**UNITED STATES SECURITIES AND EXCHANGE COMMISSION****Washington, DC 20549****Form 10-Q**   (Mark One)  þ     **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE ACT OF 1934**   **For the quarterly period ended April 30, 2005** **OR** **o** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE ACT OF 1934****Commission file number: 001-31314****Aéropostale, Inc.***(Exact name of registrant as specified in its charter)*   **Delaware** **31-1443880***(State of incorporation)* *(I.R.S. Employer Identification No.)* **112 W. 34th Street, New York, NY** **10120***(Address of Principal Executive Offices)* *(Zip Code)***(646) 485-5398***(Registrant’s Telephone Number, Including Area Code)*    Indicate by check mark whether the Registrant (1) has filedall reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has beensubject to such filing requirements for the past90 days.     Yes þ          No o     Indicate by check mark whether the Registrant is an acceleratedfiler (as defined in Exchange ActRule 12b-2).     Yes þ          No o     The registrant had 55,453,524 shares of common stockoutstanding as of May 20, 2005.

 
**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  11      Item 3.     Quantitative and Qualitative Disclosures About Market Risk  15      Item 4.     Controls and Procedures  15       Cautionary Note Regarding Forward-Looking Statements and Risk    Factors  16     PART II— OTHER INFORMATION  21      Item 1.     Legal Proceedings  21      Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds  21      Item 3.     Defaults Upon Senior Securities  21      Item 4.     Submission of Matters to a Vote of Security Holders  21      Item 5.     Other Information  21      Item 6.     Exhibits  21     SIGNATURES  22 
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**PART I****FINANCIAL INFORMATION****Item 1.*                          FinancialStatements*****AÉROPOSTALE, INC.****CONDENSED CONSOLIDATED BALANCE SHEETS****(Unaudited)**                  **April 30,** **January 29,** **May 1,**  **2005** **2005** **2004**         **(In Thousands)****ASSETS**                CURRENT ASSETS:                 Cash and cash equivalents $119,293  $106,128  $67,657      Short-term investments  58,151   76,224   36,412      Merchandise inventory  89,575   81,238   70,958      Tenant allowances receivable  8,757   4,809   5,060      Prepaid expenses  8,942   10,138   11,591      Other current assets  990   950   1,214                 Total current assets  285,708   279,487   192,892     FIXTURES, EQUIPMENT AND IMPROVEMENTS, NET  133,337   122,651   101,410     INTANGIBLE ASSETS  2,529   2,529   —     OTHER ASSETS  1,129   1,152   2,029                  TOTAL ASSETS $422,703  $405,819  $296,331            **LIABILITIES AND STOCKHOLDERS’ EQUITY**                CURRENT LIABILITIES:                 Accounts payable $63,607  $44,858  $34,372      Accrued compensation  7,621   14,580   6,084      Income taxes payable  1,793   6,322   895      Accrued expenses  27,107   31,234   23,032                 Total current liabilities  100,128   96,994   64,383     DEFERRED RENT AND TENANT ALLOWANCES  70,070   63,065   49,600     RETIREMENT BENEFIT PLAN LIABILITY  6,669   6,158   6,121     DEFERRED INCOME TAXES  1,351   1,351   —     COMMITMENTS AND CONTINGENT LIABILITIES                STOCKHOLDERS’ EQUITY:                 Common stock — par value, $0.01 per share;    200,000 shares authorized, 58,423, 58,115 and    57,258 shares issued  584   581   573      Preferred stock — par value, $0.01 per share;    5,000 shares authorized, no shares issued or outstanding  —   —   —      Additional paid-in capital  85,985   79,069   67,947      Other comprehensive loss  (817)  (817)  (672)     Deferred compensation  (3,762)  (1,271)  (1,749)     Retained earnings  232,929   224,315   146,464      Treasury stock at cost (2,974, 2,749 and 1,733 shares)  (70,434)  (63,626)  (36,336)                Total stockholders’ equity  244,485   238,251   176,227                  TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $422,703  $405,819  $296,331           See notes to unaudited condensed consolidated financialstatements.
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**AÉROPOSTALE, INC.****CONDENSED CONSOLIDATED STATEMENTS OF INCOME****AND COMPREHENSIVE INCOME****(Unaudited)**            **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands, Except**  **Per Share Data)**    NET SALES $211,674  $167,654     COST OF SALES (includes certain buying, occupancy and    warehousing expenses)  151,903   118,547             Gross profit  59,771   49,107     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  46,437   39,105            INCOME FROM OPERATIONS  13,334   10,002     INTEREST INCOME, NET  785   259            INCOME BEFORE INCOME TAXES  14,119   10,261     INCOME TAXES  5,505   4,000            NET INCOME AND COMPREHENSIVE INCOME $8,614  $6,261            BASIC EARNINGS PER SHARE $0.16  $0.11            DILUTED EARNINGS PER SHARE $0.15  $0.11            Weighted average basic shares  55,409   55,820            Weighted average diluted shares  56,573   57,700        See notes to unaudited condensed consolidated financialstatements.
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**AÉROPOSTALE, INC.****CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS****(Unaudited)**               **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands)**    CASH FLOWS FROM OPERATING ACTIVITIES:             Net income $8,614  $6,261      Adjustments to reconcile net income to net cash from operating    activities:              Depreciation and amortization  4,535   3,370       Other  467   1,357       Changes in operating assets and liabilities:               Merchandise inventory  (8,337)  (9,151)       Accounts payable  18,749   3,895        Other assets and liabilities  (7,654)  (9,400)               Net cash from operating activities  16,374   (3,668)           CASH FLOWS FROM INVESTING ACTIVITIES:             Purchases of fixtures, equipment and improvements  (15,200)  (12,193)     Purchase of short-term investments  (73,837)  (153,712)     Proceeds from sale of short-term investments  91,910   117,300                Net cash from investing activities  2,873   (48,605)           CASH FLOWS FROM FINANCING ACTIVITIES:             Purchase of treasury stock  (6,808)  (18,641)     Net proceed from exercise of stock options  726   215                Net cash from financing activities  (6,082)  (18,426)           NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  13,165   (70,699)    CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR  106,128   138,356            CASH AND CASH EQUIVALENTS, END OF PERIOD $119,293  $67,657            SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:             Tax benefit related to exercise of stock options included in    change in other assets and liabilities $3,368  $2,612        See notes to unaudited condensed consolidated financialstatements.
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIALSTATEMENTS****1. ****Basis of Presentation**     References to the “Company,” “we,”“us,” or “our” means Aéropostale, Inc.and its subsidiaries, except as expressly indicated or unlessthe context otherwise requires. We are a mall-based specialtyretailer of casual apparel and accessories for young women andyoung men in the United States. As of April 30, 2005, weoperated 597 stores in 47 states.     The accompanying unaudited condensed consolidated financialstatements have been prepared in accordance with Rule 10-01of Regulation S-X and do not include all of the informationand footnotes required by accounting principles generallyaccepted in the United States. However, in the opinion of ourmanagement, all known adjustments necessary for a fairpresentation of the results of the interim periods have beenmade. These adjustments consist primarily of normal recurringaccruals and estimates that impact the carrying value of assetsand liabilities. Actual results may materially differ from theseestimates.     Our business is highly seasonal, and historically we haverealized a significant portion of our sales, net income, andcash flow in the second half of the fiscal year, driven by theimpact of the back-to-school selling season in the third quarterand the holiday selling season in the fourth quarter. Therefore,our interim period consolidated financial statements will not beindicative of our full-year results of operations, financialcondition or cash flows. These financial statements should beread in conjunction with our Annual Report on Form 10-K forour fiscal year ended January 29, 2005.     References to “fiscal 2005” mean the 52-week periodended January 28, 2006, and references to “fiscal2004” mean the 52-week period ended January 29, 2005.References to the first quarter of 2005 mean the thirteen-weekperiod ended April 30, 2005, and references to the firstquarter of 2004 mean the thirteen-week period ended May 1,2004.**2. ****Stock Based Compensation**     We periodically grant stock options to our employees, and weaccount for these stock options in accordance with theprovisions of Accounting Principles Board Opinion No. 25,*Accounting for Stock Issued to Employees*, or “APBNo. 25”. We have also adopted the disclosure-onlyprovisions of Statement of Financial Accounting StandardsNo. 148, *Accounting for Stock-BasedCompensation — Transition and Disclosure*, or“SFAS No. 148”. In accordance with theprovisions of SFAS No. 148 and APB No. 25, sinceall options were issued at market value, we have not recognizedcompensation expense related to stock options in ourconsolidated financial statements. If we would have elected torecognize compensation
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED****FINANCIAL STATEMENTS —  (Continued)**expense based on the fair value of options at grant date, asprescribed by SFAS No. 148, our net income andearnings per share would have been reduced to the pro formaamounts indicated in the following table:            **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands,**  **Except Per Share**  **Data)**    Net income:             As reported $8,614  $6,261      Add: Restricted stock amortization, net of taxes  204   53      Less: Total stock based compensation expense determined under    the fair value method, net of taxes  (600)  (265)            Pro-forma $8,218  $6,049            Basic earnings per share:             As reported $0.16  $0.11             Pro-forma $0.15  $0.11            Diluted earnings per share:             As reported $0.15  $0.11             Pro-forma $0.15  $0.10             The weighted average fair value of the Company’s stockoptions was calculated using the Black-Scholes Option PricingModel with the following weighted average assumptions used forgrants in their respective periods. For the first quarter of2005: no dividend yield; expected volatility of 40%; risk freeinterest rate of 4.11%; and expected life of 5 years. Forthe first quarter of 2004: no dividend yield; expectedvolatility of 70%; risk free interest rate of 2.72%; andexpected life of 5 years.     Certain of our executives and directors have been awardedrestricted stock, pursuant to restricted stock agreements. Therewere 163,000 outstanding shares of restricted stock as ofApril 30, 2005. The restricted stock awarded to employeesvest at the end of three years of continuous service with us.The restricted stock awarded to directors vest pro-rata over athree-year period, based upon continuous service. Totalcompensation expense is being amortized over the vesting period.Amortization expense was $0.3 million for the first quarterof 2005 and $0.1 million for the first quarter of 2004.**3. ****Reclassification of Auction Rate Securities**     Auction rate securities, which were previously recorded in cashand cash equivalents in our interim fiscal 2004 condensedconsolidated financial statements, have been included inshort-term investments in the accompanying consolidatedfinancial statements due to their liquidity and pricing resetfeature. There was no impact on net income, stockholders’equity, debt covenants or cash flow from operations as a result
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED****FINANCIAL STATEMENTS —  (Continued)**of this reclassification. The condensed consolidated financialstatements for the first quarter of 2004 have been reclassifiedas follows:           **As previously** **As**  **reported** **reclassified**       **(In Thousands)**    Cash and cash equivalents $104,069  $67,657            Short-term investments $—  $36,412            Cash flows from investing activities $(12,193) $(48,605)       **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 distributioncenter and warehouse to the stores, payroll for our design,buying and merchandising departments, and occupancy costs.Occupancy costs include: rent, contingent rents, common areamaintenance, real estate taxes, utilities, repairs, maintenanceand all depreciation.     Selling, general and administrative expenses, or“SG&A”, include costs related to: sellingexpenses, store management and corporate expenses such aspayroll and employee benefits, marketing expenses, employmenttaxes, information technology maintenance costs and expenses,insurance and legal expenses, and store pre-opening and othercorporate level expenses. Store pre-opening expenses includestore level payroll, grand opening event marketing, travel,supplies and other store pre-opening expenses.**5. ****Recent Accounting Developments**     In December 2004, the Financial Accounting Standards Boardissued SFAS No. 123(R), Shares-Based Payment, arevision of SFAS No. 123, *Accounting for StockBased Compensation.* This amendment supersedes APBNo. 25, and its related implementation guidance. UnderSFAS No. 123(R), all forms of share-based payment toemployees, including employee stock options, must be treated ascompensation and recognized in the income statement.     As discussed in Note 2, we currently account for stockoptions under APB No. 25 and, accordingly, do not recognizecompensation expense in our consolidated financial statements.Also as prescribed by SFAS No. 148, we have disclosedthe pro-forma impact of expensing options in Note 2.     In April 2005, the Securities and Exchange Commission delayedthe date of compliance with SFAS No. 123(R) forpublicly held companies until the first fiscal year beginning onor after June 15, 2005. Accordingly, we will adopt theprovisions of SFAS No. 123(R) at the beginning of our2006 fiscal year. We believe that the adoption ofSFAS No. 123(R) will not have a material impact on ourconsolidated financial statements or cash flows.
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED****FINANCIAL STATEMENTS —  (Continued)****6. ****Earnings Per Share**     The following table sets forth the computations of basic anddiluted earnings per share:           **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands, Except**  **Per Share Data)**    Net income $8,614  $6,261            Weighted average basic shares  55,409   55,820     Impact of dilutive securities  1,164   1,880            Weighted average diluted shares  56,573   57,700            Earnings per basic share $0.16  $0.11            Earnings per diluted share $0.15  $0.11             Options to purchase 172,000 shares during the firstquarter of 2005, and 480,000 shares during the firstquarter of 2004 were not included in the computation of dilutedearnings per share because the exercise price of the options wasgreater than the average market price of the common shares.**7. ****Revolving Credit Facility**     In April 2005, we amended our revolving credit facility (the“credit facility”) with Fleet Retail Finance, Inc. Asamended, the credit facility allows us to borrow or obtainletters of credit up to an aggregate of $50 million, withletters of credit having a sub-limit of $15 million. Theamount of available credit can be increased to an aggregate of$75 million if we so request. The credit facility maturesin April 2010, and our assets collateralize indebtedness underthe credit facility. Borrowings under the credit facility bearinterest at our option, either at (a) the lender’sprime rate or (b) the Euro Dollar Rate plus 0.75% to 1.25%,dependent upon our financial performance. There are no covenantsin the credit facility requiring us to achieve certain earningslevels and there are no capital spending limitations. There arecertain negative covenants under the credit facility, includingbut not limited to, limitations on our ability to incur otherindebtedness, encumber our assets, or undergo a change ofcontrol. Additionally, we are required to maintain a ratio of2:1 for the value of our inventory to the amount of the loansunder the credit facility. As of April 30, 2005, we were incompliance with all covenants under the credit facility. Eventsof default under the credit facility include, subject to graceperiods and notice provisions in certain circumstances, failureto pay principal amounts when due, breaches of covenants,misrepresentation, default of leases or other indebtedness,excess uninsured casualty loss, excess uninsured judgment orrestraint of business, business failure or application forbankruptcy, indictment of or institution of any legal process orproceeding under federal, state, municipal or civil statutes,legal challenges to loan documents, and a change in control. Ifan event of default occurs, the lenders under the creditfacility will be entitled to take various actions, including theacceleration of amounts due there under and requiring that allsuch amounts be immediately paid in full as well as possessionand sale of all assets that have been used as collateral. AtApril 30, 2005, we had no amount outstanding under thecredit facility, and no stand-by or commercial letters of creditissued under the credit facility. In addition, we have not hadoutstanding borrowings under the credit facility since November2002.
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED****FINANCIAL STATEMENTS —  (Continued)****8. ****Retirement Benefit Plans**     We have a qualified, defined contribution retirement plan with a401(k) salary deferral feature that covers substantially all ofour employees who meet certain requirements. Under the terms ofthe plan, employees may contribute up to 14% of gross earningsand we will provide a matching contribution of 50% of the first5% of gross earnings contributed by the participants. We alsohave the option to make additional contributions. The terms ofthe plan provide for vesting in our matching contributions tothe plan over a five-year service period with 20% vesting aftertwo years and 50% vesting after year three. Vesting increasesthereafter at a rate of 25% per year so that participantswill be fully vested after year five. Contribution expense was$0.2 million for the first quarter of 2005, and$0.1 million for the first quarter of 2004.     We maintain a supplemental executive retirement plan, which is anonqualified defined benefit plan for certain officers. The planis non-contributory and not funded and provides benefits basedon years of service and compensation during employment.Participants are vested upon entrance in the plan. Pensionexpense is determined using various actuarial cost methods toestimate the total benefits ultimately payable to officers andthis cost is allocated to service periods. The actuarialassumptions used to calculate pension costs are reviewedannually.     The components of net periodic pension benefit cost are asfollows:           **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands)**    Service cost $105  $70     Interest cost  183   173     Amortization of prior experience cost  19   19     Amortization of net loss  137   94     Loss recognized due to settlement  —   1,396            Net periodic pension benefit cost $444  $1,752             The loss recognized due to settlement in 2004 resulted from theearly retirement of our former President and Chief OperatingOfficer, and we made a contribution of $2.4 million inAugust 2004 in connection with this early retirement.     During the first quarter of fiscal 2004, we adopted a long-termincentive deferred compensation plan established for the purposeof providing long-term incentive to a select group ofmanagement. The plan is a non-qualified, defined contributionplan and is not funded. Participants in this plan include allemployees designated by us as Vice President, or otherhigher-ranking position that are not participants in the SERP.Annual monetary credits are recorded to each participant’saccount based on compensation levels and years as a participantin the plan. Annual interest credits are applied to the balanceof each participant’s account based upon establishedbenchmarks. Each annual credit is subject to a three-yearcliff-vesting schedule, and participant’s accounts will befully vested upon retirement after completing five years ofservice and attaining age 55. Plan expenses were$0.1 million for the first quarter of 2005.     In fiscal 2004, we adopted a postretirement benefit plan forcertain officers. At April 30, 2005, we had a liability of$38,000 in connection with this plan.
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**AÉROPOSTALE, INC.****NOTES TO UNAUDITED CONDENSED CONSOLIDATED****FINANCIAL STATEMENTS —  (Continued)****9. ****Stock Repurchase Program**     We repurchase our common stock from time to time under a$100.0 million stock repurchase program. The repurchaseprogram may be modified or terminated by the Board of Directorsat any time, and there is no expiration date for the program.The extent and timing of repurchases will depend upon generalbusiness and market conditions, stock prices, and requirementsgoing forward. We repurchased 225,000 shares for$6.8 million during the first quarter of 2005. Since theinception of the repurchase program, we have repurchased a totalof 3.0 million shares of our common stock for totalconsideration of $70.4 million. At April 30, 2005 wehad $29.6 million of repurchase availability remaining.**10. ****Commitments and Contingent Liabilities**     We are party to various litigation matters and proceedings inthe ordinary course of business. In the opinion of ourmanagement, dispositions of these matters are not expected tohave a material adverse affect on our financial position,results from operations or cash flows. We have not provided anyfinancial guarantees as of April 30, 2005.
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**Item 2.*****Management’s Discussion and Analysis of Financial    Condition and Results of Operations*****Introduction**     Aéropostale, Inc. is a mall-based specialty retailer ofcasual apparel and accessories in the United States. Our targetcustomers are both young women and young men from age 11to 18, and we provide our customers with a selection ofhigh-quality, active-oriented, fashion basic merchandise atcompelling values in a high-energy store environment. Wemaintain control over our proprietary brand by designing andsourcing all of our own merchandise. Our products can bepurchased only in our stores, which sell Aéropostalemerchandise exclusively, or organized sales events at collegecampuses. We launched our e-commerce business on May 24,2005 and we plan to open our first Jimmy’Z brand storeslater this year. As of April 30, 2005, we operated 597stores in 47 states.     Management’s Discussion and Analysis of Financial Conditionand Results of Operations, or “MD&A,” is intendedto provide information to help you better understand ourfinancial condition and results of operations. Our business ishighly seasonal, and historically we realize a significantportion of our sales, net income, and cash flow in the secondhalf of the fiscal year, driven by the impact of theback-to-school selling season in our third quarter and theholiday selling season in our fourth quarter. Therefore, ourinterim period consolidated financial statements will not beindicative of our full-year results of operations, financialcondition or cash flows. We recommend that you read this sectionalong with our condensed consolidated financial statementsincluded in this report and along with our Annual Report onForm 10-K for the year ended January 29, 2005.**Overview**     We achieved net sales of $211.7 million for the firstquarter of 2005, a 26.3% increase over the first quarter of2004. This increase was driven by total square footage growth of22.6% and a 4.4% comparable store sales increase. Our grossprofit, as a percentage of net sales, decreased by1.1 percentage points for the first quarter of 2005,primarily driven by increased promotional activities. SG&A,as a percentage of net sales, declined by 1.4 percentagepoints for the first quarter of 2005, and included a retirementcharge of $1.4 million recorded in 2004 that represented0.8 percentage points of the decrease. Leveraging of storepayroll and other operating costs against the increased netsales was the primary driver of the remaining decrease. Netincome for the first quarter of 2005 grew to $8.6 million,or $0.15 per diluted share, from $6.3 million, or$0.11 per diluted share, for the first quarter of lastyear. As of April 30, 2005, we had working capital of$185.6 million, cash and cash equivalents of$119.3 million, short-term investments of$58.2 million, and no third party debt outstanding. Cashflows from operating activities were $16.4 million for thefirst quarter of 2005. We operated 597 stores at April 30,2005, an increase of 22% from the same period last year.
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     We use a number of key indicators of financial condition andoperating performance to evaluate the performance of ourbusiness, some of which are set forth in the following table:            **13 weeks ended**     **April 30, 2005** **May 1, 2004**         Net sales (in millions) $211.7  $167.7     Total store count at end of period  597   489     Comparable store sales count at end of period  443   357     Net sales growth  26.3%  49.4%    Comparable store sales growth  4.4%  18.9%    Net sales per average square foot $104  $101     Gross profit (in millions) $59.8  $49.1     Income from operations (in millions) $13.3  $10.0     Diluted earnings per share $0.15 $0.11    Square footage growth  22.6%  25.8%    Percentages of net sales by category:             Women’s  58%  58%     Men’s  26%  27%     Accessories  16%  15%     The following table sets forth our results of operations as apercentage of net sales. We also use this information toevaluate the performance of our business:           **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**         Net sales  100.0%   100.0%     Gross profit  28.2%   29.3%     Selling, general and administrative expenses  21.9%   23.3%     Income from operations  6.3%   6.0%     Interest income, net  0.3%   0.1%     Income before income taxes  6.6%   6.1%     Income taxes  2.5%   2.4%     Net income  4.1%   3.7% **Results of Operations — first quarter of 2005compared with the first quarter of 2004**     *Sales.* Net sales consist of sales from comparable storesand non-comparable stores. A store is included in comparablestore sales after fourteen months of operation. We consider aremodeled or relocated store with more than a 25% change insquare feet to be a new store. Prior period sales from storesthat have closed are not included in comparable store sales, norare sales from our arrangements with colleges and universities.     Net sales increased by $44.0 million, or by 26.3%.Increased comparable store sales and new store sales drove thenet sales increase. Comparable store sales increased by$7.0 million, or by 4.4%. Comparable sales increased in allof our categories: young women’s, young men’s, andaccessories. The comparable store sales increase reflected a6.1% increase in units per transaction and an 8.7% increase inthe number of sales transactions. The average dollar per unitdecreased 9.5%. Non-comparable store sales increased by$37.0 million, or by 21.9%, primarily due to 108 morestores open at the end of the first quarter of 2005 versus theend of the first quarter of 2004.     *Gross profit.* Cost of sales includes costs related to:merchandise sold, distribution and warehousing, freight from thedistribution center and warehouse to the stores, payroll for ourdesign, buying and
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merchandising departments, and occupancy costs. Occupancy costsinclude: rent, contingent rents, common area maintenance, realestate taxes, utilities, repairs, maintenance and alldepreciation.     Gross profit increased by $10.7 million, but decreased by1.1 percentage points as a percentage of net sales. Thedecrease as a percentage of net sales was primarily due to adecrease in merchandise margin resulting from increasedpromotional activities, as well as start-up costs for our newJimmy’Z brand stores in the first quarter of 2005.     *SG&A.* SG&A includes costs related to: sellingexpenses, store management and corporate expenses such aspayroll and employee benefits, marketing expenses, employmenttaxes, information technology maintenance costs and expenses,insurance and legal expenses, and store pre-opening and othercorporate level expenses. Store pre-opening expenses includestore level payroll, grand opening event marketing, travel,supplies and other store pre-opening expenses.     SG&A increased by $7.3 million. This increase isprimarily attributable to a $4.9 million increase in storepayroll, driven by new store growth. SG&A, as a percentageof net sales, decreased by 1.4 percentage points. Includedin SG&A for the first quarter of 2004 is a retirement chargeof $1.4 million, or 0.8 percentage points of thedecrease. The remainder of the decrease was primarilyattributable to the leveraging of store payroll and otheroperating costs against the increased net sales.     *Interest income and income taxes.* Interest income, net ofinterest expense, increased by $0.5 million, and was drivenby an increase of $73.4 million in cash and cashequivalents, together with short-term investments. The effectivetax rate was 39.0% for both periods presented.     *Net income.* Net income increased by $2.4 million, or$0.04 per diluted share, for the first quarter of 2005, ascompared with the first quarter of 2004.**Liquidity and Capital Resources**     Our cash requirements are primarily for working capital, theconstruction 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 historicallyrealized a significant portion of our cash flows from operationsduring the second half of the fiscal year. Most recently, ourcash requirements have been met primarily through cash and cashequivalents on hand during the first half of the fiscal year,and through cash flows from operations during the second half ofthe year. We expect to continue to meet our cash requirementsfor the next twelve months primarily through cash flows fromoperations and existing cash and cash equivalents. In addition,we have recently amended our revolving credit facility (the“credit facility”), and have expanded our borrowingavailability to provide for a $50 million base borrowingavailability with $25 million of additional borrowingavailability (see note 7 to the Notes to the CondensedConsolidated Financial Statements for a further description). Wehave not had outstanding borrowings under the credit facilitysince November 2002. At April 30, 2005, we had workingcapital of $185.6 million, cash and cash equivalents of$119.3 million, short-term investments of $58.2, and nothird party debt outstanding.     The following table sets forth our cash flows for the periodindicated:           **13 weeks ended**     **April 30,** **May 1,**  **2005** **2004**       **(In Thousands)**    Net cash from operating activities $16,374  $(3,668)    Net cash from investing activities  2,873   (48,605)    Net cash from financing activities  (6,082)  (18,426)           Net increase (decrease) in cash and cash equivalents $13,165  $(70,699)            *Operating activities.* Cash flows from operatingactivities, our principle form of liquidity on a full-yearbasis, increased by $20.0 million for the first quarter of2005, as compared to the same period in
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2004. Increased net income of $2.4 million and aquarter-over-quarter reduction in cash used for accounts payableof $14.9 million were the primary drivers of the increasein cash flows from operating activities. The reduction in cashused for accounts payable was primarily due to the timing ofpayments. Due to the seasonality of our business, we havehistorically generated a significant portion of our cash flowsfrom operating activities in the second half of the fiscal year,and we expect this trend to continue for the balance of thisfiscal year.     *Capital requirements.* Investments in capital expendituresare principally for the construction of new stores, remodelingof existing stores, and investments in information technology.Our future capital requirements will depend primarily on thenumber of new stores we open, the number of existing stores weremodel and the timing of these expenditures. Capitalexpenditures for the full fiscal year of 2005 are expected toapproximate $50 million. We plan to open approximately 100new Aeropostale stores in fiscal 2005, 39 of which opened in thefirst quarter. We also plan to open approximately 14 of our newJimmy’Z brand stores later this year. In addition, we planto remodel certain existing stores and continue to improve andenhance our information technology systems.     We had $58.2 million in short-term investments atApril 30, 2005, consisting of auction rate debt andpreferred stock securities. Auction rate securities are termsecurities that earn income at a rate that is periodicallyreset, typically within 35 days, to reflect current marketconditions through an auction process. These securities havelong-term contractual maturities and are classified as“available-for-sale” securities in the current assetsection of our condensed consolidated balance sheet as ofApril 30, 2005.     *Financing activities and capital resources.* We repurchaseour common stock from time to time under a $100.0 millionstock repurchase program. The repurchase program may be modifiedor terminated by the Board of Directors at any time, and thereis no expiration date for the program. The extent and timing ofrepurchases will depend upon general business and marketconditions, stock prices, and requirements going forward. Werepurchased 225,000 shares for $6.8 million during thefirst quarter of 2005, versus 828,000 shares repurchasedfor $18.6 million during the first quarter of 2004. Sincethe inception of the repurchase program, we have repurchased atotal of 3.0 million shares of our common stock for totalconsideration of $70.4 million. At April 30, 2005 wehad $29.6 million of repurchase availability remaining.     In April 2005, we amended our revolving credit facility to allowus to borrow or obtain letters of credit up to at least anaggregate of $50 million (see note 7 to the Notes tothe Condensed Consolidated Financial Statements for a furtherdiscussion). At April 30, 2005, we had no amountoutstanding under the credit facility, and no stand-by orcommercial letters of credit issued under the credit facility.In addition, we have not had outstanding borrowings under thecredit facility since November 2002.*Contractual Obligations*     The following table summarizes our contractual obligations as ofApril 30, 2005:                          **Payments Due**         **Balance of**      **Fiscal** **In Fiscal** **In Fiscal** **After Fiscal**  **Total** **2005** **2006 and 2007** **2008 and 2009** **2009**             **(In Thousands)**    Contractual Obligations                         Employment agreements $5,011  $1,807  $3,204  $—  $—      Event sponsorship agreement  1,810   —   1,810   —   —      Operating leases  418,676   42,476   107,393   105,246   163,561                      Total contractual obligations $425,497  $44,283  $112,407  $105,246  $163,561                      Annual computed bonuses in excess of capped amounts for certainmembers of our senior management are carried forward to thefollowing year. As of April 30, 2005, $3.3 million wasavailable for carry forward and is not included in the abovetable. The operating leases included in the above table do
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not include contingent rent based upon sales volume, whichrepresented approximately 17% of minimum lease obligations infiscal 2004, or variable costs such as maintenance, insuranceand taxes, which represented approximately 53% of minimum leaseobligations in fiscal 2004. Our open purchase orders arecancelable without penalty and are therefore not included in theabove table. We have not provided any financial guarantees as ofApril 30, 2005.**          ***Off-Balance Sheet Arrangements*     We have not created, and are not party to, any special-purposeor off-balance sheet entities for the purpose of raisingcapital, incurring debt or operating our business. We do nothave any arrangements or relationships with entities that arenot consolidated into the financial statements that arereasonably likely to materially affect our liquidity or theavailability of capital resources. As of April 30, 2005, wehave not issued any letters of credit for the purchase ofmerchandise inventory or any capital expenditures.**Critical Accounting Estimates**     The preparation of financial statements in conformity withaccounting principles generally accepted in the United Statesrequires the appropriate application of certain accountingpolicies, many of which require us to make estimates andassumptions about future events and their impact on amountsreported in our financial statements and related notes. Webelieve the application of our accounting policies, and theestimates inherently required therein, are reasonable. Theseaccounting policies and estimates are constantly reevaluated,and adjustments are made when facts and circumstances dictate achange. However, since future events and their impact cannot bedetermined with certainty, actual results may differ from ourestimates, and such differences could be material to theconsolidated financial statements. Historically, we have foundour application of accounting policies to be appropriate, andactual results have not differed materially from thosedetermined using necessary estimates. A summary of oursignificant accounting policies and a description of accountingpolicies that we believe are most critical may be found in theMD&A included in our Annual Report on Form 10-K for theyear ended January 29, 2005.**Item 3.*****Quantitative and Qualitative Disclosures About Market    Risk***     At April 30, 2005, we had no borrowings outstanding underour credit facility and we have not had any borrowingsoutstanding under our credit facility since November 2002. Tothe extent that we may borrow pursuant to our credit facility inthe future, we may be exposed to market risk related to interestrate fluctuations. Additionally, we have not entered intofinancial instruments for hedging purposes.**Item 4.*****Controls and Procedures***     (a) *Evaluation of Disclosure Controls andProcedures:* Pursuant to Exchange Act Rule 13a-15(b)under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), our management carried out anevaluation, under the supervision and with the participation ofour Chairman and Chief Executive Officer along with our ChiefFinancial Officer, of the effectiveness of the design andoperation of our disclosure controls (as defined inRule 13a-15(e) of the Exchange Act) and procedures. Basedupon that evaluation, our Chief Executive Officer along with ourChief Financial Officer concluded that as of the end of ourfiscal 2005 first quarter, ended April 30, 2005, ourdisclosure controls and procedures (1) are effective intimely alerting them to material information relating to ourcompany (including its consolidated subsidiaries) required to beincluded in our periodic SEC filings and (2) are adequateto ensure that information required to be disclosed by us in thereports filed or submitted by us under the Exchange Act isrecorded, processed and summarized and reported within the timeperiods specified in the SEC’s rules and forms. It shouldbe noted, however, that the design of any system of controls islimited in its ability to detect errors and therefore there canbe no assurance that any design of system controls will succeedin achieving its stated goals under all potential futureconditions, regardless of how remote.
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     (b) *Changes in internal controls:* During the periodcovered by this quarterly report, there have been no significantchanges in our internal controls over our financial reportingthat have materially affected, or are reasonably likely tomaterially affect, our internal controls over our financialreporting.**Cautionary Note Regarding Forward-Looking Statements andRisk Factors**     This Quarterly Report on Form 10-Q contains forward-lookingstatements within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the SecuritiesExchange Act of 1934. Such forward-looking statements involvecertain risks and uncertainties, including statements regardingthe company’s strategic direction, prospects and futureresults. Certain factors, including factors outside of ourcontrol, may cause actual results to differ materially fromthose contained in the forward-looking statements. The followingrisk factors should be read in connection with evaluating theCompany’s business and future prospects. All forwardlooking statements included in this report are based oninformation available to us as of the date hereof, and we assumeno obligation to update or revise such forward-lookingstatements to reflect events or circumstances that occur aftersuch statements are made. Such uncertainties include, amongothers, the following factors: **Fluctuations in comparable store sales and quarterly results    of operations may cause the price of our common stock to decline    substantially.**     Our comparable store sales and quarterly results of operationshave fluctuated in the past and are likely to continue tofluctuate in the future. In addition, there can be no assurancethat we will be able to maintain our recent levels of comparablestore sales as our business continues to expand. Our comparablestore sales and quarterly results of operations are affected bya variety of factors, including: •     fashion trends;  •     changes in our merchandise mix;  •     the effectiveness of our inventory management;  •     actions of competitors or mall anchor tenants;  •     calendar shifts of holiday or seasonal periods;  •     the timing of promotional events;  •     weather conditions; and  •     changes in general economic conditions and consumer spending    patterns.     If our future comparable store sales fail to meet theexpectations of investors, then the market price of our commonstock could decline substantially. You should refer to thesection entitled “Management’s Discussion and Analysisof Financial Condition and Results of Operations” for moreinformation. **Our business could suffer as a result of a    manufacturer’s inability to produce merchandise on time and    to specifications.**     We do not own or operate any manufacturing facilities andtherefore we depend upon independent third parties for themanufacture of all of our merchandise. We utilize both domesticand international manufacturers to produce our merchandise. Theinability of a manufacturer to ship orders in a timely manner ormeet our quality standards could cause delivery daterequirements to be missed, which could result in lost sales. **Our business could suffer if a manufacturer fails to use    acceptable labor practices.**     Our sourcing agents and independent manufacturers are requiredto operate in compliance with all applicable foreign anddomestic laws and regulations. While our vendor operatingguidelines promote ethical business practices for our vendorsand suppliers, we do not control these manufacturers or theirlabor practices. The violation of labor or other laws by anindependent manufacturer, or by one of the sourcing agents, orthe divergence of an independent manufacturer’s or sourcingagent’s labor practices
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from those generally accepted as ethical in the United States,could interrupt, or otherwise disrupt the shipment of finishedproducts or damage the Company’s reputation. Any of these,in turn, could have a material adverse effect on theCompany’s financial condition and results of operations. Tohelp mitigate this risk, we engage a third party independentcontractor to visit the production facilities we receive ourproducts from. This independent contractor assesses thecompliance of the facility with, among other things, local andUnited States labor laws and regulations as well as foreign anddomestic fair trade and business practices. **We rely on a small number of vendors to supply a significant    amount of our merchandise.**     In fiscal 2004, we sourced 35% of our merchandise from our topthree vendors; one company supplied 15% of our merchandise, andtwo others each supplied 10% of our merchandise. In addition,approximately 68% of our merchandise was directly sourced fromour top ten vendors, and one company acted as our agent withrespect to the sourcing of 21% of our merchandise. Ourrelationships with our vendors generally are not on acontractual basis and do not provide assurances on a long-termbasis as to adequate supply, quality or acceptable pricing. Mostof our vendors could discontinue selling to us at any time. Ifone or more of our significant vendors were to sever theirrelationship with us, we could be unable to obtain replacementproducts in a timely manner, which could cause our sales todecrease. **Failure of a new business concept could have a material    adverse effect on our results of operations and our business**     We now, and we may in the future, seek to expand our existingbusiness by expanding into new brand concepts and other businessopportunities. In particular, we will be opening our firstJimmy’Z brand stores during fiscal 2005. The operation ofthe Jimmy’Z stores and the sale of Aéropostale, andpotentially Jimmy’Z, merchandise over the Internet throughour e-commerce business, are subject to numerous risks,including unanticipated operating problems; lack of priorexperience; lack of customer acceptance; new vendorrelationships; competition from existing and new retailers; anddiversion of management’s attention from the Company’score Aéropostale business. The Jimmy’Z conceptinvolves, among other things, implementation of a retail apparelconcept which is subject to many of the same risks asAéropostale, as well as additional risks inherent with amore fashion driven concept, including risks of difficulty inmerchandising, uncertainty of customer acceptance, fluctuationsin fashion trends and customer tastes, as well as the attendantmark-down risks. Risks inherent in any new concept areparticularly acute with respect to Jimmy’Z because this isthe first significant new venture by us, and the nature of theJimmy’Z business differs in certain respects from that ofour core Aéropostale business. There can be no assurancethat the Jimmy’Z stores or our e-commerce business willachieve sales and profitability levels justifying ourinvestments in these businesses. If those sales levels are notachieved we may be forced to impair the carrying value ourinvestments, which may have a material adverse effect on ourresults of operations. **Foreign suppliers manufacture most of our merchandise and the    availability and costs of these products may be negatively    affected by risks associated with international trade.**     Trade restrictions such as increased tariffs or quotas, or both,could affect the importation of apparel generally and increasethe cost and reduce the supply of merchandise available to us.Much of our merchandise is sourced directly from foreign vendorsin Europe, Asia and Central America. In addition, many of ourdomestic vendors maintain production facilities overseas. Someof these facilities are also located in regions that may beaffected by political instability that could cause a disruptionin trade. Any reduction in merchandise available to us or anyincrease in its cost due to tariffs, quotas or local politicalissues could have a material adverse effect on our results ofoperations. **Our storeline 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 andoperate new stores successfully. We opened 103 stores in fiscal2004, 95 stores in fiscal 2003 and 93 stores in fiscal 2002.Additionally, we plan to open approximately 100 newAéropostale stores and approximately 14 new Jimmy’Zstores during fiscal 2005.
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We expect to continue to open a significant number of new storesin future years while also remodeling a portion of our existingstore base. Our planned expansion will place increased demandson our operational, managerial and administrative resources.These increased demands could cause us to operate our businessless effectively, which in turn could cause deterioration in thefinancial performance of our individual stores. In addition, tothe extent that our new store openings are in existing markets,we may experience reduced net sales volumes in previouslyexisting stores in those same markets. **Our continued expansion plan is dependent on a number of    factors which, if not implemented, could delay or prevent the    successful opening of new stores and penetration into new    markets.**     Unless we continue to do the following, we may be unable to opennew stores successfully and, if so, our continued growth wouldbe impaired: •     identify suitable markets and sites for new store locations;  •     negotiate acceptable lease terms;  •     hire, train and retain competent store personnel;  •     foster current relationships and develop new relationships with    vendors that are capable of supplying a greater volume of    merchandise;  •     manage inventory effectively to meet the needs of new and    existing stores on a timely basis;  •     expand our infrastructure to accommodate growth; and  •     generate sufficient operating cash flows or secure adequate    capital on commercially reasonable terms to fund our expansion    plans.     In addition, we will open new stores in markets in the UnitedStates in which we currently have few or no stores. Ourexperience in these markets is limited and there can be noassurance that we will be able to develop our brand in thesemarkets or adapt to competitive, merchandising and distributionchallenges that may be different from those in our existingmarkets. Our inability to open new stores successfully and/orpenetrate new markets would have a material adverse effect onour revenue and earnings growth. **The loss of the services of key personnel could have a    material adverse effect on our business.**     The Company’s key executive officers have substantialexperience and expertise in the retail business and have madesignificant contributions to the growth and success of theCompany’s brands. The unexpected loss of the services ofone or more of these individuals could adversely affect theCompany. Specifically, if we were to lose the services of JulianR. Geiger, our Chairman and Chief Executive Officer, and/orChristopher L. Finazzo, our Executive Vice President-ChiefMerchandising Officer, our business could be adversely affected.In addition, Mr. Geiger and Mr. Finazzo maintain manyof our vendor relationships, and the loss of either of themcould negatively impact present vendor relationships. **Our net sales and inventory levels fluctuate on a seasonal    basis.**     Our net sales and net income are disproportionately higher fromAugust through January each year due to increased sales fromback-to-school and holiday shopping. Sales during this periodcannot be used as an accurate indicator for our annual results.Our net sales and net income from February through July aretypically lower due to, in part, the traditional retail slowdownimmediately following the winter holiday season. Any significantdecrease in sales during the back-to-school and winter holidayseasons would have a material adverse effect on our financialcondition and results of operations. In addition, in order toprepare for the back-to-school and holiday shopping seasons, wemust order and keep in stock significantly more merchandise thanwe would carry during other parts of the year. Any unanticipateddecrease in demand for our products during these peak shoppingseasons could require us to sell excess inventory at asubstantial markdown, which could reduce our net sales and grossmargins and negatively impact our profitability.
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 **If we are unable to identify and respond to consumers’    fashion preferences in a timely manner, our profitability would    decline.**     We may not be able to keep pace with the rapidly changingfashion trends and consumer tastes inherent in the apparelindustry. Our current design philosophy is based on the beliefthat our target customers prefer clothing that suits the demandsof their active lifestyles and that they like to identify with alogo. Accordingly, we produce casual, comfortable apparel, amajority of which displays either the“Aéropostale” or “Aéro” logo.There can be no assurance that fashion trends will not move awayfrom casual clothing or that we will not have to alter ourdesign strategy to reflect a consumer change in logo preference.Failing to anticipate, identify or react appropriately tochanges in styles, trends, desired images or brand preferences,could have a material adverse effect on the Company’ssales, financial condition and results of operations. **A downturn in the United States economy may affect consumer    spending habits.**     Consumer purchases of discretionary items and retail products,including the Company’s products, may decline duringrecessionary periods and also may decline at other times whendisposable income is lower. A downturn in the economy mayadversely affect our sales. **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 storesin prominent locations within successful shopping malls. Wecannot control the development of new shopping malls, theavailability or cost of appropriate locations within existing ornew shopping malls, or the success of individual shopping malls.A significant decrease in shopping mall traffic would have amaterial adverse effect on our results of operations. **We rely on a single distribution center.**     We maintain one distribution center to receive, store anddistribute merchandise to all of our stores. Any significantinterruption in the operation of the distribution center due tonatural disasters, accidents, system failures or otherunforeseen causes could have a material adverse effect on theCompany’s financial condition and results. **We rely on a third party to manage our distribution    center.**     The efficient operation of our stores is dependent on ourability to distribute, in a timely manner, merchandise to ourstore locations throughout the United States. An independentthird party operates our distribution and warehouse facility. Wedepend on this third party to receive, sort, pack and distributesubstantially all of our merchandise. This third party employspersonnel represented by a labor union. Although there have beenno work stoppages or disruptions since the inception of ourrelationship with this third party provider beginning in 1991,there can be no assurance that work stoppages or disruptionswill not occur in the future. We also use a separate third partytransportation company to deliver our merchandise from ourwarehouse to our stores. Any failure by either of these thirdparties to respond adequately to our warehousing anddistribution needs would disrupt our operations and negativelyimpact our profitability. **We rely on a third party to administer to certain aspects of    our E-Commerce business**     Under an e-commerce agreements with GSI Commerce, Inc.(“GSI”), GSI operates the retail potion of ourwebsite, www.aeropostale.com. Under this agreement, GSI ownscertain content and technology related to the website, hosts andmaintains the website, and fulfills orders through the websiteas well as furnishing all other “back-end” operationsrequired to operate the website. Any significant interruption ofoperations at GSI due to natural disasters, accidents, systemfailures or other unforeseen causes would have a materialadverse effect on the Company’s e-commerce business.
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 **Failure to protect our trademarks adequately could negatively    impact our brand image and limit our ability to penetrate new    markets.**     We believe that our key trademarks AÉROPOSTALE® and,to a lesser extent, AERO® are integral to our logo-drivendesign strategy. We have obtained a federal registration of theAÉROPOSTALE® trademark in the United States and haveapplied for or obtained registrations in most foreign countriesin which our vendors are located. We use the AERO mark in manyconstantly changing designs and logos even though we have notapplied to register every variation or combination thereof foradult clothing. We also believe that the newly obtainedJIMMY’Z and Woody Car Design marks are an important part ofour growth strategy and expansion of our business. We haveacquired federal registrations in the United States and inCanada and have expanded the scope of our filings in the UnitedStates Patent and Trademark Office for a greater number ofapparel and accessory categories. There can be no assurance thatthe registrations we own and have obtained will prevent theimitation of our products or infringement of our intellectualproperty rights by others. If any third party imitates ourproducts in a manner that projects lesser quality or carries anegative connotation, our brand image could be materiallyadversely affected. Because we have not registered the AERO markin all forms and categories and have not registered the“AÉROPOSTALE”, “JIMMY’Z” and WoodyCar Design marks in all categories or in all foreign countriesin which we now or may in the future source or offer ourmerchandise, international expansion and our merchandising ofnon-apparel products using these marks could be limited.     In addition, there can be no assurance that others will not tryto block the manufacture, export or sale of our products asviolation of their trademarks or other proprietary rights. Otherentities may have rights to trademarks that contain the word“AERO” or may have registered similar or competingmarks for apparel and accessories in foreign countries in whichour vendors are located. Our applications for internationalregistration of the AÉROPOSTALE® mark have beenrejected in several countries in which our products aremanufactured because third parties have already registered themark for clothing in those countries. There may also be otherprior registrations in other foreign countries of which we arenot aware. In addition, we do not own the Jimmy’Z brandoutside of the United States and Canada. Accordingly, it may bepossible, in those few foreign countries where we were not beenable to register the AÉROPOSTALE® mark, or in thecountries where the Jimmy’Z brand is owned by a thirdparty, for a third party owner of the national trademarkregistration for “AÉROPOSTALE”,“JIMMY’Z” or the Woody Car Design to enjoin themanufacture, sale or exportation of Aéropostale orJimmy’Z branded goods to the United States. If we wereunable to reach a licensing arrangement with these parties, ourvendors may be unable to manufacture our products in thosecountries. Our inability to register our trademarks or purchaseor license the right to use our trademarks or logos in thesejurisdictions could limit our ability to obtain supplies from ormanufacture in less costly markets or penetrate new marketsshould our business plan change to include selling ourmerchandise in those jurisdictions outside the United States. **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 measuresand military action in response to an act of terrorism hasdisrupted commerce and has intensified the uncertainty of theU.S. economy. Any further acts of terrorism or a future warmay disrupt commerce and undermine consumer confidence, whichcould negatively impact our sales revenue by causing consumerspending and/or mall traffic to decline. Furthermore, an act ofterrorism or war, or the threat thereof, could negatively impactour business by interfering with our ability to obtainmerchandise from foreign vendors. Inability to obtainmerchandise from our foreign vendors or substitute othervendors, at similar costs and in a timely manner, couldadversely affect our operating results and financial condition.
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**PART II****OTHER INFORMATION****Item 1.*****Legal Proceedings***     We are party to various litigation matters and proceedings inthe ordinary course of business. In the opinion of ourmanagement, dispositions of these matters are not expected tohave a material adverse affect on our financial position,results from operations or cash flows.**Item 2.*****Unregistered Sales of Equity Securities and Use of    Proceeds***     Our Board of Directors has authorized a share repurchase programof our outstanding common stock in the amount of$100.0 million. Our purchases of treasury stock for thethirteen weeks ended April 30, 2005 pursuant to the sharerepurchase program, and remaining repurchase availability atthat date, 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)**    February 2005  70,000  $28.85   70,000  $34,356     March 2005  65,000  $32.50   65,000  $32,243     April 2005  90,000  $29.72   90,000  $29,568                  Total  225,000  $30.26   225,000  $29,568              **Item 3.*****Defaults Upon Senior Securities***     Not applicable.**Item 4.*****Submission of Matters to a Vote of Security Holders***     No matters were submitted to a vote of our shareholders duringthe period covered by this quarterly report.**Item 5.*****Other Information***     Not applicable.**Item 6.*****Exhibits:***      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.
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**SIGNATURES**     Pursuant to the requirements of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed onits 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: June 1, 2005
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