See Notes to Consolidated Financial Statements

4

See Notes to Consolidated Financial Statements

5

See Notes to Consolidated Financial Statements

7

The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the "Company") at August 3, 2002 and for the three and six month periods ended August 3, 2002 (the "current period") and August 4, 2001 (the "prior period") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Consolidated Balance Sheet at February 2, 2002 was derived from the audited financial statements. The Company's business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.

Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company's Fiscal 2001 Annual Report.

The Company's financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, "Fiscal 2002" and "Fiscal 2001" refer to the fifty-two week period ending February 1, 2003 and the fifty-two week period ended February 2, 2002, respectively.

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires 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, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which amends existing accounting guidance on asset impairment and provides a single accounting model for long-lived assets to be disposed of. Additionally, SFAS No. 144 broadens the reporting of discontinued operations and changes the timing of recognizing losses on such operations. This standard supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of APB No. 30. The Company adopted the new standard on February 3, 2002, the beginning of Fiscal 2002. Adoption of SFAS 144 did not have a material impact on the Company's earnings or its financial position.

The Canadian dollar is the functional currency for the Canadian businesses. In accordance with SFAS Statement No. 52, Foreign Currency Translation, assets and liabilities denominated in foreign currencies were translated into U.S. dollars (the reporting currency) at the exchange rate prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into U.S. dollars at the monthly average exchange rate for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation adjustments are reported as an element of other comprehensive income, net of income taxes, in accordance with SFAS Statement No. 130, Reporting Comprehensive Income (see Note 6 of the Consolidated Financial Statements).

The Company principally records revenue upon purchase of merchandise by customers. Revenue is not recorded on the purchase of stored value cards and gift certificates by customers. A current liability is recorded upon purchase and revenue is recognized when the card is redeemed for merchandise. Revenue is recorded net of sales returns. A sales returns reserve is provided on gross sales for projected merchandise returns based on historical average return percentages.

Cash includes cash equivalents. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash in excess of operating requirements is invested in marketable equity or government debt obligations. As of August 3, 2002, short-term investments included investments with an original maturity of greater than three months (averaging approximately 10 months) and consisted primarily of tax-exempt municipal bonds and commercial paper classified as available for sale.

The Company has 250 million common shares authorized at $.01 par value, 74,144,168 and 73,823,625 shares issued and 71,833,065 and 71,906,072 shares outstanding as of August 3, 2002 and February 2, 2002, respectively.  The Company has 5 million preferred shares authorized at $.01 par value, with none issued or outstanding at August 3, 2002.

On February 24, 2000, the Company's Board of Directors authorized the repurchase of up to 3,750,000 shares of its stock.  As part of this stock repurchase program, the company purchased 337,100 shares of common stock for approximately $5.6 million on the open market during the six months ended August 3, 2002. Additionally, during the six months ended August 3, 2002 and August 4, 2001, the Company purchased 56,000 shares and 44,000 shares, respectively, from certain employees at market prices totaling $1.6 million and $1.4 million, respectively, for the payment of taxes in connection with the vesting of restricted stock as permitted under the 1999 Stock Incentive Plan. These repurchases have been recorded as treasury stock.

9

Options to purchase 5,443,000 and 40,000 shares of common stock were outstanding at August 3, 2002 and August 4, 2001, respectively, but were not included in the computation of net income per diluted share because the options' exercise prices were greater than the average market price of the underlying shares.

Certain reclassifications have been made to the Consolidated Financial Statements for the prior period in order to conform to the August 3, 2002 presentation.

The Company has various transactions with related parties. The Company believes that the terms of these transactions are as favorable to the Company as those that could be obtained from third parties.

10

In addition, the Company and its subsidiaries sell end-of-season, overstock and irregular merchandise to various parties, including Value City Department Stores, Inc. ("VCDS"), a publicly traded subsidiary of SSC. These sell-offs are typically sold below cost. Proceeds from sell-offs have an insignificant effect on cost of sales. For the three months ended August 3, 2002 and August 4, 2001, proceeds from sell-offs to VCDS were $0.2 million and $1.4 million, respectively. For the six months ended August 3, 2002 and August 4, 2001, proceeds from sell-offs to VCDS were $3.9 million and $2.2 million, respectively.

The Company had approximately $1.6 million and $2.3 million included in accounts receivable at August 3, 2002 and February 2, 2002, respectively, that pertained to related parties. The majority of the receivable related to merchandise sell-offs.

SSC and its affiliates charge the Company for various professional services provided to the Company, including certain legal, real estate and insurance services. For the three months ended August 3, 2002 and August 4, 2001, the Company paid approximately $0.1 million for these services. The Company paid approximately $0.2 million and $0.6 million for these services for the six months ended August 3, 2002 and August 4, 2001, respectively.

Additionally, the Company paid $0.5 million and $0.7 million, respectively, for the three and six months ended August 3, 2002 and $0.4 million for the six months ended August 4, 2001, to cover its share of operating costs based on usage of the corporate aircraft. There were no monies paid for usage of the corporate aircraft during the three months ended August 4, 2001.

7. Goodwill and Other Intangible Assets

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new standard, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives.

The Company adopted SFAS No. 142 on February 3, 2002, the beginning of Fiscal 2002. The Company assessed the useful life of its goodwill and deemed it to have an indefinite life; therefore, amortization ceased on February 2, 2002. Additionally, the Company performed the related asset impairment tests and determined that no goodwill impairment exists.

Other intangible assets, net of accumulated amortization, were immaterial as of August 3, 2002 and August 4, 2001 and are included in other assets, net of accumulated amortization, on the balance sheet for the respective periods.

In accordance with SFAS No. 142, the Company did not restate the three or six months ended August 3, 2001 to add back the amortization expense of goodwill. For the three and six months ended August 3, 2001, goodwill amortization expense did not have a material impact on net income or earnings per share.

On November 30, 2000, the Company entered into an interest rate swap agreement, a derivative instrument, totaling $29.2 million in connection with the term facility.  The swap amount decreases on a monthly basis beginning January 1, 2001 until the termination of the agreement in December 2007.  The Company utilizes the interest rate swap to manage interest rate risk.  The Company pays a fixed rate of 5.97% and receives a variable rate based on the one-month Bankers' Acceptance Rate. This agreement effectively changes the interest rate on the borrowings under the term facility from a variable rate to a fixed rate of 5.97% plus 140 basis points.

The Company recognizes its derivative on the balance sheet at fair value at the end of each period.  Changes in the fair value of the derivative that is designated and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss). For the three months ended August 3, 2002 and August 4, 2001, unrealized net gains (losses) on derivative instruments of approximately $0.1 million and $(0.1) million, respectively, net of related tax effects, were recorded in other comprehensive income (loss).

The Company does not believe there is any significant exposure to credit risk due to the creditworthiness of the bank. In the event of non-performance by the bank, the Company's loss would be limited to any unfavorable interest rate differential.

For the three and six months ended August 3, 2002, the effective tax rate used for the provision of income tax approximated 38%. For the three and six months ended August 4, 2001, the effective tax rate used for the provision of income tax approximated 36% and 37%, respectively.

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The Company is a party to ordinary routine litigation incidental to its business. Management does not expect the results of the litigation to be material to the financial statements individually or in the aggregate.

13

Ernst & Young LLP, our independent accountants, have performed a limited review of the Consolidated Financial Statements for the three and six month periods ended August 3, 2002 and August 4, 2001, as indicated in their report on the limited review included below. Since they did not perform an audit, they express no opinion on the Consolidated Financial Statements referred to above. Management has given effect to any significant adjustments and disclosures proposed in the course of the limited review.

The Board of Directors and Stockholders
American Eagle Outfitters, Inc.

We have reviewed the accompanying consolidated balance sheet of American Eagle Outfitters, Inc. as of August 3, 2002, the related consolidated statements of operations for the three and six month periods ended August 3, 2002 and August 4, 2001, and the consolidated statements of cash flows for the six month periods ended August 3, 2002 and August 4, 2001. These financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of American Eagle Outfitters, Inc. as of February 2, 2002, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein) and in our report dated March 1, 2002 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 2, 2002, is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania
August 13, 2002

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Net sales increased 9.2% to $319.2 million from $292.4 million for the same period last year, primarily due to new stores. We operated 822 total stores at the end of the period compared to 733 total stores at the end of the prior period.

Consolidated comparable store sales, which include American Eagle and Bluenotes/Thriftys stores, decreased 5.5% when compared to the same period last year. Comparable store sales for the American Eagle stores declined 4.8% for the three months ended August 3, 2002.

Gross profit increased to $109.8 million from $108.0 million. Gross profit as a percent of net sales decreased to 34.4% from 36.9%. The decrease in gross profit as a percent of net sales was attributable primarily to lower merchandise margins and the deleveraging of buying, occupancy and warehousing costs in our American Eagle stores in the United States. Lower merchandise margins resulted from an increase in markdowns as a percent to sales offset by improved markon. The deleveraging of buying, occupancy and warehousing costs resulted primarily from an increase in rent expense as a percent to sales.

Selling, general and administrative expenses increased to $81.2 million from $75.3 million. As a percent of net sales, these expenses decreased to 25.4% from 25.7%. The decrease as a percent to sales is due primarily to a decrease in the cost of communications, store salaries, professional services, information technology, supplies and travel as a percent to sales.

15

Depreciation and amortization expense increased to $12.5 million from $9.9 million due primarily to our new store expansion in the United States. As a percent of net sales, these expenses increased to 3.9% from 3.4 %.

Other income decreased to $0.2 million, or 0.1% of net sales, from $0.9 million, or 0.3% of net sales. The decrease as a percent of net sales was primarily due to higher interest expense.

Income before income taxes decreased to $16.3 million from $23.7 million. As a percent of net sales, income before income taxes decreased to 5.2% from 8.1%. The decrease in income before income taxes as a percent of sales was attributable to the factors noted above.

Net sales increased 9.8% to $597.1 million from $543.9 million for the same period last year, primarily due to new stores. We operated 822 total stores at the end of the period compared to 733 total stores at the end of the prior period.

Consolidated comparable store sales, which include American Eagle and Bluenotes/Thriftys stores, decreased 5.7% when compared to the same period last year. Comparable store sales for the American Eagle stores declined 4.9% for the six months ended August 3, 2002.

Gross profit increased to $219.8 million from $209.9 million. Gross profit as a percent of net sales decreased to 36.8% from 38.6%. The decrease in gross profit as a percent of net sales was attributable to the deleveraging of buying, occupancy and warehousing costs, which resulted primarily from an increase in rent expense as a percent to sales.

Selling, general and administrative expenses increased to $159.3 million from $144.9 million. As a percent of net sales, these expenses increased to 26.7% from 26.6%. The increase as a percent to sales is due primarily to an increase in the cost of communications and advertising offset by the leveraging of store salaries and travel.

Depreciation and amortization expense increased to $24.4 million from $17.9 million due primarily to our new store expansion in the United States. As a percent of net sales, these expenses increased to 4.1% from 3.3%.

Other income decreased to $0.9 million, or 0.2% of net sales, from $1.8 million, or 0.3% of net sales. The decrease as a percent of net sales was primarily due to lower investment income resulting from lower average investment rates and higher interest expense.

Income before income taxes decreased to $36.9 million from $48.9 million. As a percent of net sales, income before income taxes decreased to 6.2% from 9.0%. The decrease in income before income taxes as a percent of sales was attributable to the factors noted above.

16

The following sets forth certain measures of the Company's liquidity:

Net cash used for operating activities was $12.8 million for the six months ended August 3, 2002 compared to $22.9 million for the same period last year. The decrease in net cash used for operating activities was due primarily to an increase in accounts payable compared to the prior year offset by decreased accrued liabilities and increased receivables compared to the prior year.

Net cash used for investing activities of $56.8 million was primarily for capital expenditures of $32.1 million and the net purchase of short-term investments of $22.7 million for the six months ended August 3, 2002.

Cash outflows for financing activities for the six months ended August 3, 2002 were primarily for stock repurchases of $5.6 million offset by $4.8 million provided by borrowings on the revolving operating facility.

At August 3, 2002, the Company had an unsecured demand lending arrangement (the "facility") with a bank to provide a $125.0 million line of credit at either the lender's prime lending rate (4.8% at August 3, 2002) or a negotiated rate such as LIBOR. The facility has a limit of $40.0 million that can be used for direct borrowing. No borrowings were required against the line for the current or prior period. At August 3, 2002, letters of credit in the amount of $50.0 million were outstanding leaving a remaining available balance on the facility of $75.0 million. During June 2001, the Company entered into an agreement with a separate financial institution for an uncommitted letter of credit facility for $50.0 million. At August 3, 2002, letters of credit in the amount of $23.4 million were outstanding, leaving a remaining available balance on the uncommitted letter of credit facility of $26.6 million.

During November 2000, the Company entered into a $29.1 million non-revolving term facility (the "term facility") and a $4.9 million revolving operating facility (the "operating facility") in connection with the Canadian acquisition. The term facility matures in December 2007 and bears interest at the one-month Bankers' Acceptance Rate (2.8% at August 3, 2002) plus 140 basis points. The operating facility is due in November 2002, has five additional one-year extensions, and bears interest at either the lender's prime lending rate (4.5% at August 3, 2002) or the Bankers' Acceptance Rate (2.8% at August 3, 2002) plus 120 basis points. At August 3, 2002, borrowings under the operating facility were $4.8 million.

Capital expenditures, net of construction allowances, totaled $32.1 million for the six months ended August 3, 2002. This amount consisted primarily of expenditures related to new and remodeled American Eagle stores in the United States.

We expect capital expenditures during the remainder of Fiscal 2002 to be approximately $50 to $55 million, net of construction allowances, which will relate primarily to approximately 45-50 new American Eagle stores in the United States and Canada, remodeling approximately 15-20 American Eagle stores in the United States and system improvements. This forward-looking statement will be influenced by factors including our financial position, consumer spending, and the number of acceptable mall store leases that may become available. We believe that our existing cash and investment balances, our cash flow from operations, and our bank lines of credit will be sufficient to meet our anticipated cash requirements through Fiscal 2002.

17

The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. When more than one accounting principle, or method of its application, is generally accepted, management selects the principle or method that is appropriate in the Company's specific circumstances. Application of these accounting principles requires management to make estimates about the future resolution of existing uncertainties. Accordingly, results could differ from these estimates. In preparing these financial statements, management has made its best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality. For more information regarding the Company's critical accounting policies, please see the discussion in Management's Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for the year ended February 2, 2002.

We do not believe that inflation has had a significant effect on our net sales or our profitability. Substantial increases in cost, however, could have a significant impact on our business and the industry in the future.

This report contains various 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent our expectations or beliefs concerning future events, including the following:

- the planned opening of approximately 45-50 American Eagle stores in the United States and Canada during the
   remainder of Fiscal 2002,
- the planned remodeling of approximately 15-20 American Eagle stores during the remainder of Fiscal 2002, and
- the sufficiency of existing cash and investment balances, cash flows and line of credit facilities to meet Fiscal
  2002 cash requirements.

We caution that these statements are further qualified by factors that could cause actual results to differ materially from those in the forward-looking statements, including without limitation, the following:

- our ability to anticipate and respond to changing consumer preferences and fashion trends in a timely manner,
- the ability to obtain suitable sites for new stores at acceptable costs,
- our ability to successfully acquire and integrate other businesses,
- the expansion of buying and inventory capabilities,
- the interruption of the flow of merchandise from key vendors,
- any disaster or casualty resulting in the interruption of service for our distribution centers,
- the effect of overall economic conditions and consumer spending patterns,
- the effect of changes in weather patterns,
- the change in currency and exchange rates, interest rates, duties, tariffs, or quotas,
- the effect of competitive pressures from other retailers,  
- the effect of international and domestic acts of terror, and
- the potential for a strike by the International Longshoreman's Workers Union on the entire United States West
Coast.

The impact of the above factors, some of which are beyond our control, may cause our actual results to differ materially from expected results in these statements and other forward-looking statements we may make from time-to-time.

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PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

The stockholder proposal regarding adoption of human rights standards did not pass. It received 4,797,762 shares for, 48,741,229 shares against, 1,947,747 shares abstain and 9,070,259 shares not voted. The Company has an existing comprehensive vendor compliance program that contractually requires all suppliers to meet our global workplace standards, including human rights standards.

Item 6. Exhibits

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated September 13, 2002

American Eagle Outfitters, Inc.
(Registrant)

/s/ Laura A. Weil

Laura A. Weil
Executive Vice President and Chief Financial Officer

/s/ Dale E. Clifton

Dale E. Clifton
Vice President, Controller and Chief Accounting Officer

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I, Jay L. Schottenstein, Chief Executive Officer of American Eagle Outfitters, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Eagle Outfitters, Inc.;
   
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

September 13, 2002

/s/ Jay L. Schottenstein

Jay L. Schottenstein
Chief Executive Officer

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I, Laura A. Weil, Chief Financial Officer of American Eagle Outfitters, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Eagle Outfitters, Inc.;
   
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

September 13, 2002

/s/ Laura A. Weil

Laura A. Weil
Executive Vice President and Chief Financial Officer