##### 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
    May 5, 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
  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 and Comprehensive
    Income


4Condensed
    Consolidated Statements of Cash Flows


5Notes to Condensed
    Consolidated Financial Statements


6Item 2.


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


10Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


15Item 4.


Controls and
    Procedures


15PART II 
    OTHER INFORMATIONItem 1.


Legal
    Proceedings


15Item 1A.


Risk
    Factors


15Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


21Item 3.


Defaults Upon
    Senior Securities


21Item 4.


Submission of
    Matters to a Vote of Security Holders


21Item 5.


Other
    Information


21Item 6.


Exhibits


21SIGNATURES


23EX-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  May 5,


February 3,


April 29,2007


2007


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

$
154,119


$
200,064


$
143,951Short-term investments


56,565



76,223



60,212Merchandise inventory


107,575



101,476



108,971Tenant allowances receivable


6,792



4,523



7,802Prepaid expenses


11,636



12,175



11,597Prepaid income taxes










5,614Deferred income taxes


8,039



1,185



Other current assets


2,659



3,147



2,587Total current assets


347,385



398,793



340,734Fixtures, equipment and
    improvements, net


193,832



175,591



170,228Intangible assets


1,400



1,400



2,455Deferred income taxes


4,949



3,784



Other assets


1,608



1,596



1,986TOTAL ASSETS

$
549,174


$
581,164


$
515,403LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
43,416


$
63,918


$
71,104Accrued compensation


11,259



15,553



6,319Deferred income taxes










5,195Income taxes payable


12,608



37,802



1,770Accrued expenses


46,208



47,525



35,094Total current liabilities


113,491



164,798



119,482Deferred rent and tenant allowances


90,949



88,344



85,395Retirement benefit plan liabilities


16,332



15,906



9,229Uncertain tax contingency
    liabilities


3,323







Deferred income taxes










2,344Commitments and contingent
    liabilitiesStockholders
    Equity:Preferred stock  par
    value, $0.01 per share; 5,000 shares authorized, no
    shares issued or outstanding










Common stock  par
    value, $0.01 per share; 200,000 shares authorized,
    59,528, 59,332 and 59,147 shares issued and outstanding


595



593



592Additional paid-in capital


107,136



101,429



93,754Accumulated other comprehensive
    loss


(5,199
)


(5,274
)


(1,557
)Retained earnings


428,465



414,916



316,632Treasury stock at cost (7,846,
    7,687 and 4,628 shares)


(205,918
)


(199,548
)


(110,468
)Total stockholders equity


325,079



312,116



298,953TOTAL LIABILITIES AND
    STOCKHOLDERS EQUITY

$
549,174


$
581,164


$
515,403    3




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##### Table of Contents



AÉROPOSTALE,
    INC.
 CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME  13 Weeks EndedMay 5,


April 29,2007


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

$
275,782


$
246,292Cost of sales (includes certain
    buying, occupancy and warehousing expenses)


187,079



175,814Gross profit


88,703



70,478Selling, general and
    administrative expenses


68,219



58,265Income from operations


20,484



12,213Interest income


2,135



1,496Income before income taxes


22,619



13,709Income taxes


8,867



5,346Net income

$
13,752


$
8,363Basic earnings per share

$
0.27


$
0.15Diluted earnings per share

$
0.26


$
0.15Weighted average basic shares


51,655



54,407Weighted average diluted shares


52,136



55,077  CONDENSED
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  13 Weeks EndedMay 5,


April 29,2007


2006(Unaudited)(In thousands)Net income

$
13,752


$
8,363Minimum pension liability (net of
    tax of $49)


75



Comprehensive income

$
13,827


$
8,363    4




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##### Table of Contents



AÉROPOSTALE,
    INC.
 CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS  13 Weeks EndedMay 5,


April 29,2007


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

$
13,752


$
8,363Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


8,224



6,740Stock-based compensation


1,954



1,315Excess tax benefits from
    stock-based compensation


(1,232
)


(5,894
)Other


(2,138
)


(871
)Changes in operating assets and
    liabilities:Merchandise inventory


(6,099
)


(17,063
)Accounts payable


(20,502
)


13,939Other assets and liabilities


(38,537
)


(17,213
)Net cash used in operating
    activities


(44,578
)


(10,684
)CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases of fixtures, equipment
    and improvements


(19,104
)


(14,910
)Purchase of short-term investments


(173,436
)


(102,960
)Proceeds from sale of short-term
    investments


193,094



62,785Net cash provided by (used in)
    investing activities


554



(55,085
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Purchase of treasury stock


(5,674
)


(2,324
)Proceed from exercise of stock
    options


2,521



915Excess tax benefits from
    stock-based compensation


1,232



5,894Net cash (used in) provided by
    financing activities


(1,921
)


4,485Net decrease in cash and cash
    equivalents


(45,945
)


(61,284
)Cash and cash equivalents,
    beginning of year


200,064



205,235Cash and cash equivalents, end of
    period

$
154,119


$
143,951Supplemental Disclosure of Cash
    Flow Information:Non-cash operating and investing
    activities

$
7,362


$
1,829    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
  back-to-school Form 10-K
  52-week 53-week
  2.
    Cost of
    Sales and Selling, General and Administrative Expenses     6




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Earnings
    Per Share    13 Weeks EndedMay 5,


April 29,2007


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

$
13,752


$
8,363Weighted average basic shares


51,655



54,407Impact of dilutive securities


481



670Weighted average diluted shares


52,136



55,077Earnings per basic share

$
0.27


$
0.15Earnings per diluted share

$
0.26


$
0.15     4.
    Revolving
    Credit Facility    5.
    Retirement
    Benefit Plans   7




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        13 Weeks EndedMay 5,


April 29,2007


2006(In thousands)Service cost

$
134


$
123Interest cost


225



233Amortization of prior experience
    cost


19



19Amortization of net loss


105



142Net periodic pension benefit cost

$
483


$
517       6.
    Stock
    Repurchase Program    7.
    Stock-Based
    Compensation  Share-Based Payment, a revision of SFAS No. 123,
    Accounting for Stock-Based Compensation
 8




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Stock Issued to Employees
  8.
    Commitments
    and Contingent Liabilities    9.
    Income
    Taxes  Accounting
    for Uncertainty in Income Taxes
       9




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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).
  back-to-school Form 10-K
    Overview
     10




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##### Table of Contents



13 Weeks EndedMay 5,


April 29,2007


2006Net sales (in millions)

$
275.8


$
246.3Total store count at end of period


765



704Comparable store count at end of
    period


665



550Net sales growth


12.0
%


16.4
%Comparable store sales change


2.5
%


(2.9
)%Comparable average unit retail
    change


(2.2
)%


6.3
%Comparable units per sales
    transaction change


(0.6
)%


(4.5
)%Comparable sales transaction change


5.2
%


(4.4
)%Net sales per average square foot

$
102


$
100Gross profit (in millions)

$
88.7


$
70.5Income from operations (in
    millions)

$
20.5


$
12.2Diluted earnings per share

$
0.26


$
0.15Average square footage growth


9.4
%


19.5
%Change in total inventory over
    comparable period


(1.3
)%


21.7
%Change in inventory per square
    foot over comparable period


(9.0
)%


2.7
%Percentages of net sales by
    category:Young Womens


61
%


58
%Young Mens


22
%


24
%Accessories


17
%


18
%     13 Weeks EndedMay 5,


April 29,2007


2006Net sales


100.0
%


100.0
%Gross profit


32.2
%


28.6
%Selling, general and
    administrative expenses


24.7
%


23.6
%Income from operations


7.5
%


5.0
%Interest income, net


0.7
%


0.6
%Income before income taxes


8.2
%


5.6
%Income taxes


3.2
%


2.2
%Net income


5.0
%


3.4
%   Results
    of Operations
  Sales  e-commerce
   11




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##### Table of Contents



Gross profit 
    SG&A 
      Interest income and income taxes 
    Net income 
    Liquidity
    and Capital Resources
   12




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##### Table of Contents



13 Weeks EndedMay 5,


April 29,2007


2006(In thousands)Net cash used in operating
    activities

$
(44,578
)

$
(10,684
)Net cash provided by (used in)
    investing activities


554



(55,085
)Net cash (used in) provided by
    financing activities


(1,921
)


4,485Net decrease in cash and cash
    equivalents

$
(45,945
)

$
(61,284
)   Operating activities 
    Capital requirements 
    Financing activities and capital resources 
   13




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Contractual
    Obligations
    Payments DueBalance of


In 2008


In 2010


AfterTotal


2007


and 2009


and 2011


2011(In thousands)Contractual ObligationsEmployment agreements

$
7,643


$
2,820


$
4,735


$
88


$
Sponsorship and advertising
    contracts


3,230



1,248



1,982







Liabilities for uncertain tax
    positions


7,621



7,621











Operating leases


576,791



66,244



159,283



143,463



207,801Total contractual obligations

$
595,285


$
77,933


$
166,000


$
143,551


$
207,801       Form 10-K
        Off-Balance
    Sheet Arrangements
    Critical
    Accounting Estimates
   14




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##### Table of Contents



Form 10-K
  Accounting for Uncertainty in
    Income Taxes
  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    Item 1A.
    Risk
    factors  Cautionary
    Note Regarding Forward-Looking Statements
  Form 10-Q
 15




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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.
   16




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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.
    Our
    business could suffer if a manufacturer fails to use acceptable
    labor practices.
    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; 17




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##### Table of Contents




    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.
    A
    substantial interruption in our information systems could have a
    material adverse effect on our business.
    Failure
    of new business concepts would have a negative effect on our
    results of operations.
  and/or
  There
    is an increased risk in operating stores in foreign
    countries.
   18




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Our
    net sales and inventory levels fluctuate on a seasonal
    basis.
  back-to-school back-to-school back-to-school
  A
    downturn in the United States economy may affect
    consumer-spending habits.
    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 a single distribution center.
    We
    rely on a third party to manage our distribution
    center.
    We
    rely on a third party to manage the warehousing and order
    fulfillment for our
    E-Commerce
    business.
  e-commerce e-commerce e-commerce
 19




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##### Table of Contents



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
 20




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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)(In thousands)February 4 to March 3, 2007


45,000


$
38.18



45,000


$
148,734
(c)March 4 to April 7, 2007


65,000


$
41.00



65,000


$
146,069April 8 to May 5, 2007


30,000


$
43.02



30,000


$
144,778Total


140,000


$
40.53



140,000     (a)
    
    On March 14, 2007, our Board of Directors approved a
    $100.0 million increase in repurchase availability under
    the program, bringing total repurchase authorization, since
    inception of the program, to $350.0 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)
    
    Includes additional $100.0 million of repurchase
    availability that was approved on March 14, 2007.  Item 3.
    Defaults
    Upon Senior Securities   Item 4.Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information    Item 6.
    Exhibits  ExhibitNo.

Description3
.1

Form of Amended and Restated
    Certificate of Incorporation.3
.2

Form of Amended and Restated
    By-Laws.4
.1

Specimen Common Stock
    Certificate.10
.1

Aéropostale, Inc. 1998 Stock
    Option Plan.10
.2

Aéropostale, Inc. 2002
    Long-Term Incentive Plan.10
.3

Loan and Security Agreement, dated
    July 31, 1998 between Bank Boston Retail Finance Inc., as
    agent for the lenders party thereto (the Lenders),
    the Lenders and MSS-Delaware, Inc.10
.4

First Amendment to Loan and
    Security Agreement, dated November 8, 1999, by and between
    Bank Boston Retail Finance Inc., as agent for the Lenders, the
    Lenders and MSS-Delaware, Inc.10
.5

Second Amendment to Loan and
    Security Agreement, dated May 2, 2002, by and between Fleet
    Retail Finance Inc. (f/k/a Bank Boston Retail Finance), as agent
    for the Lenders, the Lenders and Aéropostale, Inc. (f/k/a
    MSS-Delaware, Inc.).10
.6

Third Amendment to Loan and
    Security Agreement, dated June 13, 2001, by and between
    Fleet Retail Finance Inc. (f/k/a Bank Boston Retail Finance), as
    agent for the Lenders, the Lenders and Aéropostale, Inc.
    (f/k/a MSS-Delaware, Inc.). 21




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##### Table of Contents



ExhibitNo.

Description10
.7

Fourth Amendment to Loan and
    Security Agreement, dated February 2, 2002, by and between
    Fleet Retail Finance Inc. (f/k/a Bank Boston Retail Finance), as
    agent for the Lenders, the Lenders and Aéropostale, Inc.
    (f/k/a MSS-Delaware, Inc.).10
.8

Lease Agreement, dated
    April 1, 2006, between Frank Greek and Sons and
    Aéropostale, Inc.10
.9

Merchandise Servicing Agreement,
    dated April 1, 2002, between American Distribution, Inc.
    and Aeropostale, Inc.10
.10

Interim Merchandise Servicing
    Agreement, dated as of February 11, 2002, by and between
    American Consolidation Inc. and Aéropostale, Inc.10
.11

Sourcing Agreement, dated
    July 22, 2002, by and among Federated Department Stores,
    Inc., Specialty Acquisition Corporation and Aéropostale,
    Inc.10
.12

Amendment No. 1 to
    Stockholders Agreement, dated April 23, 2002, by and
    among Aéropostale, Inc., Bear Stearns MB
    1998-1999
    Pre-Fund, LLC and Julian R. Geiger.10
.13

Employment Agreement, dated as of
    February 1, 2002, between Aéropostale, Inc. and Julian
    R. Geiger.10
.14

Fifth Amendment to Loan and
    Security Agreement, dated October 7, 2003, by and between
    Fleet Retail Finance Inc. (f/k/a Bank Boston Retail Finance), as
    agent for the Lenders, the Lenders and Aéropostale, Inc.
    (f/k/a MSS-Delaware, Inc).10
.15

Employment Agreement, dated as of
    February 1, 2007, between Aéropostale, Inc. and
    Michael J. Cunningham.10
.16

Employment Agreement, dated as of
    February 1, 2007, between Aéropostale, Inc. and Thomas
    P. Johnson.10
.17

Employment Agreement, dated as of
    February 1, 2007, between Aéropostale, Inc. and
    Olivera
    Lazic-Zangas.10
.18

Amendment No. 1, dated as of
    April 11, 2005, to Employment Agreement, dated as of
    February 1, 2004, between Aéropostale, Inc. and Julian
    R. Geiger.10
.19

Employment Agreement, dated as of
    February 1, 2007, between Aéropostale, Inc. and Mindy
    Meads.21


Subsidiaries of the
    Company.23
.1

Consent of Deloitte &
    Touche LLP.31
.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.
    
    Incorporated by reference to the Registration Statement on
    Form S-1,
    originally filed by Aéropostale, Inc. on March 8, 2002
    (Registration
    No. 333-84056).
    
    Incorporated by reference to the Registrants Annual Report
    on 10-K, for
    the fiscal year ended February 1, 2003 (File
    No. 001-31314).
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    for the quarterly period ended November 1, 2003 (File
    No. 001-31314).
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    dated February 6, 2007
    (File No. 001-31314).
    
    Incorporated by reference to the Registrants Annual Report
    on
    Form 10-K,
    for the fiscal year ended January 28, 2006 (File
    No. 001-31314).
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    dated March 8, 2007
    (File No. 001-31314). 22




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##### Table of Contents



SIGNATURES    Aeropostale,
    Inc.
  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)
   23