Aeropostale Reports Record First Quarter 2007 Results

Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of active and casual apparel for young men and women, today reported results for the first quarter ended May 5, 2007. Net income for the first quarter of fiscal 2007 was $13.8 million, or $0.26 per diluted share, an increase of 73.3% compared to net income of $8.4 million, or $0.15 per diluted share, in the first quarter of fiscal 2006. For the first quarter of fiscal 2007, total net sales increased 12.0% to $275.8 million, from $246.3 million in the year-ago period. Same store sales for the first quarter increased 2.5%, compared to the corresponding 13 weeks ended May 6, 2006. Julian R. Geiger, Chairman and Chief Executive Officer, said, "We are very pleased with our performance for the first quarter, the results of which significantly exceeded our expectations. Our balanced and trend-right merchandise assortments are continuing to be received positively by our customers. Our accomplishments for the quarter also reflect improvements we have made in our planning process and in our inventory management. As a result of the consistent execution of our strategic initiatives, we achieved strong increases in our gross margins and we ended the quarter with record earnings. We are thrilled with the momentum of our business and look forward to exciting summer and back to school selling seasons.” Second Quarter Guidance The Company announced its earnings guidance for the second quarter of fiscal 2007. The Company believes it will achieve earnings in the range $0.26 to $0.28 per diluted share. Based on the calendar year shift, which includes the acceleration of the back to school selling season, this guidance reflects an estimated shift of $0.04 to $0.06 earnings per share to the second quarter from the third quarter. This compares to net income for the second quarter of fiscal 2006 of $8.4 million, or $0.16 per diluted share, (which included $2.1 million of other income in connection with the resolution of a dispute with a vendor regarding the enforcement of the Company’s intellectual property rights). Net income, excluding other income, was $7.2 million, or $0.13 per diluted share for the second quarter of fiscal 2006. The Company believes that the disclosure of sales on a pro-forma basis due to the 53rd week in fiscal 2006 and reporting diluted earnings per share which excluded other income in fiscal 2006, both of which are non-GAAP financial measures, provides investors useful information to help them better understand the Company’s expected results without the impact of the two items described above. Conference Call Information: The Company will be holding a conference call today at 4:15 P.M. EDT to review its first quarter 2007 financial results. The broadcast will be available through the ‘Investor Relations’ link at www.aeropostale.com and at www.fulldisclosure.com. To listen to the broadcast your computer must have Windows Media Player installed. If you do not have Windows Media Player go to the latter site prior to the call, where you can download the software for free. About Aeropostale, Inc. Aeropostale, Inc. is a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men. The company provides customers with a focused selection of high-quality, active-oriented, fashion and fashion basic merchandise at compelling values. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale products are currently purchased only in its stores, on-line through its e-commerce website (www.aeropostale.com) or at organized sales events at college campuses. The company currently operates 757 Aeropostale stores in 47 states and 14 Jimmy’Z stores in 11 states. SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS. ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES. EXHIBIT A   AÉROPOSTALE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS   (in thousands)     May 5,2007 February 3,2007 April 29,2006   ASSETS Current Assets: Cash and cash equivalents $ 154,119  $ 200,064  $ 143,951  Short-term investments 56,565  76,223  60,212  Merchandise inventory 107,575  101,476  108,971  Other current assets   22,271    21,030    27,600  Total current assets 340,530  398,793  340,734    Fixtures, equipment and improvements, net 193,833  175,591  170,228    Other assets   15,056    6,780    4,441    TOTAL ASSETS $ 549,419  $ 581,164  $ 515,403    LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 43,416  $ 63,918  $ 71,104  Accrued expenses   68,822    100,880    48,378  Total current liabilities 112,238  164,798  119,482    Other non-current liabilities 112,701  104,250  96,968    Stockholders’ equity   324,480    312,116    298,953      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $   549,419    $   581,164    $   515,403  EXHIBIT B   AÉROPOSTALE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SELECTED STORE DATA   (in thousands, except per share and store data)   13 weeks ended May 5, 2007 April 29, 2006 % of sales % of sales Net sales $ 275,782  100.0% $ 246,292  100.0%   Cost of sales (including certain buying, occupancy and warehousing expenses)     187,079    67.8      175,814    71.4    Gross profit 88,703  32.2  70,478  28.6    Selling, general and administrative expenses   68,219  24.7    58,265  23.6    Income from operations 20,484  7.5  12,213  5.0    Interest income, net   2,135  0.7    1,496  0.6    Income before income taxes 22,619  8.2  13,709  5.6    Income taxes   8,867  3.2    5,346  2.2    Net income $ 13,752  5.0% $ 8,363  3.4%   Basic earnings per share $ 0.27  $ 0.15    Diluted earnings per share $ 0.26  $ 0.15    Weighted average basic shares 51,655  54,407    Weighted average diluted shares 52,136  55,077    STORE DATA:   Comparable store sales increase (decrease) 2.5% (2.9)%   Stores open at end of period 765  704    Total square footage at end of period 2,707,976  2,497,544    Average square footage during period 2,663,060  2,434,560