendar shifts of holiday or seasonal periods;
    changes in general economic conditions and consumer spending
    patterns;
    the timing of promotional events; and
    weather conditions.    If we
    were unable to identify and respond to consumers fashion
    preferences in a timely manner, our profitability would
    decline.
    We
    rely on a small number of vendors to supply a significant amount
    of our merchandise.
   22




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##### Table of Contents



Our
    business could suffer as a result of a manufacturers
    inability to produce merchandise on time and to our
    specifications.
    A
    downturn in the United States economy may affect
    consumer-spending habits.
    Failure
    of new business concepts would have a negative effect on our
    results of operations.
  and/or
  Our
    business could suffer if a manufacturer fails to use acceptable
    labor practices.
   23




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##### Table of Contents



Foreign
    suppliers manufacture most of our merchandise and the
    availability and costs of these products may be negatively
    affected by risks associated with international
    trade.
    Our
    growth strategy relies on the continued addition of a
    significant number of new stores each year, which could strain
    our resources and cause the performance of our existing stores
    to suffer.
    Our
    continued expansion plan is dependent on a number of factors
    which, if not implemented, could delay or prevent the successful
    opening of new stores and penetration into new
    markets.
    
    identify suitable markets and sites for new store locations;
    negotiate acceptable lease terms;
    hire, train and retain competent store personnel;
    foster current relationships and develop new relationships with
    vendors that are capable of supplying a greater volume of
    merchandise;
    manage inventory effectively to meet the needs of new and
    existing stores on a timely basis;
    expand our infrastructure to accommodate growth; and
    generate sufficient operating cash flows or secure adequate
    capital on commercially reasonable terms to fund our expansion
    plans.  and/or
  The
    loss of the services of key personnel could have a material
    adverse effect on our business.
   24




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##### Table of Contents



A
    substantial interruption in our information systems could have a
    material adverse effect on our business.
    There
    is an increased risk in operating stores in foreign
    countries.
    Our
    net sales and inventory levels fluctuate on a seasonal
    basis.
    Our
    ability to attract customers to our stores depends heavily on
    the success of the shopping malls in which we are
    located.
    We
    currently rely on two distribution centers.
    We
    rely on a third party to manage our distribution
    centers.
   25




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##### Table of Contents



We
    rely on a third party to manage the warehousing and order
    fulfillment for our
    E-Commerce
    business.
  e-commerce e-commerce e-commerce e-commerce
  Failure
    to protect our trademarks adequately could negatively impact our
    brand image and limit our ability to penetrate new
    markets.
  ® ® logo-driven ®
  ® ®
  The
    effects of war or acts of terrorism could have a material
    adverse effect on our operating results and financial
    condition.
  and/or
 26




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##### Table of Contents



Item 2
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Approximate DollarTotal Number





Total Number of


Value of Sharesof Shares





Shares Purchased


That May Yet be(or Units)


Average


as Part of Publicly


Purchased Under thePurchased


Price Paid


Announced Plans


Plans or ProgramsPeriod

(a)


per Share


or Programs


(b)(c)(In thousands)August 5 to September 1, 2007


555,000


$
20.81



555,000


$
122,483September 2 to October 6, 2007


4,640,200


$
19.55



4,640,200


$
31,642October 7 to November 3, 2007


1,096,678


$
20.84



1,096,678


$
8,760Total


6,291,878


$
19.88



6,291,878     (a)
    
    On November 12, 2007, our Board of Directors approved a
    $250.0 million increase in repurchase availability under
    the program, bringing total repurchase authorization, since
    inception of the program, to $600.0 million.(b)
    
    The repurchase program may be modified or terminated by the
    Board of Directors at any time, and there is no expiration date
    for the program.(c)
    
    Excludes additional $250.0 million of repurchase
    availability that was approved on November 12, 2007.  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information   27




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##### Table of Contents



Item 6.
    Exhibits  ExhibitNo.

Description31
.1

Certification by Julian R. Geiger, Chairman and Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.*31
.2

Certification by Michael J. Cunningham, Executive Vice President
    and Chief Financial Officer, pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.*32
.1

Certification by Julian R. Geiger pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.**32
.2

Certification by Michael J. Cunningham pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.**     *
    
    Filed herewith.**
    
    Furnished herewith. 28




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##### Table of Contents



SIGNATURES
    Aeropostale, Inc.
  /s/  JULIAN
    R. GEIGER    Chairman of the Board and Chief Executive Officer
    (Principal Executive Officer)
  MICHAEL
    J. CUNNINGHAM
    Executive Vice President  Chief Financial
    Officer
    (Principal Financial Officer)
   29