AEO · Read the filing

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Company, our operations and our present business environment. MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying Notes thereto contained in Part II, Item 8 – Financial Statements and Supplementary Data " — of this report.

This MD&A generally discusses Fiscal 2025 and Fiscal 2024 and provides year-to-year comparisons between Fiscal 2025 and Fiscal 2024. Discussions of Fiscal 2023 and year-to-year comparisons between Fiscal 2024 and Fiscal 2023 that are not included in this Annual Report can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II. Item 7 of our annual report on Form 10-K for the fiscal year ended February 1, 2025.

Introduction

This MD&A is organized as follows:

•Executive Overview

•Key Performance Indicators

•Current Trends and Outlook

•Results of Operations

•Non-GAAP Information

•Liquidity and Capital Resources

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Executive Overview

We are a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under our American Eagle® and Aerie® brands.

We have two reportable segments, American Eagle and Aerie. Our Chief Operating Decision Maker (defined as our CEO) analyzes segment results and allocates resources between segments based on adjusted operating income, which is a non-GAAP financial measure. See "Non-GAAP Information" below and Note 14, Segment Reporting, to the Consolidated Financial Statements included herein for additional information.

Key Performance Indicators

Our management evaluates the following items, which are considered key performance indicators, in assessing our performance:

Comparable Sales — Comparable sales and comparable sales changes provide a measure of sales growth for stores and channels open at least one year over the comparable prior-year period. In fiscal years following those with 53 weeks, the prior-year period is shifted by one week to compare similar calendar weeks. A store is included in comparable sales in the 13th month of operation. However, stores that have a gross square footage change of 25% or greater due to a remodel are removed from the comparable sales base, but are included in total sales. These stores are returned to the comparable sales base in the 13th month following the remodel. Sales from American Eagle, Aerie, Todd Snyder, and Unsubscribed stores, as well as sales from AEO Direct and other digital channels, are included in total comparable sales. Sales from licensed stores are not included in comparable sales. Individual American Eagle and Aerie brand comparable sales disclosures include sales from stores and AEO Direct.

Omni-Channel Sales Performance — Our management utilizes the following quality of sales metrics in evaluating our omni-channel sales performance: comparable sales, average unit retail price, total transactions, units per transaction, and consolidated comparable traffic. We include these metrics in our discussion within this MD&A when we believe that they enhance the understanding of the matter being discussed. Investors may find them useful as such. Each of these metrics is defined as follows (except comparable sales, which is defined separately above):

•

Average unit retail price represents the selling price of our goods. It is the cumulative net sales divided by the net units sold for a period of time.

•

Total transactions represents the count of customer transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).

•

Units per transaction represents the number of units sold divided by total transactions over a period of time (inclusive of Company-owned stores and AEO Direct, unless specified otherwise).

•

Consolidated comparable traffic represents visits to our Company-owned stores, limited to those stores that qualify to be included in comparable sales as defined above, including AEO Direct, over a period of time.

Gross Profit — Gross profit measures whether we are optimizing the profitability of our sales. Gross profit is the difference between total net revenue and cost of sales. Cost of sales consists of merchandise costs, including design, sourcing, importing, and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs, Quiet Platforms costs to service our customers and buying, occupancy and warehousing costs and services. Design costs consist of compensation, rent, depreciation, travel, supplies, and samples.

Buying, occupancy and warehousing costs and services consists of compensation, employee benefit expenses and travel for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operations.

The inability to obtain acceptable levels of sales, initial markups or any significant increase in our use of markdowns could have an adverse effect on our consolidated gross profit and results of operations.

Operating Income — Our management views operating income as a key indicator of our performance. The key drivers of operating income are net revenue, gross profit, our ability to control selling, general, and administrative ("SG&A") expenses, and our level of capital expenditures.

Cash Flow and Liquidity — Our management evaluates cash flow from operations and investing and financing activities in determining the sufficiency of our cash position and capital allocation strategies. Cash flow has historically been sufficient to cover our uses of cash. Our management believes that cash flow and liquidity will be sufficient to fund anticipated capital expenditures and working capital requirements for the next 12 months and beyond.

Current Trends and Outlook

Macroeconomic Conditions, Inflation and Tariffs

During Fiscal 2024 and Fiscal 2025, our results were negatively impacted by macro-economic challenges and global inflationary pressures impacting consumer spending behavior, which constrained revenue and increased margin pressure to clear through excess inventory.

In addition, recent trade policies and uncertainty related thereto, including with respect to tariffs and other restrictions, with respect to countries from which we source our merchandise and raw materials, have created a dynamic and unpredictable trade landscape. This has and may continue to adversely impact our business and operations. On February 20, 2026, the U.S. Supreme Court held that the U.S. administration’s imposition of tariffs unlawful pursuant to the International Emergency Economic Powers Act (“IEEPA”) was unlawful, striking down the 10% global baseline tariff, as well as the higher tariffs imposed on certain U.S. trading partners. The U.S. Supreme Court’s ruling did not affect all of the recently imposed tariffs, including those imposed following trade remedy investigations by the Department of Commerce or the U.S. Trade Representative. Nor does it prohibit the imposition of future tariffs through alternative trade authorities available to the U.S. administration. On February 20, 2026, shortly after the announced U.S. Supreme Court decision, the U.S. administration announced that it would be imposing a new 10% global tariff for a period of 150 days pursuant to a balance-of-payments provision in Section 122 of the Trade Act of 1974, effective February 24, 2026, which is being challenged in court by several US states. The U.S. administration further announced that it would begin additional trade remedy investigations into unidentified trading partners pursuant to Section 301 of the Trade Act of 1974 and with respect to certain unidentified product sectors pursuant to Section 232 of the Trade Expansion Act of 1962. The Court of International Trade subsequently issued an interim order requiring U.S. Customs and Border Protection ("CBP") to process unliquidated entries without the unlawful tariffs and to develop a plan that could result in refunds of duties previously collected. CBP has indicated it is developing a plan within 45 days to implement that order, however the scope, timing, and ultimate availability of any refunds remains uncertain. While the Company has taken steps to preserve its rights should a refund process be established, no assurance can be given that refunds will be realized.

Accordingly, uncertainty with respect to tariffs remains ongoing. The imposition of tariffs by the U.S. government, associated geopolitical tensions, including reciprocal tariffs by trading partners, and uncertainties regarding U.S. import tariffs have and may further affect our margins and operations or could lead to further weakened business conditions for our industry. We continue to evaluate the impact of tariffs and other trade policies on our business.

For further information about the risks associated with global economic conditions and the effect of economic pressures on our business, see "Risk Factors" in Part I, Item 1A of this Annual Report.

Results of Operations

Overview

With a deliberate action plan that ignited growth, we improved profitability and cash flow fueling a strong finish to Fiscal 2025. Initiatives across merchandising, operations and marketing continue to strengthen our company and position our brands for long-term success. We remain committed to driving continued profitable growth and strong cash flow for our shareholders. Except as otherwise indicated, all comparisons are to Fiscal 2024.

•

Total net revenue increased $219 million to $5.547 billion compared to $5.329 billion last year.

•

Total comparable sales increased 3%. By brand, comparable sales for Aerie increased 9%, and American Eagle comparable sales were flat year-over-year.

•

Gross profit decreased 3% to $2.025 billion and decreased by 270 basis points to 36.5% as a percentage of revenue.

•

Operating income decreased 47% to $226.2 million and decreased by 390 basis points to 4.1% as a percentage of total revenue. Non-GAAP adjusted operating income decreased 26% to $327.8 million and decreased by 240 basis points to 5.9% as a percentage of revenue.

•

Net income attributable to AEO decreased 42% to $192.0 million and decreased by 270 basis points to 3.5% as a percentage of total revenue. Diluted earnings per share attributable to AEO decreased to $1.09 for Fiscal 2025 compared to $1.68 for Fiscal 2024. Non-GAAP adjusted net income attributable to AEO decreased 23% to $266.0 million and decreased by 160 basis points to 4.8% as a percentage of revenue. Non-GAAP adjusted diluted earnings per share attributable to AEO decreased to $1.50 for Fiscal 2025 compared to $1.74 for Fiscal 2024.

The following table shows, for the periods indicated, the percentage relationship to total net revenue of the listed items included in our Consolidated Statements of Operations.

Fiscal Years Ending

(In thousands) (Percentage of revenue) (In thousands) (Percentage of revenue)

Net loss attributable to noncontrolling interests 6,461 0.2 2,477 0.1

Diluted net income per common share attributable to AEO(1) $ 1.09 $ 1.68

(1) Please see “Non-GAAP Information” below for non-GAAP financial measures.

Comparison of Fiscal 2025 to Fiscal 2024

Total Net Revenue

Total net revenue for Fiscal 2025 increased $219 million to $5.547 billion compared to $5.329 billion for Fiscal 2024. Total comparable sales increased by 3% and 4% for Fiscal 2025 and Fiscal 2024, respectively. Digital revenue increased 7%, driven by increased transaction volume as a result of increased traffic. Higher average dollar sales and units per transaction also contributed to the increase in digital revenue. Store revenue was flat compared to Fiscal 2024.

Fiscal Years Ending Increase/(Decrease)

American Eagle. Net revenue was relatively flat year-over-year. American Eagle comparable sales were flat year-over-year.

Aerie. The increase innet revenue was driven by increased traffic and transactions across channels, as well as increased units per transaction and transaction value. Aerie comparable sales increased 9% year-over-year.

Other. Net revenue decreased compared to Fiscal 2024 primarily due to planned lower revenue from Quiet Platforms due to our change in strategy for this business.

Gross Profit

Fiscal Years Ending Increase/(Decrease)

(In thousands) (In thousands) (Percentage)

The decrease in gross profit was driven by a decrease of $30 million in merchandise margin due to increased promotional activity and $70 million of incremental tariffs, net of mitigation efforts, as well as an inventory charge taken in the first quarter of Fiscal 2025 related to the write-down of spring and summer merchandise.

Additionally, buying, occupancy, and warehousing costs increased $34 million year-over-year, primarily due to new store openings and digital sales volume. As a percentage of net revenue, buying, occupancy, and warehousing costs leveraged 10 basis points compared to Fiscal 2024, due to higher sales in Fiscal 2025.

Our gross profit may not be comparable to that of other retailers, as some retailers include all costs related to their distribution network, as well as design costs, in cost of sales, and others may exclude a portion of these costs from cost of sales, including them in a line item such as SG&A expenses. Refer to Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements included herein for a description of our accounting policy regarding cost of sales, including certain buying, occupancy and warehousing expenses.

Selling, General, and Administrative Expenses

Fiscal Years Ending Increase/(Decrease)

(In thousands) (In thousands) (Percentage)

SG&A expenses increased $54 million year-over-year. The increase was primarily related to planned investments in advertising.

Impairment, Restructuring and Other Charges

For Fiscal 2025, we recorded the following:

Fiscal Year Ended

January 31,

Quiet Platforms impairment and restructuring charges (1) 58,966

Corporate and store impairment and restructuring charges (2) 42,637

Total impairment and restructuring charges $ 101,603

Impairment and restructuring charges as a percentage of net revenue 1.8 %

(1)

As part of our continued supply chain network optimization project, the Company made the decision to close the Quiet Platforms business and discontinue services for all third-party customers. The Company recorded $59.0 million of impairment and restructuring charges related to closing Quiet fulfillment centers.

(2)

The Company recorded $42.6 million of impairment and restructuring charges related to corporate operations and store impairment.

As set forth below, for Fiscal 2024, we recorded $10.7 million of employee severance related to corporate restructuring, and $6.8 million of impairment and restructuring costs due to the sale of our Hong Kong retail operations.

Fiscal Year Ended

February 1,

Corporate restructuring costs 10,729

Hong Kong retail operations impairment and restructuring costs 6,832

Total impairment and restructuring charges $ 17,561

Impairment and restructuring charges as a percentage of net revenue 0.3 %

Refer to Note 15, Impairment, Restructuring and Other Charges, to the Consolidated Financial Statements included in this Annual Report for additional information.

Depreciation and Amortization Expense

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

Operating Income

Fiscal Years Ending Increase/(Decrease)

Operating income

The decrease in total operating income was primarily driven by lower gross profit in the American Eagle brand and increased investments in advertising, as well as an $84 million increase in impairment, restructuring and other charges during Fiscal 2025.

American Eagle. The decrease was primarily the result of the $114 million decline in gross margin, driven by lower merchandise margin due to increased promotional activity and $44 million of incremental tariffs, net of mitigation efforts. SG&A expenses increased $28 million primarily due to planned investments in advertising. Depreciation and amortization expense also increased $10 million primarily as a result of remodeled stores.

Aerie. The increase was primarily the result of the $65 million increase in gross margin, driven by higher merchandise margin on the $196 million, or 12%, increase in total net revenue, which was partially offset by increased promotional activity

and $26 million of incremental tariffs, net of mitigation efforts, as well as a $19 million increase in buying, occupancy, and warehousing costs primarily related to delivery and new store rent. SG&A expenses increased $33 million primarily due to store compensation and planned investments in advertising.

Other. The reduction in loss was primarily related to planned lower volume from Quiet Platforms.

Interest Expense (Income), Net

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

The increase in interest expense (income), net was primarily attributable to a $7 million reduction in interest income as a result of lower investable cash balances, as well as a $5 million increase in interest expense as a result of borrowings on our Credit Facility (as defined below) in Fiscal 2025.

Other (Income), Net

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

The increase in other (income), net consists of a $26 million gain on equity method investments, partially offset by foreign currency fluctuations.

Income Taxes

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

Effective tax rate 25.6 % 25.7 %

The effective income tax rate was 25.6% for Fiscal 2025, compared to an effective income tax rate of 25.7% for Fiscal 2024.The lower effective income tax rate in Fiscal 2024 was primarily driven by changes in international provisions of the Tax Cut and Jobs Act of 2017 partially offset by changes in non-deductible executive compensation. Our effective income tax rate is also dependent upon the overall mix of earnings in jurisdictions with different tax rates.

The Organization for Economic Cooperation and Development ("OECD") Global Anti-Base Erosion Pillar Two minimum tax rules, also referred to as "Pillar Two", are intended to apply to tax years beginning in 2024 and generally provide for a minimum effective tax rate of 15%. While the U.S. has not enacted legislation to adopt Pillar Two, certain countries in which we operate have enacted such legislation, and other countries are in the process of doing so. We considered the applicable tax laws in relevant jurisdictions and concluded there is no material effect on our effective tax rate or our consolidated results of operation, financial position, and cash flows for the year ended January 31, 2026. The Company

will continue to evaluate the potential effect of Pillar Two on future reporting periods and expects the impact to be immaterial.

Refer to Note 2, Summary of Significant Accounting Policies, and Note 13, Income Taxes, to the Consolidated Financial Statements included herein for additional information regarding our accounting for income taxes.

Net Income attributable to AEO

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

The change in net income was attributable to the factors described above.

Net income per diluted share attributable to AEO for Fiscal 2025 was $1.09, which included $97.9 million (net of $3.7 million of non-controlling interest), or $0.43 per diluted share, of pre-tax impairment and restructuring charges. Refer to "Non-GAAP Information" below for additional detail.

Net income per diluted share attributable to AEO for Fiscal 2024 was $1.68, which includes $17.6 million ($0.06 per diluted share) of pre-tax impairment and restructuring charges. Refer to "Non-GAAP Information" below for additional detail.

Non-GAAP Information

This Results of Operations section contains operating income, net income and net income per diluted share presented on an adjusted basis, which are non-GAAP financial measures ("non-GAAP" or "adjusted"). These financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance, when reviewed in conjunction with our GAAP consolidated financial statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. The table below reconciles the GAAP financial measure to the non-GAAP financial measure discussed above for Fiscal 2025:

GAAP to Non-GAAP Reconciliation

(Dollars in thousands, except per share amounts)

Fiscal Year Ended

% of Revenue 4.1 % 3.5 %

Tax effect of the above (2) $ 24,809

Net loss attributable to non-controlling interests $ (3,707 ) $ (0.02 )

% of Revenue 5.9 % 4.8 %

(1) Refer to Note 15, Impairment, Restructuring, and Other Charges, to the Consolidated Financial Statements included herein for additional information.

(2) The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and on a non-GAAP basis.

The table below reconciles the GAAP financial measure to the non-GAAP financial measure discussed above for Fiscal 2024:

GAAP to Non-GAAP Reconciliation

(Dollars in thousands, except per share amounts)

Fiscal Year Ended

% of Revenue 8.0 % 6.2 %

Add: Impairment, restructuring and other charges (1) $ 17,561 $ 12,983 $ 0.06

Tax effect of the above (2) $ 4,577

% of Revenue 8.3 % 6.4 %

(1) Refer to Note 15, Impairment, Restructuring, and Other Charges, to the Consolidated Financial Statements included herein for additional information.

(2) The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and on a non-GAAP basis.

Liquidity and Capital Resources

Our uses of cash have historically been for working capital, the construction of new stores and remodeling of existing stores, information technology and e-commerce upgrades and investments, distribution center improvements and expansion, and the return of value to shareholders through the repurchase of common stock and the payment of dividends. Additionally, our uses of cash have included the development of the Aerie brand, investments in technology and omni-channel capabilities, and our international expansion efforts.

Historically, our uses of cash have been funded with cash flow from operations and existing cash on hand. We also maintain an asset-based revolving credit facility that allows us to borrow up to $700 million, which will expire in June 2027. Refer to Note 8, Long-Term Debt, Net, to the Consolidated Financial Statements included herein for additional information regarding our long-term debt.

We expect to be able to fund our future cash requirements through current cash holdings and available liquidity.

The following sets forth certain measures of our liquidity:

Working capital, in thousands $ 446,610

Current Ratio 1.51

The following table sets forth net cash flows in operating, investing, and financing activities for Fiscal 2025 and 2024:

Fiscal Years Ending (Decrease)/Increase

January 31, February 1,

(In thousands)

Total cash provided by (used for):

(Decrease) increase in cash and cash equivalents $ (70.0 ) $ (45.1 ) $ (24.9 )

Cash Flows Provided by Operating Activities

For both Fiscal 2025 and Fiscal 2024, our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs.

Cash Flows Used for Investing Activities

For both Fiscal 2025 and Fiscal 2024, investing activities primarily consisted of capital expenditures for property and equipment. For further information on capital expenditures, refer to "Capital Expenditures for Property and Equipment" caption below.

Cash Flows Used for Financing Activities

During Fiscal 2025, cash used for financing activities consisted primarily of $201.8 million, including excise taxes, used to repurchase the Company's common stock under the ASR Agreement (as defined below), $85.3 million for cash dividends paid at a quarterly rate of $0.125 per share for all four quarters of Fiscal 2025, and $56.9 million, including commissions and excise taxes, used for the repurchase of common stock under our publicly announced repurchase program

During Fiscal 2024, cash used for financing activities consisted primarily of $190.9 million, including commissions and excise taxes, used to repurchase common stock under our publicly announced repurchase programs, and $96.5 million for cash dividends paid at a quarterly rate of $0.125 for all four quarters of Fiscal 2024.

Cash returned to shareholders through dividends and share repurchases, including excise taxes, was $344.0 million and $287.4 million in Fiscal 2025 and Fiscal 2024, respectively.

Capital Expenditures for Property and Equipment

For Fiscal 2025, capital expenditures totaled $260.8 million. See below for a breakdown of expenditures:

Fiscal Years Ending Increase/(Decrease)

January 31, February 1,

(In thousands) (In thousands) (Percentage)

For Fiscal 2026, we expect capital expenditures to be in the range of $250 to 260 million related to the continued support of our expansion efforts, stores, information technology upgrades to support growth and investments in e-commerce, as well as to support and enhance our supply chain. We expect to be able to fund our capital expenditures through current cash holdings and cash generated from operations.

See below for a breakdown for stores remodeled and new stores opened in Fiscal 2025 and Fiscal 2024:

Fiscal Years Ending

New Stores Remodels New Stores Remodels

Todd Snyder 4 - 4 -

Unsubscribed 2 - 1 -

(1) American Eagle includes AE stand-alone stores, Aerie side-by-side stores connected to an AE brand location, AE, Aerie, and OFFLINE locations connected as one store, and OFFLINE side-by-side stores connected to an AE brand location.

(2) Aerie includes Aerie stand-alone, OFFLINE stand-alone, and OFFLINE side-by-side stores connected to an Aerie brand location.

Revolving Credit Facility

In June 2022, we entered into an amended and restated credit agreement (the "Credit Agreement"). The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires in June 2027.

All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries.

As of January 31, 2026, we were in compliance with the terms of the Credit Agreement and had $12 million outstanding in stand-by letters of credit.

Share Repurchases

On March 11, 2025, the Company’s Board of Directors authorized 50 million additional shares for repurchase as part of its existing share repurchase program, which was previously announced in February 2024.

As of January 31, 2026, the Company had a total of 49.0 million shares remaining authorized for repurchase through February 3, 2029. During Fiscal 2025, there were 3.0 million shares repurchased under this authorization.

Subsequent to the end of Fiscal 2025 and through the period ending March 30, 2026, the Company repurchased 3.0 million shares of common stock as part of our publicly announced share repurchase program.

On March 14, 2025, the Company entered into an accelerated share repurchase agreement (the "ASR Agreement") with Bank of America, N.A. ("Bank of America") to repurchase an aggregate of $200 million of the Company’s common stock.

Pursuant to the terms of the ASR Agreement, on March 17, 2025, the Company made an aggregate payment of $200 million to Bank of America and received an aggregate initial delivery of approximately 14.5 million shares of its common stock. At final settlement on June 16, 2025, the Company received an additional 3.9 million shares. The cumulative repurchases under the ASR Agreement totaled 18.4 million shares, in the aggregate, at an average price of $10.86 per share.

Dividends

Dividends are disclosed in Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that may affect the reported consolidated financial condition and results of operations should actual results differ from these estimates and assumptions. We base our estimates and assumptions on the best available information and believe them to be reasonable for the circumstances. We believe that of our significant accounting policies, the following involve a higher degree of judgment and complexity. Refer to Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements included herein for a complete discussion of our significant accounting policies. Management has reviewed these critical accounting policies and estimates with the Audit Committee of our Board.

Revenue Recognition. In accordance with Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers, we record revenue for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the estimated customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets.

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages.

Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise.

The Company recognizes royalty revenue generated from its license or franchise agreements based upon a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned.

Revenue associated with Quiet Platforms is recognized as the services are performed.

Merchandise Inventory. Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company.

We review our inventory in order to identify slow-moving merchandise and generally use markdowns to clear merchandise. Additionally, we estimate a markdown reserve for future planned markdowns related to current inventory. If inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, or competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price, additional markdowns may be necessary. These markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected.

We estimate an inventory shrinkage reserve for anticipated losses for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve is calculated based on historical percentages and can be affected by changes in merchandise mix and changes in actual shrinkage trends. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our inventory shrinkage reserve. However, if actual physical inventory losses differ significantly from our estimate, our consolidated operating results could be adversely affected.

Impairment of long-lived assets. In accordance with ASC 360, Property, Plant, and Equipment ("ASC 360"), we evaluate the value of leasehold improvements, store fixtures, and operating lease ROU assets associated with retail stores, distribution centers, and corporate operations. We evaluate long-lived assets for impairment at the individual retail store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income (loss) in the Consolidated Statements of Operations.

Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected.

Impairment of goodwill and intangible assets. Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value.

In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of

the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference.

Share-Based Payments. We account for share-based payments in accordance with ASC 718, Compensation – Stock Compensation ("ASC 718"). To determine the fair value of our awards, we use the Black-Scholes option-pricing model for stock option awards and a Monte-Carlo simulation for performance-based restricted stock awards, which requires management to apply judgment and make assumptions to determine the fair value of our awards. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the "expected term") and the estimated volatility of the price of our common stock over the expected term. We calculate a weighted-average expected term based on historical experience. Expected stock price volatility is based on historical volatility of our common stock. Changes in these assumptions can materially affect the estimate of the fair value of our share-based payments and the related amount recognized in our Consolidated Financial Statements.

Income Taxes. We calculate income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in our level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the effective income tax rate.

We evaluate our income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is more likely than not that the position is sustainable based on its technical merits.

The calculation of the deferred tax assets and liabilities, and the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance require management to make estimates and assumptions. We believe that our assumptions and estimates are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss).

Recent Accounting Pronouncements

Recent accounting pronouncements the Company has adopted or is currently evaluating prior to adoption, including the dates of adoption or expected dates of adoption, as applicable, and anticipated effects on the Company’s audited Consolidated Financial Statements, are included in Note 2, "Summary of Significant Accounting Policies," to the Consolidated Financial Statements included herein.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We have market risk exposure related to interest rates and foreign currency exchange rates. Market risk is measured as the potential negative impact on earnings, cash flows, or fair values resulting from a hypothetical change in interest rates or foreign currency exchange rates over the next year.

We have estimated our market risk exposure using sensitivity analysis. To test the sensitivity of our market risk exposure, we have estimated the changes in fair value of market risk sensitive instruments assuming a hypothetical 10% adverse change in market prices or rates. The results of the sensitivity analyses are summarized below.

Interest Rate Risk

Our earnings from our investments are not materially affected by changes in market interest rates. This is determined by considering the impact of a hypothetical 10% change in yield rates on our cash and investment balances and assumes no change in our investment structure.

Foreign Exchange Rate Risk

We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. We do not utilize hedging instruments to mitigate foreign currency exchange risks. A hypothetical 10% movement in the Canadian dollar and Mexican peso exchange rate could result in a $30 million to $35 million foreign currency translation fluctuation, which would be recorded in accumulated other comprehensive income in the Consolidated Balance Sheets. An unrealized gain of $40.8 million is included in accumulated other comprehensive loss for the year ended January 31, 2026. This is primarily related to the fluctuations of the U.S. dollar to Mexican peso and US dollar to Canadian dollar exchange rates.

This sensitivity analysis has inherent limitations. The analysis disregards the possibility that rates of multiple foreign currencies will not always move in the same direction relative to the value of the U.S. dollar over time.

Item 8. Financial Statements and Supplementary Data.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 48

Consolidated Balance Sheets 50

Consolidated Statements of Operations 51

Consolidated Statements of Comprehensive Income 52

Consolidated Statements of Stockholders’ Equity 53

Consolidated Statements of Cash Flows 54

Index for Notes to the Consolidated Financial Statements 56

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of American Eagle Outfitters, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of American Eagle Outfitters, Inc. (the Company) as of January 31, 2026 and February 1, 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 30, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Retail Store Long-Lived Asset Impairment

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1993.

Pittsburgh, Pennsylvania

March 30, 2026

AMERICAN EAGLE OUTFITTERS, INC.

Consolidated Balance Sheets

Fiscal Years Ending

January 31, February 1,

(In thousands, except per share amounts) 2026 2025

Assets

Current assets:

Short-term investments — 50,000

Property and equipment, at cost, net of accumulated depreciation 785,622 751,264

Liabilities and Stockholders’ Equity

Current liabilities:

Current portion of operating lease liabilities 320,005 313,034

Unredeemed gift cards and gift certificates 75,278 70,094

Other current liabilities and accrued expenses 96,875 74,751

Non-current liabilities:

Commitments and contingencies — —

Stockholders’ equity:

Accumulated other comprehensive loss (15,586 ) (56,390 )

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

Consolidated Statements of Operations

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ending

January 31, February 1, February 3,

Net loss attributable to noncontrolling interests 6,461 2,477 942

Basic net income per common share attributable to AEO $ 1.12 $ 1.71 $ 0.87

Diluted net income per common share attributable to AEO $ 1.09 $ 1.68 $ 0.86

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

Consolidated Statements of Comprehensive Income

Fiscal Years Ending

January 31, February 1, February 3,

Other comprehensive gain (loss)

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

Consolidated Statements of Stockholders' Equity

Repurchase of common stock from employees (766 ) — — — — (10,666 ) — (10,666 )

Other comprehensive income — — — — — — 16,220 16,220

Contributions from non-controlling interests — — 1,312 — — — — 1,312

Repurchase of common stock from employees (557 ) — — — — (13,769 ) — (13,769 )

Other comprehensive income — — — — — — (39,980 ) (39,980 )

Contributions from non-controlling interests — — 3,022 — — — — 3,022

Repurchase of common stock from employees (658 ) — — — — (7,946 ) — (7,946 )

Other comprehensive income — — — — — — 40,804 40,804

Contributions from non-controlling interests — — 1,513 — — — — 1,513

(1)

600,000 authorized, 249,566 issued and 168,958 outstanding, $0.01 par value common stock at January 31, 2026; 600,000 authorized, 249,566 issued and 188,618outstanding, $0.01 par value common stock at February 1, 2025; 600,000 authorized, 249,566 issued and 196,936 outstanding, $0.01 par value common stock at February 3, 2024. The Company has 5,000 authorized, with no issued or outstanding, $0.01 par value preferred stock for all periods presented.

(2)

80,608 shares, 60,948shares, and 52,630 shares at January 31, 2026, February 1, 2025, and February 3, 2024 respectively. During Fiscal 2025, Fiscal 2024, and Fiscal 2023, 2,414 shares, 1,739shares, and 2,539 shares, respectively, were reissued from treasury stock for the issuance of share-based payments.

Refer to Notes to Consolidated Financial Statements

AMERICAN EAGLE OUTFITTERS, INC.

Consolidated Statements of Cash Flows

Fiscal Years Ending

January 31, February 1, February 3,

Operating activities:

Distribution received from equity method investment 20,853 — —

Income earned from equity method investment (26,175 ) — —

Other operating activities (2,920 ) — —

Changes in assets and liabilities:

Investing activities:

Purchase of available-for-sale investments — (50,000 ) (100,000 )

Purchase of equity method investment — (35,000 ) —

Financing activities:

Accelerated Share Repurchase (201,849 ) — —

Principal payments on revolving line of credit (841,700 ) — (30,000 )

Proceeds from other financing 18,603 — —

Refer to Notes to Consolidated Financial Statements

Index for Notes to the Consolidated Financial Statements

Note 1 Business Operations 56

Note 2 Summary of Significant Accounting Policies 56

Note 3 Cash and Cash Equivalents and Short-term Investments 64

Note 4 Fair Value Measurements 64

Note 5 Earnings per Share 65

Note 6 Property and Equipment, Net 66

Note 7 Goodwill and Intangible Assets, Net 66

Note 8 Long-Term Debt, Net 67

Note 9 Leases 68

Note 10 Accumulated Other Comprehensive Loss 70

Note 11 Share-Based Payments 70

Note 12 Retirement Plan and Employee Stock Purchase Plan 73

Note 13 Income Taxes 73

Note 14 Segment Reporting 77

Note 15 Impairment, Restructuring and Other Charges 79

Note 16 Subsequent Events 81

AMERICAN EAGLE OUTFITTERS, INC.

Notes to Consolidated Financial Statements

For the Year Ended January 31, 2026

1. Business Operations

American Eagle Outfitters, Inc. (the "Company," "we" and "our"), a Delaware corporation, operates under the American Eagle® ("AE") and Aerie® brands. We also operate Todd Snyder New York ("Todd Snyder"), a premium menswear brand, and Unsubscribed, which focuses on consciously-made slow fashion.

Founded in 1977, the Company is a leading multi-brand specialty retailer that operates nearly 1,500retail stores in the U.S. and internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.wcom and more than 300international store locations managed by third-party operators. Through its portfolio of brands, the Company offers high quality, on-trend clothing, accessories, and personal care products at affordable prices. The Company’s online business, AEO Direct, ships to approximately 90countries worldwide.

AEO Direct reinforces each particular brand platform and is designed to complement the in-store experience. We offer the ability for customers to return products seamlessly via any channel regardless of where products were originally purchased. We also offer a variety of channels to fulfill customer orders. These include "ship to home," which can be fulfilled either through our distribution centers or our store sites (buy online, ship from stores) when purchased online or through our app; and "store pick-up," which consists of online orders being fulfilled either in store or curbside, and we offer "store-to-door" capability where customers order within our store, and the goods are shipped directly to their home.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and consolidated entities where the Company's ownership percentage is less than 100%.

Non-controlling interests’ (“NCI”) share of net income (loss) is presented as net income (loss) attributable to NCI on the Consolidated Statements of Operations and Comprehensive Income and the NCI share of stockholders' equity is presented as a component of Total stockholders' equity on the Consolidated Balance Sheets.

Certain prior‐period amounts have been reclassified to conform to the current‐period presentation, including the separate presentation of noncontrolling interests. These reclassifications had no impact on the Company’s operating income, net income attributable to noncontrolling interests, net income per common share attributable to AEO or cash flows.

All intercompany transactions and balances have been eliminated in consolidation. At January 31, 2026, the Company operated in two reportable segments, American Eagle and Aerie.

Fiscal Year

Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, "Fiscal 2028" refers to the 53-week period that will end on February 3, 2029. "Fiscal 2027" refers to the 52-week period that will end on January 29, 2028. "Fiscal 2026" refers to the 52-week period that will end on January 30, 2027. "Fiscal 2025" refers to the 52-week period ended on January 31, 2026. "Fiscal 2024" refers to the 52-week period ended February 1, 2025. "Fiscal 2023" refers to the 53-week period ended February 3, 2024.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. of America ("GAAP") requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires increased transparency in tax disclosures, specifically by expanding requirements for rate reconciliation and income taxes paid information. Additionally, the amendment requires disclosures of income/(loss) from continuing operations before taxes disaggregated between domestic and foreign, and income tax expense/(benefit), disaggregated by federal, state, and foreign. Disclosure requirements about the nature and estimated range of the reasonably possible change in unrecognized tax benefits over the next year have been removed as part of this amendment. The guidance is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 prospectively effective for Fiscal 2025.

Refer to Note 13, Income Taxes, to the Consolidated Financial Statements for additional information regarding Income Taxes.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires disclosure of additional information for specific expense categories in the notes to financial statements for interim and annual periods. Specifically, the amendment requires quantitative disclosure for purchases of inventory, employee compensation, depreciation, and intangible asset amortization within an expense caption. For any remaining amounts within an expense caption, a qualitative description must be included. In all reporting periods, a total selling expense amount must be disclosed, with an annual disclosure of the entity's definition of selling expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company plans to adopt ASU 2024-03 effective for Fiscal 2027.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses ("ASU 2025-05"), which amends the guidance under Topic 326. This amendment provides the option to use a practical expedient to assume balance sheet conditions remain unchanged when developing forecasts for estimating expected credit losses. The guidance is effective for fiscal years beginning after December 15, 2025. The Company plans to adopt ASU 2025-05 effective for Fiscal 2026 and does not expect a material impact to the Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06").The new guidance modernizes accounting for the costs of internal-use software by removing "project stages" from the capitalization process. The guidance is effective for annual periods beginning after December 15, 2027 and interim periods within those years. Early adoption is permitted. The Company plans to adopt ASU 2025-06 effective for Fiscal 2028.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) ("ASU 2025-07"). This amendment clarifies the scope of derivative accounting to exclude nonexchange-traded contracts. The guidance is effective for annual periods beginning after December 15, 2027 and interim periods within those years. Transition may be applied prospectively, or under a modified retrospective approach. The Company plans to early adopt ASU 2025-07 effective for Fiscal 2026, using the modified retrospective approach, and does not expect a material impact to the Consolidated Financial Statements.

Foreign Currency Translation

In accordance with Accounting Standard Codification ("ASC") 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars ("USD") (the reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. Refer to Note 10, Accumulated Other Comprehensive Loss, to the Consolidated Financial Statements for information regarding accumulated other comprehensive income (loss).

Cash and Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with an original maturity greater than three months, but less than one year.

Refer to Note 3, Cash and Cash Equivalents and Short-term Investments, to the Consolidated Financial Statements for information regarding cash and cash equivalents, and short-term investments.

Accounts Receivable

The Company's receivables are primarily generated from product sales and royalties from our licensees. Receivables also include amounts due from landlords, including construction allowance and lease incentive receivables, vendors, and governmental authorities, as well as amounts for sell-offs of past season merchandise. The primary indicators of the credit quality of our receivables are aging, payment history, economic sector information and outside credit monitoring, and are assessed on a quarterly basis. Our credit loss exposure is mainly concentrated in our accounts receivable portfolio.

Our allowance for credit losses is calculated using a loss-rate method based on historical experience, current market conditions and reasonable forecasts. For Fiscal 2025, the increase to our reserve primarily related to the deterioration of credit quality for a specific customer.

A rollforward of the activity in the Company's allowance for doubtful accounts is presented below:

Fiscal Years Ending

January 31, February 1, February 3,

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company.

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, or competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected.

The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends.

Property and Equipment

Property and equipment, including assets acquired with finance leases, are recorded on the basis of cost with depreciation computed utilizing the straight-line method over the assets’ estimated useful lives. The useful lives of our major classes of assets are as follows:

Buildings 25 years

Leasehold improvements Lesser of 10 years or the term of the lease

Fixtures and equipment Five years

Information technology Three to five years

As of January 31, 2026, the weighted average remaining useful life of our assets was approximately six years.

In accordance with ASC 360, Property, Plant, and Equipment ("ASC 360"), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ("ROU") assets associated with retail stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income within impairment, restructuring, and other charges in the Consolidated Statements of Operations.

Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumptions used in our fair value analysis are forecasted revenue and market rent. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected.

When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense.

Refer to Note 6, Property and Equipment, Net, to the Consolidated Financial Statements for additional information regarding property and equipment, and refer to Note 15, Impairment, Restructuring and Other Charges, to the Consolidated Financial Statements for additional information regarding impairment charges for Fiscal 2025, Fiscal 2024, and Fiscal 2023.

Goodwill and Intangible Assets

The Company’s goodwill is primarily related to the acquisitions of its regionalized fulfillment center network, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. The Company last performed an annual goodwill impairment test as of January 31, 2026. No indicators of impairment were present during Fiscal 2025 or Fiscal 2024. In Fiscal 2023, the Company concluded that the goodwill assigned to the Quiet Platforms reporting unit was impaired, resulting in a charge of $39.6 million recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations, due to insufficient prospective cash flows to support the carrying value of the business. Significant, subjective assumptions used in the Company's fair value estimate included forecasted cost of sales, forecasted operating expense and discount rate.

Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years.

The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. During Fiscal 2025 and Fiscal 2023, the Company recorded a $1.3 million and $40.5 million impairment charge, respectively, within impairment, restructuring, and other charges on the Consolidated Statements of Operations, related to the definite-lived intangible assets of Quiet Platforms, due to insufficient prospective cash flows to support the carrying value of the assets. No definite-lived intangible asset impairment charges were recorded during Fiscal 2024.

Refer to Note 7, Goodwill and Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets and refer to Note 15, Impairment, Restructuring and Other Charges, to the Consolidated Financial Statements for additional information regarding impairment charges for Fiscal 2023.

Equity Method Investments

During Fiscal 2024, the Company entered into a Limited Partnership Agreement of ACON Apparel Investors, L.P. (the "Fund"), with ACON Apparel GenPar, LLC. ("ACON") as the general partner. The Company paid $35.0 million for a 20% interest for its limited partner position in the Fund, which is recorded in Other Assets in the Consolidated Balance Sheet. Realized and unrealized gains (losses) are included within the Consolidated Statements of Operations as a component of Other (income), net. During Fiscal 2025, the Company recorded a $23.0 million unrealized gain related to its position in the

Fund. During the 13 weeks ended January 31, 2026, the Company received a distribution of $20.9 million related to its position in the Fund.

Construction Allowances

As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally composed of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor.

Self-Insurance Liability

The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop-loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability.

Leases

In accordance with the provisions of ASC 842, Leases ("ASC 842"), the Company accounts for its leases, both operating and finance, by recognizing initial ROU assets and lease liabilities measured at the present value of lease payments to be made over the lease term.

Refer to Note 9, Leases, to the Consolidated Financial Statements for additional information.

Co-Branded and Private Label Credit Cards

The Company offers a co-branded credit card and a private-label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the "Bank") in accordance with a credit card agreement (the "Agreement"). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations.

Customer Loyalty Program

The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and AerieTM (the "Program"). The Program features a variety of benefits for loyalty members and credit card members. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn dollar rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.

Points earned under the Program on purchases at AE and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). The portion of the sales revenue attributed to the reward points is deferred and recognized when the reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue.

The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606.

Sales Return Reserve

Fiscal Years Ending

January 31, February 1, February 3,

The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) other current assets and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets.

Long-Term Debt

In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due 2025 (the "2025 Notes"). In accordance with ASU 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), the 2025 Notes were accounted for as a single balance in long-term debt beginning in Fiscal 2022, and until their final redemption in Fiscal 2023.

In June 2022, the Company entered into an amended and restated credit agreement (the "Credit Agreement"). The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires in June 2027.

Refer to Note 8, Long-Term Debt, Net, to the Consolidated Financial Statements for additional information regarding Long-Term Debt.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits may materially impact the Company’s effective income tax rate.

The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is "more likely than not" that the position is sustainable based on its technical merits.

The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income.

In Fiscal 2025, the Company adopted ASU 2023-09 which requires enhanced disaggregation in the rate reconciliation and expanded disclosure of income taxes paid by jurisdiction. The Company adopted this standard on a prospective basis; accordingly, the newly required disaggregated disclosures are provided for in the current fiscal period, while prior-period comparative disclosures have not been retrospectively adjusted.

Refer to Note 13, Income Taxes, to the Consolidated Financial Statements for additional information.

Accelerated Share Repurchase Agreement

Revenue Recognition

The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets.

The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable.

The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to "Customer Loyalty Program" above for additional information.

Revenue associated with Quiet Platforms is recognized as the services are performed.

Cost of Sales, Including Certain Buying, Occupancy, and Warehousing Expenses

Cost of sales consists of merchandise costs, including design costs, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, "merchandise costs"); Quiet Platforms' costs to service its customers; and buying, occupancy and warehousing costs and services.

Design costs are related to the Company's design center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our design center. These costs are included in cost of sales as the respective inventory is sold.

Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased.

Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales.

Advertising Costs

Certain advertising costs, including direct mail, in-store photographs, and other promotional costs are expensed when the marketing campaign commences. As of January 31, 2026, the Company had prepaid advertising costs of $17.8 million. As of February 1, 2025, the Company had prepaid advertising expense of $12.1 million. All other advertising costs are expensed as incurred. The Company recognized $251.3 million, $206.3million, and $186.9 million in advertising expense during Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively.

Store Pre-Opening Costs

Store pre-opening costs consist primarily of rent, advertising, supplies, and payroll expenses. These costs are expensed as incurred.

Interest Expense (Income), Net

Interest expense (income), net primarily consists of interest expense from Credit Facility borrowings and interest income from cash and cash equivalents.

Other Income, Net

Other income, net consists primarily of foreign currency fluctuations and realized and unrealized gains (losses) on equity method investments.

Legal Proceedings and Claims

The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies ("ASC 450"), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact that are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.

Supplemental Disclosures of Cash Flow Information

The table below shows supplemental cash flow information for cash amounts paid (received) during the respective periods:

Fiscal Years Ending

January 31, February 1, February 3,

Cash paid (received) during the periods for:

Refer to Note 13, Income Taxes, to the Consolidated Financial Statements for additional information.

Segment Information

The Company has identified two operating segments (American Eagle and Aerie brand) that also represent our reportable segments and reflect our Chief Operating Decision Maker’s ("CODM") (defined as our Chief Executive Officer ("CEO")) internal view of analyzing results and allocating resources. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosures they have been included in the Corporate and Other category. For additional information regarding the Company’s segment and geographic information, refer to Note 14, Segment Reporting, to the Consolidated Financial Statements.

3. Cash and Cash Equivalents and Short-term Investments

The following table summarizes the fair market value of our cash, cash equivalents, and short-term investments, which are recorded on the Consolidated Balance Sheets:

Fiscal Years Ending

January 31, February 1,

Cash and cash equivalents:

Short-term investments:

Certificates of deposits $ - $ 50,000

Total short-term investments $ - $ 50,000

4. Fair Value Measurements

ASC 820, Fair Value Measurement Disclosures ("ASC 820"), defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.

Financial Instruments

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

•

Level 1 — Quoted prices in active markets.

•

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3, Cash and Cash Equivalents and Short-term Investments, to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments.

The Company had no other financial instruments that required fair value measurement for any of the periods presented.

Long-Term Debt

As of January 31, 2026 and February 1, 2025, there were no outstanding borrowings under the Company's Credit Facility.

Refer to Note 8, Long-Term Debt, Net, to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements.

Non-Financial Assets

The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value. Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820.

During Fiscal 2025, the Company recorded asset impairment charges of $33.4 million related to operating lease ROU assets and $37.2 million related to fixed assets. The Company also recorded asset impairment charges of $1.3 million related to Quiet Platforms definite-lived intangible assets. These assets were adjusted to their fair value and the loss on impairment was recorded within Impairment, Restructuring and Other Charges in the Consolidated Statements of Operations for the fiscal year ended January 31, 2026.

During Fiscal 2024, the Company recorded asset impairment charges of $6.4 million related to the sale of its Hong Kong retail operations.

Refer to Note 15, Impairment, Restructuring and Other Charges, to the Consolidated Financial Statements for additional information.

The fair value of the Company’s assets in Fiscal 2025 and Fiscal 2024 was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located.

The fair value of the Company's ROU assets was based upon market rent assumptions.

5. Earnings per Share ("EPS")

Net income per basic and diluted share attributable to AEO is computed based on the weighted average number of outstanding shares of common stock. The following is a reconciliation between basic and diluted weighted average shares outstanding:

Fiscal Years Ending

January 31, February 1, February 3,

Numerator:

Add: Interest expense, net of tax, related to the 2025 Notes (1) — — 58

Denominator:

Add: Dilutive effect of the 2025 Notes (1) — — 205

(1)

In accordance with ASU 2020-06, the Company utilizes the "if-converted" method of calculating diluted EPS.

(2)

For all periods presented, anti-dilutive shares relate to stock options and unvested restricted stock.

Refer to Note 2, Summary of Significant Accounting Policies, and Note 11, Share-Based Payments, to the Consolidated Financial Statements for additional information regarding the 2025 Notes and share-based compensation, respectively.

6. Property and Equipment, Net

Property and equipment, net consists of the following:

Fiscal Years Ending

January 31, February 1,

Refer to Note 9, Leases to the Consolidated Financial Statements included herein for additional information regarding property and equipment acquired under finance leases.

Depreciation expense is as follows:

Fiscal Years Ending

January 31, February 1, February 3,

Depreciation expense included depreciation for assets acquired under finance leases of $10.5 million, $7.0 million, and $1.9 million for Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively. Additionally, during Fiscal 2025, Fiscal 2024 and Fiscal 2023, the Company recorded $4.7 million, $5.1 million, and $3.6 million, respectively, related to asset write-offs within depreciation and amortization expense.

7. Goodwill and Intangible Assets, Net

Goodwill and definite-lived intangible assets, net consist of the following:

Fiscal Years Ending

(In thousands) American Eagle Aerie Total American Eagle Aerie Total

(1)

Beginning balances include accumulated impairment of $43.8 million for both January 31, 2026 and February 1, 2025.

Fiscal Year Ending January 31, 2026

Intangible assets, Accumulated Accumulated Intangible assets,

(In thousands) gross amortization impairment (1) net

(1)

Accumulated impairment includes $1.3 million related to Quiet Platforms trade names recorded in Fiscal 2025, and $31.2 million of customer relationships and $9.3 million of trade names related to Quiet Platforms recorded in Fiscal 2023.

Fiscal Year Ending February 1, 2025

Intangible assets, Accumulated Accumulated Intangible assets,

(In thousands) gross amortization impairment (1) net

(1)

Accumulated impairment includes $31.2 million of customer relationships and $9.3 million of trade names related to Quiet Platforms recorded in Fiscal 2023.

Amortization expense is as follows:

Fiscal Years Ending

The table below summarizes the estimated future amortization expense for intangible assets existing as of January 31, 2026 for the next five fiscal years:

Future

(In thousands) Amortization

8. Long-Term Debt, Net

The Company had no long-term debt outstanding as of January 31, 2026, February 1, 2025, and February 3, 2024.

Revolving Credit Facility

In June 2022, the Company amended and restated its Credit Agreement. The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations. The Credit Facility expires in June 2027.

As of January 31, 2026 and February 1, 2025, there were no outstanding borrowings under the Credit Agreement, and the Company was in compliance with the terms of the Credit Agreement with $12.0million outstanding in stand-by letters of credit.

Borrowings under the Credit Facility accrue interest at the election of the Company at an adjusted secured overnight financing rate ("SOFR") plus 0.10% plus an applicable margin (ranging from 1.125% to 1.375%) or an alternate base rate plus an applicable margin (ranging from 0.125% to 0.375%), with each such applicable margin being based on average borrowing availability under the Credit Facility. Interest is payable quarterly and at the end of each applicable interest period. The weighted average interest rate for borrowings during Fiscal 2025 was 5.6%. The total interest expense related to the Credit Facility borrowings for Fiscal 2025 was $6.4 million. There were no Credit Facility borrowings in Fiscal 2024. The weighted average interest rate for borrowings during Fiscal 2023 was 6.0%. The total interest expense related to the Credit Facility borrowings for Fiscal 2023 was $1.1 million.

9. Leases

The Company leases all store premises, regional distribution facilities, some of its office space and certain information technology, supply chain and office equipment under operating and finance leases.

Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes, and certain other expenses.

Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s discretion and is not reasonably certain at lease commencement. When measuring operating lease ROU assets and operating lease liabilities the Company only includes cash flows related to options to extend or terminate leases when those options are executed.

Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities.

When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset.

For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

Finance Lease Classification January 31, 2026 February 1, 2025

Assets

Liabilities

Current

Finance leases Other current liabilities and accrued expenses 12,901 11,303

Non-current

Finance leases Other non-current liabilities 28,884 23,228

(1) Finance lease assets are recorded net of accumulated depreciation of $20.3 million and $13.1 million as of January 31, 2026 and February 1, 2025, respectively.

The following table summarizes expense categories and cash payments for operating and finance leases during the period. It also includes the total non-cash transaction activity for new operating and finance lease assets and related lease liabilities entered into during the period.

Fiscal Years Ending

January 31, February 1, February 3,

Lease costs

Operating lease costs

Finance lease costs

Other information

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for finance leases (819 ) (112 ) (91 )

Financing cash flows for finance leases (3,857 ) (4,073 ) (668 )

The following table contains the average remaining lease term and discount rate, weighted by outstanding operating and finance lease liabilities as of the end of the period:

Lease term and discount rate January 31, 2026 February 1, 2025

AEO US Equity

AEO · 10-K · period ended 2026-01-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data.

AEO US Equity☆

AEO · 10-K · period ended 2026-01-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data.

AEO US Equity