Aerie posted exceptional growth, with revenue up 32% and record margins

 AEO’s digital demand accelerated and increased 48%; Aerie grew 113% and AE rose 21%

 Improved demand and operating discipline drove $173 million in positive operating cash flow and a strengthened financial position, ending with $899 million in cash

 Ending inventory declined 21%; AEO is well positioned for the second half

PITTSBURGH — (BUSINESS WIRE) – American Eagle Outfitters, Inc. (NYSE: AEO) today reported EPS of ($0.08) for the 13 weeks ended August 1, 2020.  This compared to $0.38 for the 13 weeks ended August 3, 2019.  Adjusted EPS of ($0.03) this year excluded $0.05 of COVID-19 related expenses and restructuring charges and compared to adjusted EPS of $0.39 last year, which excluded $0.01 of restructuring costs.

Jay Schottenstein, AEO’s Chairman and Chief Executive Officer commented, “In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business – a true testament to the agility, talent and commitment of our team.  Aerie was simply outstanding, fueled by strong demand, with revenue rising 32% and record margins, demonstrating the power of the brand and signaling the vast opportunity ahead.   Across brands, digital sales accelerated and we successfully reopened stores during the quarter.”

“Throughout this event, we operated with strong disciplines, reduced expenses, cut inventories and carefully managed liquidity.  We controlled what we could, and generated positive free cash flow, strengthening our balance sheet.   Inventories are in good shape and I believe we are very well-positioned for the second half of the year.  We will remain focused on managing through the near term and preparing for a new future as we accelerate strategies to transform our business and emerge with strength”

Adjusted amounts represent Non-GAAP results, as described in the accompanying GAAP to Non-GAAP reconciliations.

Second Quarter 2020 Results

•  Total net revenue for the 13 weeks ended August 1, 2020 decreased $157 million, or 15% to $884 million, compared to $1.04 billion for the 13 weeks ended August 3, 2019. The decline to last year largely reflected store closures during the second quarter.  Revenue in the year-ago period also included $40 million from Japanese license royalties.
• By brand, American Eagle revenue decreased 26%, following a 1% decline last year. Aerie’s revenue increased 32%, following a 22% increase last year.
• The company’s second quarter digital demand, as measured by ordered sales, increased 48%. Aerie digital demand rose 113% and AE increased 21%.  AEO’s digital reported revenue increased 74%, reflecting the strong demand and a timing benefit related to the reversal of temporary fulfillment delays from the first quarter.  Aerie digital revenue rose 142% and AE increased 47%.
• Gross profit of $265 million compared to $383 million last year. The year-ago gross profit included an approximately $38 million benefit from Japanese license royalties.  The decline to last year also reflected a reduction in store revenue and higher delivery and distribution center costs, primarily due to a strong digital business and higher cost per shipment.  This was partly offset by lower rent expense and an increase in mark-up.  As a rate to revenue, gross margin of 30.0% compared to 36.7% last year.
• Selling, general and administrative expense of $224 million decreased $29 million from $253 million last year, primarily reflecting lower operating expenses due to store closures and disciplined cost controls.
• Depreciation and amortization expense of $39 million decreased $6 million from $45 million last year, due to asset impairments taken in recent quarters, as well as lower capital spending.
• Operating loss of $12 million compared to income of $82 million last year. Adjusted operating income of $2 million this year excluded $15 million of COVID-19 related expenses and restructuring charges and compared to adjusted operating income of $85 million last year, which excluded $3 million of restructuring charges.  GAAP and adjusted operating income in the year-ago period included a $34 million benefit from Japanese license royalties.
• Net interest expense of $9 million compared to net interest income of $2 million last year, reflecting interest expense associated with convertible notes and borrowings under the revolving credit facility this year.
• EPS of ($0.08) compared to EPS of $0.38 last year. Adjusted EPS of ($0.03) excluded $0.05 of COVID-19 related expenses and restructuring costs and compared to adjusted EPS of $0.39 last year, which excluded $0.01 of restructuring costs.

 Restructuring and COVID-19 Related Charges

In the second quarter of 2020, the company incurred incremental COVID-19 expenses and restructuring charges of approximately $15 million pre-tax, or $0.05 per share after-tax.  In the second quarter of 2019, the company incurred restructuring charges of $3 million pre-tax, or $0.01 per share after-tax.

Inventory

Total ending inventory at cost decreased $114 million or 21% to $421 million.  AE brand inventory was significantly lower, as inventories were cut due to COVID-19-related store closures and inventory optimization strategies.  Aerie inventory increased to support strong demand.  In the fall, the company plans to continue inventory optimization initiatives to streamline assortments, provide greater alignment of inventory to sales plans and better utilize supply chain strengths to chase product demand.

Capital Expenditures

In the second quarter of 2020, capital expenditures totaled $27 million.  On a year-to-date basis, capital expenditures were $61 million.  For fiscal 2020, the company continues to expect capital expenditures to be in the range of $100 to $125 million, prioritizing strategic customer-facing and supply chain investments.  This compares to $210 million for the full-year fiscal 2019.

Cash Flow and Balance Sheet

The company generated $173 million in operating cash flow during the second quarter and ended the period with total cash and short-term investments of $899 million, an increase from $317 million last year.  The quarter-end cash balance included $406 million in proceeds from the April 2020 convertible notes offering and $200 million in outstanding borrowings from the company’s revolving credit facility.  Due to the strong cash flow, the company repaid $130 million in outstanding borrowings from its revolving credit facility during the second quarter.  Subsequent to quarter-end, the company repaid the facility’s remaining $200 million outstanding balance.

Shareholder Returns

As previously announced, the company suspended its dividend in June 2020 and at this point does not anticipate declaring a dividend for the rest of this year. The company’s first quarter cash dividend was deferred until 2021 and will be payable on April 23, 2021 to stockholders of record at the close of business on April 9, 2021.

 Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to http://www.aeo-inc.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company’s website.

Non-GAAP Measures

This press release includes information on non-GAAP financial measures (“non-GAAP” or “adjusted”), including earnings per share information and the consolidated results of operations excluding non-GAAP items.  These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies.  Management believes that this non-GAAP information is useful for an alternate presentation of the company’s performance, when reviewed in conjunction with the company’s GAAP financial statements.  These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations.

* * * *

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. Our purpose is to show the world that there’s REAL power in the optimism of youth. The company operates stores in the United States, Canada, Mexico, and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 25 countries. For more information, please visit www.aeo-inc.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including third quarter 2020 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company’s control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “potential,” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.  The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of the company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and in any subsequently-filed Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company’s financial performance and could cause actual results for the third quarter 2020 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the impact that the COVID-19 pandemic, the 2020 U.S. Presidential election and disruption related to social unrest will have on our operations and financial results, which is difficult to accurately predict; the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

Expanded Role Includes Oversight of Merchandising, Design and Marketing for American Eagle and Aerie

PITTSBURGH —  American Eagle Outfitters Inc. (NYSE: AEO) today announced that Jennifer Foyle has been promoted to Chief Creative Officer, AEO Inc. effective immediately, reporting to Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer.  In addition to her existing responsibilities as Aerie’s Global Brand President, Jen’s expanded role includes oversight of merchandising, design and marketing for the American Eagle brand.  Chad Kessler, American Eagle Global Brand President, will report to Jen.

“Jen is a strategic brand visionary, with a proven ability to drive consistent profitable growth.  She has led Aerie to incredible success, resulting in the quadrupling of sales and profits over the past five years.  She brings passion, innovative thinking and an ability to infuse clear vision across product and marketing to create real connections with customers.  In Aerie, we have one of the best brands in retail today, and I know Jen’s influence will be instrumental as we continue to drive our momentum and shape the future of American Eagle,” said Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer.

“I look forward to working with Chad and the team to build on AE’s many strengths and leading product lines to fuel the next chapter of growth.  We also remain intensely focused on the vast opportunity ahead for Aerie,” said Jen Foyle, Chief Creative Officer, AEO Inc. and Aerie Global Brand President.

About Jennifer Foyle
Jen has more than 26 years of experience in the apparel retail industry and as the Aerie Global Brand President led Aerie to nearly $800 million in annual revenue in 2019, delivering 21 consecutive quarters of double digit sales growth, with consistent increases in profitability. In 2014, Jen revolutionized the intimate apparel industry by bringing body positivity and inclusivity to the forefront with the power of #AerieREAL. This movement has been a game-changer for the Aerie business and for millions of women and girls who have been empowered to love their REAL selves inside and out.  Throughout her tenure, Jen has assembled and developed a strong bench of talent at all levels and across functions.

In 2018, Jen was honored by AdWeek with a prestigious Brand Genius award, which recognizes exceptional talent, insight, creativity and bravery in business. Aerie’s commitment to body confidence and empowerment has also been recognized with Glossy’s Best Influencer Campaign in 2018, a Femmy Award in 2017, and the NEDA Inspires Award in 2015, among others.

Jen began her career at Bloomingdales and held positions of increasing responsibility at Gap Inc. and J. Crew. Prior to joining Aerie in 2010 she was the President of the global lifestyle brand, Calypso St. Barth.

She is a graduate of Roanoke College in Salem, Virginia.  Jen sits on the Board of LIM Fashion Education Foundation and is a member of the Housing Works Thrift Shops Board of Directors, a non-profit combatting the dual crisis of AIDS and homelessness and is involved in the volunteer management non-profit, NY Cares.

For more information about AEO, Inc. please visit www.aeo-inc.com.

Earlier this year, Aerie announced the #AerieREAL Change Initiative program, giving grants to Changemakers to help them on their journey in making the world a better place. This week, Aerie granted 20 advocates $20,000 each to help foster their many ideas for changing the world. From building libraries to researching breakthroughs in women’s health, they’re making space for girls that keep it REAL and push humanity forward.

To read more about each Changemaker, including their initiative of focus, head to the Aerie Real Life blog.

AEO Inc. is very proud to congratulate Noel Spiegel, Lead Independent Director and Chair of the Audit Committee on being named one of the National Association of Corporate Directors (NACD) Top 100  for 2020! The annual listing honors the most influential individuals in corporate governance who exemplify knowledge, leadership, and excellence.

“Noel has been a valuable member of the AEO Inc. Board of Directors for many years. His leadership and expertise have been instrumental in our success and we look forward to benefiting from Noel’s thoughtful insights as we position the company for continued growth,” said Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer. “Noel’s commitment to excellence helps to strengthen AEO’s business, culture and purpose.”

Noel has served as a Director of the AEO Inc. since June 2011 and provides expertise in public company accounting, disclosure and financial system management to the Board and as Chair of the Audit Committee. Noel was a partner at Deloitte & Touche, LLP until his retirement in May 2010. In his more than 40 year career at Deloitte, he served in numerous management positions, including Deputy Managing Partner, member of the Executive Committee, and Partner-in-Charge of Audit Operations in Deloitte’s New York Office Managing Partner, among other leadership roles.

“Courage, excellence, and exemplary leadership in the boardroom are as important today as they have ever been―and even more so as companies face an unwavering succession of challenges brought on by the COVID-19 pandemic,” said Peter R. Gleason, NACD CEO. “This year’s honorees have positively earned the recognition that these awards offer. Not only have they served their boards and the governance community well, but they have also provided inspirational examples of what effective, purposeful, and accountable governance during difficult, exceptional times truly means.”

Honorees will be recognized in the November/December issue of NACD Directorship magazine, on the NACD Directorship 100 website, and during the Virtual NACD Summit 2020 on October 12.

Today is the 55^th Anniversary of the Voting Rights Act of 1965. In honor of one of the most important pieces of civil rights legislation in U.S. history, American Eagle is launching This Is Our Time, a campaign mobilizing customers and associates to register to vote in the upcoming 2020 election. The initiative is in partnership with HeadCount, a non-partisan organization that uses the power of music to register young people to vote and participate in democracy.

AE will also be selling limited edition This is Our Time tees. Tees come with markers to share custom messages and 100% of proceeds of tee sales will benefit HeadCount.

Customers are encouraged to visit AE’s Vote 2020 action center to register to vote, sign up for election reminders, and learn about ways to make a difference!

By Madeline Stone | Link to article

American Eagle Outfitters is adding another brand to its collection.

Offline by Aerie (stylized as OFFL/NE) is an activewear brand with pieces suited for both exercise and leisure. It will be a sub-brand of Aerie, American Eagle Outfitters’ popular underwear and loungewear brand.

The brand launches online on Monday with a collection of leggings, bike shorts, tops, sports bras, fleece, bottoms, and accessories. Prices range from $15.95 to $64.95.

The company also plans to open two Offline stores by the end of 2020, though it has not yet disclosed where those stores will be located.

The launch comes at a time when many Americans continue to work and study at home amid the coronavirus pandemic.

“Health and wellness have always been at the core of Aerie’s mission as we’ve led the body positivity movement, inspiring and empowering women around the world to feel confident inside and out,” Jen Foyle, Aerie’s global brand president, said in a press release. “OFFLINE’s unique take on active lifestyle products celebrates REAL life when some days you feel like you can take on the world and other days you need that extra push to get off the couch.”

Offline is the second new retail concept that American Eagle Outfitters has launched this summer. At the end of June, it opened a single-location concept called Unsubscribed in East Hampton, New York.

Unsubscribed’s selection is focused on comfort, with products in its private label including silk dresses, distressed oxford button-downs, cashmere sweaters, lightweight jersey tops, and 100% recycled nylon swimwear. The store is also stocking items from third-party designers including LemLem, Boyish Jeans, A. Shirt. Story, and Indego Africa.

American Eagle Outfitters also owns its namesake American Eagle brand in addition to Aerie and Todd Snyder.

It’s meant to inspires us to slow down and take a minute for ourselves.

By Dara Prant | Link to article

Aerie continues to be anomaly in a fairly gloomy retail sector. At a time when most brands are scaling back or shutting down completely, the intimates retailer is launching a new sub-brand, called OFFLINE™, to satisfy all your comfy activewear cravings.

OFFLINE™, which drops online on Monday, is an evolution and expansion of the brand’s Chill.Play.Move. range, which marked Aerie’s foray into athleisure four years ago. Its updated off-duty sartorial offering is designed to remind you to slow down and take time for yourself — think cozy cotton separates that you can wear while enjoying your morning cup of coffee or during an at-home yoga session.

“Aerie has always been about being real and true to who you are,” says Aerie Global Brand President Jennifer Foyle. “We have always engaged with our customers in an authentic way, empowering them to feel confident and love their real selves. Our strong community, who makes up our DNA, has come to know us for these core values and our incredibly soft, cozy and comfortable product. We are always looking for new opportunities to expand and grow our brand, and OFFL/NE by Aerie is just that.”

Highlights from the collection include the OG Legging, a super-soft, no frills style that’ll take your chill vibes up a notch; the Goals Legging, a supportive bottom for flexing your literal or creative muscles; the OTT Fleece Hoodie, an easy-to-throw-on, hard-to-take-off pullover; and the Real Me Tank and Strappy Back Bra, both of which are made using the label’s four-way stretch fabric and provide extra bust support.

Even though some of the leggings and tops are made with sweat-inducing activities in mind, Aerie wants to make it clear that it doesn’t believe in telling shoppers how to define their “me” time or how to stay active. The joyful campaign imagery accompanying the launch is the perfect embodiment of this: Captured with no gym in sight, the models cartwheel in zebra-stripe shorts and lounge in overgrown fields wearing matching sports bra and leggings sets. If anything, the visuals will inspire you to pick lavender or take your dog on a long walk — activities that are both restorative and safe to do amid a global pandemic.

The launch marks parent company American Eagle Outfitters’ second new brand launch in under a month.

By Kellie Ell | Link to article

Aerie is getting active. 

The intimates brand, part of the American Eagle Outfitters family, is launching a new sub-brand today called Offline by Aerie.

The activewear line — an extension of Aerie’s popular Chill.Play.Move collection — is made up of more than 250 pieces and includes leggings, sports bras, bike shorts, fleece and accessories, in Flower-Power patterns, animal prints and lots of splashy colors.

“Offline is about you moving,” Jennifer Foyle, Aerie global brand president, told WWD. “You’re an Aerie customer and now we’re going to move with you and take you onto the next level of your journey, whatever it is.”

While the activewear market remains saturated with big names like Nike, Adidas and Lululemon, as well as scores of smaller brands and start-ups, Foyle said what makes Offline special is that it can be worn while incorporating movement into everyday life, however big or small that may be.

“It could be waking up and taking your dogs for a walk,” Foyle said. “I would like to see more journeys with girls that maybe need that help getting off the sofa or [who] are new to working out. I don’t think it should look particularly forced.”

True to form, the brand is also a little bit imperfect. The crooked “i” in the logo is meant to remind shoppers that it’s OK to celebrate flaws, Foyle said. (Aerie was one of the first brands to feature models of different shapes and sizes — sans airbrushing — back in 2014 with its AerieReal campaign.) The success of the AerieReal campaign encouraged Foyle and her team to continue building on that platform.

“We’re a humble brand,” Foyle said. “We always have work to do and are thinking about what more we can deliver to our consumer. We want to embrace the future, a bright future and do things differently.”

That’s why Foyle began conceptualizing the brand more than a year ago, before the pandemic hit and before working-out-from-home became the norm.

“The customer was demanding it,” she said. “COVID-19 has definitely taught us all to think differently, as far as leadership, as far as consumer product offerings, as far as where we’re going. But, as far as when we considered Offline by Aerie, we felt like she wanted more from us. I don’t think [fitness trends] are just [a product of] current times. I think it’s a new lifestyle.”

The activewear launch also marks parent company American Eagle Outfitters’ second new brand launch in less than a month. The retailer opened Unsubscribed, a single store retail concept in The Hamptons that focuses on slow retail, earlier this summer. (American Eagle Outfitters also owns Todd Snyder, in addition to the nameplate brand.)

Foyle said Unsubscribed is off to a good start as many shoppers seek refuge from the city heat in the middle of a pandemic.

Meanwhile, Aerie continues to break records. The intimates brand is the second largest lingerie e-tailer, second only to market share leader Victoria’s Secret, according to the NPD Group. In 2018, Aerie had 3 percent of the U.S. women’s intimate apparel industry, up from 2 percent a year earlier, according to Euromonitor International.

In March, Foyle told WWD that Aerie — then already nearing the $1 billion mark — had its sights set on becoming a $3 billion brand. And despite company losses last quarter as a result of the coronavirus shutdown, digital sales at Aerie surged 75 percent during the quarter. Aerie also continues to open new physical stores as many of its peers close brick-and-mortar locations at alarming rates. The brand opened about 60 new stores last year. Foyle added recently that two Offline by Aerie stores are coming by the end of the year, but was tightlipped about the locations.

“We have not even come close to leveraging what we can do with the Aerie platform,” Foyle said. “There’s so much opportunity.”

Offline by Aerie is available at aerie.com and Aerie stores. The prices range between $15.95 to $64.95, and run in sizes XXS to XXL. Foyle said her team will continue to add to the product assortment, with things like shoes and more sustainable fabrics in the future.

“Offline is not one-dimensional,” Foyle said. “It’s a journey with our customer; it’s how we feel she’s living and the product categories that she needs.”

New OFFLINE sub-brand builds on strong category demand designed uniquely for Aerie

American Eagle Outfitters, Inc. (NYSE: AEO) announced today the launch of OFFLINE™ by Aerie, a new sub-brand offering a complete collection of activewear and accessories built for REAL movement and REAL comfort. Leveraging AEO’s continued success cultivating lifestyle brands, paired with Aerie’s incredible strength and growing customer demand, OFFLINE is the evolution and expansion of the brand’s popular Chill.Play.Move. collection into an unparalleled offering of soft, cozy and comfortable activewear. Uniquely designed for the Aerie girl’s slam dunks, slipups, the hell yeas, the ughs, the 5ks and the recovery days.

“Health and wellness have always been at the core of Aerie’s mission as we’ve led the body positivity movement, inspiring and empowering women around the world to feel confident inside and out. OFFLINE’s unique take on active lifestyle products celebrates REAL life when some days you feel like you can take on the world and other days you need that extra push to get off the couch,” said Jennifer Foyle, Aerie Global Brand President. “Building on the growing success of our leggings and activewear, OFFLINE provides another powerful platform to grow our community, while uniquely complementing Aerie’s full lifestyle collection of bras, undies, lounge and soft apparel. We’re here for your journey as you fly and as you fall, and even the slant of the I in our name is a reminder that there is no straight path to the finish line.”

OFFLINE by Aerie will be available online at aerie.com with two retail store locations planned to open by the end of 2020.

The OFFLINE collection features an activewear assortment of leggings, bike shorts, tops, sports bras, fleece, bottoms and accessories. Signature products include:

• OG Legging: The legging that started it all. It’s the softest and easiest cotton, offered in high-waisted and mid-rise options. Your go to for class, work, brunch, couch surfing, coffee, repeat.
• Real Me Legging: Our #1! This legging feels like the real you with soft support and a weightless touch. Your go-to, do-everything, go-everywhere legging.
• OTT Fleece Hoodie: Luxe meets movement in our over the top, buttery soft fleece. Seriously comfy and ready to move.
• Goals Legging: No center front seam and the most booty support. For flexing those muscles and hitting the gym.
• Real Me fabric now in new silhouettes!
  • Real Me Tank:  Soft support and a weightless touch in our new tank silhouette! Added shelf for extra support.
  • Real Me Strappy Back Bra: Feminine strappy back detail, long line body and removable pads.
• The Hugger Legging: The support you need and the cozy you can’t beat. These leggings have pockets and are brushed inside and out for extra warm and cozy feels.

The sub-brand also continues Aerie’s commitment to responsibly sourced styles, which are reflected through the REAL Good™ badge, an icon that identifies products made from more sustainable raw materials including recycled fabrics. It also designates products manufactured in a factory that meets expectations for AEO’s Water Leadership Program, an initiative that focuses on water reduction and water recycling, in keeping with the company’s ongoing commitment to sustainability.

About Aerie
Aerie is a lifestyle brand offering intimates, apparel, activewear and swim collections. With the #AerieREAL™ movement, Aerie celebrates its community by advocating for body positivity and the empowerment of all women. Aerie believes in inspiring customers to love their real selves, inside and out. Retouching-free since 2014. Visit www.aerie.com to learn more. Let the Real You Shine®.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. Our purpose is to show the world that there’s REAL power in the optimism of youth. The company operates stores in the United States, Canada, Mexico, and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 25 countries. For more information, please visit www.aeo-inc.com.

At AEO we believe in the importance of treating our associates, customers, communities, and partners with compassion, understanding and fairness.

Earlier this year, when the COVID-19 pandemic intensified, there was widespread closures of retail stores and global supply chain production facilities. AEO had to make immediate and difficult business decisions, which included closing nearly 1,000 American Eagle and Aerie stores across the U.S., Canada, and Mexico to protect the health and well-being of all of our stakeholders. At the same time, we recognized the importance of standing together with our suppliers who make our products. During that time, AEO:

• Held to our Vendor agreements and accepted 100% of existing finished goods and work in process against confirmed purchase orders.
• Accelerated payments for all remaining spring/summer orders to help the liquidity of our suppliers, and paid all invoices within days after invoicing. We paid our vendors quickly and on time because it was clear that they would be in urgent need of cash payments to withstand the impact on their businesses and continue to pay their workers and raw material suppliers.
• Remained dedicated to protecting workers in our supply chain. We are proud to have endorsed the International Labour Organization’s (ILO)“COVID-19 Call to Action in the Global Garment Industry” and continue to participate in ILO’s work for stronger social safety systems in our sourcing countries.

Our goal has always been to create strong, supportive relationships with our factory partners and to work collaboratively with them.

While we negotiated a one-time discount on a small amount of unshipped orders last April, we continued to take deliveries and pay invoices immediately.

With stores reopened and online demand strong, we anticipate being able to continue supporting our supply chain vendors through the rest of 2020 and beyond.