##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, DC 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, 2004

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) 485-5398

(Registrants Telephone Number, Including
Area Code)


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 þ          No o

Indicate by check mark whether the Registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).     Yes þ          No o

As of November 21, 2004, the registrant had
55,669,342 shares of common stock outstanding.



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AÉROPOSTALE, INC.

TABLE OF CONTENTS

|                                                         |         |                                                                          |                                                                                           |  |   |    | 
|-------------------------------------------------------- | ------- | ------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------- |  | - | -- | 
|PART I. FINANCIAL
    INFORMATION                        |         |                                                                          | 2                                                                                         | 
|                                                         | Item 1. |                                                                          | Financial Statements
    (unaudited)                                                      |  |   | 2  | 
|                                                         |         | Condensed Consolidated
    Balance Sheets                                |                                                                                           |  | 2 |   
|                                                         |         | Condensed Consolidated
    Statements of Income and Comprehensive Income |                                                                                           |  | 3 |   
|                                                         |         | Condensed Consolidated
    Statements of Cash Flows                      |                                                                                           |  | 4 |   
|                                                         |         | Notes to the Condensed
    Consolidated Financial Statements             |                                                                                           |  | 5 |   
|                                                         | Item 2. |                                                                          | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |  |   | 10 | 
|                                                         | Item 3. |                                                                          | Quantitative and Qualitative
    Disclosures About Market Risk                            |  |   | 19 | 
|                                                         | Item 4. |                                                                          | Controls and Procedures                                                                   |  |   | 19 | 
|                                                         |         | Factors Affecting Future
    Performance                                 |                                                                                           |  |   |   
|PART II. OTHER
    INFORMATION                           |         |                                                                          |                                                                                           | 
|                                                         | Item 1. |                                                                          | Legal Proceedings                                                                         |  |   | 19 | 
|                                                         | Item 2. |                                                                          | Changes in Securities and
    Use of Proceeds                                             |  |   | 19 | 
|                                                         | Item 3. |                                                                          | Defaults Upon Senior
    Securities                                                       |  |   | 20 | 
|                                                         | Item 4. |                                                                          | Submission of Matters to a
    Vote of Security Holders                                   |  |   | 20 | 
|                                                         | Item 5. |                                                                          | Other Information                                                                         |  |   | 20 | 
|                                                         | Item 6. |                                                                          | Exhibits and Reports on
    Form 8-K                                                      |  |   | 20 | 
|SIGNATURES                                               |         |                                                                          | 21                                                                                        | 
|EX-10.25: LONG TERM INCENTIVE DEFERRED COMPENSATION PLAN
|EX-31.1: CERTIFICATION                                  
|EX-31.2: CERTIFICATION                                  
|EX-32.1: CERTIFICATION                                  
|EX-32.2: CERTIFICATION                                  



1



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##### Table of Contents






PART I

FINANCIAL INFORMATION




Item 1.Financial
Statements

AÉROPOSTALE, INC.




CONDENSED CONSOLIDATED BALANCE
SHEETS

(Unaudited)


|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |         |         |         | 
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ----------- | ------- | ----------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | 
|                                          |                                                                                                                       | October 30,                |                                            | January 31, |         | November 1,
|                                          |                                                                                                                       | 2004                       |                                            | 2004        |         | 2003       
|                                          |                                                                                                                       |                            |                                            |             |         |            
|                                          |                                                                                                                       |                           
|                                          |                                                                                                                       | (In Thousands)            
|ASSETS                                    |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|CURRENT ASSETS:                           |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          | Cash and cash equivalents                                                                                             |                            | $                                          | 120,660     |         |             | $      | 138,356 |         |         | $      | 78,529  |        
|                                          | Merchandise inventory                                                                                                 |                            |                                            | 114,515     |         |             |        | 61,807  |         |         |        | 113,447 |        
|                                          | Tenant allowances receivable                                                                                          |                            |                                            | 11,411      |         |             |        | 2,044   |         |         |        | 5,492   |        
|                                          | Prepaid expenses                                                                                                      |                            |                                            | 9,449       |         |             |        | 8,734   |         |         |        | 9,551   |        
|                                          | Other current assets                                                                                                  |                            |                                            | 948         |         |             |        | 1,506   |         |         |        | 2,587   |        
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          |                                                                                                                       | Total current assets       |                                            |             | 256,983 |             |        |         | 212,447 |         |        |         | 209,606 |        
|FIXTURES, EQUIPMENT AND IMPROVEMENTS, NET |                                                                                                                       |                            | 121,845                                    |             |         |             | 92,578 |         |         |         | 92,326 |        
|OTHER ASSETS                              |                                                                                                                       |                            | 3,527                                      |             |         |             | 2,023  |         |         |         | 9,528  |        
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          |                                                                                                                       |                            | TOTAL ASSETS                               |             | $       | 382,355     |        |         | $       | 307,048 |        |         | $       | 311,460 | 
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                         
|LIABILITIES AND STOCKHOLDERS
    EQUITY  |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|CURRENT LIABILITIES:                      |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          | Accounts payable                                                                                                      |                            | $                                          | 69,075      |         |             | $      | 30,477  |         |         | $      | 54,350  |        
|                                          | Accrued expenses                                                                                                      |                            |                                            | 39,837      |         |             |        | 41,091  |         |         |        | 35,816  |        
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          |                                                                                                                       | Total current liabilities  |                                            |             | 108,912 |             |        |         | 71,568  |         |        |         | 90,166  |        
|DEFERRED RENT AND TENANT ALLOWANCES       |                                                                                                                       |                            | 59,579                                     |             |         |             | 45,585 |         |         |         | 46,078 |        
|PENSION PLAN LIABILITY                    |                                                                                                                       |                            | 4,425                                      |             |         |             | 4,202  |         |         |         | 3,031  |        
|STOCKHOLDERS EQUITY:                     |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          | Common stock  par value,
    $0.01 per share; 300,000 shares authorized, 58,168,
    56,795 and 56,061 shares issued |                            |                                            | 582         |         |             |        | 568     |         |         |        | 561     |        
|                                          | Additional paid-in capital                                                                                            |                            |                                            | 78,709      |         |             |        | 63,289  |         |         |        | 58,943  |        
|                                          | Other comprehensive loss                                                                                              |                            |                                            | (672        | )       |             |        | (672    | )       |         |        |        |        
|                                          | Deferred compensation                                                                                                 |                            |                                            | (1,441      | )       |             |        |        |         |         |        |        |        
|                                          | Retained earnings                                                                                                     |                            |                                            | 189,047     |         |             |        | 140,203 |         |         |        | 112,681 |        
|                                          | Treasury stock at cost (2,499 and 945 shares)                                                                         |                            |                                            | (56,786     | )       |             |        | (17,695 | )       |         |        |        |        
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          |                                                                                                                       | Total stockholders equity |                                            |             | 209,439 |             |        |         | 185,693 |         |        |         | 172,185 |        
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        
|                                          |                                                                                                                       |                            | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |             | $       | 382,355     |        |         | $       | 307,048 |        |         | $       | 311,460 | 
|                                          |                                                                                                                       |                            |                                            |             |         |             |        |         |         |         |        |        

See notes to unaudited condensed consolidated
financial statements.

2



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##### Table of Contents



AÉROPOSTALE, INC.




CONDENSED CONSOLIDATED STATEMENTS OF
INCOME

AND COMPREHENSIVE INCOME


(Unaudited)


|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |         | 
|------------------------------------------------------------------------------- | ------------ | ------------------------------------- | ------- | -------------- |  | ----------- | ------- | ----------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                |              |                                       |         |               
|                                                                                |              | 13 weeks ended                        |         | 39 weeks ended
|                                                                                |              |                                       |         |               
|                                                                                |              | October 30,                           |         | November 1,    |  | October 30, |         | November 1,
|                                                                                |              | 2004                                  |         | 2003           |  | 2004        |         | 2003       
|                                                                                |              |                                       |         |                |  |             |         |            
|                                                                                |              |                                      
|                                                                                |              | (In Thousands, Except Per Share Data)
|NET SALES                                                                       |              | $                                     | 274,616 |                |  | $           | 220,071 |             |  | $ | 637,122 |         |  | $ | 462,226 |        
|COST OF SALES (includes certain buying, occupancy
    and warehousing expenses) |              |                                       | 176,415 |                |  |             | 146,149 |             |  |   | 430,328 |         |  |   | 322,472 |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|                                                                                | Gross profit |                                       |         | 98,201         |  |             |         | 73,922      |  |   |         | 206,794 |  |   |         | 139,754 | 
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                    |              |                                       | 46,775  |                |  |             | 38,123  |             |  |   | 127,805 |         |  |   | 96,432  |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|INCOME FROM OPERATIONS                                                          |              |                                       | 51,426  |                |  |             | 35,799  |             |  |   | 78,989  |         |  |   | 43,322  |        
|INTEREST INCOME, Net                                                            |              |                                       | 336     |                |  |             | 65      |             |  |   | 796     |         |  |   | 499     |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|INCOME BEFORE INCOME TAXES                                                      |              |                                       | 51,762  |                |  |             | 35,864  |             |  |   | 79,785  |         |  |   | 43,821  |        
|INCOME TAXES                                                                    |              |                                       | 20,076  |                |  |             | 13,986  |             |  |   | 30,941  |         |  |   | 17,089  |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|NET INCOME AND COMPREHENSIVE INCOME                                             |              | $                                     | 31,686  |                |  | $           | 21,878  |             |  | $ | 48,844  |         |  | $ | 26,732  |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|BASIC NET INCOME PER SHARE                                                      |              | $                                     | 0.57    |                |  | $           | 0.39    |             |  | $ | 0.88    |         |  | $ | 0.49    |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|DILUTED NET INCOME PER SHARE                                                    |              | $                                     | 0.55    |                |  | $           | 0.37    |             |  | $ | 0.85    |         |  | $ | 0.46    |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|Basic weighted average shares outstanding                                       |              |                                       | 55,894  |                |  |             | 55,761  |             |  |   | 55,792  |         |  |   | 54,312  |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        
|Diluted weighted average shares outstanding                                     |              |                                       | 57,210  |                |  |             | 58,754  |             |  |   | 57,399  |         |  |   | 58,202  |        
|                                                                                |              |                                       |         |                |  |             |         |             |  |   |         |         |  |   |         |        

See notes to unaudited condensed consolidated
financial statements.

3



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AÉROPOSTALE, INC.




CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Unaudited)


|                                             |                                                                                |                                              |                              |                                    |         |         |        |         |         |         |        | 
|-------------------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------------- | ---------------------------- | ---------------------------------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | 
|                                             |                                                                                |                                             
|                                             |                                                                                | 39 weeks ended                              
|                                             |                                                                                |                                             
|                                             |                                                                                | October 30,                                  |                              | November 1,                       
|                                             |                                                                                | 2004                                         |                              | 2003                              
|                                             |                                                                                |                                              |                              |                                   
|                                             |                                                                                |                                             
|                                             |                                                                                | (In Thousands)                              
|CASH FLOWS FROM OPERATING ACTIVITIES:        |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             | Net income                                                                     |                                              | $                            | 48,844                             |         |         | $      | 26,732  |        
|                                             | Adjustments to reconcile net income to net cash
    from operating activities: |                                              |                              |                                    |         |         |        |         |        
|                                             |                                                                                | Depreciation and amortization                |                              |                                    | 11,407  |         |        |         | 8,622   |        
|                                             |                                                                                | Tax effect of non-qualified stock options    |                              |                                    | 12,597  |         |        |         | 17,022  |        
|                                             |                                                                                | Other                                        |                              |                                    | (2,049  | )       |        |         | (1,702  | )      
|                                             |                                                                                | Changes in operating assets and liabilities: |                              |                                    |         |         |        |         |         |        
|                                             |                                                                                |                                              | Merchandise inventory        |                                    |         | (52,708 | )      |         |         | (66,802 | )     
|                                             |                                                                                |                                              | Accounts payable             |                                    |         | 38,598  |        |         |         | 36,396  |       
|                                             |                                                                                |                                              | Other assets and liabilities |                                    |         | 5,815   |        |         |         | 1,764   |       
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             |                                                                                |                                              |                              | Net cash from operating activities |         |         | 62,504 |         |         |         | 22,032 | 
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:        |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             | Purchases of fixtures, equipment and improvements                              |                                              |                              | (40,674                            | )       |         |        | (31,387 | )      
|                                             | Purchase of intangible assets                                                  |                                              |                              | (1,400                             | )       |         |        |        |        
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             |                                                                                | Net cash from investing activities           |                              |                                    | (42,074 | )       |        |         | (31,387 | )      
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:        |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             | Purchase of treasury stock                                                     |                                              |                              | (39,091                            | )       |         |        |        |        
|                                             | Stock options exercised and other                                              |                                              |                              | 965                                |         |         |        | 409     |        
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|                                             |                                                                                | Net cash from financing activities           |                              |                                    | (38,126 | )       |        |         | 409     |        
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS    |                                                                                |                                              | (17,696                      | )                                  |         |         | (8,946 | )      
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |                                                                                |                                              | 138,356                      |                                    |         |         | 87,475 |        
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        
|CASH AND CASH EQUIVALENTS, END OF PERIOD     |                                                                                | $                                            | 120,660                      |                                    |         | $       | 78,529 |        
|                                             |                                                                                |                                              |                              |                                    |         |         |        |        

See notes to unaudited condensed consolidated
financial statements.

4



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##### Table of Contents



AÉROPOSTALE, INC.




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS



|   |                      
|-- | ---------------------
|1. | Basis of Presentation

References to the Company,
we, us, or our means
Aéropostale, Inc., together with its wholly-owned
subsidiary, Aéropostale West, Inc., except as expressly
indicated or unless the context otherwise requires. We are a
mall-based specialty retailer of casual apparel and accessories
for young women and young men in the United States. As of
October 30, 2004, we operated 560 stores in 43 states.

The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
Rule 10-01 of Regulation S-X and do not include all of
the information and footnotes required by accounting principles
generally accepted in the United States. However, in the opinion
of our management, all known adjustments necessary for a fair
presentation of the results of the interim periods have been
made. These adjustments consist primarily of normal recurring
accruals and estimates that impact the carrying value of assets
and liabilities. Actual results may materially differ from these
estimates.

Our business is highly seasonal, and historically
we have realized a significant portion of our sales, net income,
and cash flow in the second half of the fiscal year, driven by
the impact of the back-to-school selling season in the third
quarter and the holiday selling season in the fourth quarter.
Therefore, our interim period consolidated financial statements
will not be indicative of our full-year results of operations,
financial condition or cash flows. These financial statements
should be read in conjunction with our Annual Report on
Form 10-K for our fiscal year ended January 31, 2004.

References to fiscal 2003 mean the
52-week period ended January 31, 2004 and references to
fiscal 2004 mean the 52-week period ending
January 29, 2005. Certain reclassifications have been made
to prior year balances to conform to the current year
presentation.



|   |                   
|-- | ------------------
|2. | Common Stock Split

On April 26, 2004, we completed a
three-for-two stock split on all shares of our common stock that
was effected in the form of a stock dividend. All prior period
share and per share amounts presented in this report have been
restated to give retroactive recognition to the common stock
split.



|   |                         
|-- | ------------------------
|3. | Stock Based Compensation

We periodically grant stock options to our
employees, and we account for these stock options in accordance
with the provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to
Employees (APB No. 25). We have also
adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure (SFAS No. 148). In
accordance with the provisions of SFAS No. 148 and APB
No. 25, we have not recognized compensation expense related
to stock options. If we would have elected to recognize
compensation expense based on the fair value of options at grant
date, as prescribed by SFAS No. 148,

5



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS   (Continued)


our net income and income per share would have
been reduced to the pro forma amounts indicated in the following
table:

|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |        |  
|----------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------------------------- | - | -------------- | - | ----------- | - | ----------- | - |  | - | ------ | - |  | - | ------ | -
|                              |                                                                                                         |                                       |   |               
|                              |                                                                                                         | 13 weeks ended                        |   | 39 weeks ended
|                              |                                                                                                         |                                       |   |               
|                              |                                                                                                         | October 30,                           |   | November 1,    |   | October 30, |   | November 1,
|                              |                                                                                                         | 2004                                  |   | 2003           |   | 2004        |   | 2003       
|                              |                                                                                                         |                                       |   |                |   |             |   |            
|                              |                                                                                                         |                                      
|                              |                                                                                                         | (In Thousands, Except Per Share Data)
|Net income:                   |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | As reported                                                                                             |                                       | $ | 31,686         |   |             | $ | 21,878      |   |  | $ | 48,844 |   |  | $ | 26,732 |  
|                              | Add: Restricted stock amortization net of taxes
    recorded within net income                          |                                       |   | 101            |   |             |   |            |   |  |   | 261    |   |  |   |       |  
|                              | Deduct: Total stock based compensation expense
    determined under the fair value method, net of taxes |                                       |   | (380           | ) |             |   | (103        | ) |  |   | (1,024 | ) |  |   | (270   | )
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | Pro-forma                                                                                               |                                       | $ | 31,407         |   |             | $ | 21,775      |   |  | $ | 48,081 |   |  | $ | 26,462 |  
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|Basic net income per share:   |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | As reported                                                                                             |                                       | $ | 0.57           |   |             | $ | 0.39        |   |  | $ | 0.88   |   |  | $ | 0.49   |  
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | Pro-forma                                                                                               |                                       | $ | 0.56           |   |             | $ | 0.39        |   |  | $ | 0.86   |   |  | $ | 0.49   |  
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|Diluted net income per share: |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | As reported                                                                                             |                                       | $ | 0.55           |   |             | $ | 0.37        |   |  | $ | 0.85   |   |  | $ | 0.46   |  
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       
|                              | Pro-forma                                                                                               |                                       | $ | 0.55           |   |             | $ | 0.37        |   |  | $ | 0.84   |   |  | $ | 0.45   |  
|                              |                                                                                                         |                                       |   |                |   |             |   |             |   |  |   |        |   |  |   |       

The weighted average fair value of the
Companys stock options was calculated using the
Black-Scholes Option Pricing Model with the following weighted
average assumptions used for grants in their respective periods.
For periods ended in fiscal 2004: no dividend yield; expected
volatility of 69%; risk free interest rate of 2.79%; and
expected life of 5 years. For periods ended in fiscal 2003:
no dividend yield; expected volatility of 70%; risk free
interest rate of 2.81%; and expected life of 4.7 years.
There were 521 thousand options granted during the
thirty-nine weeks ended October 30, 2004 with a weighted
average fair value of $7.4 million. There were 744 thousand
options granted during the thirty-nine weeks ended
November 1, 2003, with a weighted average fair value of
$3.9 million.

In fiscal 2004, certain of our executives and
directors were awarded restricted stock, pursuant to restricted
stock agreements. There were 80 thousand outstanding shares of
restricted stock as of October 30, 2004. The restricted
stock awarded to employees vest at the end of three years of
continuous service with us. The restricted stock awarded to
directors vest pro-rata over a three-year period, based upon
continuous service. Total compensation expense of
$1.9 million is being amortized over the vesting period,
and amortization expense for the thirty-nine weeks ended
October 30, 2004 was $0.4 million.



|   |                                                                   
|-- | ------------------------------------------------------------------
|4. | Cost of Sales and Selling, General and
    Administrative Expenses

Cost of sales includes costs related to:
merchandise sold, distribution and warehousing, freight from the
distribution center and warehouse to the stores, payroll for our
design, buying and merchandising departments, and occupancy
costs. Occupancy costs include: rent, contingent rents, common
area maintenance, real estate taxes, utilities, repairs,
maintenance and all depreciation.

Selling, general and administrative expenses
(SG&A) include costs related to: selling
expenses, store management and corporate expenses such as
payroll and employee benefits, marketing expenses,

6



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS   (Continued)


employment taxes, information technology
maintenance costs and expenses, insurance and legal expenses,
and store pre-opening and other corporate level expenses. Store
pre-opening expenses include store level payroll, grand opening
event marketing, travel, supplies and other store pre-opening
expenses.



|   |                               
|-- | ------------------------------
|5. | Recent Accounting Developments

In June 2004, the Financial Accounting Standards
Board (FASB) issued an interpretation of
FASB No. 143, Accounting for Asset Retirement
Obligations. This interpretation clarifies the scope and
timing of liability recognition for conditional asset retirement
obligations under FASB No. 143, and is effective no later
than the end of our 2005 fiscal year. We have determined that
this interpretation, and the adoption of FASB No. 143, will
not have a material impact on our consolidated financial
statements or cash flows.

In March 2004, the FASB published an Exposure
Draft, Shares-Based Payment, an amendment of FASB
Statements No. 123 and No. 95. Under this FASB
proposal, all forms of share-based payment to employees,
including employee stock options, would be treated as
compensation and recognized in the income statement and would
become effective at the beginning of our 2005 fiscal year.

The Company currently accounts for stock options
under APB No. 25. The pro-forma impact of expensing options
is disclosed in Note 3.



|   |                   
|-- | ------------------
|6. | Earnings Per Share

The following table sets forth the computations
of basic and diluted earnings per share:

|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 
|------------------------------- |  | ------------------------------------- | ------ | -------------- |  | ----------- | ------ | ----------- |  | - | ------ |  |  | - | ------ | 
|                                |  |                                       |        |               
|                                |  | 13 weeks ended                        |        | 39 weeks ended
|                                |  |                                       |        |               
|                                |  | October 30,                           |        | November 1,    |  | October 30, |        | November 1,
|                                |  | 2004                                  |        | 2003           |  | 2004        |        | 2003       
|                                |  |                                       |        |                |  |             |        |            
|                                |  |                                      
|                                |  | (In Thousands, Except Per Share Data)
|Net income                      |  | $                                     | 31,686 |                |  | $           | 21,878 |             |  | $ | 48,844 |  |  | $ | 26,732 | 
|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 
|Weighted average basic shares   |  |                                       | 55,894 |                |  |             | 55,761 |             |  |   | 55,792 |  |  |   | 54,312 | 
|Impact of dilutive securities   |  |                                       | 1,316  |                |  |             | 2,993  |             |  |   | 1,607  |  |  |   | 3,890  | 
|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 
|Weighted average diluted shares |  |                                       | 57,210 |                |  |             | 58,754 |             |  |   | 57,399 |  |  |   | 58,202 | 
|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 
|Net income per basic share      |  | $                                     | 0.57   |                |  | $           | 0.39   |             |  | $ | 0.88   |  |  | $ | 0.49   | 
|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 
|Net income per diluted share    |  | $                                     | 0.55   |                |  | $           | 0.37   |             |  | $ | 0.85   |  |  | $ | 0.46   | 
|                                |  |                                       |        |                |  |             |        |             |  |   |        |  |  |   |        | 

Options to purchase 9 thousand shares during
the thirteen weeks ended October 30, 2004, and
93 thousand shares during the thirty-nine weeks ended
October 30, 2004, were not included in the computation of
diluted earnings per share because the exercise price of the
options was greater than the average market price of the common
shares.



|   |                          
|-- | -------------------------
|7. | Revolving Credit Facility

We have available a revolving credit facility
(the credit facility) with Bank of America Retail
Finance (formerly, Fleet Retail Finance) which allows us to
borrow or obtain letters of credit up to an aggregate of
$25 million, with letters of credit having a sub-limit of
$15 million. The credit facility matures on
September 30, 2005, and our assets collateralize
indebtedness under the credit facility. Borrowings under the
credit facility bear interest at our option, either at
(a) the lenders prime rate or (b) the Euro
Dollar Rate plus 1.25% to 1.75%, dependent upon our financial
performance. Additionally,

7



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS   (Continued)


we must pay commitment fees on any unused portion
of the credit facility at an annualized rate of 0.375% on the
difference between the loan aggregate of $25 million and
the borrowings (including outstanding letters of credit) at the
preceding month-end. There are no covenants in the credit
facility requiring us to achieve certain earnings levels and
there are no capital spending limitations. There are certain
negative covenants under the credit facility, including but not
limited to, limitations on our ability to incur other
indebtedness, encumber our assets, or undergo a change of
control. Additionally, we are required to maintain a ratio of
2:1 for the value of our inventory to the amount of the loans
under the credit facility. As of October 30, 2004, we were
in compliance with all covenants under the credit facility. We
had no amount outstanding under the credit facility, and no
stand-by or commercial letters of credit issued under the credit
facility at either October 30, 2004 or January 31,
2004 and we have not had outstanding borrowings under the credit
facility since November 2002.



|   |                         
|-- | ------------------------
|8. | Retirement Benefit Plans

We have a qualified, defined contribution
retirement plan with a 401(k) salary deferral feature that
covers substantially all of our employees who meet certain
requirements. Under the terms of the plan, employees may
contribute up to 14% of gross earnings and we will provide a
matching contribution of 50% of the first 5% of gross earnings
contributed by the participants. We also have the option to make
additional contributions. The terms of the plan provide for
vesting in our matching contributions to the plan over a
five-year service period with 20% vesting after two years and
50% vesting after year three. Vesting increases thereafter at a
rate of 25% per year so that participants will be fully
vested after year five. Contribution expense was
$0.5 million for the thirty-nine weeks ended
October 30, 2004 and $0.4 million for the thirty-nine
weeks ended November 1, 2003.

We maintain a supplemental executive retirement
plan (SERP), which is a nonqualified defined benefit
plan for certain officers. The plan is noncontributory and
provides benefits based on years of service and compensation
during employment. Pension expense is determined using various
actuarial cost methods to estimate the total benefits ultimately
payable to officers and this cost is allocated to service
periods. The pension plan is not funded, and the actuarial
assumptions used to calculate pension costs are reviewed
annually.

The components of net periodic pension benefit
cost are as follows:

|                                   |  |                |       |             |  |   |     | 
|---------------------------------- |  | -------------- | ----- | ----------- |  | - | --- | 
|                                   |  |               
|                                   |  | 39 weeks ended
|                                   |  |               
|                                   |  | October 30,    |       | November 1,
|                                   |  | 2004           |       | 2003       
|                                   |  |                |       |            
|                                   |  |               
|                                   |  | (In Thousands)
|Service cost                       |  | $              | 209   |             |  | $ | 138 | 
|Interest cost                      |  |                | 486   |             |  |   | 236 | 
|Amortization of prior service cost |  |                | 56    |             |  |   | 23  | 
|Amortization of net loss           |  |                | 254   |             |  |   | 83  | 
|Loss recognized due to settlement  |  |                | 1,396 |             |  |   |    | 
|                                   |  |                |       |             |  |   |     | 
|Net periodic pension benefit cost  |  | $              | 2,401 |             |  | $ | 480 | 
|                                   |  |                |       |             |  |   |     | 

The loss recognized due to settlement in 2004
resulted from the early retirement of our former President and
Chief Operating Officer, and we made a contribution of
$2.4 million in August 2004 in connection with this early
retirement. No other contributions were made during either the
thirty-nine weeks ended October 30, 2004 or
November 1, 2003.

8



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS   (Continued)


During the first quarter of fiscal 2004, we
adopted a long-term incentive deferred compensation plan
established for the purpose of providing long-term incentive to
a select group of management. The plan is a non-qualified,
defined contribution plan and is not funded. Participants in
this plan include all employees designated by us as Vice
President, or other higher-ranking position that are not
participants in the SERP. We will record annual monetary credits
to each participants account based on compensation levels
and years as a participant in the plan. Annual interest credits
will be applied to the balance of each participants
account based upon established benchmarks. Each annual credit is
subject to a three-year cliff-vesting schedule, and
participants accounts will be fully vested upon retirement
after completing five years of service and attaining
age 55. Plan expenses were $0.2 million for the
thirty-nine weeks ended October 30, 2004.



|   |                         
|-- | ------------------------
|9. | Stock repurchase program

In the fourth quarter of fiscal 2003, our Board
of Directors approved a stock repurchase program to acquire up
to $35.0 million of our outstanding common stock. In the
first quarter of fiscal 2004, our Board of Directors approved an
additional $35.0 million of repurchase availability,
thereby increasing the amount available for stock repurchase
under this program to $70.0 million. On November 16,
2004, our Board of Directors approved an additional
$30.0 million of repurchase availability, thereby
increasing the amount available for stock repurchase under this
program to $100.0 million. 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. The extent and
timing of repurchases will depend upon general business and
market conditions, stock prices, and requirements going forward.
We repurchased 0.6 million shares for $15.7 million
during the thirteen weeks ended October 30, 2004, and we
repurchased 1.6 million shares for $39.1 million this
year to-date. We have repurchased a total of 2.5 million
shares for $56.8 million, since the inception of the
repurchase program. At October 30, 2004 we had
$13.2 million of repurchase availability remaining. After
giving effect to the most recent increase to the stock
repurchase plan, we have $43.2 million of repurchase
availability remaining.

9



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

Introduction

Aeropostale, Inc. is a mall-based specialty
retailer of casual apparel and accessories in the United States.
Our target customers are both young women and men from
age 11 to age 20, and we provide these customers with
a selection of high-quality, active-oriented, fashion basic
merchandise at compelling values in a high-energy store
environment. We maintain complete control over our proprietary
brand by designing and sourcing all of our own merchandise. Our
products can be purchased only in our stores, which sell
Aeropostale merchandise exclusively, or at organized sales
events at college campuses. We operated 560 stores in
43 states as of October 30, 2004.

Managements Discussion and Analysis of
Financial Condition and Results of Operations is intended to
provide information to help you better understand our financial
condition and results of operations. Our business is highly
seasonal, and historically we realize a significant portion of
our sales, net income, and cash flow in the second half of the
fiscal year, driven by the impact of the back-to-school selling
season in our third quarter and the holiday selling season in
our fourth quarter. Therefore, our interim period consolidated
financial statements will not be indicative of our full-year
results of operations, financial condition or cash flows. We
recommend that you read this section along with our condensed
consolidated financial statements included in this report and
along with our Annual Report on Form 10-K for the year
ended January 31, 2004.

On April 26, 2004, we completed a
three-for-two stock split on all shares of our common stock that
was effected in the form of a stock dividend. All prior period
share and per share amounts presented in this report have been
restated to give retroactive recognition to the common stock
split.

Overview

We achieved net sales of $274.6 million for
the third quarter of fiscal 2004, or a 24.8% increase over the
third quarter of fiscal 2003. We also achieved net sales of
$637.1 million for the first thirty-nine weeks of fiscal
2004, or a 37.8% increase from the first thirty-nine weeks of
fiscal 2003. Increased comparable store sales and new store
sales drove the net sales increases. Comparable store sales grew
by 5.4% for the third quarter of fiscal 2004 and by 12.8% for
the year-to-date period. Our gross profit, as a percentage of
net sales, increased by 2.2 percentage points for the third
quarter of fiscal 2004 and 2.3 percentage points for the
year-to-date period, and were primarily driven by increased
merchandise margins and leveraging of occupancy costs against
the increased net sales. SG&A, as a percentage of net sales,
declined by 0.3 percentage points for the third quarter of
fiscal 2004 and by 0.8 percentage points for the
year-to-date period. The leveraging of store payroll and other
operating costs against the increased net sales drove the
year-to-date period decrease. As a result, our net income for
the third quarter of 2004 grew to $31.7 million, or
$0.55 per diluted share, from $21.9 million, or
$0.37 per diluted share, for the third quarter of last
year. On a year-to-date basis, net income grew to
$48.8 million, or $0.85 per diluted share, from
$26.7 million, or $0.46 per diluted share last year.
At October 30, 2004, we had working capital of
$148.1 million, cash and cash equivalents of
$120.7 million, and no third party debt outstanding. During
the first thirty-nine weeks of fiscal 2004, our cash flows from
operating activities were $62.5 million. We operated 560
stores at October 30, 2004, an increase of 22% from the
same period last year.

10



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##### Table of Contents



We use a number of key indicators of financial
condition and operating performance to evaluate the performance
of our business, some of which are set forth in the following
table:

|                                              |             |                |       |                |   |             |       |             |   |   |       |    |   |   |       |    |  
|--------------------------------------------- | ----------- | -------------- | ----- | -------------- | - | ----------- | ----- | ----------- | - | - | ----- | -- | - | - | ----- | -- | -
|                                              |             |                |       |               
|                                              |             | 13 weeks ended |       | 39 weeks ended
|                                              |             |                |       |               
|                                              |             | October 30,    |       | November 1,    |   | October 30, |       | November 1,
|                                              |             | 2004           |       | 2003           |   | 2004        |       | 2003       
|                                              |             |                |       |                |   |             |       |            
|Net sales (in millions)                       |             | $              | 274.6 |                |   | $           | 220.1 |             |   | $ | 637.1 |    |   | $ | 462.2 |   
|Total store count at end of period            |             |                | 560   |                |   |             | 460   |             |   |   | 560   |    |   |   | 460   |   
|Comparable store sales count at end of period |             |                | 413   |                |   |             | 331   |             |   |   | 413   |    |   |   | 331   |   
|Net sales growth                              |             |                | 24.8  | %              |   |             | 30.1  | %           |   |   | 37.8  | %  |   |   | 34.2  | % 
|Comparable store sales growth                 |             |                | 5.4   | %              |   |             | 5.2   | %           |   |   | 12.8  | %  |   |   | 5.4   | % 
|Net sales per average square foot             |             | $              | 144   |                |   | $           | 140   |             |   | $ | 356   |    |   | $ | 318   |   
|Diluted earnings per share                    |             | $              | 0.5   | 5              |   | $           | 0.3   | 7           |   | $ | 0.8   | 5  |   | $ | 0.4   | 6 
|Square footage growth                         |             |                | 22    | %              |   |             | 25    | %           |   |   | 22    | %  |   |   | 25    | % 
|Merchandise mix as a % of net sales           |             |                |       |                |   |             |       |             |   |   |       |    |   |   |       |   
|                                              | Womens     |                |       | 65             | % |             |       | 64          | % |   |       | 62 | % |   |       | 61 | %
|                                              | Mens       |                |       | 23             | % |             |       | 25          | % |   |       | 25 | % |   |       | 26 | %
|                                              | Accessories |                |       | 12             | % |             |       | 11          | % |   |       | 13 | % |   |       | 13 | %

The following table sets forth our results of
operations as a percentage of net sales. We also use this
information to evaluate the performance of our business:

|                                             |  |                |       |                |  |             |       |             |  |  |       |   |  |  |       |  
|-------------------------------------------- |  | -------------- | ----- | -------------- |  | ----------- | ----- | ----------- |  |  | ----- | - |  |  | ----- | -
|                                             |  |                |       |               
|                                             |  | 13 weeks ended |       | 39 weeks ended
|                                             |  |                |       |               
|                                             |  | October 30,    |       | November 1,    |  | October 30, |       | November 1,
|                                             |  | 2004           |       | 2003           |  | 2004        |       | 2003       
|                                             |  |                |       |                |  |             |       |            
|Net sales                                    |  |                | 100.0 | %              |  |             | 100.0 | %           |  |  | 100.0 | % |  |  | 100.0 | %
|Gross profit                                 |  |                | 35.8  |                |  |             | 33.6  |             |  |  | 32.5  |   |  |  | 30.2  |  
|Selling, general and administrative expenses |  |                | 17.0  |                |  |             | 17.3  |             |  |  | 20.1  |   |  |  | 20.9  |  
|Income from operations                       |  |                | 18.8  |                |  |             | 16.3  |             |  |  | 12.4  |   |  |  | 9.3   |  
|Interest income, net                         |  |                | 0.1   |                |  |             |      |             |  |  | 0.1   |   |  |  | 0.1   |  
|Income before income taxes                   |  |                | 18.9  |                |  |             | 16.3  |             |  |  | 12.5  |   |  |  | 9.4   |  
|Income taxes                                 |  |                | 7.4   |                |  |             | 6.4   |             |  |  | 4.8   |   |  |  | 3.6   |  
|Net income                                   |  |                | 11.5  |                |  |             | 9.9   |             |  |  | 7.7   |   |  |  | 5.8   |  

Results of Operations

Sales.Net sales for
the third quarter of fiscal 2004 increased by
$54.5 million, or by 24.8%, from the third quarter of
fiscal 2003. Increased comparable store sales and new store
sales drove the net sales increase. Comparable store sales
increased by $10.7 million, or by 5.4%, for the third
quarter. Comparable store sales increased in our young
womens and accessories categories and declined slightly in
our young mens category. The comparable store sales
increase for the third quarter reflected a 3.1% increase in the
number of units per transaction, a 2.7% increase in the number
of sales transactions, and flat average dollar per units sold.
Non-comparable store sales for the third quarter increased by
$43.8 million, or by 19.4%, from last year, primarily due
to 100 more stores opened at the end of the third quarter of
fiscal 2004 compared to the end of the third quarter of fiscal
2003.

Net sales for the first thirty-nine weeks of
fiscal 2004 increased by $174.9 million, or by 37.8%, from
the first thirty-nine weeks of fiscal 2003. Increased comparable
store sales and new store sales drove the

11



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##### Table of Contents



net sales increases. Comparable store sales
increased by $53.3 million, or by 12.8%, for the
year-to-date period, and were driven by comparable store sales
increases in all three of our categories. The comparable store
sales increase for the year-to-date period reflected a 3.8%
increase in the number of units per transaction, a 9.8% increase
in the number of sales transactions, and was partially offset by
a 0.9% decrease in average dollar per units sold. Non-comparable
store sales increased by $121.6 million, or by 25.0%, for
the year-to-date period, primarily due to the new store openings
discussed above.


Gross profit.Gross
profit increased by $24.3 million for the third quarter of
fiscal 2004, as compared with the third quarter of fiscal 2003,
and increased by 2.2 percentage points, as a percentage of
net sales. An increase of 1.8 percentage points in
merchandise margin, as a percentage of net sales, was the
primary driver of the gross profit increase for the quarter and
was primarily due to lower promotional markdowns, as well as
lower initial cost.

Gross profit increased by $67.0 million for
the first thirty-nine weeks of fiscal 2004, as compared with the
same periods in fiscal 2003, and increased by
2.3 percentage points, as a percentage of net sales. The
leveraging of occupancy costs against the increased net sales
drove 1.1 percentage points of the gross profit increase
for the year-to-date period. In addition increased merchandise
margin, as a percentage of sales, drove 0.8 percentage
points of the gross profit increase for the year-to-date period
and was primarily due to lower promotional markdowns, as well as
lower initial cost.

SG&A.As a
percentage of net sales, SG&A decreased by
0.3 percentage points for the third quarter due primarily
to the leveraging of store operating costs against the increased
net sales. In absolute dollars, SG&A increased by
$8.7 million for the third quarter of fiscal 2004, as
compared with the third quarter of fiscal 2003. Increased
payroll of $6.7 million for the quarter, driven by new
store growth, was the primary reason for the increase in
SG&A.

As a percentage of net sales, SG&A decreased
by 0.8 percentage points for the year-to-date period,
primarily due to the leveraging of store operating costs against
the increased net sales. In absolute dollars, SG&A increased
by $31.4 million for the first thirty-nine weeks of fiscal
2004, as compared with the same periods in fiscal 2003.
Increased payroll of $19.8 million, as well as increases in
other operational items resulting from new store growth were the
primary drivers of the year-to-date period increase in SG&A.

Interest income, net and income
taxes.Interest income, net was
comparable for all periods presented and our effective tax rate
was 39.0% for all periods presented.

Net income.Net
income increased by $9.8 million, or $0.18 per diluted
share, for the third quarter of fiscal 2004 and increased by
$22.1 million, or $0.39 per diluted share, for the
first thirty-nine weeks of fiscal 2004, as compared with the
same periods in fiscal 2003.

Liquidity and Capital Resources

Our cash requirements are primarily for working
capital, the construction of new stores, the remodeling of
existing stores, and to improve and enhance our information
technology systems. Due to the seasonality of our business, we
have historically realized a significant portion of our cash
flows from operations during the second half of the fiscal year.
Most recently, our cash requirements have been met primarily
through cash and cash equivalents on hand during the first
thirty-nine weeks of the fiscal year, and through cash flows
from operations during the second half of the year. We expect to
continue to meet our cash requirements for the next twelve
months primarily through cash flows from operations and existing
cash and cash equivalents. In addition, we have available a
$25 million revolving credit facility (the credit
facility) with Bank of America Retail Finance (formerly,
Fleet Retail Finance) (see below for a further description), and
we have not had outstanding borrowings under the credit facility
since November 2002. At October 30, 2004, we had working
capital of $148.1 million, cash and cash equivalents of
$120.7 million, and no third party debt outstanding.

12



---



##### Table of Contents



The following table sets forth our cash flows for
the period indicated:

|                                          |  |                |         |             |  |   |         |  
|----------------------------------------- |  | -------------- | ------- | ----------- |  | - | ------- | -
|                                          |  |               
|                                          |  | 39 weeks ended
|                                          |  |               
|                                          |  | October 30,    |         | November 1,
|                                          |  | 2004           |         | 2003       
|                                          |  |                |         |            
|                                          |  |               
|                                          |  | (In Thousands)
|Net cash from operating activities        |  | $              | 62,504  |             |  | $ | 22,032  |  
|Net cash from investing activities        |  |                | (42,074 | )           |  |   | (31,387 | )
|Net cash from financing activities        |  |                | (38,126 | )           |  |   | 409     |  
|                                          |  |                |         |             |  |   |         |  
|Net decrease in cash and cash equivalents |  | $              | (17,696 | )           |  | $ | (8,946  | )
|                                          |  |                |         |             |  |   |         |  

Operating
activities.Cash flows from operating
activities, our principle form of liquidity on a full-year
basis, increased by $40.5 million for the first thirty-nine
weeks of fiscal 2004, as compared to the same period in fiscal
2003. Increased net income of $22.1 million and a reduction
in period-over-period cash used for merchandise inventory of
$14.1 million were the primary drivers of the increase in
cash flows from operating activities, and was partially offset
by a $5.1 million period-over-period decrease in cash
provided by tenant allowances receivable. The reduction in cash
used for merchandise inventories was a result of our continued
focus on inventory management, as well as the timing of
receipts. The reduction in cash provided by tenant allowances
receivable was due to the timing of new store openings and
landlord payments. Due to the seasonality of our business, we
have historically generated a significant portion of our cash
flows from operating activities in the second half of the fiscal
year, and we expect this trend to continue for the balance of
this fiscal year.

Capital
requirements.Net cash expended for
investing activities was primarily for capital expenditures for
the construction of new stores, remodeling of existing stores
and investments in information technology. Our future capital
requirements will depend primarily on the number of new stores
we open, the number of existing stores we remodel and the timing
of these expenditures. We opened 38 new stores during the third
quarter of fiscal 2004. Through the first three quarters of
fiscal 2004 we opened 100 new stores. The new store growth
resulted in a total square footage increase of 22% at the end of
the third quarter of 2004, as compared to the same period in
2003. Capital expenditures for the full fiscal year of 2004 are
expected to be approximately $46 million, which includes
the funding of new store openings, the remodeling of existing
stores, and the improvement and enhancement of our information
technology systems. Capital expenditures for the 2005 fiscal
year are expected to be approximately $50 million, which
includes the funding of approximately 100 new store openings,
the remodeling of existing stores, and the improvement and
enhancement of our information technology systems.

Financing activities and capital
resources.In the fourth quarter of
fiscal 2003, our Board of Directors approved a stock repurchase
program to acquire up to $35.0 million of our outstanding
common stock. In the first quarter of fiscal 2004, our Board of
Directors approved an additional $35.0 million of
repurchase availability, thereby increasing the amount available
for stock repurchase under this program to $70.0 million.
On November 16, 2004, our Board of Directors approved an
additional $30.0 million of repurchase availability,
thereby increasing the amount available for stock repurchase
under this program to $100.0 million. 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.
The extent and timing of repurchases will depend upon general
business and market conditions, stock prices, and requirements
going forward. We repurchased 0.6 million shares for
$15.7 million during the thirteen weeks ended
October 30, 2004, and we repurchased 1.6 million
shares for $39.1 million this year to-date. We have
repurchased a total of 2.5 million shares for
$56.8 million, since the inception of the repurchase
program. At October 30, 2004 we had $13.2 million of
repurchase availability remaining. After giving effect to the
most recent increase to the stock repurchase plan, we have
$43.2 million of repurchase availability remaining.

Our credit facility provides us with up to
$25 million of available borrowings. Borrowings under the
credit facility bear interest at our option, either at
(a) the lenders prime rate or (b) the Euro
Dollar Rate plus 1.25% to 1.75%, dependent upon our financial
performance. As of October 30, 2004, there were no amounts
outstanding under the credit facility and we have not had
outstanding borrowings under the credit

13



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##### Table of Contents



facility since November 2002. The credit facility
contains certain negative covenants, including but not limited
to, limitations on our ability to incur other indebtedness,
encumber our assets or undergo a change of control.
Additionally, we are required to keep a ratio of 2:1 of the
value of our inventory to the amounts outstanding at any time
under the credit facility. The credit facility has a termination
date of September 30, 2005. There are fees for early
termination. Events of default under the credit facility
include, subject to grace periods and notice provisions in
certain circumstances, failure to pay principal amounts when
due, breaches of covenants, misrepresentation, default of leases
or other indebtedness, excess uninsured casualty loss, excess
uninsured judgment or restraint of business, business failure or
application for bankruptcy, indictment of or institution of any
legal process or proceeding under federal, state, municipal or
civil statutes, legal challenges to loan documents, and a change
in control. If an event of default occurs, the lenders under the
credit facility will be entitled to take various actions,
including the acceleration of amounts due thereunder and
requiring that all such amounts be immediately paid in full as
well as possession and sale of all assets that have been used as
collateral.




| |                                                       
| | ------------------------------------------------------
| | Contractual Obligations and Commercial
    Commitments

The following tables summarize our contractual
obligations and commercial commitments as of October 30,
2004:

|                        |                               |                |   |              |  |               |   |               |  |              |   |         |  |  |   |        |  |  |   |         | 
|----------------------- | ----------------------------- | -------------- | - | ------------ |  | ------------- | - | ------------- |  | ------------ | - | ------- |  |  | - | ------ |  |  | - | ------- | 
|                        |                               |                |   |             
|                        |                               |                |   | Payments Due
|                        |                               |                |   |             
|                        |                               |                |   | Balance of   |  |              
|                        |                               |                |   | Fiscal       |  | In Fiscal     |   | In Fiscal     |  | After Fiscal
|                        |                               | Total          |   | 2004         |  | 2005 and 2006 |   | 2007 and 2008 |  | 2008        
|                        |                               |                |   |              |  |               |   |               |  |             
|                        |                               |               
|                        |                               | (In Thousands)
|Contractual Obligations |                               |                |   |              |  |               |   |               |  |              |   |         |  |  |   |        |  |  |   |        
|                        | Employment contracts          |                | $ | 4,838        |  |               | $ | 538           |  |              | $ | 4,300   |  |  | $ |       |  |  | $ |        | 
|                        | Operating leases              |                |   | 381,120      |  |               |   | 13,205        |  |              |   | 98,476  |  |  |   | 94,889 |  |  |   | 174,550 | 
|                        |                               |                |   |              |  |               |   |               |  |              |   |         |  |  |   |        |  |  |   |        
|                        | Total contractual obligations |                | $ | 385,958      |  |               | $ | 13,743        |  |              | $ | 102,776 |  |  | $ | 94,889 |  |  | $ | 174,550 | 
|                        |                               |                |   |              |  |               |   |               |  |              |   |         |  |  |   |        |  |  |   |        

The operating leases included in the above table
do not include contingent rent based upon sales volume, which
represented approximately 14% of minimum lease obligations in
fiscal 2003, or variable costs such as maintenance, insurance
and taxes, which represented approximately 57% of minimum lease
obligations in fiscal 2003. Our open purchase orders are
cancelable without penalty and are therefore not included in the
above table. There were no commercial commitments outstanding as
of October 30, 2004, nor have we provided any financial
guarantees at that date.



| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements

We have not created, and are not party to, any
special-purpose or off-balance sheet entities for the purpose of
raising capital, incurring debt or operating our business. We do
not have any arrangements or relationships with entities that
are not consolidated into the financial statements that are
reasonably likely to materially affect our liquidity or the
availability of capital resources. As of October 30, 2004,
we have not issued any letters of credit for the purchase of
merchandise inventory or any capital expenditures.

Critical Accounting Policies

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires the appropriate application of certain
accounting policies, many of which require us to make estimates
and assumptions about future events and their impact on amounts
reported in our financial statements and related notes. We
believe the application of our accounting policies, and the
estimates inherently required therein, are reasonable. These
accounting policies and estimates are constantly reevaluated,
and adjustments are made when facts and circumstances dictate a
change. However, since future events and their impact cannot be
determined with certainty, actual results may differ from our
estimates, and such differences could be material to the
consolidated financial statements. Historically, we have found
our application of accounting policies to be appropriate, and
actual results have

14



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##### Table of Contents



not differed materially from those determined
using necessary estimates. A summary of our significant
accounting policies and a description of accounting policies
that we believe are most critical may be found in the MD&A
included in our Annual Report on Form 10-K for the year
ended January 31, 2004.


Cautionary Note Regarding Forward-Looking
Statements and Factors Affecting Future Performance

This report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve certain risks and
uncertainties, including statements regarding the companys
strategic direction, prospects and future results. Certain
factors, including factors outside of our control, may cause
actual results to differ materially from those contained in the
forward-looking statements. All forward looking statements
included in this report are based on information available to us
as of the date hereof, and we assume no obligation to update or
revise such forward-looking statements to reflect events or
circumstances that occur after such statements are made. Such
uncertainties include, among others, the following factors:



| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 growth will largely depend on our ability to
open and operate new stores successfully. We opened
95 stores in fiscal 2003, 93 in fiscal 2002, and
74 stores in fiscal 2001. Additionally, through the first
three quarters of fiscal 2004, we opened 100 new stores, an
increase of 22% over our store base at the end of fiscal 2003.
We intend to continue to open a significant number of new stores
in future years while remodeling a portion of our existing store
base annually. Our proposed expansion will place increased
demands on our operational, managerial and administrative
resources. These increased demands could cause us to operate our
business less effectively, which in turn could cause
deterioration in the financial performance of our individual
stores. In addition, to the extent that our new store openings
are in existing markets, we may experience reduced net sales
volumes in existing stores in those markets.



| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our expansion plan is dependent on a number of
    factors, which could delay or prevent the successful opening of
    new stores and subsequent penetration into new
    markets.

We will be unable to open and operate new stores
successfully and our growth will be limited unless we can:



| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | identify suitable markets and sites for store
    locations;                                                                                  
|
| |  | negotiate acceptable lease terms;                                                                                                             
|
| |  | hire, train and retain competent store personnel;                                                                                             
|
| |  | maintain a proportion of new stores to mature
    stores that does not harm existing sales;                                                   
|
| |  | 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.     

In addition, we will open new stores in regions
of the United States in which we currently have few or no
stores. Our experience in these markets is limited and there can
be no assurance that we will be able to develop our brand in
these markets or adapt to competitive, merchandising and
distribution challenges that may be different from those in our
existing markets. Our inability to open new stores successfully
and/or penetrate new markets would have a material adverse
effect on our revenue and earnings growth.

15



---



##### Table of Contents





| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our net sales and inventory levels fluctuate
    on a seasonal basis, leaving our operating results particularly
    susceptible to changes in back-to-school and holiday shopping
    patterns.

Our net sales and net income are
disproportionately higher from August through January each year
due to increased sales from back-to-school and holiday shopping.
Sales during this period cannot be used as an accurate indicator
for our annual results. Our net sales and net income from
February through July are typically lower due to, in part, the
traditional retail slowdown immediately following the winter
holiday season. Any significant decrease in sales during the
back-to-school and winter holiday seasons would have a material
adverse effect on our financial condition and results of
operations. In addition, in order to prepare for the
back-to-school and holiday shopping seasons, we must order and
keep in stock significantly more merchandise than we would carry
during other parts of the year. Any unanticipated decrease in
demand for our products during these peak shopping seasons could
require us to sell excess inventory at a substantial markdown,
which could reduce our net sales and gross margins and
negatively impact our profitability.



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fluctuations in comparable store sales and
    quarterly results of operations could cause the price of our
    common stock to decline substantially.

Our comparable store sales and quarterly results
have fluctuated in the past and are expected to continue to
fluctuate in the future. In addition, we cannot assure you that
we will be able to maintain the recent levels of comparable
store sales as we expand our business. Our comparable store
sales and quarterly results of operations are affected by a
variety of factors, including:



| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | fashion trends;                                                               
|
| |  | calendar shifts of holiday or seasonal periods;                               
|
| |  | the effectiveness of our inventory management;                                
|
| |  | changes in our merchandise mix;                                               
|
| |  | the timing of promotional events;                                             
|
| |  | weather conditions;                                                           
|
| |  | changes in general economic conditions and
    consumer spending patterns; and
|
| |  | actions of competitors or mall anchor tenants.                                

If our future comparable store sales fail to meet
the expectations of research analysts, then the market price of
our common stock could decline substantially. You should refer
to the section entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations
for more information.



| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to identify and respond to
    consumers fashion preferences in a timely manner, our
    profitability would decline.

We may be unable to keep pace with the rapidly
changing fashion trends and consumer tastes inherent in the
apparel industry. Our current design philosophy is based on the
belief that our target customers prefer clothing that suits the
demands of their active lifestyles and that they like to
identify with a logo. Accordingly, we produce casual,
comfortable apparel, a majority of which displays either the
Aeropostale or Aero logo. There can be
no assurance that fashion trends will not move away from casual
clothing or that we will not have to alter our design strategy
to reflect a consumer change in logo preference. If we fail to
anticipate, identify or react appropriately to changes in
styles, trends, desired images or brand preferences, we may need
to incur higher markdowns to reduce excess inventory. Utilizing
such markdowns would negatively impact our profitability.

16



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##### Table of Contents





| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | Our concentration of stores in the eastern
    United States makes us susceptible to adverse conditions in this
    region.

The majority of our stores are located in the
eastern half of the United States. As a result, our operations
are more susceptible to regional factors than the operations of
our more geographically diversified competitors. These regional
factors include, among others, economic and weather conditions,
as well as demographic and population changes.



| |                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We rely on third parties to manage the
    warehousing and distribution aspects of our business. If these
    third parties do not adequately perform these functions, our
    business would be disrupted.

The efficient operation of our stores is
dependent on our ability to distribute, in a timely manner,
merchandise to our store locations throughout the United States.
An independent third party operates our distribution and
warehouse facility in South River, New Jersey. We depend on this
third party to receive, sort, pack and distribute substantially
all of our merchandise. This third party employs personnel
represented by a labor union. Although there have been no work
stoppages or disruptions since the inception of our relationship
with this third party provider in 1991, there can be no
assurance that work stoppages or disruptions will not occur in
the future. We also use a separate third party transportation
company to deliver our merchandise from our warehouse to our
stores. Any failure by either of these third parties to respond
adequately to our warehousing and distribution needs would
disrupt our operations and negatively impact our profitability.



| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We rely on a small number of vendors to supply
    a significant amount of our merchandise, and our failure to
    maintain good relationships with one or more of them could harm
    our ability to source our products.

In fiscal 2003, we sourced 34% of our merchandise
from our top three vendors; Mias Fashion Mfg. Co, Inc., or MFM,
supplied 12%, and Niteks USA, Inc. and South Bay Apparel, Inc.
each supplied 11% of our products, respectively. In addition,
Federated Merchandising Group, or FMG, a wholly owned subsidiary
of Federated Department Stores, Inc., acted as our agent with
respect to the sourcing of 21% of our merchandise. Our
relationships with our vendors generally are not on a
contractual basis and do not provide assurances on a long-term
basis as to adequate supply, quality or acceptable pricing. Most
of our vendors could discontinue selling to us at any time. If
one or more of our significant vendors were to sever their
relationship with us, we could be unable to obtain replacement
products in a timely manner, which could cause our sales to
decrease.



| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Foreign suppliers manufacture most of our
    merchandise; therefore the availability and costs of these
    products may be negatively affected by risks associated with
    international trade.

Trade restrictions such as increased tariffs or
quotas, or both, could affect the importation of apparel
generally and increase the cost and reduce the supply of
merchandise available to us. Much of our merchandise is sourced
directly from foreign vendors in Europe, Asia and Central
America. In addition, many of our domestic vendors maintain
production facilities overseas. Some of these facilities are
also located in regions that may be affected by political
instability that could cause a disruption in trade. Any
reduction in merchandise available to us or any increase in its
cost due to tariffs, quotas or local political issues could have
a material adverse effect on our results of operations.



| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | The departure of certain members of our senior
    management team could adversely affect our business.

The success of our business is dependent upon our
senior management closely supervising all aspects of our
business, in particular the operation of our stores and the
designing of our merchandise. If we were to lose the benefit of
this involvement, and in particular if we were to lose the
services of Julian R. Geiger, our Chairman and Chief
Executive Officer, and Christopher L. Finazzo, our
Executive Vice President-Chief Merchandising Officer, our
business could be adversely affected. In addition,
Mr. Geiger and Mr. Finazzo maintain many of our vendor
relationships, and the loss of either of them could negatively
impact present vendor relationships.

17



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##### Table of Contents





| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our failure to protect our trademarks
    AEROPOSTALE® and, to a lesser extent, AEROTM
    adequately could have a negative impact on our brand image and
    limit our ability to penetrate new markets.

We believe that our trademarks AEROPOSTALE®
and, to a lesser extent, AEROTM are integral to our
logo-driven design strategy. We have obtained a federal
registration of the AEROPOSTALE® trademark in the United
States and have applied for or obtained registrations in most
foreign countries in which our vendors are located. We use the
term AERO in many constantly changing designs and
logos even though we have not applied to register every
variation or combination thereof for adult clothing. There can
be no assurance that the registrations we obtained will prevent
the imitation of our products or infringement of our
intellectual property rights by others. If any third party
imitates our products in a manner that projects lesser quality
or carries a negative connotation, our brand image could be
materially adversely affected. Because we have not yet obtained
federal registration for the AEROTM mark and have not
registered the AEROPOSTALE mark in all categories or
in all foreign countries in which we now or may in the future
source or offer our merchandise, international expansion and our
merchandising of non-apparel products using these marks could be
limited.

In addition, we cannot assure you that others
will not try to block the manufacture, export or sale of our
products as violative of their trademarks or other proprietary
rights. Other entities may have rights to trademarks that
contain the word AERO or may have registered similar
or competing marks for apparel and accessories in foreign
countries in which our vendors are located. Our applications for
international registration of the AEROPOSTALE® mark have
been rejected in several countries in which our products are
manufactured because third parties have already registered the
mark for clothing in those countries. There may also be other
prior registrations in other foreign countries of which we are
not aware. Accordingly, it may be possible, in those few foreign
countries where we were not been able to register the
AEROPOSTALE® mark, for a third party owner of the national
trademark registration for AEROPOSTALE to enjoin the
manufacture, sale or exportation of Aeropostale branded goods to
the United States. If we were unable to reach a licensing
arrangement with these parties, our vendors may be unable to
manufacture our products in those countries. Our inability to
register our trademarks or purchase or license the right to use
our trademarks or logos in these jurisdictions could limit our
ability to obtain supplies from or manufacture in less costly
markets or penetrate new markets should our business plan change
to include selling our merchandise in those jurisdictions
outside the United States.



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Our ability to attract customers to our stores
    depends heavily on the success of the shopping malls in which we
    are located.

In order to generate customer traffic we must
locate our stores in prominent locations within successful
shopping malls. We cannot control the development of new
shopping malls, the availability or cost of appropriate
locations within existing or new shopping malls, or the success
of individual shopping malls. Furthermore, factors beyond our
control impact mall traffic, such as general economic conditions
and consumer spending levels. A continued slowdown in the United
States economy could negatively affect consumer spending and
reduce mall traffic. A significant decrease in shopping mall
traffic would have a material adverse effect on our results of
operations.



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | The effects of war or acts of terrorism could
    have a material adverse effect on our operating results and
    financial condition.

The continued threat of terrorism, heightened
security measures and military action in response to an act of
terrorism has disrupted commerce and has intensified the
uncertainty of the U.S. economy. Any further acts of
terrorism or a future war may disrupt commerce and undermine
consumer confidence, which could negatively impact our sales
revenue by causing consumer spending and/or mall traffic to
decline. Furthermore, an act of terrorism or war, or the threat
thereof, could negatively impact our business by interfering
with our ability to obtain merchandise from foreign vendors.
Inability to obtain merchandise from our foreign vendors or
substitute other vendors, at similar costs and in a timely
manner, could adversely affect our operating results and
financial condition.

18



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##### Table of Contents





| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | Our market share may be adversely impacted at
    any time by a significant number of competitors.

The teen apparel market is highly competitive and
is characterized by low barriers to entry. We compete against a
diverse group of retailers, including national and local
specialty retail stores, mass merchandisers, regional retail
chains, traditional department stores and mail-order retailers.
Many of our competitors are already established in markets that
we have not penetrated. In addition, many of our competitors
have many more stores in operation than us, and therefore
greater national recognition than we do. This significant number
of competitors may adversely impact our market share and results
of operations.






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

At October 30, 2004, we had no borrowings
outstanding under our credit facility and we have not had any
borrowings outstanding under our credit facility since November
2002. To the extent that we may borrow pursuant to our credit
facility in the future, we may be exposed to market risk related
to interest rate fluctuations. Additionally, we have not entered
into financial instruments for hedging purposes.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

(a) Explanation of disclosure controls
and procedures: The Company, including its Chief Executive
Officer and Chief Financial Officer, carried out an evaluation
of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934, as amended (the Exchange Act).
Based upon that evaluation, the Companys Chief Executive
Officer along with the Companys Chief Financial Officer
concluded that as of the end of the period covered by this
report, the Companys disclosure controls and procedures
were effective to ensure that information we are required to
disclose in our filings with the SEC under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods specified in the SECs rules and forms. These
disclosure controls were also concluded to be effective to
ensure that information that we are required to disclose in the
reports that we file under the Exchange Act is accumulated and
communicated to our management, including our principal
executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding disclosure. It
should be noted, however, that the design of any system of
controls is limited in its ability to detect errors and
therefore there can be no assurance that any design of system
controls will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.

(b) Changes in internal controls:
During the period covered by this quarterly report, there have
been no changes to our internal controls over our financial
reporting that have materially affected, or are reasonably
likely to materially affect our internal controls over our
financial reporting.




PART II

OTHER INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

From time to time, in the ordinary course of
business, we are involved in various legal proceedings. We
believe that the ultimate outcome of current litigation will not
have a material adverse impact on our results of operations,
financial condition or cash flows.






|        |                                              
|------- | ---------------------------------------------
|Item 2. | Changes in Securities and Use of
    Proceeds

In the fourth quarter of 2003, our Board of
Directors authorized a share repurchase program of our
outstanding common stock in the amount of $35.0 million. In
the first quarter of 2004, we announced that our Board of
Directors had approved an increase in our share repurchase
program to acquire an additional $35.0 million of our
common stock. The additional authorization increased the total
share repurchase

19



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##### Table of Contents



program to $70.0 million. Our purchases of
treasury stock for the thirteen weeks ended October 30,
2004 pursuant to the share repurchase program were as follows:


|               |  |            |         |            |  |                  |       |                    |  |  |         |  |  |   |        | 
|-------------- |  | ---------- | ------- | ---------- |  | ---------------- | ----- | ------------------ |  |  | ------- |  |  | - | ------ | 
|               |  |            |         |            |  | Total Number of  |       | Approximate Dollar
|               |  | Total      |         |            |  | Shares Purchased |       | Value of Shares   
|               |  | Number of  |         |            |  | as Part of       |       | that May Yet Be   
|               |  | Shares (or |         | Average    |  | Publicly         |       | Purchased Under   
|               |  | Units)     |         | Price Paid |  | Announced Plans  |       | the Plans or      
|Period         |  | Purchased  |         | per Share  |  | or Programs      |       | Programs          
|               |  |            |         |            |  |                  |       |                   
|               |  |            |         |            |  |                  |       | (In Thousands)    
|August 2004    |  |            |        |            |  | $                |      |                    |  |  |        |  |  | $ | 28,941 | 
|September 2004 |  |            | 370,300 |            |  | $                | 28.32 |                    |  |  | 370,300 |  |  | $ | 18,454 | 
|October 2004   |  |            | 180,000 |            |  | $                | 29.11 |                    |  |  | 180,000 |  |  | $ | 13,214 | 
|Total          |  |            | 550,300 |            |  | $                | 28.58 |                    |  |  | 550,300 |  |  | $ | 13,214 | 

On November 16, 2004, our Board of Directors
approved an additional $30.0 million of repurchase
availability.






|        |                                    
|------- | -----------------------------------
|Item 3. | Defaults Upon Senior
    Securities

Not applicable.






|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders

Not applicable.






|        |                  
|------- | -----------------
|Item 5. | Other Information

Not applicable.






|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) Exhibits:

| |    |     |  |                                                                                                                                                                
| | -- | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .25 |  | Aeropostale, Inc. Long-Term Incentive Deferred
    Compensation Plan, effective January 1, 2004.                                                               
| | 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.       

Reports on Form 8-K:



| |    |                                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------
| | 1. | The Registrants Current Report on Form 8-K,
    dated August 4, 2004, related to fiscal July sales results
    sales. 
|
| | 2. | The Registrants Current Report on Form 8-K,
    dated August 19, 2004, related to second quarter earnings
    results.
|
| | 3. | The Registrants Current Report on Form 8-K,
    dated September 1, 2004, related to fiscal August sales
    results.  
|
| | 4. | The Registrants Current Report on Form 8-K,
    dated October 6, 2004, related to fiscal September sales
    results. 

20



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##### Table of Contents






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.



| |                                                      
| | -----------------------------------------------------
| | AEROPOSTALE, INC.                                    
|
| | /s/ JULIAN R. GEIGER                                 
| |                                                      
| | Julian R. Geiger                                     
| | Chairman of the Board and Chief Executive
    Officer
| | (Principal Executive Officer)                        
|
| | /s/ MICHAEL J. CUNNINGHAM                            
| |                                                      
| | Michael J. Cunningham                                
| | Executive Vice President-Chief Financial
    Officer 
| | (Principal Financial Officer)                        

Dated: December 3, 2004

21