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AMERICANEAGLE

OUTFITTERS,INC.

ANNUAL REPORT2006

AMERICAN EAGLEOUTFITTERSANNUALREPORT 200601

DearStockholders:

Fiscal2006wasa remarkableyearforAmericanEagle

Outfitters. It wasourthirdconsecutiveyearofrecord

profitability and industry-leadingperformance. We deliveredstrong results,whilealso investing in future growthwithin our corebrand,aswellaswiththe launch oftwonew brands,aerie and MARTIN+OSA.

Ourperformancein2006 reflectsthe strength of the

AmericanEagle brand, driven by ourrelentless customer focus,aswellasthedepthanddiversityoftalentwithin our teams.Bymakingappropriate investmentsintheareasof research,design, qualityassuranceand merchandising,we further strengthenedtheever-importantconnection withour customer and our abilitytodeliver on-trendassortments with a highquality-to-price valueratio.

2006 was our third

consecutiveyear of recordprofitability andindustry-leading performance.

02AMERICAN EAGLEOUTFITTERSANNUALREPORT 2006

AEiswell-positioned

tosustainstrong performance. Total salesreached $2.8billion for 2006,up20%from the prioryear. Contributing to therecordsales, comparablestore salesrose 12%.Ouroperatingprofitmarginwas21.0%, animprovement overlast year"s record 19.8%, reflecting oureffortstodeliver a strong merchandisemargin and a commitmenttooperationalexcellence.Netincomefor 2006 increased32% to $387million, or $1.70 per dilutedshare.

Wealso strengthenedthecompany"scashpositionto$1.1

billion at year-end,whilecontinuingtoinvestinourgrowth initiativesanda sharerepurchaseprogram. I wouldliketohighlight an importantmilestonethat took place early in 2007.On March8th,AmericanEagle"scommon stockbegantradingontheNewYork StockExchangeunder thesymbol "AEO."Joining theNYSEisa truemarkofour progress in buildinga global brandand deliveringworld- classfinancialperformance. I thankallofourAEassociates whoseefforts overtheyearscontributed to thisachievement.

As we lookahead,weareconfidentthatAmericanEagle

iswell-positioned to sustainstrongperformance. We are excited aboutour growth strategiesandcontinuetoinvest intalentand strengthenour operationswith new systems andupgradedfacilities.

AMERICAN EAGLEOUTFITTERSANNUALREPORT 200603

Wearedrivinggrowththroughselectivelyopening new stores continuedtoperformextremely well, quickly achievingsales productivitycomparabletoourmaturestores, and a first-year ROI of morethan70%. We alsofocused on maximizingexisting real estate by increasingthesizeofoursmallerAEstores,as well as relocatingstores to bettersites.Thisstrategynot only benefited salesproductivity,butalsohada meaningfullift tostoreprofitability. We ended 2006with salesper foot productivityof$524,an11% increasefrom the prioryear.Our

2007 planscallfor approximately10%growth in total square

footage, includingroughly45-50 newAEstores and 45 remod- els, at least 15 newaerie stores,and12MARTIN+OSAstores. Buildingpowerfulbrand-defining categoriesthat resonate with our customers is at theheart of our"DestinationAE" thepastseveral years, we haveestablisheda dominant positioninjeans,whichhave become a cornerstonefor the AEbrand, driven by consistentfits,on-trendstylesand a strongvalueandqualityoffering.

Buildingpowerful

brand-defining categories isattheheartofour

DestinationAEstrategy.

04AMERICAN EAGLEOUTFITTERSANNUALREPORT 2006

Lookingahead,wewill continuetobuild uponournumber

onemarket sharepositionbyofferinginnovationand new- ness in jeans thatison-targetfortheAEcustomer. We will also pursue similargrowthincategoriessuchasknit tops andaccessories, whereweseemeaningfulopportunity to bethebrand-of-choice.To buildthesecategories,weare devotingextensive resources in merchandising,designand sourcing to offerourcustomers on-trendstylingcombined with unsurpassedqualityandvalue.

Throughinnovation

we"recreatingthe best onlineexperience atae.com. An increasinglyimportant partoftheAmericanEagle brand experience is ae.com.Ouronlinebusinesscontinued to grow rapidly in 2006,with increasedtraffic and a higher conversion rate,driving a 48% increaseinsales.Technology, the Internet inparticular, is second-naturetoourcustomersandim- portant to how theylive theirlives.OurWebsite mustnot only offerworld-classshopping,but alsobecomeanonline destinationwhereourgirlsand guyscome to be informed, inspiredandentertained. We continuetoimproveae.com byaddingnew featuresand functionality,exclusive offers andproducts, as wellasentertaining,interactivecontent that createsa deeperbrandexperience.

In 2007weare

acceleratingthe growthofaerie. In2006 we celebrateda majormilestone withthelaunch of "aeriebyAmericanEagle,"our new intimates sub-brand. Ourcollectionsfeature undies,bras and dorm-wearwith a comfortable,cozyandsweetlysexyfeeling for the 15 to 25 year-oldAEgirl.Customers haverespondedenthusiastically toaerie,whichisoffered in allAEstores and threeaerie stand-alonestores.Based on positiveresults,weareaccel- erating our realestate strategyfor aerie, planningatleast

15stand-alonestores and five new side-by-sidelocations for

2007.Wealso haveopportunitiestobuild the brandfurther

byexpandingthe collectionand addingaccessories, personal care and othercomplementarycategories.Weareexcited aboutthegrowth potential of thisbusiness, and believe aerie can eventuallybea $500millionto$1 billionbrand.

AMERICAN EAGLEOUTFITTERSANNUALREPORT 200605

MARTIN+OSA is an

importantlong-term growthopportunity targetinganentirely newcustomerbase. MARTIN+OSA, our new lifestyle brandlaunchedin2006, representsanimportantlong-term growth opportunity.

Targeted at 25 to 40 year-olds,MARTIN+OSAprovides

this underserveddemographicwith sportswear-influenced fashionthatcangoeffortlesslyfromtheworkplace to leisure activities.As withanynew brand, thereare elements that have beenwell-received and others thatwearerefining.

Based on theresponse fromcustomers,weareconfident

that thebrand,demographicandstoreenvironmentare righton-target.WehadfiveMARTIN+OSAstores at theend oflast year,and plantoopen 12 morein2007.

06AMERICAN EAGLEOUTFITTERSANNUALREPORT 2006

AMERICAN EAGLEOUTFITTERSANNUALREPORT 200607

AmericanEagleOutfitters" marketing missionisto be the most relevant, valuableandimportant lifestyle brandamong ourtargeted customers.TheAEbrandistheleaderamong

15to25year-olds,and we willcontinuetobuild and further

strengthenthisleadership positionintheyearstocome. Further,wehope to applyour customer-centricapproach tobuildaerie as asub-brand,aswell as MARTIN+OSA among the 25 to 40 year-old demographic.

We"recreatinga

360-degree customer

relationshiptobe relevantandimportant whereverthey are. Wewill neverstoplearning aboutwhat"s important to our customers- investing in focusgroups, fit clinicsand customer intercepts to sharpenour awareness of their passions, perspectivesand preferences.We"reworkingtocreate a

360-degree customerrelationship to be relevantand impor-

tant wherevertheyare.Thatmeansthatourstores,Web siteand externalmarketing allworktogethercohesively to deliver a consistentmessage.Weknow thatcustomersdon"t segregate thebrandbychannel,and we wanttomaximizethe customer experience for each.Further,wehopetocreate a relationship withourcustomers evenbeyondthe stores andae.com withinnovative,authentic programsthatreflect what"simportant to them.

08AMERICAN EAGLEOUTFITTERSANNUALREPORT 2006

UnderlyingeverythingwedoatAmericanEagle is a strong commitmenttooperatingdiscipline.Thisincludesinvesting in systems and solutions thatcontribute to ourgrowthbyen- hancing the customerexperience,supporting our new brands, andpromotingadvances in productivity and cost-efficiency.

Ourefforts to improvemarginsandmanage inventory

levelshave benefited froma markdownoptimization system whichallowsusto makemore effectivepricing decisions.Investmentsinretailsize profilingand demand forecasting for planningand replenishmentalsoshould contribute to enhancedinventorymanagement.Inthe sourcing and supplychainareas,weareadoptingvarious technologiesthat allowclosercoordination withvendors andagents,improve transportationfunctions,evaluate vendorperformanceand optimizelogistics capacity.And, in2007,weareimplementinga new point-of-salesystem to enhancecustomerservice and speed the check-out process. Goingforward,ourpositionasanearlyadopter of advanced retailingtechnologieswill continuetobe a key factor in our performanceand a source of competitivestrength.

AmericanEagle has a

strongcommitmentto operationalexcellence.

AMERICAN EAGLEOUTFITTERSANNUALREPORT 200609

support to worthy causes and giving backtoourcommu- nities.ThroughtheAEFoundation,wedonatedcash and clothingtonon-profitorganizations across theU.S.and Canadalastyear.Among the groupswehavesupported are BigBrothersBig SistersofAmerica; the JumpStart program, whichrecruits and trainscollegestudentstomentor pre-schoolchildren;the StudentConservationAssociation, whichinvolvesstudents in preservingthe environment; andmanylocalcharitiesinourPittsburghcommunity that focusonyouth development, disaster reliefandthe envi- ronment.Wealso get involvedinissuesthatmattertoour cardsorcash to supporttheirpersonalcharitableevents andvolunteer efforts.

Wearepassionate

aboutgivingback toourcommunities.

Aswelooktoward 2007,weareexcited aboutour plans

togrow the AE brand,expandnew concepts, and further strengthenour financialperformance. I"m confidentthat oureffortstoforgea strong connectionwithcustomers, ourcommitmenttooperatingdisciplines,and the talent andenergy of ourteam willdeliverprofitablegrowth to ourshareholders for yearstocome. I thankyoufor yoursupport of American Eagleandlook forward to sharingour achievements withyou in thefuture.

Sincerely,

JamesV.O"Donnell

ChiefExecutiveOfficer10AMERICAN EAGLEOUTFITTERSANNUAL REPORT2006

FINANCIALHIGHLIGHTS

February3,2007

$2,794,409 12% $1,340,429 48.0%
$586,790 21.0%
$387,359 13.9% $1.70 $827,113 $251,644 2.60 $1,417,312 30.1%
911
$524

5,173,065

January 28, 2006

$2,321,962 16% $1,077,749 46.4%
$458,689 19.8% $293,711 12.7% $1.26 $751,518 $145,774 3.06 $1,155,552 27.8%
869
$471

4,772,487

January 29, 2005

$1,889,647 21%
$881,188 46.6%
$360,968 19.1% $224,232 11.9% $1.00 $589,607 $84,416 3.06 $963,486 26.7%
846
$412

4,540,095

January 31, 2004

$1,441,864 (7%) $552,559 38.3%
$131,778 9.1% $83,108 5.8% $0.38 $337,812 $24,357 2.44 $637,377 9.9% 805
$343

4,239,497

February1,2003

$1,388,758 (4%) $543,104 39.1%
$158,061 11.4% $99,644 7.2% $0.46 $241,573 2.51 $571,590 16.5% 753
$374

3,817,442

FORTHE YEARSENDED

(1) (Inthousands,exceptpershareamounts, ratiosandotherfinancialinformation)

SUMMARYOFOPERATIONS

(2)

Netsales

(3)

Comparablestoresalesincrease(decrease)

(4

Grossprofit

Grossprofitasapercentageofnetsales

Operatingincome

(5)

Operatingincomeasapercentageofnetsales

Incomefromcontinuingoperations

Incomefromcontinuingoperationsasa

percentageofnetsales

Incomefromcontinuingoperationsper

commonshare-diluted (6

BALANCESHEETINFORMATION

Totalcashandshort-terminvestments

Long-terminvestments

Currentratio

(7

Stockholders"equity

Averagereturnonstockholders"equity

OTHER FINANCIALINFORMATION

(8

Totalstoresatyear-end

Netsalesperaveragegrosssquarefoot

(9

Totalgrosssquarefeetatendofperiod

UNITEDSTATES

SECURITIESANDEXCHANGECOMMISSION

WASHINGTON,D.C.20549

FORM10-K

SECURITIESEXCHANGEACTOF1934

FortheFiscalYearEndedFebruary3,2007

OR

SECURITIESEXCHANGEACTOF1934

CommissionFileNumber:1-33338

AmericanEagleOutfitters,Inc.

DelawareNo.13-2721761

(Stateorotherjurisdictionof incorporationororganization) (I.R.S.EmployerIdentificationNo.)

Act.YES[X]NO[]

theAct.YES[]NO[X]

ExchangeAct.(Checkone):

Act).YES[]NO[X]

July29,2006was$4,125,890,813.

DOCUMENTSINCORPORATEDBYREFERENCE

AMERICANEAGLEOUTFITTERS,INC.

TABLEOFCONTENTS

Page

Number

PARTI

PARTII

PARTIII

PARTIV

PARTI

ITEM1.BUSINESS.

General

EagleOutfitters

andMARTIN+OSA TM brands. also offavoriteAE TM designfunandsportbackintosportswear. 2004.
transaction.

AMERICANEAGLEOUTFITTERSPAGE1

GrowthStrategy

RealEstate

alonestoresinCanada.

Fiscal

2006

Fiscal

2005

Fiscal

2004

Fiscal

2003

Fiscal

2002

Storesatbeginningofperiod869846805753678

Storesopenedduringtheperiod*5036505979

Storesclosedduringtheperiod*(8(13(9(7(4)

openedduringthatperiod. whichreopenedduringFebruary2006.

PAGE2ANNUALREPORT2006

DestinationAE

aeriebyAmericanEagle ae.com

MARTIN+OSA

AMERICANEAGLEOUTFITTERSPAGE3

ConsolidatedStoreLocations

Alabama18Illinois29Montana2PuertoRico2

Alaska3Indiana18Nebraska6RhodeIsland3

Arizona13Iowa12Nevada5SouthCarolina13

Colorado14Louisiana13NewMexico3Texas62

Connecticut10Maine3NewYork41Utah10

Florida46Michigan30Ohio37Washington18

Hawaii4Mississippi7Oregon9Wisconsin15

Idaho3Missouri17Pennsylvania49Wyoming2

Canada-72stores

Alberta8NewBrunswick3Ontario37

BritishColumbia12Newfoundland2Quebec4

Manitoba2NovaScotia2Saskatchewan2

Purchasing

non-NorthAmericansuppliers. priortoshipmentofmerchandise.

GlobalLaborCompliance

dignityandrespect.

Conductispostedonourwebsite,www.ae.com.

PAGE4ANNUALREPORT2006

SecurityCompliance

TradeCompliance

MARTIN+OSA.

CustomerCreditandReturns

AMERICANEAGLEOUTFITTERSPAGE5

,Discover ,MasterCard ,Visa ,bankdebitcards,cashor check.

Operations.

cardandcustomerservicepolicies.

Competition

TrademarksandServiceMarks

WehaveregisteredAmericanEagleOutfitters

asatrademark andanapplicationispendingtoregisterAE isregisteredforavarietyofclothingitems.

WehaveregisteredAmericanEagleOutfitters

quotesdbs_dbs7.pdfusesText_13

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