##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the Fiscal Year Ended January 29, 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                                                           |  | No. 31-1443880                          
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|112 West 34th Street, 22nd floor
    New York, NY                  |  | 10120(Zip Code)                         
|(Address of principal executive offices)                           |  |                                         

Registrants telephone number, including area code:


(646) 485-5398


Securities registered pursuant to Section 12(b) of the
Act:


|                                |  |                                          
|------------------------------- |  | -----------------------------------------
|Title of Each Class             |  | Name of Each Exchange on Which Registered
|                                |  |                                          
|Common Stock, without par value |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the
Act: None


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE








---










AÉROPOSTALE, INC.


TABLE OF CONTENTS


|                                                  |  |                                                                                                                          |  |   
|------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | --
|PART I                                           
|Item 1.                                           |  | Business                                                                                                                 |  | 2 
|Item 2.                                           |  | Properties                                                                                                               |  | 13
|Item 3.                                           |  | Legal Proceedings                                                                                                        |  | 13
|Item 4.                                           |  | Submission of Matters to a Vote of Security
    Holders                                                                  |  | 13
|                                                 
|PART II                                          
|Item 5.                                           |  | Market for the Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities |  | 14
|Item 6.                                           |  | Selected Financial Data                                                                                                  |  | 14
|Item 7.                                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                |  | 16
|Item 7A.                                          |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                           |  | 22
|Item 8.                                           |  | Financial Statements and Supplementary
    Data                                                                          |  | 23
|Item 9.                                           |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                 |  | 44
|Item 9A.                                          |  | Controls and Procedures                                                                                                  |  | 44
|Item 9B.                                          |  | Other Information                                                                                                        |  | 44
|                                                 
|PART III                                         
|Item 10.                                          |  | Directors and Executive Officers of the
    Registrant                                                                   |  | 44
|Item 11.                                          |  | Executive Compensation                                                                                                   |  | 44
|Item 12.                                          |  | Security Ownership of Certain Beneficial
    Owners and Management                                                       |  | 44
|Item 13.                                          |  | Certain Relationships and Related
    Transactions                                                                       |  | 44
|Item 14.                                          |  | Principal Accountant Fees and Services                                                                                   |  | 44
|                                                 
|PART IV                                          
|Item 15.                                          |  | Exhibits and Financial Statement
    Schedule                                                                            |  | 45
|Signatures                                        |  | 48                                                                                                                      
|EX-10.25: AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
|EX-21: SUBSIDIARIES OF THE COMPANY               
|EX-23.1: CONSENT OF DELOITTE & TOUCHE LLP        
|EX-31.1: CERTIFICATION                           
|EX-31.2: CERTIFICATION                           
|EX-32.1: CERTIFICATION                           
|EX-32.2: CERTIFICATION                           



1



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As used in this Annual Report on Form 10-K, unless the
context otherwise requires, all references to we,
us, our, Aéropostale or
the Company refer to Aéropostale, Inc., and its
subsidiaries. The term common stock means our common
stock, $.01 par value. Our website is located at
www.aeropostale.com (this and any other references in
this Annual Report on Form 10-K to Aéropostale.com is
solely a reference to a uniform resource locator, or URL, and is
an inactive textual reference only, not intended to incorporate
the website into this Annual Report on Form 10-K). On our
website, we make available, as soon as reasonably practicable
after electronic filing with the Securities and Exchange
Commission, our annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K,
and any amendments to those reports. All of these reports are
provided to the public free of charge.





PART I







|        |         
|------- | --------
|Item 1. | Business

Overview


www.aeropostale.com










Growth Strategy


Continue to open new Aéropostale stores.


Enhance and expand our brand.


2



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Continue high levels of store productivity.




| |                            
| | ---------------------------
| | New Business Opportunities.

JimmyZ.


E-Commerce. www.aeropostale.com


Stores


Existing stores.


|               |  |        |    | 
|-------------- |  | ------ | -- | 
|               |  | Number |   
|               |  | of     |   
|State          |  | Stores |   
|               |  |        |   
|Alabama        |  |        | 14 | 
|Arkansas       |  |        | 3  | 
|Arizona        |  |        | 10 | 
|California     |  |        | 18 | 
|Colorado       |  |        | 8  | 
|Connecticut    |  |        | 10 | 
|Delaware       |  |        | 4  | 
|Florida        |  |        | 29 | 
|Georgia        |  |        | 12 | 
|Illinois       |  |        | 23 | 
|Indiana        |  |        | 19 | 
|Iowa           |  |        | 11 | 
|Kansas         |  |        | 5  | 
|Kentucky       |  |        | 8  | 
|Louisiana      |  |        | 7  | 
|Massachusetts  |  |        | 19 | 
|Maryland       |  |        | 13 | 
|Maine          |  |        | 3  | 
|Michigan       |  |        | 26 | 
|Minnesota      |  |        | 12 | 
|Mississippi    |  |        | 2  | 
|Missouri       |  |        | 15 | 
|North Carolina |  |        | 18 | 
|North Dakota   |  |        | 4  | 
|Nebraska       |  |        | 5  | 
|New Hampshire  |  |        | 6  | 
|New Jersey     |  |        | 23 | 
|New Mexico     |  |        | 1  | 
|New York       |  |        | 43 | 
|Ohio           |  |        | 33 | 
|Oklahoma       |  |        | 5  | 
|Oregon         |  |        | 3  | 
|Pennsylvania   |  |        | 41 | 
|Rhode Island   |  |        | 1  | 
|South Carolina |  |        | 9  | 
|South Dakota   |  |        | 2  | 

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|              |  |        |     | 
|------------- |  | ------ | --- | 
|              |  | Number |    
|              |  | of     |    
|State         |  | Stores |    
|              |  |        |    
|Tennessee     |  |        | 16  | 
|Texas         |  |        | 32  | 
|Virginia      |  |        | 20  | 
|Vermont       |  |        | 2   | 
|Washington    |  |        | 8   | 
|Wisconsin     |  |        | 13  | 
|West Virginia |  |        | 5   | 
|              |  |        |    
|Total         |  |        | 561 | 
|              |  |        |    



|            |  |        |     |  |        |           |   |               |  |  |     | 
|----------- |  | ------ | --- |  | ------ | --------- | - | ------------- |  |  | --- | 
|            |  |        |     |  |        | Total     |  
|            |  |        |     |  |        | Number of |  
|            |  | Stores |     |  | Stores |           |   | Stores at End | 
|            |  | Opened |     |  | Closed |           |   | of Period     | 
|            |  |        |     |  |        |           |   |               | 
|Fiscal 2002 |  |        | 93  |  |        |           | 4 |               |  |  | 367 | 
|Fiscal 2003 |  |        | 95  |  |        |           | 3 |               |  |  | 459 | 
|Fiscal 2004 |  |        | 103 |  |        |           | 1 |               |  |  | 561 | 

Store design and environment.




Store management.


Expansion opportunities and site selection.




4



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Pricing




Design and Merchandising




Design.




Merchandising.




|              |  |        |     |  |      |  |     |      |  |  |     | 
|------------- |  | ------ | --- |  | ---- |  | --- | ---- |  |  | --- | 
|              |  | Fiscal |    
|              |  |        |    
|              |  | 2004   |     |  | 2003 |  |     | 2002 | 
|              |  |        |     |  |      |  |     |      | 
|Young Womens |  |        | 60% |  |      |  | 60% |      |  |  | 58% | 
|Young Mens   |  |        | 26% |  |      |  | 27% |      |  |  | 30% | 
|Accessories   |  |        | 14% |  |      |  | 13% |      |  |  | 12% | 

Sourcing




5



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Marketing and Advertising




www.aeropostale.com


Distribution






6



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Information Systems






| |   |                                
| | - | -------------------------------
| |  | point-of-sale;                 
|
| |  | inventory management;          
|
| |  | supply chain;                  
|
| |  | planning and replenishment; and
|
| |  | financial reporting.           



Trademarks


tm sm




Competition






Employees




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Seasonality




Available Information


www.aeropostale.com


www.aeropostale.com


Cautionary Note Regarding Forward-Looking Statements and
Risk Factors






| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | Fluctuations in Comparable Store Sales and Quarterly
    Results of Operations may Cause the Price of our Common Stock to
    Decline Substantially.





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

8



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| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Our Business Could Suffer As a Result of a
    Manufacturers Inability to Produce Merchandise on Time and
    to Specifications.





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Our Business Could Suffer if a Manufacturer Fails to Use
    Acceptable Labor Practices.





| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | We Rely on a Small Number of Vendors to Supply a
    Significant Amount of our Merchandise.





| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Failure of a New Business Concept could have a Material
    Adverse Effect on our Results of Operations and our
    Business



9



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| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Foreign Suppliers Manufacture Most of our Merchandise and
    the Availability and Costs of These Products may be Negatively
    Affected by Risks Associated with International Trade.





| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Growth Strategy Relies on the Continued Addition of a
    Significant Number of New Stores Each Year, Which Could Strain
    our Resources and Cause the Performance of our Existing Stores
    to Suffer.





| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Continued Expansion Plan is Dependent on a Number of
    Factors Which, if Not Implemented, Could Delay or Prevent the
    Successful Opening of New Stores and Penetration into New
    Markets.





| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | identify suitable markets and sites for new store locations;                                                                                  
|
| |  | negotiate acceptable lease terms;                                                                                                             
|
| |  | hire, train and retain competent store personnel;                                                                                             
|
| |  | foster current relationships and develop new relationships with
    vendors that are capable of supplying a greater volume of
    merchandise;
|
| |  | manage inventory effectively to meet the needs of new and
    existing stores on a timely basis;                                              
|
| |  | expand our infrastructure to accommodate growth; and                                                                                          
|
| |  | generate sufficient operating cash flows or secure adequate
    capital on commercially reasonable terms to fund our expansion
    plans.     



10



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| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | The Loss of the Services of Key Personnel Could Have a
    Material Adverse Effect on our Business.





| |                                                                      
| | ---------------------------------------------------------------------
| | Our Net Sales and Inventory Levels Fluctuate on a
    Seasonal Basis.





| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | If we are Unable to Identify and Respond to
    Consumers Fashion Preferences in a Timely Manner, our
    Profitability Would Decline.





| |                                                                                 
| | --------------------------------------------------------------------------------
| | A Downturn in the United States Economy May Affect
    Consumer Spending Habits.





| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Our Ability to Attract Customers to our Stores Depends
    Heavily on the Success of the Shopping Malls in Which we are
    Located.





| |                                         
| | ----------------------------------------
| | We Rely on a Single Distribution Center.



11



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| |                                                                
| | ---------------------------------------------------------------
| | We Rely on a Third Party to Manage our Distribution
    Center.





| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Failure to Protect our Trademarks Adequately Could
    Negatively Impact our Brand Image and Limit our Ability to
    Penetrate New Markets.







| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | The Effects of War or Acts of Terrorism Could Have a
    Material Adverse Effect on our Operating Results and Financial
    Condition.



12



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|        |           
|------- | ----------
|Item 2. | Properties














|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








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



13



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PART II







|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|            |  |              |       |  |     |   |       | 
|----------- |  | ------------ | ----- |  | --- | - | ----- | 
|            |  | Market Price |      
|            |  |              |      
|            |  | High         |       |  | Low |  
|            |  |              |       |  |     |  
|Fiscal 2004 |  |              |       |  |     |   |       | 
|4th quarter |  | $            | 34.38 |  |     | $ | 25.65 | 
|3rd quarter |  |              | 33.98 |  |     |   | 25.87 | 
|2nd quarter |  |              | 30.94 |  |     |   | 21.99 | 
|1st quarter |  |              | 25.20 |  |     |   | 19.86 | 
|Fiscal 2003 |  |              |       |  |     |   |       | 
|4th quarter |  | $            | 21.57 |  |     | $ | 16.83 | 
|3rd quarter |  |              | 23.13 |  |     |   | 16.20 | 
|2nd quarter |  |              | 18.33 |  |     |   | 11.00 | 
|1st quarter |  |              | 12.43 |  |     |   | 6.44  | 





|              |  |                |         |  |            |                 |                  |                     |                    |                 |                     |  |  |   |        | 
|------------- |  | -------------- | ------- |  | ---------- | --------------- | ---------------- | ------------------- | ------------------ | --------------- | ------------------- |  |  | - | ------ | 
|              |  |                |         |  |            | Total Number of |                  |                     | Approximate Dollar |                
|              |  | Total Number   |         |  |            |                 | Shares Purchased |                     |                    | Value of Shares |                    
|              |  | of Shares      |         |  | Average    |                 |                  | as Part of Publicly |                    |                 | that may yet be     | 
|              |  | (or Units)     |         |  | Price Paid |                 |                  | Announced Plans     |                    |                 | Purchased Under the | 
|Period        |  | Purchased      |         |  | per Share  |                 |                  | or Programs         |                    |                 | Plans or Programs   | 
|              |  |                |         |  |            |                 |                  |                     |                    |                 |                     | 
|              |  | (In thousands) |         |  |            |                 | (In thousands)   |                     |                    | (In thousands)  |                    
|November 2004 |  |                |        |  |            | $               |                 |                     |                    |                 |                    |  |  | $ | 43,214 | 
|December 2004 |  |                | 20,000  |  |            | $               | 28.94            |                     |                    |                 | 20,000              |  |  | $ | 42,635 | 
|January 2005  |  |                | 230,000 |  |            | $               | 27.22            |                     |                    |                 | 230,000             |  |  | $ | 36,374 | 
|              |  |                |         |  |            |                 |                  |                     |                    |                 |                     | 
|Total         |  |                | 250,000 |  |            | $               | 27.36            |                     |                    |                 | 250,000             |  |  | $ | 36,374 | 
|              |  |                |         |  |            |                 |                  |                     |                    |                 |                     | 






|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



14



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|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |      |  |   |         |      |  |   |         |      | 
|------------------------------------------- | --------------------------------- | ------------------------------------- | ------- | ------- | ----------- | - | ------- | ---------------------- |  | - | ----------------- | ---- |  | ----------- | ------- | ---- | ----------- | - | ------- | --------- |  | - | -------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                            |                                   |                                       |         | 52 Week |             |   |         |                        | 
|                                            |                                   | Fiscal Year Ended                     |         |         | Period      |   |         | Six Month Period Ended |  |   | Fiscal Year Ended |     
|                                            |                                   |                                       |         |         | Ended       |   |         |                        |  |   |                   |     
|                                            |                                   | January 29,                           |         |         | January 31, |   |         | February 1,            |  |   | February 2,       |      |  | February 2, |         |      | February 3, |   |         | August 4, |  |   | July 29, |     
|                                            |                                   | 2005                                  |         |         | 2004        |   |         | 2003                   |  |   | 2002              |      |  | 2002        |         |      | 2001        |   |         | 2001      |  |   | 2000     |     
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|                                            |                                   | (In thousands, except per share data) |        
|Statement of Income Data:                   |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |      |  |   |         |      |  |   |         |     
|Net sales                                   |                                   | $                                     | 964,212 |         |             | $ | 734,868 |                        |  | $ | 550,904           |      |  | $           | 404,438 |      |             | $ | 284,040 |           |  | $ | 184,369  |      |  | $ | 304,767 |      |  | $ | 213,445 |     
|Gross profit, as a percent of sales         |                                   |                                       | 33.2    | %       |             |   | 31.3    | %                      |  |   | 29.5              | %    |  |             | 32.2    | %    |             |   | 36.6    | %         |  |   | 32.4     | %    |  |   | 28.3    | %    |  |   | 28.8    | %   
|SG&A, as a percent of sales                 |                                   |                                       | 19.1    | %       |             |   | 19.3    | %                      |  |   | 20.1              | %    |  |             | 21.4    | %    |             |   | 19.4    | %         |  |   | 18.7     | %    |  |   | 21.6    | %    |  |   | 21.4    | %   
|Net income, as a percent of sales           |                                   |                                       | 8.7     | %       |             |   | 7.4     | %                      |  |   | 5.7               | %    |  |             | 6.6     | %    |             |   | 10.7    | %         |  |   | 8.2      | %    |  |   | 3.7     | %    |  |   | 5.3     | %   
|Income from continuing operations           |                                   |                                       | 84,112  |         |             |   | 54,254  |                        |  |   | 31,290            |      |  |             | 24,857  |      |             |   | 28,637  |           |  |   | 14,694   |      |  |   | 10,914  |      |  |   | 9,366   |     
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|Net income                                  |                                   |                                       | 84,112  |         |             |   | 54,254  |                        |  |   | 31,290            |      |  |             | 26,506  |      |             |   | 30,269  |           |  |   | 15,082   |      |  |   | 11,319  |      |  |   | 11,368  |     
|Preferred dividends                         |                                   |                                       |        |         |             |   |        |                        |  |   | 362               |      |  |             | 1,113   |      |             |   | 574     |           |  |   | 508      |      |  |   | 1,048   |      |  |   | 1,040   |     
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|Net income available to common stockholders |                                   | $                                     | 84,112  |         |             | $ | 54,254  |                        |  | $ | 30,928            |      |  | $           | 25,393  |      |             | $ | 29,695  |           |  | $ | 14,574   |      |  | $ | 10,271  |      |  | $ | 10,328  |     
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|Diluted earnings per common share:          |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |      |  |   |         |      |  |   |         |     
|                                            | From continuing operations        |                                       | $       | 1.47    |             |   | $       | 0.93                   |  |   | $                 | 0.54 |  |             | $       | 0.44 |             |   | $       | 0.52      |  |   | $        | 0.27 |  |   | $       | 0.19 |  |   | $       | 0.16 | 
|                                            | From discontinued operations      |                                       |         |        |             |   |         |                       |  |   |                   |     |  |             |         |     |             |   |         |          |  |   |          | 0.01 |  |   |         |     |  |   |         | 0.04 | 
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|                                            | From cumulative accounting change |                                       |         |        |             |   |         |                       |  |   |                   |     |  |             |         | 0.03 |             |   |         | 0.03      |  |   |          |     |  |   |         |     |  |   |         |     | 
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|                                            | Diluted earnings per common share |                                       | $       | 1.47    |             |   | $       | 0.93                   |  |   | $                 | 0.54 |  |             | $       | 0.47 |             |   | $       | 0.55      |  |   | $        | 0.28 |  |   | $       | 0.19 |  |   | $       | 0.20 | 
|                                            |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |     
|Selected Operating Data:                    |                                   |                                       |         |         |             |   |         |                        |  |   |                   |      |  |             |         |      |             |   |         |           |  |   |          |      |  |   |         |      |  |   |         |     
|Number of stores open at end of period      |                                   |                                       | 561     |         |             |   | 459     |                        |  |   | 367               |      |  |             | 278     |      |             |   | 278     |           |  |   | 224      |      |  |   | 252     |      |  |   | 178     |     
|Comparable store sales increase             |                                   |                                       | 8.7     | %       |             |   | 6.6     | %                      |  |   | 6.6               | %    |  |             | 15.5    | %    |             |   | 23.0    | %         |  |   | 14.5     | %    |  |   | 8.7     | %    |  |   | 14.5    | %   
|Average store sales (in thousands)          |                                   | $                                     | 1,849   |         |             | $ | 1,728   |                        |  | $ | 1,651             |      |  | $           | 1,521   |      |             | $ | 1,028   |           |  | $ | 872      |      |  | $ | 1,360   |      |  | $ | 1,372   |     
|Average square footage per store            |                                   |                                       | 3,512   |         |             |   | 3,511   |                        |  |   | 3,541             |      |  |             | 3,463   |      |             |   | 3,463   |           |  |   | 3,460    |      |  |   | 3,437   |      |  |   | 3,548   |     
|Sales per square foot                       |                                   | $                                     | 526     |         |             | $ | 491     |                        |  | $ | 471               |      |  | $           | 456     |      |             | $ | 297     |           |  | $ | 250      |      |  | $ | 392     |      |  | $ | 380     |     

|                                               |  |                |         |  |             |   |         |             |  |   |             |  |  |           |         |  |  |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ----------- | - | ------- | ----------- |  | - | ----------- |  |  | --------- | ------- |  |  | - | ------- | 
|                                               |  | As of          |        
|                                               |  |                |        
|                                               |  | January 29,    |         |  | January 31, |   |         | February 1, |  |   | February 2, |  |  | August 4, |        
|                                               |  | 2005           |         |  | 2004        |   |         | 2003        |  |   | 2002        |  |  | 2001      |        
|                                               |  |                |         |  |             |   |         |             |  |   |             |  |  |           |        
|                                               |  | (In thousands) |        
|Balance Sheet Data:                            |  |                |         |  |             |   |         |             |  |   |             |  |  |           |         |  |  |   |         | 
|Working capital                                |  | $              | 182,493 |  |             | $ | 140,879 |             |  | $ | 86,791      |  |  | $         | 38,181  |  |  | $ | 10,810  | 
|Total assets                                   |  |                | 405,819 |  |             |   | 307,048 |             |  |   | 223,032     |  |  |           | 146,927 |  |  |   | 121,128 | 
|121/2%
    Series B redeemable preferred stock |  |                |        |  |             |   |        |             |  |   |            |  |  |           | 9,617   |  |  |   | 9,043   | 
|Total debt                                     |  |                |        |  |             |   |        |             |  |   |            |  |  |           |        |  |  |   | 35,267  | 
|Total stockholders equity                     |  |                | 238,251 |  |             |   | 185,693 |             |  |   | 127,959     |  |  |           | 60,190  |  |  |   | 26,290  | 
|Cash dividends declared per common share       |  |                |        |  |             |   |        |             |  |   |            |  |  |           |        |  |  |   |        | 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Introduction




Overview






|                                              |             |                   |       |    |             |   |       |             |   |   |       |    |  
|--------------------------------------------- | ----------- | ----------------- | ----- | -- | ----------- | - | ----- | ----------- | - | - | ----- | -- | -
|                                              |             | Fiscal Year Ended |      
|                                              |             |                   |      
|                                              |             | January 29,       |       |    | January 31, |   |       | February 1, |  
|                                              |             | 2005              |       |    | 2004        |   |       | 2003        |  
|                                              |             |                   |       |    |             |   |       |             |  
|Net sales (in millions)                       |             | $                 | 964.2 |    |             | $ | 734.9 |             |   | $ | 550.9 |   
|Total store count at end of period            |             |                   | 561   |    |             |   | 459   |             |   |   | 367   |   
|Comparable store sales count at end of period |             |                   | 448   |    |             |   | 359   |             |   |   | 272   |   
|Net sales growth                              |             |                   | 31.2  | %  |             |   | 33.4  | %           |   |   | 36.2  | % 
|Comparable store sales growth                 |             |                   | 8.7   | %  |             |   | 6.6   | %           |   |   | 6.6   | % 
|Net sales per average square foot             |             | $                 | 526   |    |             | $ | 491   |             |   | $ | 471   |   
|Gross profit (in millions)                    |             | $                 | 319.9 |    |             | $ | 229.7 |             |   | $ | 162.6 |   
|Income from operations (in millions)          |             | $                 | 135.9 |    |             | $ | 88.2  |             |   | $ | 52.1  |   
|Diluted earnings per share                    |             | $                 | 1.47  |    |             | $ | 0.93  |             |   | $ | 0.54  |   
|Square footage growth                         |             |                   | 23.0  | %  |             |   | 24.0  | %           |   |   | 35.0  | % 
|Percentages of net sales by category          |             |                   |       |    |             |   |       |             |   |   |       |   
|                                              | Womens     |                   |       | 60 | %           |   |       | 60          | % |   |       | 58 | %
|                                              | Mens       |                   |       | 26 | %           |   |       | 27          | % |   |       | 30 | %
|                                              | Accessories |                   |       | 14 | %           |   |       | 13          | % |   |       | 12 | %

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Results of Operations




|                           |  |                   |       |   |             |  |       |             |  |  |       |  
|-------------------------- |  | ----------------- | ----- | - | ----------- |  | ----- | ----------- |  |  | ----- | -
|                           |  | Fiscal Year Ended |      
|                           |  |                   |      
|                           |  | January 29,       |       |   | January 31, |  |       | February 1, | 
|                           |  | 2005              |       |   | 2004        |  |       | 2003        | 
|                           |  |                   |       |   |             |  |       |             | 
|Net sales                  |  |                   | 100.0 | % |             |  | 100.0 | %           |  |  | 100.0 | %
|Gross profit               |  |                   | 33.2  |   |             |  | 31.3  |             |  |  | 29.5  |  
|SG&A                       |  |                   | 19.1  |   |             |  | 19.3  |             |  |  | 20.1  |  
|Income from operations     |  |                   | 14.1  |   |             |  | 12.0  |             |  |  | 9.4   |  
|Interest income, net       |  |                   | 0.1   |   |             |  | 0.1   |             |  |  | 0.1   |  
|                           |  |                   |       |   |             |  |       |             | 
|Income before income taxes |  |                   | 14.2  |   |             |  | 12.1  |             |  |  | 9.5   |  
|Income taxes               |  |                   | 5.5   |   |             |  | 4.7   |             |  |  | 3.8   |  
|                           |  |                   |       |   |             |  |       |             | 
|Net income                 |  |                   | 8.7   | % |             |  | 7.4   | %           |  |  | 5.7   | %
|                           |  |                   |       |   |             |  |       |             | 



| |      
| | -----
| | Sales









| |                               
| | ------------------------------
| | Cost of Sales and Gross Profit





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| |     
| | ----
| | SG&A









| |                
| | ---------------
| | Interest Income





| |             
| | ------------
| | Income Taxes







| |                                  
| | ---------------------------------
| | Net Income and Earnings Per Share



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Liquidity and Capital Resources






|                                                      |  |                   |          |   |             |   |         |             |  |   |         |  
|----------------------------------------------------- |  | ----------------- | -------- | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                                      |  | Fiscal Year Ended |         
|                                                      |  |                   |         
|                                                      |  | January 29,       |          |   | January 31, |   |         | February 1, | 
|                                                      |  | 2005              |          |   | 2004        |   |         | 2003        | 
|                                                      |  |                   |          |   |             |   |         |             | 
|Net cash from operating activities                    |  | $                 | 136,975  |   |             | $ | 103,500 |             |  | $ | 52,520  |  
|Net cash from investing activities                    |  |                   | (124,301 | ) |             |   | (35,926 | )           |  |   | (29,718 | )
|Net cash from financing activities                    |  |                   | (44,902  | ) |             |   | (16,693 | )           |  |   | 19,715  |  
|                                                      |  |                   |          |   |             |   |         |             | 
|Net (decrease), increase in cash and cash equivalents |  | $                 | (32,228  | ) |             | $ | 50,881  |             |  | $ | 42,517  |  
|                                                      |  |                   |          |   |             |   |         |             | 



| |                     
| | --------------------
| | Operating Activities





| |                     
| | --------------------
| | Investing Activities



Accounting for Certain Investments in
Debt and Equity Securities.


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| |                     
| | --------------------
| | Financing Activities







Inflation




Contractual Obligations and Commercial Commitments




|                         |                               |                        |   |           |        |  |     |        |  |     |       |         |           |         |   |        |  |  |   |         | 
|------------------------ | ----------------------------- | ---------------------- | - | --------- | ------ |  | --- | ------ |  | --- | ----- | ------- | --------- | ------- | - | ------ |  |  | - | ------- | 
|                         |                               | Payments Due by Period |  
|                         |                               |                        |  
|                         |                               |                        |   | Less Than |        |  | 1-3 |        |  | 3-5 |       |         | More than |        
|                         |                               | Total                  |   |           | 1 Year |  |     | Years  |  |     | Years |         |           | 5 Years |  
|                         |                               |                        |   |           |        |  |     |        |  |     |       |         |           |         |  
|                         |                               | (In thousands)         |  
|Contractual Obligations: |                               |                        |   |           |        |  |     |        |  |     |       |         |           |         |   |        |  |  |   |        
|                         | Employment agreements         |                        | $ | 5,614     |        |  | $   | 2,410  |  |     | $     | 3,204   |           |         | $ |       |  |  | $ |        | 
|                         | Event sponsorship agreement   |                        |   | 2,540     |        |  |     | 730    |  |     |       | 1,810   |           |         |   |       |  |  |   |        | 
|                         | Operating leases              |                        |   | 383,118   |        |  |     | 52,605 |  |     |       | 98,513  |           |         |   | 96,072 |  |  |   | 135,928 | 
|                         |                               |                        |   |           |        |  |     |        |  |     |       |         |           |         |  
|                         | Total contractual obligations |                        | $ | 391,272   |        |  | $   | 55,745 |  |     | $     | 103,527 |           |         | $ | 96,072 |  |  | $ | 135,928 | 
|                         |                               |                        |   |           |        |  |     |        |  |     |       |         |           |         |  



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Off-Balance Sheet Arrangements




Critical Accounting Estimates








| |                      
| | ---------------------
| | Merchandise Inventory





| |                             
| | ----------------------------
| | Defined Benefit Pension Plan



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| |                    
| | -------------------
| | Finite-lived Assets





| |             
| | ------------
| | Income Taxes



Recent Accounting Developments


Recent Accounting
Developments







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



22



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

|                                                                     |  |      |           | 
|-------------------------------------------------------------------- |  | ---- | --------- | 
|                                                                     |  | Page |          
|                                                                     |  |      |          
|Reports of Independent Registered Public
    Accounting Firm         |  |      | 24 and 26 | 
|Managements Report on Internal
    Control over Financial Reporting |  |      | 25        | 
|Consolidated Balance Sheets                                          |  |      | 27        | 
|Consolidated Statements of Income and
    Comprehensive Income       |  |      | 28        | 
|Consolidated Statements of
    Stockholders Equity                  |  |      | 29        | 
|Consolidated Statements of Cash Flows                                |  |      | 30        | 
|Notes to Consolidated Financial
    Statements                       |  |      | 31        | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                          
| | -------------------------
| | Deloitte & Touche
    LLP





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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING






Internal Control  Integrated Framework




25



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                          
| | -------------------------
| | Deloitte & Touche
    LLP





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AÉROPOSTALE, INC.


CONSOLIDATED BALANCE SHEETS


|                                           |                                                                                                               |                                            |              |         |             |         |        |         |         |         | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------ | ------- | ----------- | ------- | ------ | ------- | ------- | ------- | 
|                                           |                                                                                                               | January 29,                                |              |         | January 31, |        
|                                           |                                                                                                               | 2005                                       |              |         | 2004        |        
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               | (In thousands)                             |             
|ASSETS                                    
|Current assets:                            |                                                                                                               |                                            |              |         |             |         |        |        
|                                           | Cash and cash equivalents                                                                                     |                                            | $            | 106,128 |             |         | $      | 138,356 |        
|                                           | Short-term investments                                                                                        |                                            |              | 76,224  |             |         |        |        |        
|                                           | Merchandise inventory                                                                                         |                                            |              | 81,238  |             |         |        | 61,807  |        
|                                           | Prepaid expenses                                                                                              |                                            |              | 10,138  |             |         |        | 8,734   |        
|                                           | Other current assets                                                                                          |                                            |              | 5,759   |             |         |        | 3,550   |        
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               | Total current assets                       |              |         | 279,487     |         |        |         | 212,447 |        
|Fixtures, equipment and improvements  Net |                                                                                                               |                                            | 122,651      |         |             |         | 92,578 |        
|Intangible assets                          |                                                                                                               |                                            | 2,529        |         |             |         |       |        
|Deferred income taxes                      |                                                                                                               |                                            |             |         |             |         | 968    |        
|Other assets                               |                                                                                                               |                                            | 1,152        |         |             |         | 1,055  |        
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               |                                            | Total assets |         | $           | 405,819 |        |         | $       | 307,048 | 
|                                           |                                                                                                               |                                            |              |         |             |        
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY      
|Current liabilities:                       |                                                                                                               |                                            |              |         |             |         |        |        
|                                           | Accounts payable                                                                                              |                                            | $            | 44,858  |             |         | $      | 30,477  |        
|                                           | Accrued expenses                                                                                              |                                            |              | 52,136  |             |         |        | 41,091  |        
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               | Total current liabilities                  |              |         | 96,994      |         |        |         | 71,568  |        
|Deferred rent and tenant allowances        |                                                                                                               |                                            | 63,065       |         |             |         | 45,585 |        
|Retirement benefit plan liabilities        |                                                                                                               |                                            | 6,158        |         |             |         | 4,202  |        
|Deferred income taxes                      |                                                                                                               |                                            | 1,351        |         |             |         |       |        
|Commitment and contingent liabilities      |                                                                                                               |                                            |              |         |             |         |        |        
|Stockholders equity:                      |                                                                                                               |                                            |              |         |             |         |        |        
|                                           | Common stock  par value, $0.01 per share;
    200,000 shares authorized, 58,115 and 56,795 shares
    issued |                                            |              | 581     |             |         |        | 568     |        
|                                           | Preferred stock  par value, $0.01 per share;
    5,000 shares authorized, no shares issued or outstanding    |                                            |              |        |             |         |        |        |        
|                                           | Additional paid-in capital                                                                                    |                                            |              | 79,069  |             |         |        | 63,289  |        
|                                           | Deferred compensation                                                                                         |                                            |              | (1,271  | )           |         |        |        |        
|                                           | Other comprehensive loss                                                                                      |                                            |              | (817    | )           |         |        | (672    | )      
|                                           | Retained earnings                                                                                             |                                            |              | 224,315 |             |         |        | 140,203 |        
|                                           | Treasury stock at cost (2,749 and 945 shares)                                                                 |                                            |              | (63,626 | )           |         |        | (17,695 | )      
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               | Total stockholders equity                 |              |         | 238,251     |         |        |         | 185,693 |        
|                                           |                                                                                                               |                                            |              |         |             |        
|                                           |                                                                                                               | Total liabilities and stockholders equity |              | $       | 405,819     |         |        | $       | 307,048 |        
|                                           |                                                                                                               |                                            |              |         |             |        



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AÉROPOSTALE, INC.


CONSOLIDATED STATEMENTS OF INCOME


|                                                                                |                                                                  |                   |         |         |             |   |         |             |  |   |         |         | 
|------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------- | ------- | ------- | ----------- | - | ------- | ----------- |  | - | ------- | ------- | 
|                                                                                |                                                                  | Fiscal Year Ended |        
|                                                                                |                                                                  |                   |        
|                                                                                |                                                                  | January 29,       |         |         | January 31, |   |         | February 1, | 
|                                                                                |                                                                  | 2005              |         |         | 2004        |   |         | 2003        | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                |                                                                  | (In thousands)    |        
|Net sales                                                                       |                                                                  | $                 | 964,212 |         |             | $ | 734,868 |             |  | $ | 550,904 |        
|Cost of sales (includes certain buying, occupancy and
    warehousing expenses) |                                                                  |                   | 644,305 |         |             |   | 505,152 |             |  |   | 388,301 |        
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                | Gross profit                                                     |                   |         | 319,907 |             |   |         | 229,716     |  |   |         | 162,603 | 
|                                                                                | Selling, general and administrative expenses                     |                   |         | 183,977 |             |   |         | 141,520     |  |   |         | 110,506 | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|Income from operations                                                          |                                                                  |                   | 135,930 |         |             |   | 88,196  |             |  |   | 52,097  |        
|                                                                                | Interest income, net of interest expense of $125, $286, and $341 |                   |         | 1,438   |             |   |         | 760         |  |   |         | 56      | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|Income before income taxes                                                      |                                                                  |                   | 137,368 |         |             |   | 88,956  |             |  |   | 52,153  |        
|Income taxes                                                                    |                                                                  |                   | 53,256  |         |             |   | 34,702  |             |  |   | 20,863  |        
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|Net income                                                                      |                                                                  | $                 | 84,112  |         |             | $ | 54,254  |             |  | $ | 31,290  |        
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                | Basic earnings per common share                                  |                   | $       | 1.51    |             |   | $       | 0.99        |  |   | $       | 0.60    | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                | Diluted earnings per common share                                |                   | $       | 1.47    |             |   | $       | 0.93        |  |   | $       | 0.54    | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                | Weighted average basic shares                                    |                   |         | 55,735  |             |   |         | 54,758      |  |   |         | 51,581  | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 
|                                                                                | Weighted average diluted shares                                  |                   |         | 57,255  |             |   |         | 58,287      |  |   |         | 56,781  | 
|                                                                                |                                                                  |                   |         |         |             |   |         |             | 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


|                                                 |  |                   |        |   |             |   |        |             |  |   |        | 
|------------------------------------------------ |  | ----------------- | ------ | - | ----------- | - | ------ | ----------- |  | - | ------ | 
|                                                 |  | Fiscal Year Ended |       
|                                                 |  |                   |       
|                                                 |  | January 29,       |        |   | January 31, |   |        | February 1, | 
|                                                 |  | 2005              |        |   | 2004        |   |        | 2003        | 
|                                                 |  |                   |        |   |             |   |        |             | 
|                                                 |  | (In thousands)    |       
|Net income                                       |  | $                 | 84,112 |   |             | $ | 54,254 |             |  | $ | 31,290 | 
|Minimum pension liability adjustment, net of tax |  |                   | (145   | ) |             |   | (672   | )           |  |   |       | 
|                                                 |  |                   |        |   |             |   |        |             | 
|Comprehensive income                             |  | $                 | 83,967 |   |             | $ | 53,582 |             |  | $ | 31,290 | 
|                                                 |  |                   |        |   |             |   |        |             | 



28



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AÉROPOSTALE, INC.





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |   |   |      |      |   |   |         |        |   |   |         |         |  
|------------------------- | ---------------------------------------------------------- | -------------- | ------ | ------------ | --------- | - | --- | ---------- |  |  | --------------- | ------ | ------- | ------- | -- | ----- | ------------- | - | ------ | -------- | - | - | ------ | ------ | - | ---- | ------ | ------ | -------- | - | ------- | ------- | - | - | ---- | ---- | - | - | ------- | ------ | - | - | ------- | ------- | -
|                          |                                                            |                |        | Common Stock |           |   |     |            |  |  | Treasury Stock, |        |         |         |    |       |               |  
|                          |                                                            | Common Stock   |        |              | Nonvoting |   |     | Additional |  |  |                 |        | at Cost |         |    | Other |               |   |        |          |  
|                          |                                                            |                |        |              |           |   |     | Paid-in    |  |  | Deferred        |        |         |         |    |       | Comprehensive |   |        | Retained |   |   |       
|                          |                                                            | Shares         |        |              | Amount    |   |     | Shares     |  |  | Amount          |        |         | Capital |    |       | Compensation  |   |        | Shares   |   |   | Amount |        |   | Loss |        |        | Earnings |   |         | Total   |  
|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |  
|                          |                                                            | (In thousands) |       
|BALANCE, FEBRUARY 2, 2002 |                                                            |                | 46,571 |              |           | $ | 465 |            |  |  | 1,677           |        |         | $       | 17 |       |               | $ | 9,160  |          |   | $ | (4,473 | )      |   |      |       |        |          | $ |        |         |   | $ |     |      |   | $ | 55,021  |        |   | $ | 60,190  |        
|                          | Net income                                                 |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         | 31,290 |   |   |         | 31,290  |  
|                          | Stock options exercised                                    |                |        | 799          |           |   |     | 8          |  |  |                 | 1,100  |         |         |    | 12    |               |   |        | 267      |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 287     |  
|                          | Tax benefit related to exercise of stock options           |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        | 2,674    |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 2,674   |  
|                          | Deferred offering costs                                    |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        | (1,981   | ) |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | (1,981  | )
|                          | Initial public offering                                    |                |        | 2,812        |           |   |     | 28         |  |  |                 |       |         |         |    |      |               |   |        | 31,360   |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 31,388  |  
|                          | Amortization of equity based compensation                  |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        | 4,473  |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 4,473   |  
|                          | Conversion of common stock nonvoting to common stock       |                |        | 2,777        |           |   |     | 29         |  |  |                 | (2,777 | )       |         |    | (29   | )             |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         |        |  
|                          | Accrued dividend  Series B redeemable preferred
    stock |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         | (362   | ) |   |         | (362    | )
|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |  
|BALANCE, FEBRUARY 1, 2003 |                                                            |                | 52,959 |              |           |   | 530 |            |  |  |                |        |         |         |   |       |               |   | 41,480 |          |   |   |       |        |   |      |       |        |          |   |        |         |   |   |     |      |   |   | 85,949  |        |   |   | 127,959 |        
|                          | Net income                                                 |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         | 54,254 |   |   |         | 54,254  |  
|                          | Stock options exercised                                    |                |        | 3,836        |           |   |     | 38         |  |  |                 |       |         |         |    |      |               |   |        | 1,027    |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 1,065   |  
|                          | Tax benefit related to exercise of stock options           |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        | 20,782   |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 20,782  |  
|                          | Repurchase of common stock                                 |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        | (945   | )        |   |         | (17,695 | ) |   |      |     |   |   |         |       |   |   |         | (17,695 | )
|                          | Other comprehensive loss                                   |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      | (672 | ) |   |         |       |   |   |         | (672    | )
|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |  
|BALANCE, JANUARY 31, 2004 |                                                            |                | 56,795 |              |           |   | 568 |            |  |  |                |        |         |         |   |       |               |   | 63,289 |          |   |   |       |        |   |      | (945   | )      |          |   | (17,695 | )       |   |   | (672 | )    |   |   | 140,203 |        |   |   | 185,693 |        
|                          | Net income                                                 |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         | 84,112 |   |   |         | 84,112  |  
|                          | Stock options exercised                                    |                |        | 1,320        |           |   |     | 13         |  |  |                 |       |         |         |    |      |               |   |        | 1,016    |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 1,029   |  
|                          | Tax benefit related to exercise of stock options           |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        | 12,893   |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 12,893  |  
|                          | Repurchase of common stock                                 |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        | (1,804 | )        |   |         | (45,931 | ) |   |      |     |   |   |         |       |   |   |         | (45,931 | )
|                          | Issuance of restricted stock                               |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        | 1,871    |   |   |        | (1,871 | ) |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         |        |  
|                          | Amortization of restricted stock                           |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        | 600    |   |      |        |       |          |   |         |        |   |   |      |     |   |   |         |       |   |   |         | 600     |  
|                          | Other comprehensive loss                                   |                |        |             |           |   |     |           |  |  |                 |       |         |         |    |      |               |   |        |         |   |   |        |       |   |      |        |       |          |   |         |        |   |   |      | (145 | ) |   |         |       |   |   |         | (145    | )
|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |  
|BALANCE, JANUARY 29, 2005 |                                                            |                | 58,115 |              |           | $ | 581 |            |  |  |                |        |         | $       |   |       |               | $ | 79,069 |          |   | $ | (1,271 | )      |   |      | (2,749 | )      |          | $ | (63,626 | )       |   | $ | (817 | )    |   | $ | 224,315 |        |   | $ | 238,251 |        
|                          |                                                            |                |        |              |           |   |     |            |  |  |                 |        |         |         |    |       |               |   |        |          |   |   |        |        |   |      |        |        |          |   |         |         |  



29



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AÉROPOSTALE, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |        |         |         |         |        |        |         |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | -------------------------------------- | ---------------------------------- | ----------- | ------- | -------- | ----------- | ------ | ------- | ------- | ------- | ------ | ------ | ------- | -
|                                                     |                                                                                                                   | Fiscal Year Ended                                         |                                       
|                                                     |                                                                                                                   |                                                           |                                       
|                                                     |                                                                                                                   | January 29,                                               |                                        |                                    | January 31, |         |          | February 1, |       
|                                                     |                                                                                                                   | 2005                                                      |                                        |                                    | 2004        |         |          | 2003        |       
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     |                                                                                                                   | (In thousands)                                            |                                       
|Cash Flows From Operating Activities                 |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |        |         |         |        
|                                                     | Net income                                                                                                        |                                                           | $                                      | 84,112                             |             |         | $        | 54,254      |        |         | $       | 31,290  |       
|                                                     | Adjustments to reconcile net income to net cash from operating
    activities:                                    |                                                           |                                        |                                    |             |         |          |             |        |         |         |         |       
|                                                     |                                                                                                                   | Depreciation and amortization                             |                                        |                                    | 16,635      |         |          |             | 12,518 |         |         |         | 8,212  |       
|                                                     |                                                                                                                   | Amortization of tenant allowances and above market leases |                                        |                                    | (6,717      | )       |          |             | (4,624 | )       |         |         | (3,350 | )     
|                                                     |                                                                                                                   | Deferred rent, net                                        |                                        |                                    | 7,474       |         |          |             | 1,927  |         |         |         | 2,265  |       
|                                                     |                                                                                                                   | Pension expense                                           |                                        |                                    | 3,008       |         |          |             | 558    |         |         |         | 241    |       
|                                                     |                                                                                                                   | Equity based compensation charge                          |                                        |                                    |            |         |          |             |       |         |         |         | 4,473  |       
|                                                     |                                                                                                                   | Deferred income taxes                                     |                                        |                                    | 2,409       |         |          |             | 6,404  |         |         |         | (1,202 | )     
|                                                     |                                                                                                                   | Other                                                     |                                        |                                    | (597        | )       |          |             | 400    |         |         |         | 781    |       
|                                                     |                                                                                                                   | Changes in operating assets and liabilities:              |                                        |                                    |             |         |          |             |        |         |         |         |        |       
|                                                     |                                                                                                                   |                                                           | Merchandise inventory                  |                                    |             | (19,431 | )        |             |        | (15,162 | )       |         |        | (8,666 | )      
|                                                     |                                                                                                                   |                                                           | Other current assets                   |                                    |             | (3,613  | )        |             |        | (2,297  | )       |         |        | (3,169 | )      
|                                                     |                                                                                                                   |                                                           | Other assets                           |                                    |             | (128    | )        |             |        | (787    | )       |         |        | 174    |        
|                                                     |                                                                                                                   |                                                           | Accounts payable                       |                                    |             | 14,381  |          |             |        | 12,523  |         |         |        | 3,959  |        
|                                                     |                                                                                                                   |                                                           | Accrued expenses and other liabilities |                                    |             | 39,442  |          |             |        | 37,786  |         |         |        | 17,512 |        
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     |                                                                                                                   |                                                           |                                        | Net cash from operating activities |             |         | 136,975  |             |        |         | 103,500 |         |        |        | 52,520  |  
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|Cash Flows From Investing Activities                 |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |        |         |         |        
|                                                     | Purchases of fixtures, equipment and improvements                                                                 |                                                           |                                        | (46,677                            | )           |         |          | (35,926     | )      |         |         | (29,718 | )     
|                                                     | Purchase of short-term investments                                                                                |                                                           |                                        | (441,386                           | )           |         |          | (145,945    | )      |         |         |        |       
|                                                     | Sale of short-term investments                                                                                    |                                                           |                                        | 365,162                            |             |         |          | 145,945     |        |         |         |        |       
|                                                     | Purchases of intangible assets                                                                                    |                                                           |                                        | (1,400                             | )           |         |          |            |        |         |         |        |       
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     |                                                                                                                   |                                                           |                                        | Net cash from investing activities |             |         | (124,301 | )           |        |         | (35,926 | )       |        |        | (29,718 | )
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|Cash Flows From Financing Activities                 |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |        |         |         |        
|                                                     | Purchase of treasury stock                                                                                        |                                                           |                                        | (45,931                            | )           |         |          | (17,695     | )      |         |         |        |       
|                                                     | Net proceeds from stock options exercised                                                                         |                                                           |                                        | 1,029                              |             |         |          | 1,065       |        |         |         | 287     |       
|                                                     | Net proceeds from initial public offering                                                                         |                                                           |                                        |                                   |             |         |          |            |        |         |         | 31,388  |       
|                                                     | Offering costs related to initial public offering                                                                 |                                                           |                                        |                                   |             |         |          |            |        |         |         | (1,981  | )     
|                                                     | Payment of deferred finance costs                                                                                 |                                                           |                                        |                                   |             |         |          | (63         | )      |         |         |        |       
|                                                     | Payment and redemption of dividends                                                                               |                                                           |                                        |                                   |             |         |          |            |        |         |         | (9,979  | )     
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     |                                                                                                                   |                                                           |                                        | Net cash from financing activities |             |         | (44,902  | )           |        |         | (16,693 | )       |        |        | 19,715  |  
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|Net (Decrease) Increase In Cash And Cash Equivalents |                                                                                                                   |                                                           | (32,228                                | )                                  |             |         | 50,881   |             |        |         | 42,517  |        
|Cash And Cash Equivalents, Beginning Of Year         |                                                                                                                   |                                                           | 138,356                                |                                    |             |         | 87,475   |             |        |         | 44,958  |        
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|Cash And Cash Equivalents, End Of Year               |                                                                                                                   | $                                                         | 106,128                                |                                    |             | $       | 138,356  |             |        | $       | 87,475  |        
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|Supplemental Disclosures Of Cash Flow Information    |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |        |         |         |        
|                                                     | Interest paid                                                                                                     |                                                           | $                                      | 94                                 |             |         | $        | 234         |        |         | $       | 298     |       
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     | Income taxes paid                                                                                                 |                                                           | $                                      | 36,456                             |             |         | $        | 13,839      |        |         | $       | 19,649  |       
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       
|                                                     | Tax benefit related to exercise of stock options included in
    change in accrued expenses and other liabilities |                                                           | $                                      | 12,893                             |             |         | $        | 20,782      |        |         | $       | 2,674   |       
|                                                     |                                                                                                                   |                                                           |                                        |                                    |             |         |          |             |       



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







|   |                                           
|-- | ------------------------------------------
|1. | Summary of Significant Accounting Policies



| |             
| | ------------
| | Organization





| |            
| | -----------
| | Fiscal Year





| |                  
| | -----------------
| | Reclassifications





| |                 
| | ----------------
| | Use of Estimates





| |            
| | -----------
| | Seasonality





| |                 
| | ----------------
| | Cash Equivalents





| |                      
| | ---------------------
| | Merchandise Inventory



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                     
| | ------------------------------------
| | Fixtures, Equipment and Improvements



|                                |  |                                          
|------------------------------- |  | -----------------------------------------
|Fixtures and equipment          |  | 10 years                                 
|Leasehold improvements          |  | Lesser of life of the asset or lease term
|Computer equipment and software |  | 5 years                                  



| |                                           
| | ------------------------------------------
| | Evaluation for Long-lived Asset Impairment

Accounting for the Impairment or Disposal of Long-lived
Assets




| |                       
| | ----------------------
| | Pre-Operating Expenses





| |       
| | ------
| | Leases







| |                    
| | -------------------
| | Revenue Recognition





| |              
| | -------------
| | Cost of Sales



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                             
| | --------------------------------------------
| | Selling, General and Administrative Expenses





| |                
| | ---------------
| | Marketing Costs





| |                         
| | ------------------------
| | Stock Based Compensation

Accounting for Stock Issued to Employees Accounting for Stock-Based
Compensation  Transition and Disclosure


|                                   |                                                                                                   |                                       |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |                                                                                                   | Fiscal                                |  
|                                   |                                                                                                   |                                       |  
|                                   |                                                                                                   | 2004                                  |   |        | 2003 |  |   | 2002   |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|                                   |                                                                                                   | (In thousands, except per share data) |  
|Net income:                        |                                                                                                   |                                       |   |        |      |  |   |        |   |  |   |       
|                                   | As reported                                                                                       |                                       | $ | 84,112 |      |  | $ | 54,254 |   |  | $ | 31,290 |  
|                                   | Add: restricted stock amortization, net of taxes                                                  |                                       |   | 366    |      |  |   |       |   |  |   |       |  
|                                   | Less: total stock-based compensation expense determined under
    fair value method, net of taxes |                                       |   | (1,525 | )    |  |   | (375   | ) |  |   | (45    | )
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|                                   | Pro-forma                                                                                         |                                       | $ | 82,953 |      |  | $ | 53,879 |   |  | $ | 31,245 |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|Basic earnings per common share:   |                                                                                                   |                                       |   |        |      |  |   |        |   |  |   |       
|                                   | As reported                                                                                       |                                       | $ | 1.51   |      |  | $ | 0.99   |   |  | $ | 0.60   |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|                                   | Pro-forma                                                                                         |                                       | $ | 1.49   |      |  | $ | 0.98   |   |  | $ | 0.61   |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|Diluted earnings per common share: |                                                                                                   |                                       |   |        |      |  |   |        |   |  |   |       
|                                   | As reported                                                                                       |                                       | $ | 1.47   |      |  | $ | 0.93   |   |  | $ | 0.54   |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  
|                                   | Pro-forma                                                                                         |                                       | $ | 1.45   |      |  | $ | 0.92   |   |  | $ | 0.55   |  
|                                   |                                                                                                   |                                       |   |        |      |  |   |        |  

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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                        |  |        |          |   |      |  |            |      |  |  |            |  
|----------------------- |  | ------ | -------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                        |  | Fiscal |         
|                        |  |        |         
|                        |  | 2004   |          |   | 2003 |  |            | 2002 | 
|                        |  |        |          |   |      |  |            |      | 
|Expected volatility     |  |        | 69       | % |      |  | 70         | %    |  |  | 70         | %
|Expected life           |  |        | 5  years |   |      |  | 4.7  years |      |  |  | 4.0  years |  
|Risk-free interest rate |  |        | 2.80     | % |      |  | 2.81       | %    |  |  | 3.29       | %
|Expected dividend yield |  |        | 0        | % |      |  | 0          | %    |  |  | 0          | %





| |                  
| | -----------------
| | Segment Reporting

Disclosures about Segments of
an Enterprise and Related Information,


|                        |  |        |     |   |      |  |     |      |  |  |     |  
|----------------------- |  | ------ | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                        |  | Fiscal |    
|                        |  |        |    
|Merchandise Categories  |  | 2004   |     |   | 2003 |  |     | 2002 | 
|                        |  |        |     |   |      |  |     |      | 
|Young Womens           |  |        | 60  | % |      |  | 60  | %    |  |  | 58  | %
|Young Mens             |  |        | 26  |   |      |  | 27  |      |  |  | 30  |  
|Accessories             |  |        | 14  |   |      |  | 13  |      |  |  | 12  |  
|                        |  |        |     |   |      |  |     |      | 
|Total Merchandise Sales |  |        | 100 | % |      |  | 100 | %    |  |  | 100 | %
|                        |  |        |     |   |      |  |     |      | 



| |                               
| | ------------------------------
| | Recent Accounting Developments

Accounting for Stock Based Compensation.


Accounting for Asset Retirement
Obligations.


34



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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





|   |                       
|-- | ----------------------
|3. | Short-term Investments

Accounting for Certain Investments in Debt and Equity
Securities.




|   |                      
|-- | ---------------------
|4. | Accounting for Leases





|   |                            
|-- | ---------------------------
|5. | Supplier Risk Concentration



35



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                           
|-- | ------------------------------------------
|6. | Fixtures, Equipment and Improvements  Net



|                                               |  |                  |         |  |                  |   |         | 
|---------------------------------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                                               |  | January 29, 2005 |         |  | January 31, 2004 |  
|                                               |  |                  |         |  |                  |  
|Leasehold improvements                         |  | $                | 99,292  |  |                  | $ | 68,143  | 
|Store fixtures and equipment                   |  |                  | 50,003  |  |                  |   | 35,175  | 
|Computer equipment and software                |  |                  | 12,917  |  |                  |   | 9,346   | 
|Construction in progress                       |  |                  | 2,739   |  |                  |   | 7,428   | 
|                                               |  |                  |         |  |                  |  
|                                               |  |                  | 164,951 |  |                  |   | 120,092 | 
|Less accumulated depreciation and amortization |  |                  | 42,300  |  |                  |   | 27,514  | 
|                                               |  |                  |         |  |                  |  
|                                               |  | $                | 122,651 |  |                  | $ | 92,578  | 
|                                               |  |                  |         |  |                  |  





|   |                 
|-- | ----------------
|7. | Accrued Expenses



|                                      |  |                  |        |  |                  |   |        | 
|------------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                                      |  | January 29, 2005 |        |  | January 31, 2004 |  
|                                      |  |                  |        |  |                  |  
|Accrued compensation                  |  | $                | 14,580 |  |                  | $ | 11,165 | 
|Sales and use tax                     |  |                  | 2,284  |  |                  |   | 1,718  | 
|Accrued rent                          |  |                  | 8,401  |  |                  |   | 6,925  | 
|Accrued gift certificates and credits |  |                  | 12,294 |  |                  |   | 8,492  | 
|Income tax payable                    |  |                  | 6,322  |  |                  |   | 4,825  | 
|Deferred tax liability                |  |                  | 893    |  |                  |   | 895    | 
|Sales return reserve                  |  |                  | 525    |  |                  |   | 672    | 
|Payroll tax liability                 |  |                  | 1,385  |  |                  |   | 957    | 
|Other                                 |  |                  | 5,452  |  |                  |   | 5,442  | 
|                                      |  |                  |        |  |                  |  
|                                      |  | $                | 52,136 |  |                  | $ | 41,091 | 
|                                      |  |                  |        |  |                  |  



|   |                          
|-- | -------------------------
|8. | Revolving Credit Facility



36



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                   
|-- | ------------------
|9. | Earnings Per Share

Earnings Per
Share




|                                            |  |        |        |  |      |   |        |      |  |   |        |  
|------------------------------------------- |  | ------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ | -
|                                            |  | Fiscal |       
|                                            |  |        |       
|                                            |  | 2004   |        |  | 2003 |   |        | 2002 | 
|                                            |  |        |        |  |      |   |        |      | 
|Net income                                  |  | $      | 84,112 |  |      | $ | 54,254 |      |  | $ | 31,290 |  
|Preferred stock dividends                   |  |        |       |  |      |   |       |      |  |   | (362   | )
|                                            |  |        |        |  |      |   |        |      | 
|Net income available to common stockholders |  | $      | 84,112 |  |      | $ | 54,254 |      |  | $ | 30,928 |  
|                                            |  |        |        |  |      |   |        |      | 
|Weighted average basic shares               |  |        | 55,735 |  |      |   | 54,758 |      |  |   | 51,581 |  
|Impact of dilutive securities               |  |        | 1,520  |  |      |   | 3,529  |      |  |   | 5,200  |  
|                                            |  |        |        |  |      |   |        |      | 
|Weighted average diluted shares             |  |        | 57,255 |  |      |   | 58,287 |      |  |   | 56,781 |  
|                                            |  |        |        |  |      |   |        |      | 
|Per common share:                           |  |        |        |  |      |   |        |      |  |   |        |  
|Basic earnings per share                    |  | $      | 1.51   |  |      | $ | 0.99   |      |  | $ | 0.60   |  
|                                            |  |        |        |  |      |   |        |      | 
|Diluted earnings per share                  |  | $      | 1.47   |  |      | $ | 0.93   |      |  | $ | 0.54   |  
|                                            |  |        |        |  |      |   |        |      | 





|    |                       
|--- | ----------------------
|10. | Common Stock Offerings



1 2




|    |                         
|--- | ------------------------
|11. | Stock-Based Compensation



37



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       |  |       |        |   |   |      |       | 
|-------------------------------------------------------------- | --------- | ----------- | ----- | -------- | ----------- | - | ----- | ----------- | -------- |  | ----- | ------ | - | -------- | ---- | ---- | ----- |  | ----- | ------ | - | - | ---- | ----- | 
|                                                               |           | Fiscal 2004 |       |          | Fiscal 2003 |   |       | Fiscal 2002 |         
|                                                               |           |             |       |          |             |   |       |             |         
|                                                               |           |             |       | Weighted |             |   |       |             | Weighted |  |       |        |   | Weighted |     
|                                                               |           |             |       | Average  |             |   |       |             | Average  |  |       |        |   | Average  |     
|                                                               |           |             |       | Exercise |             |   |       |             | Exercise |  |       |        |   | Exercise |     
|                                                               |           | Shares      |       |          | Price       |   |       | Shares      |          |  | Price |        |   | Shares   |      |      | Price | 
|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       | 
|Outstanding, beginning of period                               |           |             | 3,092 |          |             | $ | 2.23  |             |          |  | 6,234 |        |   | $        | 0.24 |      |       |  | 8,130 |        |   | $ | 0.18 |      
|                                                               | Granted   |             |       | 528      |             |   |       | 23.79       |          |  |       | 744    |   |          |      | 9.05 |       |  |       | 30     |   |   |      | 10.37 | 
|                                                               | Exercised |             |       | (1,320   | )           |   |       | 0.78        |          |  |       | (3,836 | ) |          |      | 0.28 |       |  |       | (1,899 | ) |   |      | 0.15  | 
|                                                               | Forfeited |             |       | (42      | )           |   |       | 12.88       |          |  |       | (50    | ) |          |      | 5.38 |       |  |       | (27    | ) |   |      | 0.20  | 
|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       | 
|Outstanding, end of period                                     |           |             | 2,258 |          |             | $ | 7.93  |             |          |  | 3,092 |        |   | $        | 2.23 |      |       |  | 6,234 |        |   | $ | 0.24 |      
|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       | 
|Options exercisable at end of period                           |           |             | 1,314 |          |             | $ | 1.36  |             |          |  | 2,454 |        |   | $        | 0.62 |      |       |  | 6,204 |        |   | $ | 0.19 |      
|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       | 
|Weighted average fair value of options granted during the year |           |             |       |          |             | $ | 13.99 |             |          |  |       |        |   | $        | 5.28 |      |       |  |       |        |   | $ | 5.71 |      
|                                                               |           |             |       |          |             |   |       |             |          |  |       |        |   |          |      |      |       | 



|                         |                |             |                     |  |                  |         |  |                  |                |             |             |      |       |                  |                |  |       |  |  |   |       | 
|------------------------ | -------------- | ----------- | ------------------- |  | ---------------- | ------- |  | ---------------- | -------------- | ----------- | ----------- | ---- | ----- | ---------------- | -------------- |  | ----- |  |  | - | ----- | 
|Options Outstanding      |                |             | Options Exercisable | 
|                         |                |             |                     | 
|                         |                | Number      |                     |  | Weighted-Average |         |  |                  |                | Number      |             |      |      
|                         |                | Outstanding |                     |  | Remaining        |         |  |                  |                | Exercisable |             |      |      
|                         |                | at          |                     |  | Contractual      |         |  |                  |                | at          |             |      |      
|                         |                | January 29, |                     |  | Life             |         |  | Weighted-Average |                |             | January 29, |      |       | Weighted-Average |               
|Range of Exercise Prices |                |             | 2005                |  |                  | (Years) |  |                  | Exercise Price |             |             | 2005 |       |                  | Exercise Price | 
|                         |                |             |                     |  |                  |         |  |                  |                |             |             |      |       |                  |                | 
|                         | $0.02          |             |                     |  | 443              |         |  |                  | 1.6            |             |             | $    | 0.02  |                  |                |  | 443   |  |  | $ | 0.02  | 
|                         | 0.26 to 0.57   |             |                     |  | 718              |         |  |                  | 3.6            |             |             | $    | 0.38  |                  |                |  | 718   |  |  | $ | 0.38  | 
|                         | 7.63 to 11.80  |             |                     |  | 565              |         |  |                  | 6.2            |             |             | $    | 8.91  |                  |                |  | 138   |  |  | $ | 8.83  | 
|                         | 18.57 to 23.32 |             |                     |  | 498              |         |  |                  | 7.2            |             |             | $    | 23.17 |                  |                |  | 15    |  |  | $ | 18.57 | 
|                         | 28.95 to 33.65 |             |                     |  | 34               |         |  |                  | 7.6            |             |             | $    | 30.76 |                  |                |  |      |  |  |   |      | 
|                         |                |             |                     |  |                  |         |  |                  |                |             |             |      |       |                  |                | 
|                         |                |             |                     |  | 2,258            |         |  |                  |                |             |             |      |       |                  |                |  | 1,314 |  |  |   |       | 
|                         |                |             |                     |  |                  |         |  |                  |                |             |             |      |       |                  |                | 





|    |                         
|--- | ------------------------
|12. | Retirement Benefit Plans



38



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                              |                                                  |             |   |         |             |  |   |        |  
|----------------------------- | ------------------------------------------------ | ----------- | - | ------- | ----------- |  | - | ------ | -
|                              |                                                  | January 29, |   |         | January 31, | 
|                              |                                                  | 2005        |   |         | 2004        | 
|                              |                                                  |             |   |         |             | 
|CHANGE IN BENEFIT OBLIGATION: |                                                  |             |   |         |             |  |   |       
|                              | Net benefit obligation at beginning of period    |             | $ | 5,753   |             |  | $ | 2,997  |  
|                              | Service cost                                     |             |   | 278     |             |  |   | 184    |  
|                              | Interest cost                                    |             |   | 626     |             |  |   | 315    |  
|                              | Plan amendments                                  |             |   | 1,203   |             |  |   |       |  
|                              | Actuarial loss                                   |             |   | 5,712   |             |  |   | 2,338  |  
|                              | Settlements                                      |             |   | (270    | )           |  |   |       |  
|                              | Gross benefits paid                              |             |   | (2,418  | )           |  |   | (81    | )
|                              |                                                  |             |   |         |             | 
|                              | Net benefit obligation at end of period          |             | $ | 10,884  |             |  | $ | 5,753  |  
|                              |                                                  |             |   |         |             | 
|                              | Accumulated benefit obligation                   |             | $ | 5,845   |             |  | $ | 4,202  |  
|                              |                                                  |             |   |         |             | 
|CHANGE IN PLAN ASSETS:        |                                                  |             |   |         |             |  |   |       
|                              | Fair value of plan assets at beginning of period |             | $ |        |             |  | $ |       |  
|                              | Employer contributions                           |             |   | 2,418   |             |  |   | 81     |  
|                              | Gross benefits paid                              |             |   | (2,418  | )           |  |   | (81    | )
|                              | Actual return on plan assets                     |             |   |        |             |  |   |       |  
|                              |                                                  |             |   |         |             | 
|                              | Fair value of plan assets at end of period       |             | $ |        |             |  | $ |       |  
|                              |                                                  |             |   |         |             | 
|                              | Funded status at end of period                   |             | $ | (10,884 | )           |  | $ | (5,753 | )
|                              | Unrecognized net actuarial gain                  |             |   | 6,377   |             |  |   | 2,652  |  
|                              | Prior service and cost                           |             |   | 1,129   |             |  |   |       |  
|                              | Unrecognized transition amount                   |             |   |        |             |  |   |       |  
|                              |                                                  |             |   |         |             | 
|                              | Net amount recognized                            |             | $ | (3,378  | )           |  | $ | (3,101 | )
|                              |                                                  |             |   |         |             | 
|                              | Intangible assets                                |             | $ | 1,129   |             |  | $ |       |  
|                              | Accrued benefit cost                             |             |   | (5,845  | )           |  |   | (4,202 | )
|                              | Accumulated other comprehensive income           |             |   | 1,338   |             |  |   | 1,101  |  
|                              |                                                  |             |   |         |             | 
|                              | Net amount recognized                            |             | $ | (3,378  | )           |  | $ | (3,101 | )
|                              |                                                  |             |   |         |             | 

39



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                     |  |        |       |   |      |   |      |      |  |   |      |  
|---------------------------------------------------- |  | ------ | ----- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                     |  | Fiscal |      
|                                                     |  |        |      
|                                                     |  | 2004   |       |   | 2003 |   |      | 2002 | 
|                                                     |  |        |       |   |      |   |      |      | 
|COMPONENTS OF NET PERIODIC BENEFIT COST:             |  |        |       |   |      |   |      |      |  |   |      |  
|Service cost                                         |  | $      | 278   |   |      | $ | 184  |      |  | $ | 101  |  
|Interest cost                                        |  |        | 626   |   |      |   | 315  |      |  |   | 182  |  
|Prior service cost                                   |  |        | 74    |   |      |   | 30   |      |  |   |     |  
|Amortization of prior experience loss                |  |        | 321   |   |      |   | 110  |      |  |   | 2    |  
|Loss recognized due to settlement                    |  |        | 1,396 |   |      |   |     |      |  |   |     |  
|                                                     |  |        |       |   |      |   |      |      | 
|Net periodic benefit cost                            |  | $      | 2,695 |   |      | $ | 639  |      |  | $ | 285  |  
|                                                     |  |        |       |   |      |   |      |      | 
|WEIGHTED-AVERAGE ASSUMPTIONS USED:                   |  |        |       |   |      |   |      |      |  |   |      |  
|Discount rate to determine benefit obligations       |  |        | 5.25  | % |      |   | 6.00 | %    |  |   | 6.75 | %
|Discount rate to determine net periodic pension cost |  |        | 6.00  | % |      |   | 6.75 | %    |  |   | 7.00 | %
|Rate of compensation increase                        |  |        | 4.50  | % |      |   | 4.50 | %    |  |   | 4.50 | %









|    |                         
|--- | ------------------------
|13. | Stock Repurchase Program



40



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##### Table of Contents



AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |             
|--- | ------------
|14. | Income Taxes



|          |                 |        |        |        |      |   |        |        |  |   |        |        |  
|--------- | --------------- | ------ | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | -
|          |                 | Fiscal |       
|          |                 |        |       
|          |                 | 2004   |        |        | 2003 |   |        | 2002   | 
|          |                 |        |        |        |      |   |        |        | 
|Current:  |                 |        |        |        |      |   |        |        |  |   |        |       
|          | Federal         |        | $      | 42,728 |      |   | $      | 23,966 |  |   | $      | 18,420 |  
|          | State and local |        |        | 8,119  |      |   |        | 4,332  |  |   |        | 3,645  |  
|          |                 |        |        |        |      |   |        |        | 
|          |                 |        | 50,847 |        |      |   | 28,298 |        |  |   | 22,065 |       
|          |                 |        |        |        |      |   |        |        | 
|Deferred: |                 |        |        |        |      |   |        |        |  |   |        |       
|          | Federal         |        |        | 2,035  |      |   |        | 5,178  |  |   |        | (1,092 | )
|          | State and local |        |        | 374    |      |   |        | 1,226  |  |   |        | (110   | )
|          |                 |        |        |        |      |   |        |        | 
|          |                 |        | 2,409  |        |      |   | 6,404  |        |  |   | (1,202 | )     
|          |                 |        |        |        |      |   |        |        | 
|          |                 | $      | 53,256 |        |      | $ | 34,702 |        |  | $ | 20,863 |       
|          |                 |        |        |        |      |   |        |        | 



|                                           |                                                  |        |      |      |      |  |      |      |   |  |      |     | 
|------------------------------------------ | ------------------------------------------------ | ------ | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | --- | 
|                                           |                                                  | Fiscal |     
|                                           |                                                  |        |     
|                                           |                                                  | 2004   |      |      | 2003 |  |      | 2002 |  
|                                           |                                                  |        |      |      |      |  |      |      |  
|Federal statutory rate                     |                                                  |        | 35.0 | %    |      |  | 35.0 | %    |   |  | 35.0 | %  
|Increase (decrease) in tax resulting from: |                                                  |        |      |      |      |  |      |      |   |  |      |    
|                                           | State income taxes (net of federal tax benefits) |        |      | 4.0  |      |  |      | 4.1  |   |  |      | 4.6 | 
|                                           | Other                                            |        |      | (0.2 | )    |  |      | (0.1 | ) |  |      | 0.4 | 
|                                           |                                                  |        |      |      |      |  |      |      |  
|Effective rate                             |                                                  |        | 38.8 | %    |      |  | 39.0 | %    |   |  | 40.0 | %  
|                                           |                                                  |        |      |      |      |  |      |      |  



|                                              |                                       |             |        |         |             |   |      |         |  
|--------------------------------------------- | ------------------------------------- | ----------- | ------ | ------- | ----------- | - | ---- | ------- | -
|                                              |                                       | January 29, |        |         | January 31, |  
|                                              |                                       | 2005        |        |         | 2004        |  
|                                              |                                       |             |        |         |             |  
|Current:                                      |                                       |             |        |         |             |   |      |        
|                                              | Inventory                             |             |        | (1,784  | )           |   |      | (1,694  | )
|                                              | Other                                 |             |        | 891     |             |   |      | 799     |  
|                                              |                                       |             |        |         |             |  
|Total current                                 |                                       | $           | (893   | )       |             | $ | (895 | )      
|                                              |                                       |             |        |         |             |  
|Noncurrent:                                   |                                       |             |        |         |             |   |      |        
|                                              | Furniture, equipment and improvements |             |        | (11,358 | )           |   |      | (19,504 | )
|                                              | Deferred rent and tenant allowances   |             |        | 8,177   |             |   |      | 18,728  |  
|                                              | Other                                 |             |        | 1,830   |             |   |      | 1,744   |  
|                                              |                                       |             |        |         |             |  
|Total non-current                             |                                       |             | (1,351 | )       |             |   | 968  |        
|                                              |                                       |             |        |         |             |  
|Net deferred income tax (liabilities), assets |                                       | $           | (2,244 | )       |             | $ | 73   |        
|                                              |                                       |             |        |         |             |  



41



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                              
|--- | -----------------------------
|15. | Commitments and Contingencies





|                   |  |       |         | 
|------------------ |  | ----- | ------- | 
|Due in Fiscal Year |  | Total |        
|                   |  |       |        
|2005               |  |       | 52,605  | 
|2006               |  |       | 49,146  | 
|2007               |  |       | 49,367  | 
|2008               |  |       | 49,218  | 
|2009               |  |       | 46,854  | 
|Thereafter         |  |       | 135,928 | 
|                   |  |       |        
|Total              |  |       | 383,118 | 
|                   |  |       |        



|                     |  |        |        |  |      |   |        |      |  |   |        | 
|-------------------- |  | ------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                     |  | Fiscal |       
|                     |  |        |       
|                     |  | 2004   |        |  | 2003 |   |        | 2002 | 
|                     |  |        |        |  |      |   |        |      | 
|Minimum rentals      |  | $      | 49,481 |  |      | $ | 40,086 |      |  | $ | 31,247 | 
|Contingent rentals   |  |        | 8,704  |  |      |   | 5,683  |      |  |   | 3,673  | 
|Office space rentals |  |        | 1,159  |  |      |   | 1,068  |      |  |   | 832    | 

Employment Agreements


Legal Proceedings


Event Sponsorship Agreement


Guarantees


42



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AÉROPOSTALE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                              
|--- | ---------------------------------------------
|16. | Selected Quarterly Financial Data (Unaudited)



|            |              |                            |   |         |          |  |   |             |      |  |             |         |      |  |   |         |      | 
|----------- | ------------ | -------------------------- | - | ------- | -------- |  | - | ----------- | ---- |  | ----------- | ------- | ---- |  | - | ------- | ---- | 
|            |              | Thirteen Weeks Ended       |  
|            |              |                            |  
|            |              | May 1,                     |   |         | July 31, |  |   | October 30, |      |  | January 29, |        
|            |              | 2004                       |   |         | 2004     |  |   | 2004        |      |  | 2005        |        
|            |              |                            |   |         |          |  |   |             |      |  |             |        
|Fiscal 2004 |              |                            |   |         |          |  |   |             |      |  |             |         |      |  |   |        
|            | Net sales    |                            | $ | 167,654 |          |  | $ | 194,852     |      |  | $           | 274,616 |      |  | $ | 327,090 |     
|            | Gross profit |                            |   | 49,107  |          |  |   | 59,486      |      |  |             | 98,201  |      |  |   | 113,113 |     
|            | Net income   |                            |   | 6,261   |          |  |   | 10,897      |      |  |             | 31,686  |      |  |   | 35,268  |     
|            |              | Basic earnings per share   |   |         | 0.11     |  |   |             | 0.20 |  |             |         | 0.57 |  |   |         | 0.63 | 
|            |              | Diluted earnings per share |   |         | 0.11     |  |   |             | 0.19 |  |             |         | 0.55 |  |   |         | 0.62 | 

|            |              |                            |   |         |           |  |   |             |      |  |             |         |      |  |   |         |      | 
|----------- | ------------ | -------------------------- | - | ------- | --------- |  | - | ----------- | ---- |  | ----------- | ------- | ---- |  | - | ------- | ---- | 
|            |              | Thirteen Weeks Ended       |  
|            |              |                            |  
|            |              | May 3,                     |   |         | August 2, |  |   | November 1, |      |  | January 31, |        
|            |              | 2003                       |   |         | 2003      |  |   | 2003        |      |  | 2004        |        
|            |              |                            |   |         |           |  |   |             |      |  |             |        
|Fiscal 2003 |              |                            |   |         |           |  |   |             |      |  |             |         |      |  |   |        
|            | Net sales    |                            | $ | 112,211 |           |  | $ | 129,944     |      |  | $           | 220,071 |      |  | $ | 272,642 |     
|            | Gross profit |                            |   | 30,250  |           |  |   | 35,582      |      |  |             | 73,922  |      |  |   | 89,962  |     
|            | Net income   |                            |   | 2,112   |           |  |   | 2,742       |      |  |             | 21,878  |      |  |   | 27,522  |     
|            |              | Basic earnings per share   |   |         | 0.04      |  |   |             | 0.05 |  |             |         | 0.39 |  |   |         | 0.49 | 
|            |              | Diluted earnings per share |   |         | 0.04      |  |   |             | 0.05 |  |             |         | 0.37 |  |   |         | 0.47 | 



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|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountant on Accounting
    and Financial Disclosure






Item 9A. Controls and Procedures




| |                                                 
| | ------------------------------------------------
| | Evaluation of Disclosure Controls and Procedures





| |                                                          
| | ---------------------------------------------------------
| | Changes in Internal Controls over Financial
    Reporting








|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



44



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



| |         |                                                                                                                                                                     
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)  1. | The financial statements listed in the Index to
    Consolidated Financial Statements at page 23 are
    filed as a part of this Annual Report on Form 10-K.      
|
| | 2.      | Financial statement schedules are omitted because they are not
    applicable or the required information is shown in the financial
    statements or notes thereto.
|
| | 3.      | Exhibits included or incorporated herein:                                                                                                                           
|
| |         | See Exhibit Index.                                                                                                                                                  

45



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##### Table of Contents



EXHIBIT INDEX


|        |    |     |             |                                                                                                                                                                                                                                                               
|------- | -- | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|No.     |    |     | Description
|        |    |     |            
|        | 3  | .1  |             | Form of Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                   
|        | 3  | .2  |             | Form of Amended and Restated By-Laws.                                                                                                                                                                                                                        
|        | 4  | .1  |             | Specimen Common Stock Certificate.                                                                                                                                                                                                                           
|        | 4  | .2  |             | Stockholders Agreement, dated as of August 3, 1998,
    by and among MSS-Delaware, Inc., MSS Acquisition Corp. II,
    Federated Specialty Stores, Inc., Julian R. Geiger, David R.
    Geltzer and John S. Mills.                                          
|        | 10 | .1  |             | Aéropostale, Inc. 1998 Stock Option Plan.                                                                                                                                                                                                                    
|        | 10 | .2  |             | Aéropostale, Inc. 2002 Long-Term Incentive Plan.                                                                                                                                                                                                             
|        | 10 | .3  |             | Management Services Agreement, dated as of July 31, 1998,
    between MSS-Delaware, Inc. and MSS Acquisition
    Corp. II.                                                                                                                                   
|        | 10 | .4  |             | Loan and Security Agreement, dated July 31, 1998 between
    Bank Boston Retail Finance Inc., as agent for the lenders party
    thereto (the Lenders), the Lenders and MSS-Delaware,
    Inc.                                                             
|        | 10 | .5  |             | First Amendment to Loan and Security Agreement, dated
    November 8, 1999, by and between Bank Boston Retail Finance
    Inc., as agent for the Lenders, the Lenders and MSS-Delaware,
    Inc.                                                             
|        | 10 | .6  |             | Second Amendment to Loan and Security Agreement, dated
    May 2, 2002, by and between Fleet Retail Finance Inc.
    (f/k/a Bank Boston Retail Finance), as agent for the Lenders,
    the Lenders and Aéropostale, Inc. (f/k/a MSS-Delaware,
    Inc.).     
|        | 10 | .7  |             | Third Amendment to Loan and Security Agreement, dated
    June 13, 2001, by and between Fleet Retail Finance Inc.
    (f/k/a Bank Boston Retail Finance), as agent for the Lenders,
    the Lenders and Aéropostale, Inc. (f/k/a MSS-Delaware,
    Inc.).    
|        | 10 | .8  |             | Fourth Amendment to Loan and Security Agreement, dated
    February 2, 2002, by and between Fleet Retail Finance Inc.
    (f/k/a Bank Boston Retail Finance), as agent for the Lenders,
    the Lenders and Aéropostale, Inc. (f/k/a MSS-Delaware,
    Inc.).
|        | 10 | .9  |             | Sublease Agreement, dated February 5, 2002, between the
    United States Postal Services and Aéropostale, Inc.                                                                                                                                              
|        | 10 | .10 |             | Merchandise Servicing Agreement, dated March 1, 1999,
    between American Consolidation, Inc. and MSS Delaware, Inc.                                                                                                                                        
|        | 10 | .11 |             | Interim Merchandise Servicing Agreement, dated as of
    February 11, 2002, by and between American Consolidation
    Inc. and Aéropostale, Inc.                                                                                                             
|        | 10 | .12 |             | Sourcing Agreement, dated July 22, 2002, by and among
    Federated Department Stores, Inc., Specialty Acquisition
    Corporation and Aéropostale, Inc.                                                                                                    
|        | 10 | .13 |             | Fifth Amendment to Loan and Security Agreement, dated
    April 15, 2002, by and between Fleet Retail Finance Inc.
    (f/k/a Bank Boston Retail Finance), as agent for the Lenders,
    the Lenders and Aéropostale, Inc. (f/k/a MSS-Delaware,
    Inc.).   
|        | 10 | .14 |             | Amendment No. 1 to Stockholders Agreement, dated
    April 23, 2002, by and among Aéropostale, Inc., Bear
    Stearns MB 1998-1999 Pre-Fund, LLC and Julian R. Geiger.                                                                                      
|        | 10 | .15 |             | Employment Agreement, dated as of February 1, 2002, between
    Aéropostale, Inc. and Julian R. Geiger.                                                                                                                                                      
|        | 10 | .16 |             | Employment Agreement, dated February 1, 2002, between
    Aéropostale, Inc. and Christopher L. Finazzo.                                                                                                                                                     
|        | 10 | .17 |             | Employment Agreement, dated February 1, 2002, between
    Aéropostale, Inc. and John S. Mills.                                                                                                                                                              
|        | 10 | .18 |             | Fifth Amendment to Loan and Security Agreement, dated
    October 7, 2003, by and between Fleet Retail Finance Inc.
    (f/k/a Bank Boston Retail Finance), as agent for the Lenders,
    the Lenders and Aéropostale, Inc. (f/k/a MSS-Delaware,
    Inc). 
|        | 10 | .19 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Julian R.
    Geiger.                                                                                                                                               

46



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##### Table of Contents



|        |    |     |             |                                                                                                                                                                  
|------- | -- | --- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|No.     |    |     | Description
|        |    |     |            
|        | 10 | .20 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Christopher L.
    Finazzo.                                            
|        | 10 | .21 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and John S. Mills.                                                         
|        | 10 | .22 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Michael J.
    Cunningham.                                             
|        | 10 | .23 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Thomas P.
    Johnson.                                                 
|        | 10 | .24 |             | Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Olivera
    Lazic-Zangas.                                              
|        | 10 | .25 |             | Amendment No. 1, dated as of April 11, 2005, to
    Employment Agreement, dated as of February 1, 2004, between
    Aéropostale, Inc. and Julian R. Geiger.*     
|        | 21 |     |             | Subsidiaries of the Company.*                                                                                                                                    
|        | 23 | .1  |             | Consent of Deloitte & Touche LLP.*                                                                                                                               
|        | 31 | .1  |             | Certification by Julian R. Geiger, Chairman and Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.*                     
|        | 31 | .2  |             | Certification by Michael J. Cunningham, Executive Vice President
    and Chief Financial Officer, pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.*
|        | 32 | .1  |             | Certification by Julian R. Geiger pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.*             
|        | 32 | .2  |             | Certification by Michael J. Cunningham pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.*        






| |   |                
| | - | ---------------
| | * | Filed herewith.



| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the Registration Statement on
    Form S-1, originally filed by Aéropostale, Inc. on
    March 8, 2002 (Registration No. 333-84056).



| |    |                                                                                                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the Registrants Annual Report
    on 10-K, for the fiscal year ended February 1, 2003 (File
    No. 001-31314).



| |     |                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q, for the quarterly period ended
    November 1, 2003 (File No. 001-31314).



|     |                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
| | Incorporated by reference to the Registrants Annual Report
    on Form 10-K, for the fiscal year ended January 31,
    2004 (File No. 001-31314).

47



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##### Table of Contents






SIGNATURES






| |                  
| | -----------------
| | AÉROPOSTALE, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ Julian R. Geiger

| |                                                
| | -----------------------------------------------
| |                                                
| | Julian R. Geiger                               
| | Chairman, Chief Executive Officer, and Director





|                                                       |  |                                                                                        |  |                |  | 
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                              |  | Title                                                                                  |  | Date          
|                                                       |  |                                                                                        |  |               
|                                                      
|/s/ Julian R. GeigerJulian
    R. Geiger               |  | Chairman, Chief Executive Officer, and Director (Principal
    Executive Officer)      |  | April 12, 2005
|                                                      
|/s/ Michael J.
    CunninghamMichael
    J. Cunningham |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | April 12, 2005
|                                                      
|/s/ Alan C. SiebelsAlan
    C. Siebels                 |  | Vice President  Controller (Principal Accounting
    Officer)                         |  | April 12, 2005
|                                                      
|/s/ Bodil ArlanderBodil
    Arlander                   |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ Ronald BeegleRonald
    Beegle                     |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ Mary Elizabeth
    BurtonMary
    Elizabeth Burton |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ Robert B. ChavezRobert
    B. Chavez               |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ David EdwabDavid
    Edwab                         |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ John D. HowardJohn
    D. Howard                   |  | Director                                                                               |  | April 12, 2005
|                                                      
|/s/ David B. VermylenDavid
    B. Vermylen             |  | Director                                                                               |  | April 12, 2005

48



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##### Table of Contents



AÉROPOSTALE, INC.


SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                            |  |                   |     |  |                 |   |     |                    |  |   |             |  |  |   |     | 
|--------------------------- |  | ----------------- | --- |  | --------------- | - | --- | ------------------ |  | - | ----------- |  |  | - | --- | 
|                            |  | Balance Beginning |     |  | Amounts Charged |   |     | Write-offs Against |  |   | Balance End | 
|Reserve for Returns:        |  | of Period         |     |  | to Net Income   |   |     | Reserve            |  |   | of Period   | 
|                            |  |                   |     |  |                 |   |     |                    |  |   |             | 
|                            |  | (In thousands)    |    
|Year Ended January 29, 2005 |  | $                 | 672 |  |                 | $ | 233 |                    |  | $ | 380         |  |  | $ | 525 | 
|Year Ended January 31, 2004 |  |                   | 418 |  |                 |   | 526 |                    |  |   | 272         |  |  |   | 672 | 
|Year Ended February 1, 2003 |  |                   | 299 |  |                 |   | 319 |                    |  |   | 200         |  |  |   | 418 | 

49