Letter From Our CEO

As I look back on the year, I am particularly proud of the following achievements:

• Revenue of $5.3 billion rose 5%, marking a new record. We saw broad-based strength across brands and channels.
  
  
• Operating income of $223 million and $375 million in adjusted operating income.⁽¹⁾ Adjusted operating income increased 39% compared to Fiscal 2022, our second-highest result since 2012.
  
  
• Aerie delivered exceptional growth and profit expansion. Record revenue of $1.7 billion rose 11% from Fiscal 2022, with operating income of $276 million, up 65%. We continued to expand our customer base and delivered a winning assortment across intimates, soft apparel and OFFLINE, our exciting activewear sub-brand.
  
  
• American Eagle expanded revenue while continuing to build profitability. Revenue of $3.4 billion was up 3% from Fiscal 2022, with operating margin expanding 120 basis points to 17.8%. We also grew American Eagle’s customer file, delivering early proof points of our focus on driving profitable growth.
  
  
• Strong operating cash flow of $581 million enabled us to invest in our brands and return $104 million in cash to stockholders. This included a 25% increase in our quarterly cash dividend and one million shares repurchased during the year. Additionally, we authorized 30 million shares for future repurchases.
  
  
• As we look to strengthen the organization and improve profitability, management took action to streamline business priorities. This included restructuring the company’s international operations and fulfillment network to focus on core capabilities that serve our brands and best customers.
  
  
• We welcomed new leadership to the organization. As part of our succession plan for our Chief Operations Officer transition, we established two new positions to focus on key areas of our business. Sarah Clarke joined as our Chief Supply Chain Officer, responsible for managing AEO’s global supply chain from sourcing through distribution. Valerie van Ogtrop was appointed as Head of Brand Operations, a newly created role designed to drive greater brand collaboration while fueling growth and profitability across American Eagle and Aerie.

• Furthering our commitment to transparency, we published our second “Building a Better World” report. This highlighted progress toward our Planet (environment), People (social) and Practices (governance) goals. Our commitment to continued transparency was rewarded by MSCI with an upgrade of our rating from “BBB” to “A.”

Building on our achievements and profit improvement work initiated in Fiscal 2023, in Fiscal 2024 we launched “Powering Profitable Growth,” our new long-term corporate strategy that aims to set AEO on a path to deliver consistent, profitable growth from here. Our plan is centered on three main pillars:

• Amplify our brands.

• Execute with financial discipline.

• Optimize our operations, structuring the company to grow revenue at a three to five percent compound annual growth rate (“CAGR”) and operating income at a mid-to-high teens CAGR through Fiscal 2026.

We entered Fiscal 2024 well positioned with industry-leading brands, a solid balance sheet and best-in-class operations. American Eagle is the largest, most consistent youth brand—dressing generations of customers. Aerie has a powerful brand platform with an amazing community of customers and significant opportunity to grow brand awareness. We continue to deliver the best shopping experience across digital and stores.

As we embark on this next chapter, I could not be more excited about our future. We remain steadfast in operating the business with balance; staying agile and flexible to capitalize on demand opportunities, while optimizing profitability for the future. We believe that we are built to last and well positioned for success.

On behalf of the Board of Directors and our entire team at AEO, thank you for your continued support.

Jay L. Schottenstein
Executive Chairman of the Board and Chief Executive Officer