<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 2002

                                                      REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------

                               AEROPOSTALE, INC.

             (Exact Name of Registrant as Specified in its Charter)
                             ---------------------

<Table>
<S>                                    <C>                                    <C>
              DELAWARE                                 5600                                31-1443880
   (State or other jurisdiction of         (Primary Standard Industrial                 (I.R.S. Employer
   incorporation or organization)           Classification Code Number)              Identification Number)
</Table>

                            1372 BROADWAY, 8TH FLOOR
                            NEW YORK, NEW YORK 10018
                                 (646) 485-5398
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                                JULIAN R. GEIGER
                      CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                               AEROPOSTALE, INC.
                            1372 BROADWAY, 8TH FLOOR
                            NEW YORK, NEW YORK 10018
                                 (646) 485-5398
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                             ---------------------
                                   COPIES TO:

<Table>
<S>                                                    <C>
                JOSHUA N. KORFF, ESQ.                               WILLIAM F. SCHWITTER, ESQ.
                  KIRKLAND & ELLIS                             PAUL, HASTINGS, JANOFSKY & WALKER LLP
                  CITIGROUP CENTER                                        399 PARK AVENUE
                153 EAST 53RD STREET                                 NEW YORK, NEW YORK 10022
              NEW YORK, NEW YORK 10022                                    (212) 318-6000
                   (212) 446-4800
</Table>

                             ---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date of this Registration Statement.
                             ---------------------

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED MAXIMUM            AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED            AGGREGATE OFFERING PRICE   REGISTRATION FEE(1)
------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                        <C>
Common stock, $0.01 par value...............................        $200,000,000               $18,400
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</Table>

(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
    amended.
                             ---------------------

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT
NOTICE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                   SUBJECT TO COMPLETION, DATED MARCH 8, 2002

PROSPECTUS

                                                SHARES

                               [AEROPOSTALE LOGO]

                                  COMMON STOCK

                            ------------------------

     This is an initial public offering of           shares of common stock of
Aeropostale, Inc. We are selling           of the shares of common stock offered
under this prospectus, and certain of our stockholders, referred to in this
prospectus as the selling stockholders, are selling the remaining shares.

        There is currently no public market for our shares. We currently
estimate that the initial public offering price of the shares will be between
$     and $     per share. We have applied to have our common stock approved for
quotation on the New York Stock Exchange under the symbol "ARO."

        SEE "RISK FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT RISKS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
                            ------------------------

<Table>
<Caption>
                                                              PER SHARE    TOTAL
                                                              ---------   --------
<S>                                                           <C>         <C>
Public offering price.......................................   $          $
Underwriting discounts and commissions......................   $          $
Proceeds, before expenses, to us............................   $          $
Proceeds, before expenses, to the selling stockholders......   $          $
</Table>

                            ------------------------

     The underwriters may purchase up to an additional           shares of our
common stock from the selling stockholders at the initial public offering price
less the underwriting discount to cover over-allotments.
     The underwriters expect to deliver the shares against payment in New York,
New York on                , 2002.
                            ------------------------
                          Joint Book-Running Managers
BEAR, STEARNS & CO. INC.                                     MERRILL LYNCH & CO.
                            ------------------------
BANC OF AMERICA SECURITIES LLC

                           U.S. BANCORP PIPER JAFFRAY
                                                             WACHOVIA SECURITIES
                            ------------------------
              The date of this Prospectus is                , 2002
<PAGE>

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

     UNTIL           , 2002, ALL DEALERS EFFECTING TRANSACTIONS OF THE COMMON
STOCK OFFERED HEREBY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

                            ------------------------
                               TABLE OF CONTENTS
                            ------------------------

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Prospectus Summary..........................................    1
Risk Factors................................................    5
Forward-Looking Statements..................................   10
Use of Proceeds.............................................   10
Dividend Policy.............................................   10
Capitalization..............................................   11
Dilution....................................................   12
Selected Financial and Operating Data.......................   13
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   15
Business....................................................   23
Management..................................................   33
Certain Transactions........................................   41
Principal and Selling Stockholders..........................   43
Description of Capital Stock................................   45
Shares Eligible for Future Sale.............................   47
Underwriting................................................   49
Legal Matters...............................................   52
Experts.....................................................   52
Where You Can Find Additional Information...................   52
Index to Financial Statements...............................  F-1
</Table>

                                       (i)
<PAGE>

                               PROSPECTUS SUMMARY

     This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all the information that you should consider
before investing in our common stock. You should read the entire prospectus
carefully, especially "Risk Factors" and our consolidated financial statements
and related notes. All share numbers in this prospectus reflect a   -for-1 split
of our common stock and non-voting common stock which will occur immediately
prior to the consummation of this offering. In making comparisons to our
predecessor company, including all financial information from fiscal 1997 and
fiscal 1998, you should note that such information is derived from the
accounting records of our predecessor company and is not comparable to our
financial statements due to, among other things, different accounting policies.
In January 2002, we changed our fiscal year end from the Saturday closest to
July 31 to the Saturday closest to January 31 of each year. References in this
prospectus to fiscal 2002 refer to the fifty-two week period ending on February
2, 2003. Any specific reference to a fiscal year end prior to 2002, "fiscal
1999" for example, refers to the fifty-two or fifty-three week period ended on
the Saturday closest to July 31 of such year.

                                  AEROPOSTALE

     Our company is a fast-growing, mall-based specialty retailer of casual
apparel and accessories that targets both young women and young men aged 11 to
20. We provide our customers with a focused selection of high-quality,
active-oriented, fashion basic merchandise at compelling values. We maintain
complete control over our proprietary brand by designing and sourcing all of our
merchandise. Our products can be purchased only in our stores, which sell
Aeropostale merchandise exclusively. As of February 2, 2002, we operated 278
stores in 33 states and the District of Columbia.

     Our merchandise, which includes graphic t-shirts, tops, bottoms, sweaters,
jeans, outerwear and accessories, emphasizes comfort and style in response to
the demands of our customers' active lifestyles. We believe that a key component
of our success is our ability to understand what our customers want and can
afford. Our "design-driven, merchant-modified" philosophy ensures that our
merchandise styles both reflect the latest trends and are not too fashion
forward for our customers. Today, a significant portion of our merchandise
features either the "Aeropostale" or "Aero" logo, which we feel enhances both
our brand recognition and appeal among our target customers. We employ a
sourcing strategy that maximizes our speed to market and enables us to respond
quickly to our customers' preferences. We believe that by offering desirable
styles, comfort and consistent value, our brand will continue to enjoy
widespread appeal and our stores will continue to be preferred shopping
destinations.

     Our stores are designed to create a high energy, fun shopping environment
through the use of powerful in-store promotional signage, creative visuals,
bright lighting and popular music. Our average store size of approximately 3,500
square feet is generally smaller than that of our mall-based competitors and we
believe that this enables us to achieve higher sales productivity and project a
sense of activity and excitement. To increase customer traffic, we generally
locate our stores in busy, central mall locations near popular teen gathering
spots, such as food courts, music stores and other teen-oriented retailers. We
have successfully and consistently implemented our store model across a wide
range of mall classifications and geographic locations. We believe that our
store model will allow us to continue significant and profitable store growth in
both new and existing markets.

     The Aeropostale brand was created as a department store private label
initiative in the early 1980s by our former parent, R.H. Macy & Co., Inc. Macy's
opened the first mall-based Aeropostale store in 1987. Over the next decade,
Macy's, together with its current parent company, Federated Department Stores,
Inc., opened over 100 Aeropostale stores. The present core concept of the
Aeropostale brand, however, did not begin to materialize until 1996, when our
management team positioned Aeropostale for accelerated growth by expanding the
brand from primarily a young men's brand to a brand that offers casual apparel
and accessories for both young women and young men. In 1998, Federated sold its
specialty store division, which included our company, to our management team and
Bear Stearns Merchant Banking.

                                        1
<PAGE>

     Since we became an independent company in 1998, our management team has
developed Aeropostale into a differentiated and recognized brand. During this
period, we have:

     - Increased net sales from approximately $141.4 million in fiscal 1998 to
       approximately $304.8 million in fiscal 2001, representing a compound
       annual growth rate of approximately 29.2%;

     - Achieved annual comparable store sales growth of 5.5% in fiscal 1999,
       14.5% in fiscal 2000 and 8.7% in fiscal 2001;

     - Increased our store count by 159 stores from 119 as of August 3, 1998 to
       278 as of February 2, 2002; and

     - Improved sales per square foot from $317 in fiscal 1998 to $392 in fiscal
       2001.

BUSINESS STRENGTHS

     We believe that our business strengths will enable us to continue to expand
our store base and grow profitably. Our principal business strengths include:

     - Differentiated and recognizable brand that offers comfortable,
       high-quality, active-oriented merchandise and reflects mainstream
       fashions at compelling values;

     - Disciplined operating and financial practices through which we maintain
       complete control over all aspects of our business;

     - Flexible operating structure that enables us to react quickly to changes
       in customer preferences;

     - New store economics that provide an attractive return on investment
       across a wide variety of mall classifications and geographic locations;
       and

     - Experienced management team with a demonstrated ability to grow the
       business profitably.

GROWTH STRATEGY

     We intend to capitalize on the strength of our brand and pursue profitable
growth by:

     - Opening approximately 80 new stores in fiscal 2002 in both existing and
       new markets, and continuing to open new stores at a comparable pace in
       future years;

     - Enhancing and expanding our brand awareness and recognition through an
       innovative marketing campaign;

     - Continuing our high levels of store productivity through profitable
       pricing strategies and consistent store level execution; and

     - Investing in and expanding our infrastructure to maximize our economies
       of scale and increase our operating efficiency.

THE TEEN MARKET

     We generally target our merchandise to the teenage segment of the
population. According to the U.S. Census Bureau, the teenage population in the
United States, which is defined as persons 12 to 19 years old, will grow
approximately 37% faster than the overall population, from approximately 32
million in 2000 to approximately 34 million in 2005. The Census Bureau predicts
that the teenage population will continue to grow through 2008. According to
Teenage Research Unlimited, an independent research firm, spending among
teenagers has grown to $172 billion in 2001 from $141 billion in 1998,
reflecting a compound annual growth rate of approximately 6.8%, or more than
double the rate of inflation during this period. We believe that teenage apparel
spending is less susceptible to general economic downturns than adult apparel
spending. In addition, we believe that these demographic and spending trends
offer us strong growth opportunities.

     When we became an independent company, we incorporated in Delaware on
August 3, 1998. Our principal executive offices are located at 1372 Broadway,
8th Floor, New York, New York 10018, and our telephone number is (646) 485-5398.
Our website address is www.aeropostale.com. Information included or referred to
on our website is not a part of this prospectus.

                                        2
<PAGE>

                                  THE OFFERING

Common stock offered

  By our company....................              shares

  By the selling stockholders.......              shares

Common stock to be outstanding after
this offering.......................              shares

Use of proceeds.....................       Approximately $     will be used to
                                           redeem all of our outstanding shares
                                           of 12 1/2% Series B redeemable
                                           preferred stock and pay all accrued
                                           and unpaid dividends thereon, and the
                                           remainder will be used for general
                                           corporate purposes, including new
                                           store openings and working capital.

Proposed New York Stock Exchange
symbol..............................       ARO

     Unless otherwise indicated, all information in this prospectus assumes that
the underwriters will not exercise their over-allotment option to purchase
shares of our common stock from the selling stockholders at the price set forth
on the cover page of this prospectus.

     In addition, unless otherwise indicated, all information in this
prospectus, including the outstanding share information above, is based upon the
number of shares outstanding as of February 2, 2002 and gives effect to a
  -for-1 stock split of our common stock and non-voting common stock which will
occur immediately prior to the consummation of this offering and the following
transactions, which will be effected simultaneously with the consummation of
this offering:

     - the conversion of all of our outstanding shares of non-voting common
       stock into a total of           shares of common stock; and

     - the redemption of all of our outstanding shares of 12 1/2% Series B
       redeemable preferred stock and payment of all accrued and unpaid
       dividends thereon for a total of $            .

     The common stock to be outstanding after this offering excludes shares of
common stock issuable upon the exercise of stock options outstanding as of
February 2, 2002 under our 1998 Stock Option Plan at a weighted average exercise
price of $  per share and        additional shares of common stock reserved for
issuance under our 1998 Stock Option Plan and our 2002 Long-Term Incentive Plan.

     Aeropostale(R) and Aero(TM) are trademarks of Aeropostale, and we have
registered the trademark Aeropostale(R) with the U.S. Patent and Trademark
Office. All other trademarks, service marks and trade names referred to in this
prospectus are the property of their respective owners.

                                        3
<PAGE>

                      SUMMARY FINANCIAL AND OPERATING DATA

<Table>
<Caption>
                                                               FISCAL YEAR ENDED(1)                 THIRTEEN WEEKS ENDED
                                                       ------------------------------------      ---------------------------
                                                       JULY 31,     JULY 29,     AUGUST 4,       OCTOBER 28,    NOVEMBER 3,
                                                         1999         2000          2001             2000           2001
                                                       ---------    ---------    ----------      ------------   ------------
                                                                                                         (UNAUDITED)
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED OPERATING DATA)
<S>                                                    <C>          <C>          <C>             <C>            <C>
STATEMENT OF INCOME DATA:
Net sales............................................  $152,506     $213,445      $304,767         $ 76,831       $126,019
Gross profit.........................................    42,017       61,472        86,149           25,750         48,934
Selling, general and administrative expenses.........    32,406       45,680        65,918           15,215         23,695
Operating income.....................................     9,845       16,026        19,650(2)        10,592         25,239
Income before income taxes...........................     9,759       15,115        17,979            9,937         24,957
Income from continuing operations....................     6,230        9,366        10,914            6,007         14,727
Income (loss) from discontinued operations(3)........      (268)       2,002           405               --             --
Cumulative effect of accounting change(4)............        --           --            --               --          1,632
Net income...........................................     5,962       11,368        11,319            6,007         16,359
Diluted net income (loss) per common share:(5)
  From continuing operations.........................
  From discontinued operations.......................
  From cumulative accounting change..................
  Net income per share...............................
SELECTED OPERATING DATA:
Number of stores open at end of period...............       129          178           252              208            277
Comparable store sales increase(6)...................       5.5%        14.5%          8.7%            12.7%          22.8%
Average store sales (in thousands)(7)................  $  1,258     $  1,372      $  1,360         $    387       $    461
Average square footage per store(8)..................     3,687        3,548         3,437            3,490          3,464
Sales per square foot(9).............................  $    339     $    380      $    392         $    111       $    134
</Table>

<Table>
<Caption>
                                                               AS OF NOVEMBER 3, 2001
                                                              ------------------------
                                                                               AS
                                                               ACTUAL     ADJUSTED(10)
                                                              --------    ------------
                                                                    (UNAUDITED)
                                                                   (IN THOUSANDS)
<S>                                                           <C>         <C>
BALANCE SHEET DATA:
Working capital.............................................  $ 23,386      $
Total assets................................................   137,821
12 1/2% Series B redeemable preferred stock.................     9,326
Total debt..................................................    15,829
Total stockholders' equity..................................    42,384
</Table>

---------------
 (1) Our results of operations for fiscal 2001 included 53 weeks compared to 52
     weeks for all other fiscal years presented in this prospectus. In January
     2002, we changed our fiscal year end from the Saturday closest to July 31
     to the Saturday closest to January 31 of each year.

 (2) Includes the effect of an $815,000 charge incurred in connection with the
     closing of seven aero kids concept stores.

 (3) On February 25, 2000, we decided to discontinue our Chelsea Cambell
     specialty store business and we closed all Chelsea Cambell stores by the
     end of December 2000. The operating results of this segment for all years
     have been reclassified as discontinued operations.

 (4) On August 5, 2001, we adopted Statement of Accounting Standards No. 142,
     "Goodwill and Other Intangibles." With the adoption, the remaining balance
     of negative goodwill was recorded as a cumulative effect of such accounting
     change.

 (5) All per share information reflects a   -for-1 split of all of our common
     stock which will occur immediately prior to the consummation of this
     offering.

 (6) Our comparable store sales percentages are based on net sales and stores
     are considered comparable beginning on the first day of the fiscal month
     following the fourteenth full fiscal month of sales.

 (7) Our average store sales are based on total net sales divided by the
     weighted average of all open stores in the period.

 (8) Our average square footage per store is based on all open stores at the end
     of the period.

 (9) Our sales per square foot consists of total net sales, divided by the
     weighted average of gross square footage of all open stores.

(10) As adjusted information gives effect to the application of the net proceeds
     from the sale of the     shares of common stock offered by our company at
     an assumed initial public offering price of $  per share and after
     deducting estimated offering expenses and underwriting discounts and
     commissions. The application of our net proceeds will include the
     redemption of all of our outstanding shares of 12 1/2% Series B redeemable
     preferred stock for $6,250,000 and payment of approximately $    of accrued
     and unpaid dividends thereon, which will occur simultaneously with the
     consummation of the offering.

                                        4
<PAGE>

                                  RISK FACTORS

     Before you invest in our common stock, you should carefully consider the
various risks, including those described below, together with all of the other
information included in this prospectus. If any of these risks actually occur,
our business, financial condition or operating results could be adversely
affected. In that case, the trading price of our common stock could decline and
you could lose all or part of your investment.

                         RISKS RELATED TO OUR BUSINESS

OUR GROWTH STRATEGY RELIES ON THE CONTINUED ADDITION OF A SIGNIFICANT NUMBER OF
NEW STORES EACH YEAR, WHICH COULD STRAIN OUR RESOURCES AND CAUSE THE PERFORMANCE
OF OUR EXISTING STORES TO SUFFER.

     Our growth will largely depend on our ability to open and operate new
stores successfully. We opened 74 new stores in fiscal 2001 and 57 stores in
fiscal 2000. We plan to open approximately 80 new stores in fiscal 2002, an
increase of approximately 30% over our current store base. We intend to continue
to open a significant number of new stores in future years while remodeling a
portion of our existing store base annually. Our proposed expansion will place
increased demands on our operational, managerial and administrative resources.
These increased demands could cause us to operate our business less effectively,
which in turn could cause deterioration in the financial performance of our
individual stores. In addition, to the extent that our new store openings are in
existing markets, we may experience reduced net sales volumes in existing stores
in those markets.

OUR EXPANSION PLAN IS DEPENDENT ON A NUMBER OF FACTORS, WHICH COULD DELAY OR
PREVENT THE SUCCESSFUL OPENING OF NEW STORES AND SUBSEQUENT PENETRATION INTO NEW
MARKETS.

     We will be unable to open and operate new stores successfully and our
growth will be limited unless we can:

     - identify suitable markets and sites for store locations;

     - negotiate acceptable lease terms;

     - hire, train and retain competent store personnel;

     - maintain a proportion of new stores to mature stores that does not harm
       existing sales;

     - foster current relationships and develop new relationships with vendors
       that are capable of supplying a greater volume of merchandise;

     - manage inventory effectively to meet the needs of new and existing stores
       on a timely basis; and

     - expand our infrastructure to accommodate growth.

     In addition, we will open new stores in regions of the United States in
which we currently have few or no stores. Our experience in these markets is
limited and we cannot assure you that we will be able to develop our brand in
these markets or adapt to competitive, merchandising and distribution challenges
that may be different from those in our existing markets. Our inability to open
new stores successfully and/or penetrate new markets would have a material
adverse effect on our revenue and earnings growth.

OUR NET SALES AND INVENTORY LEVELS FLUCTUATE ON A SEASONAL BASIS, LEAVING OUR
ANNUAL OPERATING RESULTS PARTICULARLY SUSCEPTIBLE TO CHANGES IN BACK-TO-SCHOOL
AND HOLIDAY SHOPPING PATTERNS.

     Our net sales and net income are disproportionately higher from August
through January each year due to increased sales from back-to-school and holiday
shopping. Sales during this period cannot be used as an accurate indicator of
annual results. Our net sales and net income from February through July are
typically lower due, in part, to the traditional retail slowdown immediately
following the winter holiday

                                        5
<PAGE>

season. Any significant decrease in sales during the back-to-school and winter
holiday seasons would have a material adverse effect on our financial condition
and results of operations.

     In addition, in order to prepare for the back-to-school and holiday
shopping seasons, we must order and keep in stock significantly more merchandise
than we would carry during other parts of the year. Any unanticipated decrease
in demand for our products during these peak shopping seasons could require us
to sell excess inventory at a substantial markdown, which could reduce our net
sales and gross margins and negatively impact our profitability.

FLUCTUATIONS IN COMPARABLE STORE SALES AND QUARTERLY RESULTS OF OPERATIONS COULD
CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE SUBSTANTIALLY.

     Our quarterly results of operations for our individual stores have
fluctuated in the past and can be expected to continue to fluctuate in the
future. Since the beginning of fiscal 2000, our quarterly comparable store sales
have ranged from an increase of 22.8% to a decrease of 0.4%. In addition, our
recent comparable store sales have been higher than our historical average and
we cannot assure you that we will be able to maintain these levels of comparable
store sales as we expand our business.

     Our comparable store sales and quarterly results of operations are affected
by a variety of factors, including:

     - fashion trends;

     - calendar shifts of holiday or seasonal periods;

     - the effectiveness of our inventory management;

     - changes in our merchandise mix;

     - the timing of promotional events;

     - weather conditions;

     - changes in general economic conditions and consumer spending patterns;
       and

     - actions of competitors or mall anchor tenants.

     If our future comparable store sales fail to meet the expectations of
research analysts, then the market price of our common stock could decline
substantially. You should refer to the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for more
information.

IF WE ARE UNABLE TO IDENTIFY AND RESPOND TO CONSUMERS' FASHION PREFERENCES IN A
TIMELY MANNER, OUR PROFITABILITY WOULD DECLINE.

     We may be unable to keep pace with the rapidly changing fashion trends and
consumer tastes inherent in the apparel industry. Our current design philosophy
is based on the belief that our target customers prefer clothing that suits the
demands of their active lifestyles and that they like to identify with a logo.
Accordingly, we produce casual, comfortable apparel, a majority of which
displays either the "Aeropostale" or "Aero" logo. We cannot assure you that
fashion trends will not move away from casual clothing or that we will not have
to alter our design strategy to reflect a consumer change in logo preference. If
we fail to anticipate, identify or react appropriately to changes in styles,
trends, desired images or brand preferences, we may need to incur higher
markdowns to reduce excess inventory. Utilizing such markdowns would negatively
impact our profitability.

WE RELY ON THIRD PARTIES TO MANAGE THE WAREHOUSING AND DISTRIBUTION ASPECTS OF
OUR BUSINESS. IF THESE THIRD PARTIES DO NOT ADEQUATELY PERFORM THESE FUNCTIONS,
OUR BUSINESS WOULD BE DISRUPTED.

     The efficient operation of our stores is dependent on our ability to
distribute merchandise to locations throughout the United States in a timely
manner. Our distribution facility in Carlstadt, New Jersey is
                                        6
<PAGE>

leased and operated by an independent third party. We depend on this third party
to receive, sort, pack and distribute substantially all of our merchandise. In
addition, we rely on this third party to manage a separate warehouse facility
for us that we lease in South River, New Jersey. This third party employs
personnel represented by a labor union. Although there have been no work
stoppages or disruptions since the inception of our relationship with this third
party provider in 1991, we cannot assure you that there will be no disruptions
in the future. We also use a separate third party transportation company to
deliver our merchandise from our warehouses to our stores. Any failure by either
of these third parties to respond adequately to our warehousing and distribution
needs would disrupt our operations and negatively impact our profitability.

WE RELY ON A SMALL NUMBER OF VENDORS TO SUPPLY A SIGNIFICANT AMOUNT OF OUR
MERCHANDISE, AND OUR FAILURE TO MAINTAIN GOOD RELATIONSHIPS WITH ONE OR MORE OF
THEM COULD HARM OUR ABILITY TO SOURCE OUR PRODUCTS.

     For the fifty-two weeks ended February 2, 2002, we sourced approximately
41% of our merchandise from our top three vendors, one of which supplied
approximately 16% of our products. In addition, Federated Merchandising Group,
or FMG, a wholly owned subsidiary of Federated Department Stores, Inc., acted as
our agent with respect to the sourcing of approximately 27% of our merchandise.
Our relationships with our vendors generally are not on a contractual basis and
do not assure adequate supply, quality or acceptable pricing on a long-term
basis. Most of our vendors could discontinue selling to us at any time. If one
or more of our significant vendors were to sever their relationship with us, we
could be unable to obtain replacement products in a timely manner, which could
cause our sales to decrease.

MOST OF OUR MERCHANDISE IS MANUFACTURED BY FOREIGN SUPPLIERS, THEREFORE THE
AVAILABILITY AND COSTS OF THESE PRODUCTS MAY BE NEGATIVELY AFFECTED BY RISKS
ASSOCIATED WITH INTERNATIONAL TRADE.

     Trade restrictions such as increased tariffs or quotas, or both, could
affect the importation of apparel generally and increase the cost and reduce the
supply of merchandise available to us. Much of our merchandise is sourced
directly from foreign vendors in Europe, Asia and Central America. In addition,
many of our domestic vendors maintain production facilities overseas. Some of
these facilities are located in regions where political instability could cause
a disruption in trade. Any reduction in merchandise available to us or any
increase in its cost due to tariffs, quotas or local political issues could have
a material adverse effect on our results of operations.

THE DEPARTURE OF CERTAIN MEMBERS OF OUR SENIOR MANAGEMENT TEAM COULD ADVERSELY
AFFECT OUR BUSINESS.

     The success of our business is dependent upon our senior management closely
supervising all aspects of our business, in particular the operation of our
stores and the designing of our merchandise. If we were to lose the benefit of
this involvement, and in particular if we were to lose the services of Julian R.
Geiger, our Chairman and Chief Executive Officer, John S. Mills, our President
and Chief Operating Officer or Christopher L. Finazzo, our Executive Vice
President-Chief Merchandising Officer, our business could be adversely affected.
In addition, Mr. Geiger and Mr. Finazzo maintain many of our vendor
relationships, and the loss of either of them could negatively impact present
vendor relationships. We do not have employment agreements with any member of
our senior management team other than Mr. Geiger and Mr. Mills. You should refer
to the section entitled "Management" for more information.

OUR FAILURE TO PROTECT OUR TRADEMARKS AEROPOSTALE(R) AND, TO A LESSER EXTENT,
AERO(TM) ADEQUATELY COULD HAVE A NEGATIVE IMPACT ON OUR BRAND IMAGE AND LIMIT
OUR ABILITY TO PENETRATE NEW MARKETS.

     We believe that our trademarks Aeropostale(R) and, to a lesser extent,
Aero(TM) are integral to our logo-driven design strategy. We have obtained a
federal registration of the Aeropostale(R) trademark in the United States and
have applied for or obtained registrations in most foreign countries in which
our vendors are located. We use the term "Aero" in many constantly changing
designs and logos even though we have not registered the mark or variation or
combinations thereof for adult clothing. We cannot assure you that the
registrations we obtained will prevent the imitation of our products or
infringement of our intellectual property rights by others. If any third party
imitates our products in a manner that projects lesser quality
                                        7
<PAGE>

or carries a negative connotation, our brand image could be materially adversely
affected. Because we have not obtained federal registration for the Aero(TM)
mark and have not registered the "Aeropostale" mark in all categories or in all
foreign countries in which we now or may in the future source or offer our
merchandise, international expansion and our merchandising of non-apparel
products using these marks could be limited.

     In addition, we cannot assure you that others will not try to block the
manufacture, export or sale of our products as violative of their trademarks or
other proprietary rights. Other entities may have rights to trademarks that
contain the word "Aero" or may have registered similar or competing marks for
apparel and accessories in foreign countries in which our vendors are located.
Our applications for international registration of the Aeropostale(R) mark have
been rejected in a few countries in which our products are manufactured because
third parties have already registered the mark for clothing in those countries.
There may be other prior registrations in other foreign countries of which we
are not aware. In all such countries it may be possible for any third party
owner of the national trademark registration for "Aeropostale" to enjoin the
manufacture, sale or exportation of Aeropostale branded goods to the United
States. If we were unable to reach a licensing arrangement with these parties,
our vendors may be unable to manufacture our products in those countries. Our
inability to register our trademarks or purchase or license the right to use our
trademarks or logos in these jurisdictions could limit our ability to obtain
supplies from or manufacture in less costly markets or penetrate new markets
should our business plan change to include selling our merchandise in those
jurisdictions outside the United States.

OUR ABILITY TO ATTRACT CUSTOMERS TO OUR STORES DEPENDS HEAVILY ON THE SUCCESS OF
THE SHOPPING MALLS IN WHICH WE ARE LOCATED.

     In order to generate customer traffic we must locate our stores in
prominent locations within successful shopping malls. We cannot control the
development of new shopping malls, the availability or cost of appropriate
locations within existing or new shopping malls, or the success of individual
shopping malls. A significant decrease in shopping mall traffic would have a
material adverse effect on our results of operations.

OUR MARKET SHARE MAY BE ADVERSELY IMPACTED AT ANY TIME BY A SIGNIFICANT NUMBER
OF COMPETITORS.

     We operate in a highly competitive environment characterized by low
barriers to entry. We compete against a diverse group of retailers, including
national and local specialty retail stores, mass merchandisers, regional retail
chains, traditional department stores and mail-order retailers. Our market share
and results of operations may be adversely impacted by this significant number
of competitors. Many of our competitors are also larger than us and have
substantially greater resources than we do.

OUR CONCENTRATION OF STORES IN THE EASTERN UNITED STATES MAKES US SUSCEPTIBLE TO
ADVERSE CONDITIONS IN THIS REGION.

     The majority of our stores are located in the eastern half of the United
States. As a result, our operations are more susceptible to regional factors
than the operations of more geographically diversified competitors. These
factors include, among others, economic and weather conditions, as well as
demographic and population changes.

                         RISKS RELATED TO THIS OFFERING

SHARES ELIGIBLE FOR SALE IN THE NEAR FUTURE MAY CAUSE THE MARKET PRICE FOR OUR
COMMON STOCK TO DECLINE.

     Sales of a substantial number of shares of our common stock in the public
market following this offering, or the perception that these sales could occur,
may depress the market price for our common stock. These sales could also impair
our ability to raise additional capital through the sale of our equity
securities in the future.

                                        8
<PAGE>

     The number of shares of common stock available for sale in the public
market is limited by restrictions under federal securities law and under
agreements that our officers, directors and principal stockholders have entered
into with the underwriters of this offering. Those agreements restrict our
officers, directors and principal stockholders from selling, pledging or
otherwise disposing of their shares for a period of 180 days after the date of
this prospectus without the prior written consent of both Bear, Stearns & Co.
Inc. and Merrill Lynch. However, Bear, Stearns & Co. Inc. and Merrill Lynch may
together in their sole discretion, release all or any portion of the common
stock from the restrictions of the lockup agreements. Upon completion of this
offering we will have outstanding           shares of common stock. Of these
shares,           shares including the           shares sold in this offering,
are freely tradeable. The remaining           shares are eligible for sale in
the public market as follows:

<Table>
<Caption>
NUMBER OF SHARES                               DATE OF AVAILABILITY FOR SALE
----------------                               ------------------------------
<S>                                            <C>
                                               180 days from the date of this
                                               prospectus
                                               , 2002
</Table>

BEAR STEARNS MERCHANT BANKING HAS THE RIGHT TO DESIGNATE A MAJORITY OF THE
MEMBERS OF OUR BOARD OF DIRECTORS, AND THEREFORE, NO CORPORATE ACTIONS REQUIRING
BOARD APPROVAL CAN BE CONSUMMATED WITHOUT THE APPROVAL OF ITS DESIGNEES.

     Stockholders that will hold      % of our outstanding shares of common
stock upon the completion of this offering have agreed to elect five persons
designated by Bear Stearns Merchant Banking to our board of directors. Our
bylaws provide that our board of directors may not consist of more than nine
persons, therefore, the designees of Bear Stearns Merchant Banking will
represent a majority of our board. In general, the designees of Bear Stearns
Merchant Banking will be able to control most matters requiring board approval.
These matters would include the approval of significant corporate transactions,
including potential mergers, consolidations or sales of all or substantially all
of our assets. This concentration of board representation may have the effect of
impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquiror from making a tender offer for
our shares.

THE SHARES YOU PURCHASE IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND
SUBSTANTIAL DILUTION.

     The initial public offering price of our common stock will be substantially
higher than the pro forma tangible book value per share of our outstanding
common stock. At an assumed initial public offering price of $     per share,
purchasers of our common stock will incur dilution of $     per share in the pro
forma net tangible book value of their purchased shares. The shares of our
common stock owned by existing stockholders will receive a material increase in
the pro forma net tangible book value per share. Investors may also experience
additional dilution if we issue common stock in the future. As a result of this
dilution, investors purchasing stock in this offering may receive significantly
less than the full purchase price that they paid for the shares in the event of
a liquidation.

SINCE OUR COMMON STOCK HAS NEVER BEEN PUBLICLY TRADED, WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP FOR OUR COMMON STOCK, OR WHETHER
YOU WILL BE ABLE TO SELL YOUR STOCK.

     There has not been a public market for our common stock. We cannot predict
the extent to which a trading market will develop or how liquid that market
might become. The initial public offering price will be determined by
negotiations between representatives of the underwriters, the selling
stockholders and us and may not be indicative of prices that will prevail in the
trading market.

                                        9
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     Some of the matters discussed under the captions "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events, including, among
other things:

     - implementation of our growth strategy;

     - our ability to anticipate and respond to fashion trends;

     - competition in our market;

     - consumer spending patterns; and

     - economic conditions in general.

     In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar expressions. These statements are based on our current
beliefs, expectations and assumptions and are subject to a number of risks and
uncertainties. Actual results, levels of activity, performance, achievements and
events may vary significantly from those implied by the forward-looking
statements. A description of risks that could cause our results to vary appears
under the caption "Risk Factors" and elsewhere in this prospectus.

                                USE OF PROCEEDS

     We will receive net proceeds of $     from the sale of           shares of
common stock assuming a public offering price of $     after deducting estimated
offering expenses and underwriting discounts and commissions. We will not
receive any proceeds from shares of common stock sold by the selling
stockholders, nor can we participate in the sale of additional shares relating
to the underwriters' over-allotment option, if exercised.

     The principal purposes of this offering are to obtain additional capital,
create a public market for our common stock and facilitate our future access to
public securities markets.

     Approximately $     of the net proceeds from this offering will be used to
redeem all of our outstanding shares of 12 1/2% Series B redeemable preferred
stock and pay all accrued and unpaid dividends thereon. We expect to use the
remaining net proceeds for general corporate purposes, including new store
openings and working capital.

     Pending use of the remaining net proceeds of this offering, we intend to
invest the net proceeds in short-term, interest-bearing securities.

                                DIVIDEND POLICY

     We have not declared or paid any dividends on our common stock since our
inception. We currently expect to retain future earnings, if any, for use in the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.

                                        10
<PAGE>

                                 CAPITALIZATION

     The following table sets forth our cash and capitalization as of November
3, 2001 (i) on an actual basis and (ii) on an adjusted basis to reflect (a) the
conversion of all of our outstanding shares of non-voting common stock into a
total of           shares of common stock and the redemption of all of our
outstanding shares of 12 1/2% Series B redeemable preferred stock and payment of
all accrued and unpaid dividends thereon for a total of $          , each of
which will occur simultaneously with the closing of this offering, and (b) the
receipt by us of the estimated net proceeds from the sale of           shares of
common stock in this offering at an assumed initial public offering price of
$     per share.

     The outstanding share information in the table excludes, as of November 3,
2001,           shares of common stock issuable upon the exercise of outstanding
stock options under our 1998 Stock Option Plan.

<Table>
<Caption>
                                                               AS OF NOVEMBER 3, 2001
                                                              -------------------------
                                                               ACTUAL      AS ADJUSTED
                                                              ---------   -------------
                                                                     (UNAUDITED)
                                                                (IN THOUSANDS, EXCEPT
                                                              SHARE AND PER SHARE DATA)
<S>                                                           <C>         <C>
Cash........................................................   $ 7,313
                                                               =======       =======
Revolving credit facility(1)................................   $15,829
12 1/2% Series B redeemable preferred stock: par value $0.01
  per share, 6,250 shares authorized, issued and
  outstanding, actual; no shares authorized, issued or
  outstanding, as adjusted..................................     9,326
                                                               -------       -------
Stockholders' equity:
  Preferred stock: par value $0.01 per share, no shares
     authorized, issued and outstanding, actual;
     shares authorized, and no shares issued and
     outstanding, as adjusted(2)............................        --
  Common stock: par value $0.01 per share, 200,000 shares
     authorized, 82,500 shares issued and outstanding,
     actual;           shares authorized,      shares issued
     and outstanding, as adjusted...........................         1
  Non-voting common stock: par value $0.01 per share,
     200,000 shares authorized, 1,428 shares issued and
     outstanding, actual; no shares authorized, issued or
     outstanding, as adjusted...............................        --
Additional paid-in capital..................................       981
Retained earnings...........................................    41,402
                                                               -------       -------
Total stockholders' equity..................................    42,384
                                                               -------       -------
Total capitalization........................................   $67,539
                                                               =======       =======
</Table>

---------------
(1) As of February 2, 2002, there were no amounts outstanding under our credit
    facility.

(2) Reflects the filing of our Amended and Restated Certificate of Incorporation
    upon completion of this offering, creating         shares of common stock,
            shares of undesignated preferred stock and cancelling all other
    classes of preferred stock.

                                        11
<PAGE>

                                    DILUTION

     Our pro forma net tangible book value as of November 3, 2001 was
approximately $       , or $
per share of common stock. Pro forma net tangible book value per share
represents total tangible assets less total liabilities, divided by the number
of outstanding shares of common stock after giving effect to the conversion of
all of our outstanding shares of non-voting common stock into a total
of          shares of common stock and the redemption of all of our outstanding
shares of 12 1/2% Series B redeemable preferred stock, which will occur
simultaneously with the consummation of this offering. After giving effect to
the sale of the          shares of common stock offered by us at an assumed
initial public offering price of $     per share and after deducting
underwriting discounts and estimated offering expenses, the pro forma as
adjusted net tangible book value at November 3, 2001 would have been $     or
approximately $
per share of common stock. This represents an immediate increase in net tangible
book value of $     per share to existing stockholders and an immediate dilution
in net tangible book value of $     per share to new investors in this offering.
The following table illustrates this dilution on a per share basis:

<Table>
<S>                                                           <C>
Assumed initial public offering price per share.............  $
  Pro forma net tangible book value per share at November 3,
     2001...................................................  $
  Increase per share attributable to this offering..........
                                                              --------
Pro forma as adjusted net tangible book value per share
  after this offering.......................................
                                                              --------
Dilution per share to new investors.........................  $
                                                              ========
</Table>

     The table above excludes, as of November 3, 2001,        shares of common
stock issuable upon exercise of outstanding stock options under our 1998 Stock
Option Plan. To the extent options are exercised, there will be further dilution
to new investors.

     The following table sets forth, on a pro forma as adjusted basis as of
November 3, 2001, the differences between the number of shares of common stock
purchased from us, the total consideration paid and the average price per share
paid by existing stockholders and by new investors, before deducting
underwriting discounts and commissions and estimated offering expenses, at an
assumed initial public offering price of $     per share.

<Table>
<Caption>
                                       SHARES PURCHASED     TOTAL CONSIDERATION     AVERAGE
                                       -----------------    -------------------      PRICE
                                       NUMBER    PERCENT    AMOUNT     PERCENT     PER SHARE
                                       ------    -------    -------    --------    ---------
<S>                                    <C>       <C>        <C>        <C>         <C>
Existing stockholders................                  %    $                %      $
New investors........................
                                       -----      -----     ------      -----
  Total..............................             100.0%    $           100.0%
                                       =====      =====     ======      =====
</Table>

     If the underwriters' over-allotment option is exercised in full, the
percentage of shares of common stock held by existing stockholders after this
offering would be reduced to approximately      % and the number of shares of
common stock held by new investors would increase to                or
approximately      % of the total number of shares of common stock outstanding
after this offering.

                                        12
<PAGE>

                     SELECTED FINANCIAL AND OPERATING DATA

     The following selected financial and operating data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," our financial statements and related notes and other
financial information appearing elsewhere in this prospectus. The statement of
income data for the fiscal years ended July 31, 1999, July 29, 2000 and August
4, 2001, and the balance sheet data as of July 29, 2000 and August 4, 2001, are
derived from audited financial statements included elsewhere in this prospectus.
The statement of income data for the fiscal years ended August 2, 1997 and
August 1, 1998, and the balance sheet data as of August 2, 1997 and August 1,
1998 are derived from the accounting records of our predecessor company and are
not comparable to our statements in all respects due to, among other things, the
omission of corporate overhead expense and provision for taxes, different
accounting policies and the effect of purchase accounting. The statement of
income data for the thirteen weeks ended October 28, 2000 and November 3, 2001
and the balance sheet data as of November 3, 2001 have been derived from
unaudited financial statements included elsewhere in this prospectus. The
unaudited financial statements include all normal recurring adjustments, which
in the opinion of our management, are necessary for the operations for those
periods. Our results of operations for the thirteen weeks ended November 3, 2001
are not necessarily indicative of the results that may be expected for the
entire year or for any future period.

<Table>
<Caption>
                                         PREDECESSOR COMPANY(1)
                                         -----------------------
                                            FISCAL YEAR ENDED              FISCAL YEAR ENDED(2)           THIRTEEN WEEKS ENDED
                                         -----------------------      -------------------------------   -------------------------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                           1997          1998           1999       2000       2001         2000          2001
                                         ---------     ---------      --------   --------   ---------   -----------   -----------
                                                                                                               (UNAUDITED)
                                               (UNAUDITED)                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                      <C>           <C>            <C>        <C>        <C>         <C>           <C>
STATEMENT OF INCOME DATA:
Net sales..............................  $123,821      $141,419       $152,506   $213,445   $304,767      $76,831      $126,019
Cost of sales, including certain
  buying, occupancy and warehousing
  expenses.............................   106,789       111,735        110,489    151,973    218,618       51,081        77,085
                                         --------      --------       --------   --------   --------      -------      --------
Gross profit...........................    17,032        29,684         42,017     61,472     86,149       25,750        48,934
Selling, general and administrative
  expenses.............................    26,156        28,157         32,406     45,680     65,918       15,215        23,695
Store closing expenses(3)..............        --            --             --         --        815           --            --
Amortization of negative goodwill......        --            --           (234)      (234)      (234)         (57)           --
                                         --------      --------       --------   --------   --------      -------      --------
Operating income (loss)................    (9,124)        1,527          9,845     16,026     19,650       10,592        25,239
Interest expense, net..................        --            --             86        911      1,671          655           282
                                         --------      --------       --------   --------   --------      -------      --------
Income (loss) before income taxes......    (9,124)        1,527          9,759     15,115     17,979        9,937        24,957
Provision for income taxes.............        --            --          3,529      5,749      7,065        3,930        10,230
                                         --------      --------       --------   --------   --------      -------      --------
Income (loss) from continuing
  operations...........................    (9,124)        1,527          6,230      9,366     10,914        6,007        14,727
Income (loss) from discontinued
  operations(4)........................      (288)         (978)          (268)     2,002        405           --            --
                                         --------      --------       --------   --------   --------      -------      --------
Cumulative effect of accounting
  change(5)............................        --            --             --         --         --           --         1,632
Net income (loss)......................    (9,412)          549          5,962     11,368     11,319        6,007        16,359
Preferred dividends....................        --            --          1,235      1,040      1,048          250           283
                                         --------      --------       --------   --------   --------      -------      --------
Net income (loss) available to common
  stockholders.........................  $ (9,412)     $    549       $  4,727   $ 10,328   $ 10,271      $ 5,757      $ 16,076
                                         ========      ========       ========   ========   ========      =======      ========
Basic net income (loss) per common
  share:(6)
  From continuing operations(7)........
  From discontinued operations.........
  From cumulative accounting change....
  Net income per share.................
Diluted net income (loss) per common
  share:(6)
  From continuing operations(7)........
  From discontinued operations.........
  From cumulative accounting change....
  Net income per share.................
Basic weighted average number of shares
  outstanding..........................
Diluted weighted average number of
  shares
  outstanding..........................
</Table>

                                        13
<PAGE>

<Table>
<Caption>
                                         PREDECESSOR COMPANY(1)
                                         -----------------------
                                            FISCAL YEAR ENDED              FISCAL YEAR ENDED(2)           THIRTEEN WEEKS ENDED
                                         -----------------------      -------------------------------   -------------------------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                           1997          1998           1999       2000       2001         2000          2001
                                         ---------     ---------      --------   --------   ---------   -----------   -----------
                                               (UNAUDITED)                                                     (UNAUDITED)
<S>                                      <C>           <C>            <C>        <C>        <C>         <C>           <C>
SELECTED OPERATING DATA:
Number of stores open at end of
  period...............................       113           119            129        178        252          208           277
Comparable store sales increase
  (decrease)(8)........................      (7.2)%(9)    10.7%            5.5%      14.5%       8.7%        12.7%         22.8%
Average store sales (in
  thousands)(10).......................  $  1,088      $  1,194       $  1,258   $  1,372   $  1,360      $   387      $    461
Average square footage per store(11)...     3,727         3,719          3,687      3,548      3,437        3,490         3,464
Sales per square foot(12)..............  $    293      $    317       $    339   $    380   $    392      $   111      $    134
</Table>

<Table>
<Caption>
                                           PREDECESSOR COMPANY
                                                  AS OF                            AS OF                                 AS OF
                                         -----------------------      -------------------------------                 -----------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,                 NOVEMBER 3,
                                           1997          1998           1999       2000       2001                       2001
                                         ---------     ---------      --------   --------   ---------                 -----------
                                               (UNAUDITED)                    (IN THOUSANDS)                          (UNAUDITED)
<S>                                      <C>           <C>            <C>        <C>        <C>         <C>           <C>
BALANCE SHEET DATA:
Working capital........................  $ 25,519      $ 19,833       $ 22,028   $  8,186   $ 10,810                   $ 23,386
Total assets...........................    78,800        56,234         58,899     93,539    121,128                    137,821
6% Series A exchangeable redeemable
  preferred stock......................        --            --          4,885         --         --                         --
12 1/2% Series B redeemable preferred
  stock................................        --            --          7,070      7,995      9,043                      9,326
Total debt.............................    64,538(13)    57,396(13)        565     26,987     35,267                     15,829
Total stockholders' equity (deficit)...   (14,339)      (13,790)         5,676     16,006     26,290                     42,384
</Table>

---------------
 (1) The predecessor company's results of operations were derived from the
     accounting records of Federated Department Stores, Inc. Prior to August 3,
     1998, when we were sold by Federated, we were included in its consolidated
     financial statements and no corporate expenses or taxes were allocated to
     our financial statements. In addition, our predecessor company's financial
     statements were prepared based on different accounting policies, and do not
     reflect the effect of purchase accounting. Therefore, our results of
     operations could have been materially different if we were reported as a
     standalone company at that time.

 (2) Our results of operations for fiscal 2001 included 53 weeks compared to 52
     weeks for all other fiscal years presented in prospectus. In January 2002,
     we changed our fiscal year end from the Saturday closest to July 31 to the
     Saturday closest to January 31 of each year.

 (3) Reflects charge incurred in connection with the closing of seven aero kids
     concept stores.

 (4) On February 25, 2000, we decided to discontinue our Chelsea Cambell
     specialty store business and we closed all Chelsea Cambell stores by the
     end of December 2000. The operating results of this segment for all years
     have been reclassified as discontinued operations.

 (5) On August 5, 2001, we adopted Statement of Accounting Standards No. 142,
     "Goodwill and Other Intangibles." With the adoption, the remaining balance
     of negative goodwill was recorded as cumulative effect of accounting
     change.

 (6) All per share information reflects a  -for-1 split of all of our common
     stock which will occur immediately prior to the consummation of this
     offering.

 (7) Income from continuing operations per share has been computed after
     deducting preferred dividends.

 (8) Our comparable store sales percentages are based on net sales and stores
     are considered comparable beginning on the first day of the fiscal month
     following the fourteenth full fiscal month of sales.

 (9) Represents period in which our current management did not influence the
     assortment of merchandise in our stores.

(10) Our average store sales are based on total net sales divided by the
     weighted average of all open stores in the period.

(11) Our average square footage per store is based on all open stores at the end
     of the period.

(12) Our sales per square foot consists of total net sales, divided by the
     weighted average of gross square footage of all open stores.

(13) Represents intercompany debt to our former parent company.

                                        14
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion in conjunction with our
consolidated financial statements and related notes that appear elsewhere in
this prospectus. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs, and which involve risks,
uncertainties and assumptions. Our actual results may differ materially from
those discussed in the forward-looking statements. Factors that might cause
future results to differ materially from those discussed in the forward-looking
statements include, but are not limited to, those discussed in "Risk Factors."

OVERVIEW

     The Aeropostale brand was established by R.H. Macy & Co., Inc. as a
department store private label initiative in the early 1980s targeting men in
their twenties. As a result of the label's initial success, Macy's opened the
first mall-based Aeropostale specialty store in 1987. Over the next decade,
Macy's and then its current parent company, Federated Department Stores, Inc.,
continued new store expansion and opened over 100 stores. In 1996, Federated
hired Julian Geiger as Chief Executive Officer of its specialty store division
which included Aeropostale and another specialty store concept, renamed Chelsea
Cambell after we became an independent company, which targeted career women.
Julian Geiger and management subsequently determined that there was significant
opportunity for Aeropostale to increase its merchandise offering for young
women, whom we recognized as the fastest-growing target demographic.
Additionally, we decided to position our merchandise assortment as more
mainstream, active-oriented casual wear to attract a broader customer base. In
August 1998, Federated sold its specialty store division to our management team
and Bear Stearns Merchant Banking.

     Bear Stearns Merchant Banking and our management team led by Julian Geiger
believed that an opportunity existed to grow our concept nationally by
leveraging our profitable new store model and merchandising strategy. We
undertook a number of initiatives to establish the independence of our business,
including hiring additional senior management, investing in infrastructure and
strengthening vendor relationships. Subsequently, we discontinued the operations
of Chelsea Cambell to focus solely on our brand. Our strong operating results
reflect the initiatives taken by our management team, as well as the increasing
acceptance of our brand and merchandise. Since August 3, 1998, we have increased
our store count by 159 to 278 stores in 33 states and the District of Columbia,
as of February 2, 2002. From the end of fiscal 1998 through fiscal 2001, we have
increased net sales from $141.4 million to $304.8 million. Our sales per square
foot also grew from $317 to $392 during the same period. Furthermore, we
achieved comparable store sales growth of 5.5% for fiscal 1999, 14.5% for fiscal
2000 and 8.7% for fiscal 2001.

GENERAL

     Net sales.  Net sales consist of sales from comparable stores and
non-comparable stores. A store is not included in comparable store sales until
the first day of the fiscal month following the fourteenth full fiscal month of
sales. Non-comparable store sales include sales in the current fiscal year from
our stores opened during the previous fiscal year before they are considered
comparable stores and new stores opened during the current fiscal year. In
addition, all sales generated from stores that we have closed and through our
arrangements with colleges and universities for organized sales events are
included in non-comparable store sales.

     Cost of sales.  Cost of sales includes the cost of merchandise,
distribution and warehousing, freight from the distribution center and warehouse
to the stores, payroll for our design, buying and merchandising personnel and
store occupancy costs. Store occupancy costs include rent, contingent rents,
common area maintenance, real estate taxes, utilities, repairs, maintenance and
depreciation.

     Selling, general and administrative expenses.  Selling, general and
administrative expenses include selling, store management and corporate
expenses, including payroll and employee benefits, other than for our design,
buying and merchandising personnel, employment taxes, management information
systems,

                                        15
<PAGE>

marketing, insurance, legal, store pre-opening and other corporate level
expenses. Store pre-opening expenses include store level payroll, grand opening
event marketing, travel, supplies and other store opening expenses. Corporate
level expenses are primarily attributable to our corporate offices in New York,
New York, and Wayne, New Jersey.

     Store closing expenses.  In fiscal 2000, we tested a new store concept by
opening seven aero kids stores which targeted children 6 to 12 years old.
Although the concept showed growth potential, we decided that there was
significant expansion opportunity for our core Aeropostale store format, and we
determined to focus our resources solely on this concept. We recorded a noncash
charge of $815,000 in fiscal 2001 to reflect the write-down of leasehold
improvements and store fixtures and equipment to the net realizable value and
subsequently closed the seven aero kids' stores by October 2001.

     Interest expense, net.  Interest expense, net of interest income, includes
interest relating to our revolving credit facility and amortization of financing
intangibles.

     Discontinued operations.  On February 25, 2000, we decided to discontinue
our Chelsea Cambell specialty store business and we closed all Chelsea Cambell
stores by the end of December 2000. The operating results of this segment for
all years have been reclassified as discontinued operations.

     Cumulative effect of accounting change.  On August 5, 2001, we adopted
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets, which requires companies to no longer amortize negative
goodwill. The cumulative effect of this change resulted in a gain of $1.6
million in the thirteen weeks ended November 3, 2001.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the appropriate application of certain
accounting policies, many of which require us to make estimates and assumptions
about future events and their impact on amounts reported in our financial
statements and related notes. Since future events and their impact cannot be
determined with certainty, the actual results will inevitably differ from our
estimates. Such differences could be material to the financial statements.

     We believe application of accounting policies, and the estimates inherently
required therein, are reasonable. These accounting policies and estimates are
constantly reevaluated, and adjustments are made when facts and circumstances
dictate a change. Historically, we have found our application of accounting
policies to be appropriate, and actual results have not differed materially from
those determined using necessary estimates except for the change in estimated
useful lives described in Note 2 to the financial statements.

     Our accounting policies are more fully described in Note 2 to the financial
statements, located elsewhere in this prospectus. We have identified certain
critical accounting policies which are described below.

     Merchandise inventory.  Our merchandise inventory is carried at the lower
of cost or market on a first-in, first-out basis. We make certain assumptions to
adjust inventory based on historical experience and current information in order
to assess that inventory is recorded properly at the lower of cost or market.
These assumptions can have a significant impact on current and future operating
results and financial position.

     Long-lived assets.  In evaluating the fair value and future benefits of
long-lived assets, we perform an analysis of the anticipated undiscounted future
net cash flows of the related long-lived assets and reduce their carrying value
by the excess, if any, of the result of such calculation. We believe at this
time that the long-lived assets' carrying values and useful lives continues to
be appropriate.

                                        16
<PAGE>

FISCAL YEAR

     In January 2002, our board of directors resolved to change our fiscal year
end from the Saturday closest to July 31 to the Saturday closest to January 31
of each year. We changed our fiscal year end to conform with the practice
generally followed in our industry.

RESULTS OF OPERATIONS

     The following table sets forth our results of operations expressed as a
percentage of total net sales for the period indicated:

<Table>
<Caption>
                                          FISCAL YEAR ENDED               THIRTEEN WEEKS ENDED
                                  ---------------------------------    --------------------------
                                  JULY 31,    JULY 29,    AUGUST 4,    OCTOBER 28,    NOVEMBER 3,
                                    1999        2000        2001          2000           2001
                                  --------    --------    ---------    -----------    -----------
                                                                              (UNAUDITED)
<S>                               <C>         <C>         <C>          <C>            <C>
Net sales.......................   100.0%      100.0%       100.0%        100.0%         100.0%
Gross profit....................    27.6        28.8         28.3          33.5           38.8
Selling, general and
  administrative expenses.......    21.2        21.4         21.6          19.8           18.8
Store closing expenses..........      --          --          0.3            --             --
Amortization of negative
  goodwill......................     0.2         0.1          0.1           0.1             --
Operating income................     6.5         7.5          6.4          13.8           20.0
Interest expense, net...........     0.1         0.4          0.5           0.9            0.2
Income before income taxes......     6.4         7.1          5.9          12.9           19.8
Provision for income taxes......     2.3         2.7          2.3           5.1            8.1
Income from continuing
  operations....................     4.1         4.4          3.6           7.8           11.7
Income (loss) from discontinued
  operations....................    (0.2)        0.9          0.1            --             --
Cumulative effect of accounting
  change........................      --          --           --            --            1.3
Net income......................     3.9         5.3          3.7           7.8           13.0
</Table>

  Thirteen weeks ended November 3, 2001 compared to thirteen weeks ended October
  28, 2000.

     Net sales.  Our net sales for the thirteen weeks ended November 3, 2001
increased to approximately $126.0 million from approximately $76.8 million for
the thirteen weeks ended October 28, 2000, an increase of approximately $49.2
million. Of this increase, comparable store sales contributed approximately
$16.0 million and non-comparable store sales contributed approximately $33.2
million. Comparable store sales increased by 22.8% for the thirteen weeks ended
November 3, 2001, compared to an increase of 12.7% in comparable store sales in
the thirteen weeks ended October 28, 2000. This increase was due to higher
comparable sales of young women's merchandise and accessories, partially offset
by a decrease in young men's comparable sales. The increase in non-comparable
store sales was primarily due to 74 additional stores open at the beginning of
the thirteen week period ended November 3, 2001 as compared to the prior period.

     Gross profit.  Our gross profit, which represents net sales less cost of
sales, increased approximately $23.1 million in the thirteen weeks ended
November 3, 2001 to approximately $48.9 million from approximately $25.8 million
for the thirteen weeks ended October 28, 2000. As a percentage of net sales,
gross profit increased to 38.8% from 33.5% during these periods. This increase
is primarily attributable to an approximate 3.6% increase in merchandise margins
due to a shift in our merchandise mix as we sold a greater percentage of young
women's apparel, which has higher margins than young men's merchandise.
Furthermore, occupancy and payroll costs, which are relatively fixed, were lower
as a percentage of net sales than in the prior period which caused margins to
increase.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $8.5 million for the thirteen
weeks ended November 3, 2001 to approximately

                                        17
<PAGE>

$23.7 million from approximately $15.2 million for the thirteen weeks ended
October 28, 2000. This increase was partially due to an approximate $6.6 million
increase in payroll expenses that resulted from new store growth in addition to
compensation costs incurred in connection with incentive bonus programs. As a
percent of net sales, selling, general and administrative expenses decreased to
18.8% from 19.8%. This decrease as a percentage of sales volume was due
primarily to the increased leverage of store payroll.

     Interest expense.  Our interest expense decreased approximately $0.4
million, from $0.7 million for the thirteen weeks ended October 28, 2000 to
approximately $0.3 million for the thirteen weeks ended November 3, 2001
primarily due to lower average borrowings.

     Income taxes.  Our effective tax rate of 41.0% for the thirteen weeks ended
November 3, 2001 compares to an effective tax rate of 39.5% for the thirteen
weeks ended October 28, 2000. Our effective tax rate increased as a result of
the increase in income in states with higher tax rates, partially offset by the
elimination of the negative goodwill amortization.

     Income from continuing operations.  Our income from continuing operations
increased approximately $8.7 million for the thirteen weeks ended November 3,
2001 to approximately $14.7 million from approximately $6.0 million for the
thirteen weeks ended October 28, 2000. This increase was primarily due to
increased sales and gross profit.

     Income from discontinued operations.  All Chelsea Cambell stores were
closed by the end of December 2000; therefore, no activity occurred during the
thirteen week period ended November 3, 2001. For the thirteen weeks ended
October 28, 2000, our Chelsea Cambell stores had net sales of $2.1 million and
expenses of $2.1 million.

     Net income.  Our net income increased by approximately $10.4 million, to
approximately $16.4 million in the thirteen weeks ended November 3, 2001 from
approximately $6.0 million in the thirteen weeks ended October 28, 2000. As a
percentage of net sales, net income increased to 13.0% from 7.8% during these
periods.

 Fiscal year 2001 compared to fiscal year 2000.

     Net sales.  Our net sales for fiscal 2001 increased to approximately $304.8
million from approximately $213.4 million in fiscal 2000, an increase of
approximately $91.4 million. Of this increase, comparable store sales
contributed approximately $17.1 million and non-comparable store sales
contributed approximately $74.3 million. Comparable store sales increased by
8.7% in fiscal 2001, compared to an increase of 14.5% in comparable store sales
in fiscal 2000. This increase was due to higher comparable sales of young
women's merchandise and accessories, partially offset by a decrease in young
men's comparable sales. The increase in non-comparable store sales was primarily
due to an increase in our store count by 74 stores in fiscal 2001.

     Gross profit.  Our gross profit increased approximately $24.6 million in
fiscal 2001 to approximately $86.1 million from approximately $61.5 million for
fiscal 2000. As a percentage of net sales, gross profit decreased to 28.3% from
28.8% during these periods. This decrease was primarily attributable to lower
merchandise margins of approximately 0.5% due to higher markdowns across all
merchandise categories.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $20.2 million in fiscal 2001 to
approximately $65.9 million from approximately $45.7 million in fiscal 2000. Our
payroll expenses increased by approximately $14.7 million in fiscal 2001 over
the prior fiscal year principally as a result of new store growth, in addition
to compensation costs incurred in connection with incentive bonus programs. The
remaining increase was due to variable sales expenses. In addition, part of this
increase was attributable to increased marketing initiatives for which we spent
approximately $2.2 million in fiscal 2001 as compared to approximately $1.1
million in fiscal 2000. As a percentage of net sales, selling, general and
administrative expenses increased to 21.6% in fiscal 2001 from 21.4% in fiscal
2000.

                                        18
<PAGE>

     Interest expense.  Our interest expense increased by approximately $0.8
million from $0.9 million in fiscal 2000 to approximately $1.7 million in fiscal
2001 primarily due to higher seasonal borrowings necessitated by our higher
store count.

     Income taxes.  Our effective tax rate of 39.3% in fiscal 2001 compares to
an effective tax rate of 38.0% in fiscal 2000. This increase was the result of
an increase in income in states with higher tax rates.

     Income from continuing operations.  Our income from continuing operations
increased approximately $1.5 million in fiscal 2001 to approximately $10.9
million from approximately $9.4 million in fiscal 2000. This increase was
primarily due to increased sales and gross profit.

     Income (loss) from discontinued operations.  In fiscal 2001, we recognized
a gain of approximately $0.4 million from the discontinuation of our Chelsea
Cambell business after having recognized a gain of approximately $2.0 million in
fiscal 2000. The amount recognized in fiscal 2001 represents actual amounts
compared to estimated loss on disposal for fiscal 2000.

     Net income.  Our net income in fiscal 2001 decreased to approximately $11.3
from approximately $11.4 million in fiscal 2000, a decrease of $0.1 million. As
a percentage of net sales, net income decreased to 3.7% from 5.3% during these
periods.

 Fiscal year 2000 compared to fiscal year 1999

     Net sales.  Our net sales for fiscal 2000 increased to approximately $213.4
million from approximately $152.5 million in fiscal 1999, an increase of
approximately $60.9 million. Of this increase, comparable store sales
contributed approximately $21.4 million and non-comparable store sales
contributed approximately $39.5 million. Comparable store sales increased by
14.5% in fiscal 2000, compared to an increase of 5.5% in comparable store sales
in fiscal 1999. This increase was due to higher comparable sales in all
merchandise categories. The increase in non-comparable store sales was primarily
due to an increase in our store count by 49 stores in fiscal 2000.

     Gross profit.  Our gross profit increased approximately $19.5 million in
fiscal 2000 to approximately $61.5 million from approximately $42.0 million in
fiscal 1999. As a percentage of net sales, gross profit increased to 28.8% from
27.6% during these periods. Included in this increase was a 1.6% decrease in
occupancy costs as a percentage of sales in fiscal 2000 as compared to fiscal
1999.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $13.3 million in fiscal 2000 to
approximately $45.7 million from approximately $32.4 million in fiscal 1999.
This increase was mainly due to an increase of approximately $7.5 million in
payroll expenses attributable to new store growth and an increase of
approximately $1.1 million of marketing expenditures. The remaining increase was
due to variable sales expenses. As a percentage of net sales, selling, general
and administrative expenses increased to 21.4% in fiscal 2000 from 21.2% in
fiscal 1999.

     Interest expense.  Our interest expense increased by approximately $0.8
million from $0.1 million in fiscal 1999 to approximately $0.9 million in fiscal
2000, primarily due to higher seasonal borrowing.

     Income taxes.  Our effective tax rate of 38.0% for fiscal 2000 compares to
an effective tax rate of 36.2% for fiscal 1999. This increase was the result of
an increase in income in states with higher tax rates.

     Income from continuing operations.  Our income from continuing operations
increased approximately $3.2 million in fiscal 2000, to approximately $9.4
million from approximately $6.2 million in fiscal 1999. This increase was
primarily due to increased sales and gross profit partially offset by increased
income taxes.

     Income (loss) from discontinued operations.  We recorded a $2.0 million
gain in fiscal 2000 attributable to the discontinuation of our Chelsea Cambell
business after having recognized a loss of approximately $0.3 million in fiscal
1999. The gain recognized in fiscal 2000 includes loss from Chelsea Cambell
operations and estimated loss on disposal, offset by the associated tax benefit
and a negative goodwill write off.

                                        19
<PAGE>

     Net income.  Our net income in fiscal 2000 increased to approximately $11.4
million from approximately $6.0 million in fiscal 1999, an increase of
approximately $5.4 million. As a percentage of net sales, net income increased
to 5.3% from 3.9% during these periods. This increase was primarily due to
increases in sales and gross profit and a gain on discontinued business
operations.

QUARTERLY RESULTS AND SEASONALITY

     The following table sets forth our historical unaudited quarterly
consolidated statements of operations data for each of the eight fiscal quarters
ended August 4, 2001, and for the thirteen weeks ended November 3, 2001 and such
information expressed as a percentage of our revenue. This unaudited quarterly
information has been prepared on the same basis as the annual audited financial
statements appearing elsewhere in this prospectus, and includes all necessary
adjustments, consisting only of normal recurring adjustments, that we consider
necessary to present fairly the financial information for the quarters
presented. The quarterly data should be read in conjunction with the audited
consolidated financial statements and the related notes appearing elsewhere in
this prospectus.

<Table>
<Caption>
                                              FISCAL 2000                                 FISCAL 2001
                               ------------------------------------------   ---------------------------------------   THIRTEEN
                                          THIRTEEN WEEKS ENDED                       THIRTEEN WEEKS ENDED              WEEKS
                               ------------------------------------------   ---------------------------------------    ENDED
                               OCT. 30,   JAN. 29,   APRIL 29,   JULY 29,   OCT. 28,   FEB. 3,    MAY 5,    AUG. 4,   NOV. 3,
                                 1999       2000       2000        2000       2000       2001      2001      2001       2001
                               --------   --------   ---------   --------   --------   --------   -------   -------   --------
<S>                            <C>        <C>        <C>         <C>        <C>        <C>        <C>       <C>       <C>
STATEMENT OF INCOME DATA:
  Net sales..................  $53,331    $72,164     $40,552    $47,398    $76,831    $107,538   $56,629   $63,769   $126,019
  Gross profit...............   18,593     24,669       8,487      9,723     25,750      34,008    12,458    13,933     48,934
  Income (loss) from
    continuing operations....    4,413      7,667      (1,428)    (1,286)     6,007       8,687    (2,049)   (1,731)    14,727
  Income (loss) from
    discontinued
    operations...............     (611)    (1,596)     (1,621)     5,830         --         388         2        15         --
  Net income (loss)..........    3,802      6,071      (3,049)     4,544      6,007       9,075    (2,047)   (1,716)    16,359(1)
AS A PERCENTAGE OF NET SALES:
  Net sales..................    100.0%     100.0%      100.0%     100.0%     100.0%      100.0%    100.0%    100.0%     100.0%
  Gross profit...............     34.9       34.2        20.9       20.5       33.5        31.6      22.0      21.8       38.8
  Income (loss) from
    continuing operations....      8.3       10.6        (3.5)      (2.7)       7.8         8.1      (3.6)     (2.7)      11.7
  Net income (loss)..........      7.1        8.4        (7.5)       9.6        7.8         8.4      (3.6)     (2.7)      13.0
Diluted income (loss) per
  share:
  From continuing
    operations...............
  From discontinued
    operations...............
  From cumulative accounting
    change...................
  From net income............
SELECTED OPERATING DATA:
  Comparable store sales
    increase (decrease)......     18.6%      19.0%       10.1%       6.8%      12.7%       15.9%      3.4%     (0.4)%     22.8%
</Table>

     The per share amounts are calculated independently for each thirteen week
period presented. The sum of the thirteen weeks may not equal the full year per
share amounts.
---------------

(1) On August 5, 2001, we adopted Statement of Accounting Standards No. 142
    "Goodwill and Other Intangibles." With the adoption, we recorded income from
    cumulative effect of such accounting change of $1.6 million.

LIQUIDITY AND CAPITAL RESOURCES

     Our cash requirements are primarily for working capital, the construction
of new stores, the remodeling of existing stores and the improvement to our
information systems. Historically, these cash requirements have been met through
cash flow from operations and borrowings under our credit facility with Fleet
Retail Finance, Inc. At November 3, 2001, we had working capital of
approximately $23.4 million.

                                        20
<PAGE>

     During fiscal 2001 our net cash provided by operations was approximately
$19.6 million, generated by our operating earnings and increased current
liabilities and offset by purchases of merchandise inventory and other assets.

     For the thirteen weeks ended November 3, 2001, our net cash provided by
operations was approximately $28.1 million. Our net cash provided by operations
was due to a decrease in working capital.

     Our cash used in investing activities for fiscal 2001 and for the thirteen
weeks ended November 3, 2001, was entirely used for capital expenditures. These
expenditures, consisting primarily of the construction of new stores, remodeling
of existing stores and investments in technology, were approximately $7.8
million for the thirteen weeks ended November 3, 2001 and approximately $23.9
million for fiscal 2001. Our future capital requirements will depend primarily
on the number of new stores we open and the number of existing stores we remodel
and the timing of these expenditures. We opened 74 new stores in fiscal 2001, 34
stores in the twenty-six week period ended February 2, 2002 and expect to open
approximately 80 stores in fiscal 2002. Projected capital expenditures for
fiscal 2002 are approximately $27.5 million, to be used primarily to fund new
store openings and technology investments. Historically, we have financed such
capital expenditures with cash from operations and borrowings under our credit
facility. We believe that we will continue to finance capital expenditures in
this manner during fiscal 2002.

     In fiscal 2001 we had net borrowings of approximately $8.3 million. For the
thirteen weeks ended November 3, 2001 we had a net repayment under our credit
facility of approximately $19.4 million. Our secured revolving credit facility
with Fleet, as agent, provides us with up to $55 million based upon our
inventory balances, seasonal advance rates and third party credit card balances.
Borrowings bear interest at our option at either the rate per annum at which
deposits on U.S. dollars are offered to Fleet in the Eurodollar market, referred
to as the eurodollar rate, plus 1.50% to 2.00% or the base rate announced from
time to time by Fleet, dependent upon excess availability. As of February 2,
2002, there was no balance under the revolving credit facility. The revolving
credit facility contains financial performance and capital expense covenants,
and has a termination date of July, 2004. There are fees for early termination.
The revolving credit facility contains a minimum EBITDA covenant, tested
monthly. The facility also contains a maximum capital expenditures covenant,
tested quarterly.

     Events of default under the credit facility include, subject to grace
periods and notice provisions in certain circumstances, failure to pay principal
amounts when due, failure to perform covenant or liability requirements,
misrepresentation, default of leases, excess uninsured casualty loss, excess
uninsured judgment or restraint of business, business failure or application for
bankruptcy, indictment of or institution of any legal process or proceeding
under federal, state, municipal or civil statutes, legal challenges to loan
documents, death, disability or failure of selected key employees, and a change
in control, other than an initial public offering. If an event of default
occurs, the lenders under the credit facility will be entitled to take various
actions, including the acceleration of amounts due and requiring that all such
amounts be immediately paid in full as well as possession and sale of all assets
that have been used for collateral.

     We have not issued any letters of credit for the purchase of merchandise
inventory or any capital expenditure.

     We are committed under noncancelable leases for all store and office
spaces, expiring at various dates through 2011. The leases generally provide for
minimum rent plus additional increases in real estate taxes, certain operating
expenses, etc. Certain leases also require contingent rent based on sales. As of
November 3, 2001, our aggregate rent commitments were approximately $184.0
million through 2011, which includes $40.2 million to related parties.

     As of February 2, 2002 we had approximately $39.5 million in cash available
to fund operations and future store growth. In addition, we had approximately
$27.3 million available for borrowings under our credit facility as of February
2, 2002, which availability is limited by the credit facility's borrowing base
collateral requirements. In general, the borrowing base equals a seasonally
adjusted percentage of the retail value of our inventory and 80% of our third
party credit card balances. We believe that cash flows from operations, our
current cash balance, funds available under our revolving credit facility and
cash proceeds

                                        21
<PAGE>

from this offering will be sufficient to meet our working capital needs and
planned capital expenditures for fiscal 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued two new
pronouncements: SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill
and Other Intangible Assets.

     SFAS No. 141 addresses financial accounting and reporting for business
combinations and supersedes APB No. 16, Business Combinations, and FASB
Statement No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises. Under SFAS No. 141, all business combinations are to be accounted
for using one method, the purchase method. SFAS 141 prohibits the use of the
pooling-of-interest method for business combinations initiated after June 30,
2001 and applies to all business combinations accounted for by the purchase
method that are completed after June 30, 2001. We have determined that the
adoption of this statement will not have an impact on our financial statements.

     SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes ABP No. 17, Intangible
Assets. This pronouncement changes the accounting for goodwill from an
amortization method to an impairment only approach. SFAS 142 is effective for
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized in an entity's statement of financial position at
that date, regardless of when those assets were initially recognized. The
adoption of this statement had an approximately $1.6 million impact on our
financial statements for the write-off of the net negative goodwill as of August
5, 2001.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121 but
retains the fundamental provisions of SFAS No. 121 for recognition and
measurement of the impairment of long-lived assets to be held and used and
measurement of long-lived assets to be disposed of by sale. However, SFAS No.
144 applies the fair value method for testing of impairment, which differs from
SFAS No. 121. SFAS No. 144 also supersedes the accounting and reporting
provisions of APB Opinion No. 30 as it pertains to disposal of a business
segment but retains the requirement of that opinion to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or is classified as held
for sale. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. We are evaluating the impact of the adoption of this standard and have
not yet determined the effect of its adoption on our financial position and
results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest rates.  Our market risks relate primarily to changes in interest
rates. We bear this risk in two specific ways. First, our revolving credit
facility carries a variable interest rate that is tied to market indices and,
therefore, our statement of income and our cash flows will be exposed to changes
in interest rates. As of November 3, 2001, we had approximately $15.8 million of
principal outstanding. Outstanding balances under our credit facility bear
interest at our option at either the eurodollar rate plus 1.50% to 2.00% or the
base rate announced from time to time by Fleet. Based on the weighted average
borrowings outstanding during 2001, a 100 basis point change in interest rates
would result in an approximate $188,000 change to our annual interest expense.
The second component of interest rate risk involves the short term investment of
excess cash in short term, investment grade interest bearing securities. These
investments are considered to be cash equivalents and are shown that way on our
balance sheet. If there are changes in interest rates, those changes would
affect the investment income we earn on these investments and, therefore, impact
our cash flows and results of operations.

INFLATION

     We do not believe that inflation has had a material adverse impact on our
business or operating results during the periods presented. We cannot assure
you, however, that our business will not be affected by inflation in the future.

                                        22
<PAGE>

                                    BUSINESS

OVERVIEW

     Our company is a fast-growing, mall-based specialty retailer of casual
apparel and accessories that targets both young women and young men aged 11 to
20. We provide our customers with a focused selection of high-quality,
active-oriented, fashion basic merchandise at compelling values. We maintain
complete control over our proprietary brand by designing and sourcing all of our
merchandise. Our products can be purchased only in our stores, which sell
Aeropostale merchandise exclusively. We create a fun and high energy shopping
experience through the use of creative visual merchandising, colorful in-store
signage, bright lighting, popular music and an enthusiastic, well-trained sales
force. Our average store size of approximately 3,500 square feet is generally
smaller than that of our mall-based competitors and we believe that this enables
us to achieve higher sales productivity and project a sense of activity and
excitement. As of February 2, 2002, we operated 278 stores in 33 states and the
District of Columbia.

     A key differentiating aspect of our design and merchandising strategy is to
keep our styles and product offerings geared towards the demands of our target
customers' active lifestyles. We believe in maintaining a brand that minimizes
fashion risk by reflecting mainstream fashion rather than cutting-edge trends.
Our merchandise consists primarily of fashion basic apparel that projects a
casual and comfortable image. We provide a focused assortment of high-quality
merchandise, including graphic t-shirts, tops, bottoms, sweaters, jeans,
outerwear and accessories. Today, much of our merchandise features our
"Aeropostale" or "Aero" logo with which many of our customers have come to
identify. Through our integrated in-house design and merchandising teams and
quick-turn sourcing relationships, we are able to interpret and react quickly to
mainstream fashion trends and replenish fast-selling inventory rapidly.

BUSINESS STRENGTHS

     We believe that our key business strengths will enable us to continue to
expand our store base and grow profitably.

     Differentiated and recognizable brand.  We have created an active lifestyle
brand image for both young women and young men aged 11 to 20. In an effort to
differentiate the Aeropostale brand from that of our competitors, our design and
merchandising teams focus on what our customers want and can afford. As a
result, our merchandise is comprised of high-quality, comfortable,
active-oriented apparel and accessories that reflect widely accepted fashion
trends. Our "Aeropostale" and "Aero" logos further strengthen our brand
recognition and create an association with which many of our customers have come
to identify. We believe that in the markets we serve, our brand is recognized by
our target customers and our stores are viewed as preferred shopping
destinations.

  Disciplined operating and financial practices.

     - Operating discipline. Our operating discipline extends throughout all
       aspects of our company. Our design and merchandising teams work closely
       together to identify and capitalize on proven fashion trends that have
       broad appeal among our target customer base. Our designers and
       merchandisers are able to control the quality, consistency and timing of
       our merchandise because we sell only our proprietary products. We test
       our products on an ongoing basis to ensure that our products are well
       received by our customers. We source all of our products so we can offer
       them at attractive prices. Finally, we make site selections based upon
       rigorous due diligence, including extensive market research, site visits
       and assessments of mall dynamics.

     - Financial discipline. We have successfully executed a store growth
       strategy that emphasizes profitability. Since we became an independent
       company, substantially all of our stores in operation have produced
       positive store-level operating cash flows. Our gross profit margins grew
       from 33.5% for the thirteen weeks ended October 28, 2000 to 38.8% for the
       thirteen weeks ended November 3, 2001. In addition, our operating income
       margins grew from 13.8% for the thirteen weeks ended October 28, 2000 to
       20.0% for the thirteen weeks ended November 3, 2001. Our store growth and

                                        23
<PAGE>

       other capital expenditures have been funded with cash from operations.
       Consistent with our financial discipline, we employ incentive
       compensation programs based upon key financial performance indicators for
       all levels of management.

     Operating flexibility.  We maintain significant flexibility in the
operation of our business so that we can react quickly to changes in customer
preferences. We conduct daily reviews of the sales performance of our
merchandise to identify and respond to changing trends and consumer preferences.
We pursue a sourcing strategy that maximizes our speed to market. We have
established strong and loyal relationships with our vendors which allow us to
source and replenish our merchandise quickly. Currently, we are able to
replenish a majority of our merchandise within 45 to 90 days. We believe that
our warehouse and distribution facilities can adequately support our merchandise
replenishment needs and are sufficient to accommodate our planned new store
growth. Our store layout allows for a constant renewal of merchandise. We
frequently update our presentation tables, in-store promotions, signage and
window displays to create excitement in our stores.

     Attractive new store economics.  Since we became an independent company, we
have successfully and consistently implemented our store format across a wide
variety of mall classifications and geographic locations. Our average net
investment to open a new store has been approximately $285,000, which includes
capital expenditures adjusted for landlord contributions and initial inventory
at cost net of payables. Our stores have achieved average net sales of
approximately $1.2 million during their first twelve months of operations, sales
per square foot of approximately $360, store-level operating cash flow of
approximately $200,000 and an average pretax cash return on investment of
approximately 69%. Substantially all new stores have become profitable within
the first thirteen weeks of operation. In addition, the Aeropostale stores that
have been open for two full years achieved an average net sales increase of
approximately 10% in their second year of operation.

     Experienced and proven management team.  Since 1996, we have continually
increased the strength of our brand as evidenced by our successful store
expansion and improved financial results. We have a highly experienced
management team with an average of 23 years in the apparel retailing business.
Our management team maintains a corporate culture that makes our company an
enjoyable place to work. We reinforce our corporate culture through ongoing
training programs that motivate and prepare our employees to offer our customers
an enjoyable shopping experience. We believe that with the significant retail
experience of our senior management team and the enthusiasm of our sales team,
we are well positioned for future growth.

GROWTH STRATEGY

     Based upon our business strengths, we intend to pursue the following
strategies for growth:

     Open new stores.  We believe that our merchandise and stores have broad
national appeal that provides substantial new store expansion opportunities. In
the last two years, we rapidly expanded our store base, opening 57 new stores in
fiscal 2000 and 74 in fiscal 2001. We believe that we can continue to grow our
store base without compromising our new store economics. We plan to open
approximately 80 new stores in fiscal 2002, and continue to open new stores at a
comparable pace in future years. We plan to open stores both in markets in which
we currently operate and in new markets. The four states that have the largest
teenage populations in the United States are California, Florida, New York and
Texas according to data derived from information published by the U.S. Census
Bureau. New York is the only one of these four states in which we currently have
a major presence. We plan to expand into Texas by the end of 2002.

     Enhance and expand our brand.  We intend to capitalize on the success of
our brand and continue to enhance our brand recognition. As part of this
strategy, we have engaged an independent marketing firm to develop a new
campaign to increase awareness of our brand. Later this year, we intend to
supplement our current marketing strategy with two initiatives which we believe
will appeal to our target teen customers. The first is an interactive website
that will feature a web-based rewards program. We intend to follow this
initiative with an innovative television advertising campaign. We will also
continue to utilize our logo on a

                                        24
<PAGE>

significant portion of the merchandise that we sell in order to increase
awareness of our brand and to reinforce our active, youth-oriented image. We
believe that as our brand gains increased familiarity and national recognition,
our stores will continue to be preferred shopping destinations.

     Continue high levels of store productivity.  We seek to continue to produce
high levels of comparable store sales growth and average sales per square foot
by maintaining consistent store-level execution. We intend to continue employing
profitable promotional pricing strategies to maintain high levels of customer
traffic. We will also continue testing products so that we can identify
developing trends and evolve with the changing tastes of our customers.

     Further improve profitability.  As we grow our business and open new
stores, we intend to continue maximizing our economies of scale and leveraging
our low-cost infrastructure to increase operational efficiency and improve
profitability. We intend to increase our efficiency by:

     - capitalizing on the value of our brand nationally;

     - maintaining our strong vendor relationships and increasing volume
       purchasing power;

     - leveraging our expertise in new store openings;

     - optimizing our warehousing and distribution capabilities; and

     - investing in and deploying technological enhancements throughout our
       stores and operations.

THE TEEN MARKET

     We generally target our merchandise to the teenage segment of the
population. According to the U.S. Census Bureau, the teenage population in the
United States, which is defined as persons 12 to 19 years old, will grow
approximately 37% faster than the overall population, from approximately 32
million in 2000 to approximately 34 million in 2005. The Census Bureau predicts
that the teenage population will continue to grow through 2008. According to
Teenage Research Unlimited, an independent research firm, spending among
teenagers has grown to $172 billion in 2001 from $141 billion in 1998,
reflecting a compound annual growth rate of approximately 6.8%, or more than
double the rate of inflation during this period. We believe that teenage apparel
spending is less susceptible to general economic downturns than adult apparel
spending. Teen retailers further benefit from the fact that teenagers are still
growing and therefore need to replace their clothing more often than adults. We
believe that these demographic and spending trends offer us strong growth
opportunities.

                              U.S. TEEN POPULATION
[U.S. TEEN POPULATION GRAPH]

<Table>
<S>                                                           <C>
1999                                                                            31.378
2000                                                                            31.616
2001                                                                            31.958
2002                                                                            32.374
2003                                                                            32.809
2004                                                                            33.289
2005                                                                            33.576
2006                                                                            33.772
2007                                                                            33.912
2008                                                                            33.944
</Table>

---------------
Source: U.S. Census Bureau

                           GROWTH IN TEEN SPENDING(1)
[BAR GRAPH OF TEEN SPENDING]

<Table>
<S>                                                           <C>
1997                                                                              122
1998                                                                              141
1999                                                                              153
2000                                                                              155
2001                                                                              172
</Table>

---------------
Source: Teenage Research Unlimited
(1) Represents a compound annual growth rate of 9.0% over the periods presented.

                                        25
<PAGE>

PRICING

     We believe that a key component of our success is our ability to understand
what our customers want and can afford. Our merchandise, which we believe is of
comparable quality to that of our primary competitors, is generally priced lower
than their merchandise, with most of our products falling within a price range
of approximately $10.00 to $39.50 per item and an average sales price of
approximately $14.00. We use a demand-driven promotional pricing strategy to
emphasize the value we offer relative to our competitors and to encourage our
customers to keep returning to our stores. We offer promotions throughout the
year and a significant portion of the merchandise selection in our stores is on
promotion at any given time. Each promotion typically lasts for approximately
two to four weeks, depending on the demand for the product.

DESIGN AND MERCHANDISING

     Our coordinated design and merchandising teams focus on designing
merchandise that meets the demands of our core customers' lifestyles. We
maintain a separate dedicated design and merchandising group for each of the
young women's, young men's and accessories product lines. Each group is overseen
by a merchandising manager to ensure consistency with the desires of our
customers.

     Design.  We offer a focused collection of fashion basic apparel, including
graphic t-shirts, tops, bottoms, sweaters, jeans, outerwear and accessories. Our
"design-driven, merchant-modified" philosophy ensures that our merchandise
styles both reflect the latest trends and are not too fashion forward for our
customers. Much of our merchandise features our "Aeropostale" or "Aero" logo. We
believe that our logo apparel appeals to our young customers and reinforces our
brand image.

     Our design process is highly disciplined and carefully supervised, enabling
us to develop exclusive merchandise and offer a consistent assortment within a
season. About nine months prior to a selling season, the product development
process begins with our designers, merchandisers and senior management working
together to review the prior season's results and new trends and to discuss the
classifications and styles that we should develop for the upcoming season. We
continuously test our products in our stores. Our design group supplements this
analysis with market research from focus groups, travel, retail shopping, trade
shows and input from a design consultant.

     Our merchandising planning process determines the quantities of units
needed for each product category. We then consider sourcing options and
establish price targets. Once approved, we place production orders with the
appropriate vendors. This occurs approximately four months after the initial
review meeting. We typically receive initial orders within three to five months
after order placement. We then allocate merchandise to individual stores based
upon recent selling trends and current inventory levels. By monitoring sales of
each style and color and employing our flexible sourcing capabilities, we are
able to adjust our merchandise on order for later in the season and future
seasons.

     Merchandising.  Our merchandise mix has evolved with the demands of our
target customers. Over the past three years, we have increased the percentage of
our merchandise for female customers as our young women's line has grown
increasingly popular and we have added more accessories to complement our
apparel offering. In addition, we have developed a narrower and deeper
merchandise assortment in response to our customers' preferences.

     The following chart provides a historical breakdown of our merchandise mix
as a percentage of sales:

<Table>
<Caption>
                                                                                    THIRTEEN WEEKS
                                              FISCAL YEAR ENDED                         ENDED
                               ------------------------------------------------    ----------------
                               JULY 31, 1999    JULY 29, 2000    AUGUST 4, 2001    NOVEMBER 3, 2001
                               -------------    -------------    --------------    ----------------
<S>                            <C>              <C>              <C>               <C>
Young Women's................       37%              42%               49%                61%
Young Men's..................       55               47                39                 31
Accessories..................        8               11                12                  8
</Table>

                                        26
<PAGE>

SOURCING

     We employ a sourcing strategy that maximizes our speed to market and allows
us to respond quickly to our customers' preferences. We believe that we have
developed strong relationships with our vendors, some of whom rely upon us for a
significant portion of their business. The majority of our vendors can refill
orders within 45 to 90 days, enabling quick inventory replenishment. We believe
that our strong relationships have also provided us with the ability to
negotiate favorable pricing, further improving our overall cost structure. We
ensure the quality of our vendors' products by inspecting pre-production
samples, making periodic site visits to our vendors' foreign production
factories and by selectively inspecting inbound shipments at our distribution
center.

     We utilize numerous sourcing arrangements for the production of our
merchandise. During the fifty-two weeks ended February 2, 2002, Federated
Merchandising Group, or FMG, a wholly owned subsidiary of our former parent
company Federated Department Stores, Inc., acted as our agent in sourcing
approximately 27% of our merchandise. FMG oversees compliance with all laws
relating to production quotas, tariffs and customs clearance. We believe that
all transactions with FMG have been negotiated at arm's length. Our current
contract with FMG comes due for renewal in July 2003. In the event of an early
or unexpected termination of this contract, we believe that our company
possesses the ability to perform all of the sourcing functions provided by FMG
without significant interruption.

     We directly source all other production not covered by our arrangement with
FMG. During the past three years, we have sought to reduce the number of vendors
that we utilize in order to streamline our sourcing operations and to exercise
greater influence over our vendors. Approximately 70% of our merchandise was
directly sourced from our top ten vendors during the fifty-two weeks ended
February 2, 2002, although no single vendor supplied more than 17% of our total
merchandise during that period. Most of our vendors maintain sourcing offices in
the United States with the majority of their production factories located in
Europe, Asia and Central America. All payments are made in U.S. dollars to
minimize currency risk.

                                        27
<PAGE>

STORES

     Existing stores.  As of February 2, 2002 we operated 278 stores in 33
states and the District of Columbia. Our stores are typically located in
regional shopping malls in areas with high concentrations of our target
customers.

     The following map and store list shows the number of our stores in each
state as of February 2, 2002:

                 [Map Of Store Locations In The United States]
---------------

Shaded regions indicate states with largest teenage populations (derived from
U.S. Census Bureau data).

                          NUMBER OF AEROPOSTALE STORES
                             AS OF FEBRUARY 2, 2002

<Table>
<Caption>
                                      NUMBER
STATE                                OF STORES
-----                                ---------
<S>                                  <C>
Alabama..........................        4
Arizona..........................        4
California.......................        6
Connecticut......................        8
Delaware.........................        3
Florida..........................        3
Georgia..........................        8
Illinois.........................       15
Indiana..........................       13
Iowa.............................        4
Kansas...........................        2
Kentucky.........................        3
Louisiana........................        1
Massachusetts....................       12
Maryland.........................        7
Maine............................        2
Michigan.........................       13
</Table>

<Table>
<Caption>
                                      NUMBER
STATE                                OF STORES
-----                                ---------
<S>                                  <C>
Minnesota........................        6
Missouri.........................        6
North Carolina...................       10
Nebraska.........................        4
New Hampshire....................        5
New Jersey.......................       19
New York.........................       35
Ohio.............................       23
Pennsylvania.....................       30
Rhode Island.....................        1
South Carolina...................        3
Tennessee........................        9
Virginia.........................        9
Vermont..........................        2
Wisconsin........................        3
West Virginia....................        4
District of Columbia.............        1
</Table>

                                        28
<PAGE>

     The following table highlights the number of stores opened and closed in
each of the last three fiscal years and the twenty-six week period ended
February 2, 2002:

                          STORE OPENINGS AND CLOSINGS

<Table>
<Caption>
                                                                             TOTAL NUMBER
                                                      STORES     STORES      OF STORES AT
FISCAL YEAR                                           OPENED    CLOSED(1)    END OF PERIOD
-----------                                           ------    ---------    -------------
<S>                                                   <C>       <C>          <C>
Fiscal 1999.........................................    11           1            129
Fiscal 2000.........................................    57           8            178
Fiscal 2001.........................................    74           0            252
Twenty-six weeks ended February 2, 2002.............    34           8(2)         278
</Table>

---------------
(1) Does not include Chelsea Cambell stores, a concept we discontinued in fiscal
    2000.

(2) Includes the closing of seven aero kids stores.

     Store design and environment.  We design our stores to create an energetic
shopping environment, featuring powerful in-store promotional signage, creative
visuals, bright lighting and popular music. The enthusiasm of our associates is
integral to our store environment. Our stores feature display windows which
provide high visibility for mall traffic. The front of the store features the
newest and most desirable merchandise to draw shoppers into the store. We keep
our merchandise assortments fresh and exciting by updating our floor sets
approximately 11 times per year. Visual merchandising directives are initiated
at the corporate level to maintain consistency throughout all of our stores. We
generally locate our stores in central mall locations near popular teen
gathering spots, including food courts, music stores and other teen-oriented
retailers. In addition, we generally implement broad-scale renovations at every
store lease expiry.

     Our stores generally range in size from 2,500 to 6,000 square feet, with an
average square footage of approximately 3,500. We believe that by keeping our
store size generally smaller than that of many of our competitors, we are able
to achieve a high level of productivity and reinforce the sense of activity and
energy that we want our stores to project.

     Store management and training.  Our stores are organized into regions and
districts. Each of our 3 regions is managed by a regional director and
encompasses approximately 10 districts; each district is managed by a district
manager and encompasses approximately 7 to 10 individual stores. We usually
staff each store with one store manager, two assistant managers and 10 to 15
part-time sales associates, the number of which generally increases during our
peak selling seasons. Store managers are primarily responsible for hiring and
training store level associates, while our merchandise assortments, store
layout, inventory management and in-store visuals are directed by our corporate
headquarters.

     We seek to instill enthusiasm and dedication in all our employees. To
promote this strategy, we compensate our district and store managers with a base
salary plus incentive bonus payments based on store sales performance and loss
prevention. We designed our "Career Development Program" to provide managers
with training to improve both operational expertise and supervisory skills.
Training programs are completed in modules which allow managers to customize the
program to meet their individual needs.

     Our sales associates are a critical element to achieving our marketing and
customer satisfaction goals. We strive to hire employees who possess high energy
levels and excitement for our brand. All sales associates receive customer
service and product information training which enables them to assist customers
in a friendly, helpful manner. Sales associates receive hourly wages and the
potential for additional compensation through various contests and motivational
programs. We believe that our continued success is dependent on our ability to
attract, retain and motivate quality employees.

     Expansion opportunities and site selection.  Over the past two years, we
have aggressively opened new stores to capitalize on our profitable store model.
We plan to increase our store base in fiscal 2002 by

                                        29
<PAGE>

opening approximately 80 stores and to continue an aggressive pace of new store
openings in future years. We have identified mall locations in both existing and
new markets for potential new store opportunities.

     In selecting a specific site, we target high traffic, prime real estate
locations in malls with suitable demographics and favorable lease economics. As
a result, we generally locate our stores in malls in which comparable
teen-oriented retailers have performed well. Primary site evaluation criteria
include average sales per square foot, co-tenancies, traffic patterns and
occupancy costs. Historically, we have been able to locate and open stores
profitably in a wide variety of mall classifications by negotiating lease terms
that we believe are favorable, based on our expectations for store activity and
a store size of approximately 3,500 square feet. Prior to committing to each
store lease, at least one member of our senior management team visits and
approves each individual site location. After our real estate committee approves
a site, approximately 23 weeks are required to finalize the lease, design the
layout, build out the property, hire and train associates and equip and stock
the store before opening.

     Since we became an independent company, we have successfully and
consistently implemented our store format across a wide variety of mall
classifications and geographic locations. Our average net investment to open a
new store has been approximately $285,000, which includes capital expenditures
adjusted for landlord contributions and initial inventory at cost net of
payables. Our stores have achieved average net sales of approximately $1.2
million during their first twelve months of operations, sales per selling foot
of approximately $360, store-level operating cash flow of approximately $200,000
and an average pretax cash return on investment of approximately 69%.
Substantially all new stores have become profitable within the first thirteen
weeks of operation. In addition, the Aeropostale stores that have been open for
two full years achieved an average net sales increase of approximately 10% in
their second year of operation.

MARKETING AND ADVERTISING

     We employ numerous initiatives to maximize the impact of our marketing and
advertising programs. We view the enthusiasm and commitment of our store-level
employees as a key element to establishing the credibility of our brand with our
target customers. To reinforce our image with our customers, we seek to locate
our stores in mall locations near popular teen gathering spots and utilize our
window and in-store displays with colorful and brand-focused presentations. We
view the use of our logo on our merchandise as an effective means for increasing
brand awareness among our target customers.

     Over the past few years, we have developed a marketing program that allows
us to gain additional exposure for our brand on college campuses. We believe
that our target customers value and aspire to an active, collegiate lifestyle.
Accordingly, we sponsor a number of collegiate athletic conferences by providing
them with co-branded apparel and donating various scholarships. In addition, we
have entered into agreements with numerous colleges and universities that enable
us to sell and market our products on campuses through organized sales events.

     We have historically relied on these methods as effective advertising tools
and have utilized traditional media advertising on a very limited basis. We have
recently engaged an independent marketing firm to develop a multi-faceted
campaign to increase the recognition of the Aeropostale brand as we expand into
new geographical areas. The campaign will involve the use of an interactive
website that will feature a web-based customer rewards program and television
advertisements directed at our target customer base.

DISTRIBUTION

     The timely and efficient replenishment of current styles is key to our
overall business strategy. We utilize a third party operator for merchandise
processing. This third party operates a 200,000 square foot distribution
facility in New Jersey, where our merchandise is processed by using an automated
picking and packing carousel. Our vendors ticket virtually all of our
merchandise and approximately 25% of incoming merchandise is ready for direct
shipment to our stores. This reduces labor costs and processing time as does the
facility's use of an automated sorting system for separating freight by shipping
zone. We also rely on a third party transportation company to deliver our
merchandise from our warehouse to our stores.

                                        30
<PAGE>

     In order to accommodate our planned store growth, we recently signed a
lease for a 315,000 square foot facility also in New Jersey for a period of five
years with a five-year renewal option. We plan to use this building to warehouse
inventory needed to replenish and backstock all of our stores. This building
will also serve all of our general warehousing needs, such as storage of new
store merchandise, floor set merchandise and packaging supplies, with additional
capacity for processing as our growth requires. We expect this facility to be
fully operational by fall 2002. The staffing and management of this facility has
been outsourced to the same third party provider that operates the distribution
facility. This third party employs personnel represented by a labor union. There
have been no work stoppages or disruptions since the inception of our
relationship with this third party in 1991. We believe the relationship with the
employees to be good. Currently, we sublease unused space at this facility and
will continue to do so until we need it for our operations. We believe that our
current facilities are large enough to handle our expected store growth over the
next five years.

MANAGEMENT INFORMATION SYSTEMS

     Our management information systems and electronic data processing systems
provide a full range of retail, financial and merchandising applications. We
utilize a combination of customized and industry standard software systems to
provide various functions related to:

     - point-of-sales;

     - inventory management;

     - design;

     - planning and distribution; and

     - financial reporting.

     We communicate with each store on a daily basis to gather all information
on sales, merchandise transfers and sales trends and to transmit details
regarding price changes and pending deliveries. By updating our sales
information daily from each store's point of sale terminal, we can evaluate such
information to implement merchandising decisions, pricing changes and inventory
allocation.

     We view the use of technology as an important part of our growth strategy.
Over the next few years we intend to invest in new technology as appropriate.

COMPETITION

     The teen apparel market is highly competitive. We compete with a wide
variety of retailers including other specialty stores, department stores, mail
order retailers and mass merchandisers. Specifically, we compete with other teen
apparel retailers including, but not limited to, Abercrombie & Fitch, American
Eagle Outfitters, Gap, Hot Topic, Pacific Sunwear, Too, Urban Outfitters and Wet
Seal. Stores in our sector compete primarily on the bases of design, price,
quality, service and selection. We believe that our competitive advantage lies
with our differentiated brand and our unique combination of quality, comfort and
value. Moreover, we believe that we target a younger, value-oriented, customer,
while many of our competitors cater to a customer who is either older or seeking
cutting-edge fashion.

PROPERTIES

     We lease all of our store locations. Most of our leases have an initial
term of ten years with percentage rent clauses and do not contain extension
options. Generally, our leases allow for termination by us after a certain
period of time if sales at that site do not exceed specified levels.

     We currently lease approximately 18,500 square feet of office space at 1372
Broadway in New York, New York for our corporate headquarters and our design,
sourcing and production teams. This lease expires in January 2004.

                                        31
<PAGE>

     We also rent a facility in Wayne, New Jersey on a month-to-month basis.
This facility occupies approximately 9,000 square feet and is used as
administrative offices for finance, operations and information systems
personnel. In addition, we recently signed a lease for a 315,000 square foot
facility in South River, New Jersey for a five-year term with a five-year
renewal option. We anticipate that this facility will be fully operational in
fall 2002 and we will use it to warehouse inventory needed to replenish and
backstock all of our stores as well as serve all of our general warehousing
needs.

TRADEMARKS

     We have registered the Aeropostale(R) trademark and design with the U.S.
Patent and Trademark Office as a trademark for clothing and for a variety of
accessories, including sunglasses, belts and hats, and as a service mark for
retail clothing stores. We have also filed an intent-to-use application with the
U.S. Patent and Trademark Office to register aero(TM) for children's clothing
and accessories. We intend to file a statement of use for the aero(TM) mark for
children's clothing and accessories with the U.S. Patent and Trademark office.
Additionally, we have applied for or have obtained a registration for the
Aeropostale mark in 26 foreign countries where we obtain supplies, manufacture
goods or have the potential of doing so in the future.

EMPLOYEES

     As of February 2, 2002, we employed 1,080 full-time and 2,437 part-time
employees. We employ 126 of our employees at our corporate offices, and 3,391 at
our store locations. The number of part-time employees fluctuates depending on
our seasonal needs. None of our employees are represented by a labor union and
we consider the relationship with our employees to be good.

LEGAL PROCEEDINGS

     We are party to various legal proceedings in the ordinary course of
business. There are currently no material legal proceedings pending against us.

                                        32
<PAGE>

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth information with respect to our executive
officers and directors as of February 2, 2002.

<Table>
<Caption>
NAME                       AGE                        POSITION
----                       ----                       --------
<S>                        <C>     <C>
Julian R. Geiger.........   56     Chairman and Chief Executive Officer, Director
John S. Mills............   54     President and Chief Operating Officer,
                                   Director
Michael J. Cunningham....   44     Senior Vice President -- Chief Financial
                                   Officer
Christopher L. Finazzo...   46     Executive Vice President -- Chief
                                   Merchandising Officer
Thomas P. Johnson........   43     Senior Vice President -- Director of Stores
Laura W. Moran...........   52     Senior Vice President -- Director of Human
                                   Resources
Olivera Lazic-Zangas.....   39     Senior Vice President -- Director of Design
Bodil Arlander...........   38     Director
Mary Elizabeth Burton....   50     Director
David Edwab..............   47     Director
John D. Howard...........   49     Director
Richard Metrick..........   60     Director
</Table>

     Julian R. Geiger has served as our Chairman and Chief Executive Officer
since August 1998. From 1996 to 1998, he held the position of President and
Chief Executive Officer of Federated Specialty Stores, a division of Federated
Department Stores, Inc., which included Aeropostale. Before joining Federated,
he was President of the Eagle Eye Kids wholesale and retail divisions of Asian
American Partners from 1993 to 1996. Prior to then, Mr. Geiger directed a wide
range of merchandising positions from 1975 to 1993 at R.H. Macy & Co., Inc.,
including President of Merchandising for Macy's East responsible for Young
Men's, Juniors, Misses Coats and Misses Swimwear.

     John S. Mills has served as our President and Chief Operating Officer since
February 2000, and as a director since August 1998. He previously served as our
Executive Vice President -- Director of Operations from 1998 to 2000. From 1994
through 1998 he held positions as Vice President of Operations and then Senior
Vice President of Operations for Federated Specialty Stores. Before joining the
specialty store division of R.H. Macy & Co., Inc. in 1988 as Vice President of
Operations, Mr. Mills held various executive positions with the Bamberger's
division of R.H. Macy & Co., Inc., Abraham & Strauss and M. Fortunoff's from
1969 until 1988.

     Michael J. Cunningham has served as our Senior Vice President -- Chief
Financial Officer since August 2000. He previously served as Chairman and
Co-Founder of Compass International Services Corporation from 1997 to 1999. He
also held various senior executive positions for American Express Company from
1984 to 1997, including Vice President -- Operations, Vice President -- Finance,
and Director of Corporate Finance. Mr. Cunningham is a Certified Public
Accountant.

     Christopher L. Finazzo was promoted to Executive Vice President -- Chief
Merchandising Officer in February 2002 after serving as Senior Vice
President -- General Merchandise Manager from 1999 to February 2002, and as Vice
President, Divisional Merchandise Manager for Aeropostale Men's from 1996 to
1999. From 1994 to 1996, he was President of C&E Marketing and from 1992 to
1994, Director of Merchandise for Shalor Designs. From 1991 to 1992, Mr. Finazzo
was Director of Merchandise for his own company, In the Paint, Inc. Prior to
then, Mr. Finazzo held various merchandise positions with R.H. Macy's & Co.,
Inc. including Sales Manager, Assistant Buyer, Buyer and Administrator.

     Thomas P. Johnson rejoined us in January 2001 as our Senior Vice
President -- Director of Stores after having served as Senior Vice President,
Vice President, Regional Manager and District Manager with

                                        33
<PAGE>

Federated Specialty Stores from 1989 to 1996. In the interim, he served as
Senior Vice President -- Director of Stores for David's Bridal, Inc. in 2000 and
as Senior Vice President -- Director of Stores for Brooks Brothers, Inc. from
1997 to 2000. Mr. Johnson also held various field positions at Gap, Inc. as
Regional Manager for Banana Republic, District Manager and Store Manager for
Gap, Inc. from 1981 to 1989.

     Laura W. Moran has served as our Senior Vice President -- Director of Human
Resources since August 1998 and previously as Vice President -- Director of
Human Resources with Federated Specialty Stores. Between 1978 and 1998, Mrs.
Moran held several human resources positions with Bamberger's, including
Assistant Store Manager for Sales Support, Personnel Manager for Merchandising
Services, Personnel Manager and Employment Manager.

     Olivera Lazic-Zangas was promoted to Senior Vice President -- Director of
Design in February 2002. She rejoined Aeropostale in 1998 as Vice
President -- Director of Design after serving as a women's designer for Old Navy
for nine months. Prior to Old Navy, she was the Vice President -- Design
Director for Aeropostale, a position she held since 1997, after serving as the
Design Director for Women's Aeropostale from 1996 to 1997 and Women's Designer
from 1995 to 1996. Prior to 1996, Ms. Lazic-Zangas was a Men's Knit Designer for
the Federated Merchandising Group from 1988 to 1995.

     Bodil Arlander has served as a director since August 1998 and currently is
a Senior Managing Director at Bear, Stearns & Co. Inc. and a Principal of Bear
Stearns Merchant Banking, which she joined in April 1997. Between 1991 and 1997,
she worked in the Mergers and Acquisitions Group of Lazard Freres & Co. LLC.
Prior to entering the finance industry, Ms. Arlander worked throughout Europe in
the fashion and beauty industry. She also currently serves as a director of
Standard Holdings LLC and Uniscribe Professional Services, Inc.

     Mary Elizabeth Burton has served as a director since April 2001 and
currently is Chairman and Chief Executive Officer of BB Capital, Inc., a company
she founded in 1992 to provide advisory services to and make investments in
small to medium-sized retail businesses. Previously, Ms. Burton served as Chief
Executive Officer of a number of companies including Supercuts, Inc., PIP
Printing and Cosmetic Center, Inc. Ms. Burton also currently serves as a
director of The Sports Authority, Inc. and Staples, Inc.

     David Edwab has served as a director since January 2001 and currently is
the Vice Chairman of The Men's Wearhouse, Inc. From 2000 to 2001, Mr. Edwab was
a Senior Managing Director at Bear, Stearns & Co. Inc., serving as the Group
Head for Retail Investment Banking. Prior to then, he held several positions at
The Men's Wearhouse since 1991 including Treasurer, Chief Financial Officer,
Chief Operating Officer and President. Mr. Edwab began his career in public
accounting and was responsible for Deloitte & Touche's Southwest Corporate
Finance and Retail Practice for several years.

     John D. Howard has served as a director since August 1998 and currently is
a Senior Managing Director at Bear, Stearns & Co. Inc. and Head of Bear Stearns
Merchant Banking. From 1990 to 1997, he was a co-CEO of Vestar Capital Partners,
Inc., a private investment firm specializing in management buyouts. Previously,
he was a Senior Vice President of Wesray Capital Corporation, a private
investment firm specializing in leveraged buyouts. Mr. Howard also currently
serves as a director of several corporations, including Fitz and Floyd, Inc. and
Integrated Circuit Systems, Inc.

     Richard Metrick has served as a director since August 1998 and is a Senior
Managing Director at Bear, Stearns & Co. Inc. Prior to joining Bear Stearns in
March 1989, Mr. Metrick served as Chief Financial Officer of American Bakeries
Co. and of Hazeltine Corporation.

BOARD COMMITTEES

     Shortly after the consummation of this offering, we intend to establish an
audit committee and a compensation committee. The audit committee will consist
of three persons who are not employees of, and have no business relationships
with, Aeropostale. The audit committee will be responsible for reviewing our
internal accounting procedures and consulting with and reviewing the services
provided by our independent accountants. The compensation committee will also
consist of three persons who are not employees of, and

                                        34
<PAGE>

have no business relationships with, Aeropostale. The compensation committee
will be responsible for reviewing and recommending to the board of directors the
compensation and benefits of all our officers and directors, including stock
compensation and loans and establishing and reviewing general policies relating
to the compensation and benefits of our employees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Currently, our executive committee consisting of John D. Howard and Julian
R. Geiger performs the functions that will be delegated to the compensation
committee. No member of our board of directors serves, and we anticipate that no
member of our compensation committee will serve, as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.

DIRECTOR COMPENSATION

     We currently reimburse members of the board of directors for any reasonable
out-of-pocket expenses incurred by them in connection with attendance at board
and committee meetings. We intend to pay each member of our audit committee and
our compensation committee a nominal fee for each meeting attended.

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

     Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

     - any breach of their duty of loyalty to the corporation or its
       stockholders;

     - acts or omissions not in good faith or which involve intentional
       misconduct or a knowing violation of law;

     - unlawful payments of dividends or unlawful stock repurchases or
       redemptions; or

     - any transaction from which the director derived an improper personal
       benefit.

     The limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

     Our certificate of incorporation provides that we will indemnify our
directors and officers and may indemnify our employees and other agents to the
fullest extent permitted by law. We believe that indemnification under our
certificate of incorporation covers at least negligence and gross negligence on
the part of indemnified parties. Our certificate of incorporation also permits
us to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in their capacity as
an officer, director, employee or other agent.

     The limited liability and indemnification provisions in our certificate of
incorporation may discourage stockholders from bringing a lawsuit against our
directors for breach of their fiduciary duty and may reduce the likelihood of
derivative litigation against our directors and officers, even though a
derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.

     At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted for directors, officers and controlling persons of us pursuant
to the foregoing provisions or otherwise, we have

                                        35
<PAGE>

been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

EXECUTIVE COMPENSATION

     Summary compensation table.  The following table sets forth the
compensation earned, awarded or paid for services rendered to us in all
capacities for the fiscal year ended August 4, 2001, by our Chief Executive
Officer and our four next most highly compensated executive officers who earned
more than $100,000 in salary and bonus during the fiscal year ended August 4,
2001, to whom we refer in this prospectus collectively as the named executive
officers:

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                                LONG-TERM
                                                                               COMPENSATION
                                                               ANNUAL          ------------
                                                            COMPENSATION        SECURITIES
                                                         -------------------    UNDERLYING       ALL OTHER
                                           FISCAL YEAR    SALARY     BONUS     OPTIONS (#)    COMPENSATION(1)
                                           -----------   --------   --------   ------------   ---------------
<S>                                        <C>           <C>        <C>        <C>            <C>
Julian R. Geiger.........................     2001       $406,606   $358,820       --              $3,675
    Chairman and Chief Executive Officer
John S. Mills............................     2001        292,104    241,880       --               3,675
    President and Chief Operating Officer
Michael J. Cunningham....................     2001        179,327     20,132                        3,522
    Senior Vice President -- Chief
      Financial Officer
Christopher L. Finazzo...................     2001        190,945     25,369                           --
    Executive Vice President -- Chief
      Merchandising Officer
Laura W. Moran...........................     2001        173,451     39,407                        3,675
    Senior Vice President -- Director of
      Human Resources
</Table>

---------------
(1) Represents amounts we paid pursuant to our Medical Reimbursement Executive
    Plan.

STOCK OPTIONS

     The following table provides information relating to options to purchase
our common stock granted during the fiscal year ended August 4, 2001 to the
executive officers named in the summary compensation table above.

                        INDIVIDUAL GRANTS -- FISCAL 2001

<Table>
<Caption>
                                 NUMBER OF       % OF TOTAL
                                 SHARES OF     OPTIONS GRANTED
                                AEROPOSTALE    TO EMPLOYEES IN
                                COMMON STOCK     FISCAL YEAR     EXERCISE OR
                                 UNDERLYING         ENDED        BASE PRICE     EXPIRATION     GRANT DATE
                                  OPTIONS      AUGUST 4, 2001      ($/SH)          DATE       PRESENT VALUE
                                ------------   ---------------   -----------   -------------  -------------
<S>                             <C>            <C>               <C>           <C>            <C>
Name
------------------------------
Julian R. Geiger..............         --             --               --           --               --
John S. Mills.................         --             --               --           --               --
Michael J. Cunningham.........                      15.3%                      July 31, 2007
                                                     7.7                       July 31, 2007
Christopher L. Finazzo........                       7.7                       July 31, 2007
Laura W. Moran................                       3.1                       July 31, 2007
</Table>

                                        36
<PAGE>

               AGGREGATE OPTION EXERCISES DURING LAST FISCAL YEAR
                       AND FISCAL YEAR END OPTION VALUES

     The following table sets forth information with respect to the named
executive officers concerning option exercises for the fiscal year ended August
4, 2001 and exercisable and unexercisable options held as of August 4, 2001. The
value of unexercised in-the-money options is based on price of $     per share,
the fair market value of our common stock on August 4, 2001, minus the per share
exercise price, multiplied by the number of shares underlying the option.

<Table>
<Caption>
                                                                 NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                                  FISCAL YEAR ENDED               UNDERLYING OPTIONS              IN-THE-MONEY OPTIONS
                                    AUGUST 4, 2001                AT AUGUST 4, 2001                 AT AUGUST 4, 2001
                             ----------------------------   ------------------------------   -------------------------------
                               SHARES
                             ACQUIRED ON
                             EXERCISE(#)   VALUE REALIZED   EXERCISABLE   UNEXERCISABLE(1)   EXERCISABLE   UNEXERCISABLE(2)
                             -----------   --------------   -----------   ----------------   -----------   -----------------
<S>                          <C>           <C>              <C>           <C>                <C>           <C>
Julian R. Geiger...........         --             --              --              --          $29,136         $445,160
John S. Mills..............         --             --              --              --           20,784          315,920
Michael J. Cunningham......         --             --              --              --               --           33,000
Christopher L. Finazzo.....                   $37,462                                            2,750           65,202
Laura W. Moran.............                    63,550                                              825           75,265
</Table>

---------------
(1) All unvested options outstanding shall vest and become exercisable upon the
    consummation of this offering.

(2) Includes non-qualified options that although vested, will not be exercisable
    until the consummation of this offering.

1998 STOCK OPTION PLAN

     In August 1998, our board of directors and stockholders adopted our 1998
Stock Option Plan. The plan is intended to motivate and reward executives and
other key employees and to enable us to obtain and retain the services of
employees and consultants we consider essential to our long-term success. The
plan provides for benefits to be awarded in the form of incentive stock options
or non-qualified stock options. Benefits under the plan may be granted only to
persons who are our or our subsidiaries' executives and other key employees and
consultants. The plan is administered by our board of directors which has
complete authority to determine the terms, conditions and provisions of, and
restrictions relating to, and to grant, the benefits under the plan. As of
February 2, 2002, options to purchase          shares of our common stock were
outstanding under the 1998 Plan, all of which shall vest and become exercisable
upon the consummation of the offering.

     The number of shares of our common stock with respect to which benefits may
be granted under the plan may not exceed          shares in the aggregate. If
there is any change in our common stock, the number and type of shares available
under the plan and/or the price thereof, will be appropriately adjusted. As of
February 2, 2002, there were          shares available for grant under the plan.

     Options granted under the plan which are intended to qualify as incentive
stock options must be exercised within ten years of the date of grant of the
option or the expiration date set forth in the option grant, if earlier, subject
to earlier expiration upon termination of the holder's employment. The exercise
price of all options intended to qualify as incentive stock options must be at
least equal to the fair market value of the underlying shares of common stock on
the date of the grant. Incentive stock options granted to any participant who
owns 10% or more of our outstanding common stock must have an exercise price
equal to or exceeding 110% of the fair market value of a share of common stock
on the date of the grant and must not be exercisable for longer than five years.

     Our board of directors may amend or terminate the plan, but the board may
not amend the plan without the approval or our stockholders, if such amendment
would violate any law or agreement, or the rules of any exchange upon which the
common stock is listed.

     In the event of a change of control, the board may provide that the options
shall become immediately vested and that such options shall terminate if not
exercised on the date of the change in control, or that

                                        37
<PAGE>

such options shall represent the right to receive the excess of consideration
per share of common stock offered in such change of control over the exercise
price of such options.

2002 LONG-TERM INCENTIVE PLAN

     Prior to the closing of the offering, we will adopt the Aeropostale 2002
Long-Term Incentive Plan, which will become effective upon the consummation of
this offering. The plan provides for grants of stock options, stock appreciation
rights, restricted stock and performance awards. Our directors, officers and
other employees and persons who engage in services for us are eligible for
grants under the plan. The purpose of the plan is to provide these individuals
with incentives to maximize stockholder value and otherwise contribute to our
success and to enable us to attract, retain and reward the best available
persons for positions of responsibility.

     A total of          shares of our common stock, representing      % of our
common stock outstanding upon completion of this offering, will be available for
issuance under the plan, subject to adjustment in the event of a reorganization,
stock split, merger or similar change in our corporate structure or the
outstanding shares of common stock. Our compensation committee will administer
the plan. Our board also has the authority to administer the plan and to take
all actions that the compensation committee is otherwise authorized to take
under the plan. The terms and conditions of each award made under the plan,
including vesting requirements, will be set forth consistent with the plan in a
written agreement with the grantee.

     Stock options.  Under the plan, the compensation committee or the board may
award grants of incentive stock options and other, non-qualified stock options.
The compensation committee also has the authority to grant options that will
become fully vested and exercisable automatically upon a change in control. The
compensation committee may not, however, award to any one person in any calendar
year options to purchase common stock equal to more than      % of the total
number of shares authorized under the plan, and it may not award incentive
options first exercisable in any calendar year whose underlying shares have a
fair market value greater than $100,000, determined at the time of grant.

     The compensation committee will determine the exercise price and term of
any option in its discretion. The exercise price of an incentive option,
however, may not be less than 100% of the fair market value of a share of common
stock on the date of grant and the option must be exercised within 10 years of
the date of grant. The exercise price of an incentive option awarded to a person
who owns stock constituting more than 10% of our voting power may not be less
than 110% of such fair market value on such date and the option must be
exercised within five years of the date of grant.

     Stock appreciation rights.  The compensation committee may grant stock
appreciation rights, or SARs, alone or in tandem with stock options, subject to
the terms and conditions it determines under the plan. SARs granted in tandem
with options become exercisable only when, to the extent and on the conditions
that the related options are exercisable, and they expire at the same time the
related options expire. The exercise of an option results in the immediate
forfeiture of any related SAR to the extent the option is exercised, and the
exercise of an SAR results in the immediate forfeiture of any related option to
the extent the SAR is exercised.

     Upon exercise of an SAR, the grantee will receive an amount in cash and/or
shares of common stock or other securities equal to the difference between the
fair market value of a share of common stock on the date of exercise and the
exercise price of the SAR or, in the case of an SAR granted in tandem with
options, of the option to which the SAR relates, multiplied by the number of
shares as to which the SAR is exercised.

     Performance awards.  The compensation committee may grant performance
awards contingent upon achievement by the grantee or by us, of set goals and
objectives regarding specified performance criteria, over a specified
performance cycle. Awards may include specific dollar-value target awards,
performance units, the value of which is established at the time of grant,
and/or performance shares, the value of which is equal to the fair market value
of a share of common stock on the date of grant. The value of a

                                        38
<PAGE>

performance award may be fixed or fluctuate on the basis of specified
performance criteria. A performance award may be paid out in cash and/or shares
of common stock or other securities.

     Restricted stock.  Under the plan, the compensation committee may award
restricted stock subject to the conditions and restrictions, and for the
duration that it determines in its discretion.

     Amendment and termination of the plan.  The board may amend or terminate
the plan in its discretion, except that no amendment will become effective
without prior approval of our stockholders if such approval is necessary for
continued compliance with the performance-based compensation exception of
Section 162(m) of the Internal Revenue Code or any stock exchange listing
requirements. If not previously terminated by the board, the plan will terminate
on the tenth anniversary of its adoption.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

     We maintain a supplemental executive retirement plan, or SERP, which is an
unfunded defined benefit plan. The actuarial present value of accumulated
benefit obligations related to our SERP approximated $2.5 million at August 4,
2001, $1.6 million at July 29, 2000 and $1.8 million at July 31, 1999, using a
weighted average discount rate of 7% at August 4, 2001 and July 29, 2000 and
4.5% at July 31, 1999, and an assumed rate of compensation increase of 4.5% for
all years. Pension expense for the SERP amounted to $247,000 in fiscal 2001,
$171,000 in fiscal 2000 and $210,000 in fiscal 1999. Of these amounts $155,000
represented interest, $3,000 represented amortization of prior experienced
losses, and $89,000 represented the current year service component for fiscal
2001, $101,000 represented interest, ($10,000) represented amortization of prior
experienced gains, and $80,000 represented the current year service component
for fiscal 2000 and $110,000 represented interest and $100,000 represented the
current year service component for fiscal 1999.

     The following table illustrates, for representative average pensionable
compensation and years of benefit service classifications, the annual retirement
benefit that would be payable to an employee under our SERP if such employee
retired on December 31, 2001 at age 65, based on the straight-life annuity form
of payment. The annual retirement benefit amounts incorporate an offset factor
included in our SERP's benefit formula of a percentage of the employee's
estimated Social Security benefit, and are calculated based on the total salary
and bonus paid to an employee during the calendar year. Our SERP provides that a
maximum of 30 years of benefit service may be credited to a participant. The
number of years of benefit service that have been credited to our named
executive officers, as of December 31, 2001, are 28 years for Mr. Geiger, 30
years for Mr. Mills, 13 years for Mr. Finazzo and 27 years for Mrs. Moran. Mr.
Cunningham does not participate in our SERP. The benefit amounts set forth in
the following table are subject to further offsets attributable to benefits
accrued as of July 31, 1998 under the Supplementary Executive Retirement Plan of
Federated Department Stores, Inc. in the following present value amounts: Mr.
Geiger -- $249,904; Mr. Mills -- $225,242; Mr. Finazzo -- $3,563; and Mrs.
Moran -- $44,029.

                             PENSION PLAN TABLE(1)

<Table>
<Caption>
                                                      YEARS OF SERVICE
                                      ------------------------------------------------
REMUNERATION                             15        20        25        30      35(2)
------------                          --------  --------  --------  --------  --------
<S>                                   <C>       <C>       <C>       <C>       <C>
$125,000............................  $ 18,600  $ 24,800  $ 31,000  $ 37,200  $ 37,200
 150,000............................    23,700    31,600    39,500    47,400    47,400
 175,000............................    28,800    38,400    48,100    57,700    57,700
 200,000............................    33,900    45,300    56,600    67,900    67,900
 225,000............................    39,000    52,100    65,100    78,100    78,100
 250,000............................    44,200    58,900    73,600    88,400    88,400
 300,000............................    54,400    72,500    90,700   108,800   108,800
 400,000............................    74,800    99,800   124,800   149,700   149,700
 450,000............................    85,100   113,400   141,800   170,200   170,200
 500,000............................    95,300   127,100   158,900   190,600   190,600
</Table>

---------------
(1) The table reflects the Social Security benefit offset factor, but does not
    incorporate offsets due to benefits accrued under Federated's Supplementary
    Executive Retirement Plan.

(2) The maximum length of benefit service that may be credited to a participant
    under the plan is 30 years.

                                        39
<PAGE>

QUALIFIED 401(k) PLAN

     We maintain a qualified 401(k) plan. Employees are permitted to contribute
up to 14% of their annual compensation to our 401(k) plan, not to exceed $11,000
per year. Under the plan, we make matching contributions of 50% of the first 5%
of annual deferral amount per participant, to the extent not limited by IRS
rules. The terms of the plan provide that our matching contributions vest 50%
after the participant has completed three years of service with us, 75% after
four years and 100% after five years. We contributed and expensed approximately
$278,000 in fiscal 2001, $245,000 in fiscal 2000 and $153,000 in fiscal 1999.

EMPLOYMENT AGREEMENTS

     We entered into an employment agreement with Julian R. Geiger in 1998 that
will remain effective through February 1, 2003, with the option to renew for
consecutive one-year terms thereafter. Under the agreement Mr. Geiger currently
receives an annual base salary of $410,000, an annual incentive bonus and
medical and other benefits. In addition, we will pay Mr. Geiger a special bonus
of $82,286 upon the consummation of this offering. Mr. Geiger's bonus is
calculated as a percentage of his annual salary plus the product of the annual
bonus pool available to senior management and the ratio of Mr. Geiger's salary
to the total executive group salary. If we terminate Mr. Geiger's employment
without cause or if Mr. Geiger resigns his position as a consequence of a
material reduction of his responsibilities, movement of our headquarters more
than twenty-five miles from its present location or a material breach of our
agreements with him, he will be entitled to receive his base salary for six
months following termination, however, if he is fired in connection with a sale
of the company, he is entitled to receive his base salary for eighteen months.
In either case, he would also receive his bonus for the period of the preceding
fiscal year that he was still employed at our company.

     We entered into an employment agreement with John S. Mills in 1998 that
will remain effective through February 1, 2003, with the option to renew for
consecutive one-year terms thereafter. Under the agreement Mr. Mills receives an
annual base salary of $300,000, an annual incentive bonus and medical and other
benefits. In addition, we will pay Mr. Mills a special bonus of $58,857 upon the
consummation of this offering. Mr. Mills' bonus is calculated in the same manner
as Mr. Geiger's. In all other respects, Mr. Mills' agreement with us is
substantially identical to Mr. Geiger's agreement described above.

                                        40
<PAGE>

                              CERTAIN TRANSACTIONS

     Since August 2, 1998, we have not been a party to, nor have we currently
proposed, any transaction or series of similar transactions in which the amount
exceeds $60,000, and in which any director, executive officer, holder of more
than 5% of our common stock or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material interest, other
than compensation agreements and other agreements, which are described in the
"Management" section of this prospectus and the transactions described below. We
believe that each of the following transactions, other than the loans to our
executives, are on terms no less favorable than we could obtain from an
unrelated third party.

     Management services.  In July 1998, we entered into a management services
agreement with Bear Stearns Merchant Banking pursuant to which it had provided
management services to us and incurred expenses on our behalf. The services
consisted of formulating and implementing business strategies, including
identifying and assisting us in evaluating corporate opportunities, such as
marketing opportunities and financial strategies. Bear Stearns Merchant Banking
also assisted us with respect to lender, security holder and public and
government relations matters. Under the agreement, we paid Bear Stearns Merchant
Banking $450,000 in fiscal 2001, $403,000 in fiscal 2000 and $268,000 in fiscal
1999. In addition, upon the consummation of this offering Bear Stearns Merchant
Banking will be entitled to a fee equal to one percent of the proceeds we
receive from the sale of common stock in this offering. The agreement will
terminate by its terms upon the consummation of this offering.

     FMG sourcing agreement.  We employ Federated Merchandising Group, or FMG, a
wholly-owned subsidiary of a former holder of our Series A redeemable preferred
stock, Federated Department Stores, Inc., as an independent contractor to source
our merchandise. We paid fees of $0.9 million in fiscal 2000 and $3.3 million in
fiscal 1999 to FMG under our arrangement with them. As of November 9, 1999, FMG
ceased to be a related entity as we repurchased our outstanding shares of Series
A redeemable preferred stock from Federated on that date. Our agreement with FMG
provides that it will perform purchasing, facilitation and importation services
on our behalf in a manner substantially similar to the services provided to our
company when it was still of division of R.H. Macy & Co., Inc. Upon mutual
consent, this agreement may be terminated at any time.

     Loans to executives.  In 1999, we repurchased all of our outstanding shares
of Series A redeemable preferred stock from Federated Department Stores, Inc.
This triggered a loan forgiveness provision contained in loan agreements
regarding loans that Federated had previously made to Mr. Geiger and Mr. Mills.
This loan forgiveness caused Messrs. Geiger and Mills to incur significant tax
liability in 1999. We therefore extended interest free loans in the amount of
$70,000 to both Mr. Geiger and Mr. Mills to cover this tax liability. Mr. Geiger
and Mr. Mills each repaid all amounts outstanding on their respective loans in
February 2002 and currently do not have any outstanding indebtedness to our
company.

     Leases with stockholder.  We lease a number of our stores from the Simon
Property Group, L.P., an affiliate of SI-MSSD, LLC, which has been one of our
stockholders since October 1998. SI-MSSD, LLC holds          shares of our
Series B 12 1/2% redeemable preferred stock, which will be redeemed with a
portion of the proceeds of this offering, and          shares of our common
stock. Our leases with the Simon Property Group typically last ten years. Under
these leases, we generally pay a fixed amount of rent monthly plus a small
percentage of the store's gross sales. In most cases, we have the right to
terminate these leases if the store's gross sales do not meet an agreed upon
level. In many cases, in lieu of termination, we may elect to continue the lease
at a reduced monthly rent. Over our past three fiscal years, we have paid
approximately $9.6 million in the aggregate in rent to the Simon Property Group.

     Stockholders' agreement.  In August 1998, we and stockholders owning   % of
our outstanding common stock entered into an agreement pursuant to which each
party agreed to take all action necessary to ensure that five persons designated
by Bear Stearns Merchant Banking and three persons designated by Julian R.
Geiger, David Geltzer and John S. Mills as a group, referred to herein as the
management

                                        41
<PAGE>

group, serve on our board of directors. The number of persons that each of Bear
Stearns Merchant Banking and the management group are entitled to designate to
our board under the agreement will be reduced if the number of shares of our
common stock that they each hold falls beneath set thresholds. Directors
designated by either Bear Stearns Merchant Banking or the management group may
only be removed by the party or parties entitled to nominate them. Pursuant to
this agreement, we also granted holders of          shares of our common stock
the registration rights set forth in "Description of Capital
Stock -- Registration Rights."

                                        42
<PAGE>

                       PRINCIPAL AND SELLING STOCKHOLDERS

     The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of February 2, 2002, and as adjusted
to reflect the sale of common stock in this offering, by (i) each stockholder
known by us to own beneficially more than 5% of our common stock, (ii) each of
the named executive officers, (iii) each of our directors and (iv) all of our
directors and executive officers as a group. The table below assumes no exercise
of the underwriters' over-allotment option. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. Such
rules provide that in calculating the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of common stock
subject to options or warrants held by that person that are currently
exercisable or will become exercisable within 60 days after February 2, 2002 are
deemed outstanding. However, for each person listed below we have included all
options held by such person even if they will not be exercisable within 60 days
of February 2, 2002 because all outstanding options will vest and become
exercisable upon the consummation of this offering. Such shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
Unless otherwise indicated in the footnotes below, (i) the persons and entities
named in the table have sole voting and investment power with respect to all
shares beneficially owned, subject to community property laws where applicable
and (ii) the address of each of the individuals listed in the table is
Aeropostale, Inc., 1372 Broadway, New York, New York 10018. As of February 2,
2002, there were          shares of common stock outstanding, as adjusted to
reflect the conversion of all outstanding shares of non-voting common stock into
common stock upon closing of this offering.

<Table>
<Caption>
                                                    SHARES                              SHARES
                                              BENEFICIALLY OWNED                  BENEFICIALLY OWNED
                                              PRIOR TO OFFERING     NUMBER OF       AFTER OFFERING
                                              ------------------      SHARES      ------------------
                                              NUMBER     PERCENT    OFFERED(1)    NUMBER     PERCENT
                                              -------    -------    ----------    -------    -------
<S>                                           <C>        <C>        <C>           <C>        <C>
Bear Stearns MB 1998-1999 Pre-Fund,
  LLC(2)....................................
  383 Madison Avenue
  New York, NY 10179
SI-MSSD, LLC(2)(3)..........................
  114 West Washington Street
  15th Floor East
  Indianapolis, IN 46204
David Geltzer...............................
  326 North Post Road
  Princeton Junction, NJ 08550
Julian R. Geiger(4).........................
John S. Mills(5)............................
Michael J. Cunningham(6)....................
Christopher L. Finazzo(7)...................
Thomas P. Johnson(8)........................
Laura W. Moran(9)...........................
Bodil Arlander..............................
Mary Elizabeth Burton(10)...................
David Edwab.................................
John D. Howard..............................
Richard Metrick.............................
All directors and executive officers as a
  group (12 persons)(11)....................
</Table>

---------------
   * Less than 1% of the outstanding shares of common stock.

 (1) In the event that the underwriters exercise their over-allotment option,
             will sell an additional        shares,         will sell an
     additional        shares,         will sell an additional         shares,
     and             will sell an additional        shares.

                                        43
<PAGE>

 (2) Includes        shares beneficially owned by SI-MSSD, LLC registered in the
     name of Bear Stearns MB 1998-1999 Pre-Fund, LLC as trustee under a voting
     trust agreement dated October 6, 1998 between SI-MSSD, LLC and a
     predecessor of Bear Stearns MB 1998-1999 Pre-Fund, LLC, pursuant to which
     the Pre-Fund has the voting authority over the shares. The voting trust
     agreement shall terminate by its terms upon the consummation of this
     offering.

 (3) SI-MSSD, LLC is a limited liability company controlled by members of the
     Simon family. The Simon family also collectively owns a significant
     ownership interest in the Simon Property Group, L.P.

 (4) Includes options to purchase        shares of common stock.

 (5) Includes options to purchase        shares of common stock.

 (6) Includes options to purchase        shares of common stock.

 (7) Includes options to purchase        shares of common stock.

 (8) Includes options to purchase        shares of common stock.

 (9) Includes options to purchase        shares of common stock.

(10) Includes options to purchase        shares of common stock.

(11) Includes options to purchase        shares of common stock.

                                        44
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     Upon completion of the offering we will be authorized to issue
shares of common stock, $0.01 par value, and           shares of undesignated
preferred stock, $0.01 par value. The following description of our capital stock
does not purport to be complete and is subject to and qualified in its entirety
by our certificate of incorporation and bylaws, which are included as exhibits
to the registration statement of which this prospectus forms a part, and by the
provisions of applicable Delaware law.

COMMON STOCK

     As of February 2, 2002, there were           shares of common stock
outstanding which were held of record by 22 stockholders, giving effect to the
conversion of all outstanding shares of non-voting common stock into common
stock upon the consummation of this offering.

     The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the board of directors out of funds legally available for that
purpose. In the event of a liquidation, dissolution or winding up of our
company, the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
preferred stock, if any, then outstanding. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable, and the shares of common stock
to be issued in this offering will be fully paid and nonassessable.

PREFERRED STOCK

     Upon the closing of this offering, our board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of           shares of
preferred stock, $0.01 par value per share, in one or more series, each of the
series to have such rights and preferences, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by our board of directors. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of
holders of any preferred stock that may be issued in the future. Issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for others to acquire, or of discouraging others from
attempting to acquire, a majority of our outstanding voting stock. We have no
present plans to issue any shares of preferred stock.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

     Provisions of Delaware law and our certificate of incorporation and bylaws
could make it more difficult to acquire us by means of a tender offer, a proxy
contest or otherwise and the removal of incumbent officers and directors. These
provisions, summarized below, are expected to discourage types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us
outweigh the disadvantages of discouraging takeover or acquisition proposals
because, among other things, negotiation of these proposals could result in an
improvement of their terms.

     We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless (with certain exceptions) the "business
combination" or the transaction in which the person became an interested
stockholder is approved in a prescribed manner.

                                        45
<PAGE>

Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status, did own) 15% or more of a
corporation's voting stock. The existence of this provision would be expected to
have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.

REGISTRATION RIGHTS

     Subject to limitations contained in the Stockholders Agreement, dated
August 3, 1998, between us and the holders of           shares of our common
stock, at any time beginning 180 days after the date of this prospectus, these
holders may require that we use our best efforts to register up to           of
their shares of common stock for public resale. In addition, if we register any
of our securities either for our own account or for the account of other
security holders, the holders of           shares of common stock are entitled
to include their shares of common stock in the registration, subject to the
ability of the underwriters to limit the number of shares included in this
offering. All registration expenses must be borne by us and all selling expenses
relating to registrable securities must be borne by the holders of the
securities being registered.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the common stock is                .

                                        46
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

     Upon completion of this offering, we will have           shares of common
stock outstanding. Of these shares, all of the shares sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless such shares are purchased by "affiliates" as that term is
defined in Rule 144 under the Securities Act. The remaining           shares of
common stock held by existing stockholders are "restricted securities" as that
term is defined in Rule 144 under the Securities Act, described below. Subject
to such restrictions and applicable law, the holders of           shares of
common stock will be free to sell any and all shares of common stock they
beneficially own at various times commencing 180 days after the date of this
prospectus. The holders of           shares of common stock will be free to sell
any shares of common stock they beneficially own on                , 2002.

     We cannot make any predictions as to the number of shares that may be sold
in the future or the effect, if any, that sales of these shares, or the
availability of these shares for future sale, will have on the prevailing market
prices of our common stock. Sales of a significant number of shares of our
common stock in the public market, or the perception that these sales could
occur, could adversely affect prevailing market prices of our common stock and
could impair our ability to raise equity capital in the future.

LOCK-UP AGREEMENTS

     We, our officers and directors and holders of 5% or more of our common
stock, have agreed that, subject to limited exceptions, we will not, for a
period of 180 days after the date of this prospectus, offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any shares of
common stock or securities convertible into or exchangeable or exercisable for
any shares of common stock, or publicly disclose the intention to make any such
offer, sale, pledge or disposal, without the prior written consent of Bear,
Stearns & Co. Inc. and Merrill Lynch. Bear, Stearns & Co. Inc. and Merrill Lynch
may together release all or a portion of the shares subject to this lock-up
agreement at any time without prior notice.

RULE 144

     In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that do not exceed the greater of:

     - 1% of the number of shares of common stock then outstanding, which will
       equal approximately          shares immediately after this offering; or

     - the average weekly trading volume of the common stock on the Nasdaq
       National Market during the four calendar weeks preceding the filing of a
       notice on Form 144 with respect to the sale.

     Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.

RULE 144(k)

     Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell the shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

RULE 701

     Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirement, of Rule 144. Any of our employees, officers,
directors or consultants who purchased shares under a written compensatory plan
or

                                        47
<PAGE>

contract may be entitled to rely on the resale provisions of Rule 701. Rule 701
permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell their shares in reliance on Rule 144
without having to comply with the holding period, public information, volume
limitation or notice provisions of Rule 144. All holders of Rule 701 shares are
required to wait until 90 days after the date of this prospectus before selling
their shares.

     We intend to file a Registration Statement on Form S-8 registering shares
of common stock subject to outstanding options or reserved for future issuance
under our stock plans. As of February 2, 2002, options to purchase a total
          shares were outstanding and           shares were reserved for future
issuance under our stock plans. Common stock issued upon exercise of outstanding
vested options, other than common stock issued to our affiliates is available
for immediate resale in the open market.

REGISTRATION RIGHTS

     Beginning 180 days after the date of this offering, holders of
shares of our common stock will be able to require us to conduct a registered
public offering of their shares. In addition, holders of           shares of our
common stock will be entitled to have their shares included for sale in
subsequent registered offerings of our common stock. See "Description of Capital
Stock -- Registration Rights." Registration of such shares under the Securities
Act would, except for shares purchased by affiliates, result in such shares
becoming freely tradable without restriction under the Securities Act
immediately upon the effectiveness of such registration.

                                        48
<PAGE>

                                  UNDERWRITING

     Subject to the terms and conditions of an underwriting agreement, dated
          , 2002, the underwriters named below, acting through their
representatives, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Banc of America Securities LLC, U.S. Bancorp Piper Jaffray Inc.
and Wachovia Securities, have severally agreed with us and the selling
stockholders to purchase from us and the selling stockholders the number of
shares of common stock set forth below opposite their respective names.

<Table>
<Caption>
                                                              NUMBER OF
UNDERWRITERS                                                   SHARES
------------                                                  ---------
<S>                                                           <C>
Bear, Stearns & Co. Inc. ...................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Banc of America Securities LLC..............................
U.S. Bancorp Piper Jaffray Inc. ............................
Wachovia Securities.........................................
                                                              --------
Total.......................................................
                                                              ========
</Table>

     The underwriters' representatives have advised us that the underwriters
propose to offer the shares of common stock to the public at the public offering
price set forth on the cover page of this prospectus and to certain dealers at
that price less a concession of not in excess of $     per share, of which
$       may be reallowed to other dealers. After this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
representatives. No such reduction shall change the amount of proceeds to be
received by us as set forth on the cover page of this prospectus. The common
stock is offered by the underwriters as stated herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or in
part. The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

     Certain selling stockholders have granted to the underwriters an option,
exercisable within   days after the date of this prospectus, to purchase up to
an aggregate of           shares of common stock from such selling stockholders
to cover over-allotments, if any, at the public offering price less underwriting
discounts and commissions. If the underwriters exercise their over-allotment
option to purchase any of the additional      shares of common stock, each
underwriter, subject to certain conditions, will become obligated to purchase
its pro-rata portion of these additional shares based on the underwriter's
percentage underwriting commitment in the offering as indicated in the table
above. If purchased, these additional shares will be sold by the underwriters on
the same terms as those on which the shares offered hereby are being sold. The
relevant selling stockholders will be obligated, pursuant to the over-allotment
option, to sell shares to the underwriters to the extent the over-allotment
option is exercised. The underwriters may exercise the over-allotment option
only to cover over-allotments made in connection with the sale of the shares of
common stock offered in this offering.

     The following table shows the public offering price, underwriting discounts
and commissions and proceeds before expenses to us and the selling stockholders.
Such amounts are shown assuming both no exercise and full exercise of the
underwriters' over-allotment option to purchase additional shares.

<Table>
<Caption>
                                                                         TOTAL
                                                            --------------------------------
                                                    PER        WITHOUT             WITH
                                                   SHARE    OVER-ALLOTMENT    OVER-ALLOTMENT
                                                   -----    --------------    --------------
<S>                                                <C>      <C>               <C>
Public offering prices...........................    $            $                 $
Underwriting discounts...........................    $            $                 $
Proceeds, before expenses, to us.................    $            $                 $
Proceeds, before expenses, to the selling
  stockholders...................................    $            $                 $
</Table>

                                        49
<PAGE>

     The expenses of the offering, other than underwriting discounts and
commissions referred to above, are estimated at $          and are payable
entirely by us.

     We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, liabilities arising from
breaches of representations and warranties contained in the underwriting
agreement, or to contribute to payments that the underwriters may be required to
make in respect of those liabilities.

     Each of our executive officers and directors and principal stockholders,
including without limitation, the selling stockholders, has agreed for a period
of 180 days after the date of this prospectus, subject to limited exceptions,
not to:

     - offer to sell, contract to sell, or otherwise sell, dispose of, loan,
       pledge or grant any rights with respect to any shares of common stock or
       any options or warrants to purchase any shares of common stock, or any
       securities convertible into or exchangeable for shares of common stock
       owned as of the date of this prospectus or thereafter acquired directly
       by those holders or with respect to which they have the power of
       disposition; or

     - enter into any swap or other arrangement that transfers all or a portion
       of the economic consequences associated with the ownership of any common
       stock (regardless of whether any of these transactions are to be settled
       by the delivery of common stock, or such other securities, in cash or
       otherwise)

without the prior written consent of Bear, Stearns & Co. Inc. and Merrill Lynch.
Bear, Stearns & Co. Inc. and Merrill Lynch may together, however, in their sole
discretion and at any time or from time to time before the termination of the
180-day period, without notice, release all or any portion of the securities
subject to lock-up agreements.

     In addition, we have agreed that, subject to certain exceptions, during the
180-day lock-up period we will not, without the prior written consent of Bear,
Stearns & Co. Inc. and Merrill Lynch consent to the disposition of any shares
held by stockholders subject to lock-up agreements prior to the expiration of
the lock-up period, or issue, sell, contract to sell, or otherwise dispose of,
any shares of common stock, any options or warrants to purchase any shares of
common stock or any securities convertible into, exercisable for or exchangeable
for shares of common stock other than the sale of common stock in this offering,
the issuance of our common stock upon the exercise of outstanding options or
warrants, and the issuance of options or shares of common stock under existing
stock option and incentive plans.

     Other than in the United States, no action has been taken by us, the
selling stockholders or the underwriters that would permit a public offering of
the shares of common stock offered by this prospectus in any jurisdiction where
action for that purpose is required. The shares of common stock offered by this
prospectus may not be offered or sold, directly or indirectly, nor may this
prospectus or any other offering material or advertisements in connection with
the offer and sale of any such shares of common stock be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that jurisdiction.
Persons into whose possession this prospectus comes are advised to inform
themselves about and to observe any restrictions relating to the offering and
the distribution of this prospectus. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any shares of common stock
offered by this prospectus in any jurisdiction in which such an offer or a
solicitation is unlawful.

     We have submitted an application to list our common stock on the New York
Stock Exchange under the symbol "ARO."

     A prospectus in electronic format may be made available on the Internet
sites or through other online services maintained by one or more of the
underwriters of this offering, or by their affiliates. In those cases,
prospective investors may view offering terms online and, depending upon the
particular underwriter, prospective investors may be allowed to place orders
online. The underwriters may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such allocation for

                                        50
<PAGE>

online distributions will be made by the representatives on the same basis as
other allocations. Other than the prospectus in electronic format, the
information on any underwriter's web site and any information contained in any
other web site maintained by an underwriter is not part of the prospectus or the
registration statement of which this prospectus forms a part, has not been
approved and/or endorsed by us or any underwriter in its capacity as underwriter
and should not be relied upon by investors.

     The representatives have advised us that, pursuant to Regulation M under
the Securities Exchange Act, some participants in the offering may engage in
transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, that may have the effect of stabilizing or
maintaining the market price of the shares of common stock at a level above that
which might otherwise prevail in the open market. A "stabilizing bid" is a bid
for or the purchase of shares of common stock on behalf of the underwriters for
the purpose of fixing or maintaining the price of the common stock. A "syndicate
covering transaction" is the bid for or purchase of common stock on behalf of
the underwriters to reduce a short position incurred by the underwriters in
connection with the offering. A "penalty bid" is an arrangement permitting the
representatives to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with this offering if the common
stock originally sold by such underwriter or syndicate member is purchased by
the representatives in a syndicate covering transaction and has therefore not
been effectively placed by such underwriter or syndicate member. The
representatives have advised us that such transactions may be effected on the
New York Stock Exchange or otherwise and, if commenced, may be discontinued at
any time.

     Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for the common stock
offered by this prospectus has been determined though negotiations between us,
the selling stockholders, and the representatives of the underwriters. Among the
factors considered in these negotiations were prevailing market conditions, our
financial information, market valuations of other companies that we and the
representatives of the underwriters believe to be comparable to us, estimate of
our business potential, the present state of our development and other factors
deemed relevant.

     At our request, the underwriters have reserved for sale at the initial
public offering price up to 5% of the shares in this offering to be sold to its
directors, officers, employees and associates. The number of shares available
for sale to the general public will be reduced to the extent such shares are
purchased. Any of these reserved shares not so purchased will be offered by the
underwriters on the same basis as the shares offered by this prospectus.

     Certain of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment banking and other financial and
banking services to us for which they have in the past received, and may in the
future receive, customary fees.

     Management services agreement.  In July 1998, we entered into a management
services agreement with Bear Stearns Merchant Banking pursuant to which it had
provided management services to us and incurred expenses on our behalf. The
services consisted of formulating and implementing business strategies,
including identifying and assisting us in evaluating corporate opportunities,
such as marketing opportunities and financial strategies. Bear Stearns Merchant
Banking also assisted us with respect to lender, security holder and public and
government relations matters. Under the agreement, we paid Bear Stearns Merchant
Banking $450,000 in fiscal 2001, $403,000 in fiscal 2000 and $268,000 in fiscal
1999. In addition, upon the consummation of this offering Bear Stearns Merchant
Banking will be entitled to a fee equal to one percent of the proceeds we
receive from the sale of common stock in this offering. The agreement will
terminate by its terms upon the consummation of this offering.

     Bear, Stearns & Co. Inc. is a member of the National Association of
Securities Dealers, Inc. (NASD). This offering is being conducted in accordance
with the NASD Conduct Rules. Under Rule 2720 of the NASD Conduct Rules, we are
considered an affiliate of Bear Stearns & Co. Inc. Under Rule 2710, because we
intend to use more than 10% of the net proceeds from the sale of common stock in
this offering to redeem all of our outstanding shares of 12 1/2% Series B
redeemable preferred stock, of which 5,357 shares or 86.7% are owned by Bear,
Stearns MB 1998-1999 Pre-Fund LLC, an affiliate of
                                        51
<PAGE>

Bear Stearns & Co. Inc., we are deemed to have a conflict of interest with Bear,
Stearns & Co. Inc. Under these rules, when an NASD member participates in the
underwriting of an affiliate's equity securities and there is a conflict of
interest, the public offering price per share can be no lower than that
recommended by a "qualified independent underwriter" meeting certain standards.
Merrill Lynch is assuming the responsibilities of acting as the qualified
independent underwriter in pricing the offering and conducting due diligence.
The initial public offering price of the shares of our common stock will be no
higher than the price recommended by Merrill Lynch which will not receive any
additional compensation in connection with its acting as a qualified independent
underwriter.

     Underwriters.  First Union Securities, Inc. (acting under the trade name
Wachovia Securities) is an indirect, wholly-owned subsidiary of Wachovia
Corporation. Wachovia Corporation conducts its investment banking, institutional
and capital markets businesses through its various bank, broker-dealer and
nonbank subsidiaries (including First Union Securities, Inc.) under the trade
name of Wachovia Securities. Any references to Wachovia Securities in this
prospectus, however, do not include Wachovia Securities, Inc., member NASD/SIPC
and a separate broker-dealer subsidiary of Wachovia Corporation and an affiliate
of First Union Securities, Inc., which may or may not be participating as a
selling dealer in the distribution of the common stock offered by this
prospectus.

                                 LEGAL MATTERS

     The validity of the common stock offered hereby will be passed upon for us
by Kirkland & Ellis, New York, New York. Certain legal matters will be passed
upon for the underwriters by Paul, Hastings, Janofsky & Walker LLP, New York,
New York.

                                    EXPERTS

     The financial statements as of August 4, 2001 and July 29, 2000 and for
each of the three years in the period ended August 4, 2001 included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein and have been so included in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We filed with the Securities and Exchange Commission, Washington, D.C., a
registration statement on Form S-1 under the Securities Act with respect to the
shares of common stock sold in this offering. This prospectus does not contain
all the information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to our company and our
common stock, we refer you to the registration statement and to the exhibits and
schedules that were filed with the registration statement. Statements contained
in this prospectus as to the contents of any contract or other document that is
filed as an exhibit to the registration statement are not necessarily complete,
and we refer you to the full text of the contract or other document filed as an
exhibit to the registration statement. A copy of the registration statement may
be inspected by anyone without charge at the Public Reference Section of the
Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of all or any portion of the
registration statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of prescribed fees. The Securities and Exchange Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Securities and Exchange Commission. The address of the site is
http://www.sec.gov.

     Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934, and,
in accordance with the requirements of the Securities Exchange Act of 1934, will
file periodic reports, proxy statements and other information with the
Securities and Exchange Commission. These periodic reports, proxy statements and
other information will be available for inspection and copying at the regional
offices, public reference facilities and web site of the Securities and Exchange
Commission referred to above.

                                        52
<PAGE>

                               AEROPOSTALE, INC.

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<S>                                                           <C>
Independent Auditors' Report................................  F-2
Balance Sheets as of July 29, 2000, August 4, 2001 and
  November 3, 2001 (unaudited)..............................  F-3
Statements of Income for the fiscal years ended July 31,
  1999, July 29, 2000 and August 4, 2001, the thirteen weeks
  ended November 3, 2001 (unaudited) and October 28, 2000
  (unaudited)...............................................  F-4
Statements of Stockholders' Equity for the fiscal years
  ended July 31, 1999, July 29, 2000 and August 4, 2001, and
  the thirteen weeks ended November 3, 2001 (unaudited).....  F-5
Statements of Cash Flows for the fiscal years ended July 31,
  1999, July 29, 2000 and August 4, 2001, the thirteen weeks
  ended November 3, 2001 (unaudited) and October 28, 2000
  (unaudited)...............................................  F-6
Notes to Financial Statements...............................  F-7
</Table>

                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
of Aeropostale, Inc.

     We have audited the accompanying balance sheets of Aeropostale, Inc. (the
"Company") as of August 4, 2001, and July 29, 2000, and the related statements
of income, stockholders' equity, and cash flows for each of the three fiscal
years in the period ended August 4, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such financial statements present fairly, in all material
respects, the financial position of Aeropostale, Inc. as of August 4, 2001, and
July 29, 2000, and the results of its operations and its cash flows for each of
the three fiscal years in the period ended August 4, 2001 in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

January 26, 2002
New York, New York

                                       F-2
<PAGE>

                               AEROPOSTALE, INC.

                                 BALANCE SHEETS

<Table>
<Caption>
                                                             JULY 29,    AUGUST 4,    NOVEMBER 3,
                                                               2000        2001          2001
                                                             --------    ---------    -----------
                                                                                      (UNAUDITED)
                                                                    (DOLLARS IN THOUSANDS)
<S>                                                          <C>         <C>          <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents................................  $ 3,717     $  6,506      $  7,313
  Merchandise inventory....................................   47,966       58,679        66,310
  Deferred income taxes....................................    1,093          303           303
  Other current assets.....................................    9,639        7,207         9,906
                                                             -------     --------      --------
     Total current assets..................................   62,415       72,695        83,832
FIXTURES, EQUIPMENT AND IMPROVEMENTS -- Net................   23,016       42,344        48,757
DEFERRED INCOME TAXES......................................    7,530        5,477         4,628
OTHER ASSETS...............................................      578          612           604
                                                             -------     --------      --------
          TOTAL ASSETS.....................................  $93,539     $121,128      $137,821
                                                             =======     ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Revolving credit facility................................  $26,987     $ 35,267      $ 15,829
  Accounts payable.........................................   15,812       13,311        18,750
  Accrued expenses.........................................   11,430       13,307        25,867
                                                             -------     --------      --------
     Total current liabilities.............................   54,229       61,885        60,446
OTHER NONCURRENT LIABILITIES:
  Negative goodwill net of accumulated amortization of $468
     and $702..............................................    1,866        1,632            --
  Other liabilities........................................   13,443       22,278        25,665
SERIES A EXCHANGEABLE REDEEMABLE PREFERRED STOCK:
  $0.01 par value per share authorized, issued and
     outstanding, liquidation preference, $6,000; 6%
     cumulative............................................       --           --            --
SERIES B REDEEMABLE PREFERRED STOCK:
  $0.01 par value per share authorized, issued and
     outstanding, 6,250 shares liquidation preference,
     $6,250; 12.5% cumulative..............................    7,995        9,043         9,326
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Common stock -- par value, $0.01 per share; 200,000
     shares authorized, 82,500 shares issued and
     outstanding...........................................        1            1             1
  Common stock -- Nonvoting, par value, $0.01 per share;
     200,000 shares authorized, 175, 1,303 and 1,428 shares
     issued and outstanding................................       --           --            --
  Additional paid-in capital...............................      950          963           981
  Retained earnings........................................   15,055       25,326        41,402
                                                             -------     --------      --------
     Total stockholders' equity............................   16,006       26,290        42,384
                                                             -------     --------      --------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............  $93,539     $121,128      $137,821
                                                             =======     ========      ========
</Table>

                       See notes to financial statements.
                                       F-3
<PAGE>

                               AEROPOSTALE, INC.

                              STATEMENTS OF INCOME

<Table>
<Caption>
                                                   FOR THE YEAR ENDED            THIRTEEN WEEKS ENDED
                                             -------------------------------   -------------------------
                                             JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                               1999       2000       2001         2000          2001
                                             --------   --------   ---------   -----------   -----------
                                                                               (UNAUDITED)   (UNAUDITED)
                                                    (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>        <C>        <C>         <C>           <C>
NET SALES..................................  $152,506   $213,445   $304,767      $76,831      $126,019
COST OF SALES (including certain buying,
  occupancy and warehousing expenses)......   110,489    151,973    218,618       51,081        77,085
                                             --------   --------   --------      -------      --------
     Gross profit..........................    42,017     61,472     86,149       25,750        48,934
                                             --------   --------   --------      -------      --------
COSTS AND EXPENSES:
  Selling, general and administrative
     expenses..............................    32,406     45,680     65,918       15,215        23,695
  Store closing expenses...................        --         --        815           --            --
  Amortization of negative goodwill........      (234)      (234)      (234)         (57)           --
                                             --------   --------   --------      -------      --------
     Total costs and expenses..............    32,172     45,446     66,499       15,158        23,695
                                             --------   --------   --------      -------      --------
OPERATING INCOME...........................     9,845     16,026     19,650       10,592        25,239
INTEREST EXPENSE -- Net of interest income
  of $24, $20, $197, $0 and $0.............        86        911      1,671          655           282
                                             --------   --------   --------      -------      --------
INCOME BEFORE INCOME TAXES.................     9,759     15,115     17,979        9,937        24,957
PROVISION FOR INCOME TAXES.................     3,529      5,749      7,065        3,930        10,230
                                             --------   --------   --------      -------      --------
INCOME FROM CONTINUING OPERATIONS..........     6,230      9,366     10,914        6,007        14,727
DISCONTINUED OPERATIONS:
  Loss from operations of discontinued
     Chelsea Cambell business (less
     applicable income tax benefit of $583
     and $2,008)...........................      (268)    (3,212)        --           --            --
  Gain on disposal of Chelsea Cambell
     business (less applicable benefit of
     $2,776 and expense of $257)...........        --      5,214        405           --            --
                                             --------   --------   --------      -------      --------
  Income (loss) on discontinued
     operations............................      (268)     2,002        405           --            --
CUMULATIVE EFFECT OF ACCOUNTING CHANGE.....        --         --         --           --         1,632
                                             --------   --------   --------      -------      --------
NET INCOME.................................  $  5,962   $ 11,368   $ 11,319      $ 6,007      $ 16,359
                                             ========   ========   ========      =======      ========
BASIC NET INCOME (LOSS) PER COMMON SHARE
  From continuing operations...............  $  60.54   $ 100.85   $ 118.48      $ 69.55      $ 172.33
  From discontinued operations.............     (3.24)     24.25       4.86           --            --
  From cumulative accounting change........        --         --         --           --         19.47
                                             --------   --------   --------      -------      --------
  Net income per share.....................  $  57.30   $ 125.10   $ 123.34      $ 69.55      $ 191.80
                                             ========   ========   ========      =======      ========
DILUTED NET INCOME (LOSS) PER COMMON SHARE:
  From continuing operations...............  $  54.49   $  90.32   $ 104.70      $ 62.06      $ 152.01
  From discontinued operations.............     (2.92)     21.72       4.30           --            --
  From cumulative accounting change........        --         --         --           --         17.18
                                             --------   --------   --------      -------      --------
  Net income per share.....................  $  51.57   $ 112.04   $ 109.00      $ 62.06      $ 169.19
                                             ========   ========   ========      =======      ========
Basic weighted average number of shares
  outstanding..............................    82,502     82,559     83,276       82,770        83,817
Diluted weighted average number of shares
  outstanding..............................    91,665     92,184     94,226       92,765        95,018
</Table>

                       See notes to financial statements.
                                       F-4
<PAGE>

                               AEROPOSTALE, INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                                           COMMON STOCK
                                         COMMON STOCK        NONVOTING      ADDITIONAL
                                        ---------------   ---------------    PAID-IN     RETAINED
                                        SHARES   AMOUNT   SHARES   AMOUNT    CAPITAL     EARNINGS    TOTAL
                                        ------   ------   ------   ------   ----------   --------   -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                     <C>      <C>      <C>      <C>      <C>          <C>        <C>
BALANCE, AUGUST 1, 1998:..............  82,500    $ 1        --     $--        $948      $    --    $   949
  Net income..........................      --     --        --      --          --        5,962      5,962
  Stock options exercised.............      --     --        17      --          --           --         --
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,187)    (1,187)
  Accretion of Series A Preferred
    Stock.............................      --     --        --      --          --          (48)       (48)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, JULY 31, 1999:...............  82,500      1        17      --         948        4,727      5,676
  Net income..........................      --     --        --      --          --       11,368     11,368
  Stock options exercised.............      --     --       158      --           2           --          2
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,021)    (1,021)
  Accretion of Series A Preferred
    Stock.............................      --     --        --      --          --          (19)       (19)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, JULY 29, 2000:...............  82,500      1       175      --         950       15,055     16,006
  Net income..........................      --     --        --      --          --       11,319     11,319
  Stock options exercised.............      --     --     1,128      --          13           --         13
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,048)    (1,048)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, AUGUST 4, 2001:..............  82,500      1     1,303      --         963       25,326     26,290
  Net income..........................      --     --        --      --          --       16,359     16,359
  Stock options exercised.............      --     --       125      --          18           --         18
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --         (283)      (283)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, NOVEMBER 3, 2001
  (unaudited):........................  82,500    $ 1     1,428     $--        $981      $41,402    $42,384
                                        ======    ===     =====     ===        ====      =======    =======
</Table>

                       See notes to financial statements.
                                       F-5
<PAGE>

                               AEROPOSTALE, INC.

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                            FOR THE YEAR ENDED            THIRTEEN WEEKS ENDED
                                                      -------------------------------   -------------------------
                                                      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                                        1999       2000       2001         2000          2001
                                                      --------   --------   ---------   -----------   -----------
                                                                                        (UNAUDITED)   (UNAUDITED)
                                                                        (AMOUNTS IN THOUSANDS)
<S>                                                   <C>        <C>        <C>         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................  $ 5,962    $ 11,368   $ 11,319     $  6,007      $ 16,359
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization...................      244       3,799      3,938          731         1,428
    Amortization of leases..........................     (997)     (1,451)    (1,917)        (389)         (610)
    Impairment charge...............................       --          --        815           --            --
    Amortization of negative goodwill...............   (1,284)       (847)      (234)         (57)           --
    Gain on disposal of discontinued operations.....      851       2,782       (662)          --            --
    Deferred rent, net..............................      843         916      1,132          262            87
    Pension expense.................................      210         171        247           75           100
    Deferred income taxes...........................      678       2,068      2,843          577           849
    Cumulative effect of accounting change..........       --          --         --           --        (1,632)
    Changes in operating assets and liabilities:
      Merchandise inventory.........................   (3,203)    (20,964)   (10,713)     (11,039)       (7,631)
      Other current assets..........................   (1,092)     (6,520)     2,432          826        (2,699)
      Other assets..................................     (210)       (357)        21          (15)           (9)
      Accounts payable..............................    5,914       5,317     (2,501)      (2,325)        5,439
      Accrued expenses and other liabilities........    5,188       8,129     12,844        5,980        16,370
                                                      -------    --------   --------     --------      --------
         Net cash provided by operating
           activities...............................   13,104       4,411     19,564          633        28,051
                                                      -------    --------   --------     --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of fixtures, equipment and
    improvements....................................   (4,461)    (19,656)   (23,916)      (6,452)       (7,824)
                                                      -------    --------   --------     --------      --------
    Cash used in investing activities...............   (4,461)    (19,656)   (23,916)      (6,452)       (7,824)
                                                      -------    --------   --------     --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised...........................       --           2         13            3            18
  Net borrowings under revolving credit facility....   (3,801)     26,563      8,280        7,632       (19,438)
  Payment of deferred finance costs.................       --          --       (220)          --            --
  Redemption of Series A preferred stock............       --      (4,537)        --           --            --
  Payment of dividends..............................       --        (463)        --           --            --
                                                      -------    --------   --------     --------      --------
    Cash (used in) provided by financing
      activities....................................   (3,801)     21,565      8,073        7,635       (19,420)
                                                      -------    --------   --------     --------      --------
    Cash used in discontinued operations............   (5,346)     (6,513)      (932)        (101)           --
                                                      -------    --------   --------     --------      --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....     (504)       (193)     2,789        1,715           807
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......    4,414       3,910      3,717        3,717         6,506
                                                      -------    --------   --------     --------      --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............  $ 3,910    $  3,717   $  6,506     $  5,432      $  7,313
                                                      =======    ========   ========     ========      ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Income taxes paid.................................  $ 1,193    $  1,369   $  1,953     $     31      $  2,110
                                                      =======    ========   ========     ========      ========
  Interest expense paid.............................  $   210    $    785   $  1,724     $    617      $    294
                                                      =======    ========   ========     ========      ========
SIGNIFICANT NONCASH INVESTING AND FINANCING
  TRANSACTIONS:
  Accrued dividends on Series A Exchangeable
    Redeemable Preferred Stock......................  $   367    $     96   $     --     $     --      $     --
                                                      =======    ========   ========     ========      ========
  Accrued dividends on Series B Redeemable Preferred
    Stock...........................................  $   820    $    925   $  1,048     $    250      $    283
                                                      =======    ========   ========     ========      ========
  Accretion on Series A Exchangeable Redeemable
    Preferred Stock.................................  $    48    $     19   $     --     $     --      $     --
                                                      =======    ========   ========     ========      ========
</Table>

                       See notes to financial statements.
                                       F-6
<PAGE>

                               AEROPOSTALE, INC.

                         NOTES TO FINANCIAL STATEMENTS
         (AMOUNTS IN THOUSANDS, EXCEPT SHARE, PER SHARE AND STORE DATA)

1. BUSINESS

     Description of Business -- Aeropostale, Inc. (the "Company") is a
mall-based specialty retailer of casual apparel and accessories for young women
and young men with a total of 252 stores as of August 4, 2001 located in 32
states and the District of Columbia. In February 2000, the Company decided to
discontinue the operations of its Chelsea Cambell stores (Note 16).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Fiscal Year -- The Company elected to change its fiscal year from a 52/53
week year that ends on the Saturday nearest to July 31 to a 52/53 week year that
ends on the Saturday nearest to January 31, effective for the transition period
ended on February 2, 2002. For tax purposes, the Company has retained its July
year-end. As used herein, "Fiscal 2001" refers to the year end August 4, 2001,
"Transition 2001" refers to the thirteen week period from August 5, 2001 to
November 3, 2001. Similarly, "2000" and "1999" refer to the fiscal years ended
July 29, 2000 and July 31, 1999 and "Transition 2000" refers to the thirteen
week period from July 30, 2000 to October 28, 2000. All references to amounts
related to the thirteen weeks ended October 28, 2000 and November 3, 2001 are
unaudited.

     Interim Financial Information -- The accompanying unaudited consolidated
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information 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. Operating results for the thirteen week ended October 28, 2000 and
November 3, 2001 are not necessarily indicative of the results that may be
expected for the period ending February 2, 2002.

     Cash Equivalents -- The Company considers credit card receivables and all
short-term investments with an original maturity of three months or less as cash
equivalents.

     Merchandise Inventory -- Inventory consists of finished goods and is valued
at the lower of cost or market determined on a first-in, first-out basis.
Merchandise inventory includes warehousing, freight, merchandise and design
costs as an inventory product cost.

     Fixtures, Equipment and Improvements -- Fixtures, equipment and
improvements are stated at cost. Depreciation and amortization are provided for
by the straight-line method over the following estimated useful lives:

<Table>
<S>                              <C>
Store fixtures and equipment...  10 years
Leasehold improvements.........  Lesser of life of the asset or life of lease
Computer equipment and
  software ....................  5 years
</Table>

     Effective the first quarter of 2001, the Company adjusted the estimated
useful lives for store fixtures and equipment from 7 to 10 years and computer
equipment and software from 3 to 5 years. The Company examined and reviewed its
accounting policies and practices and determined that revised useful lives
reflect a more accurate timing of the economic benefits to be received from such
assets. The change in estimate had a $574 (net of tax benefit of $382) impact on
the current year's results.

     Impairment of Long-Lived and Intangible Assets -- The Company follows
Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to

                                       F-7
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

be generated by those assets are less than the assets' carrying amount. In
evaluating the fair value and future benefits of long-lived assets, the Company
performs an analysis of the anticipated undiscounted future net cash flows of
the related long-lived assets and reduces their carrying value by the excess, if
any, of the result of such calculation. Management believes at this time that
the long-lived assets' carrying value and useful life continues to be
appropriate, after adjusting for the impairment disclosed below.

     In accordance with SFAS No. 121, the Company recorded noncash store closing
expenses of $815 to reflect the write-down of leasehold improvements and stores
fixtures and equipment to their net realizable value, in seven stores closed by
October 2001. The Company did not incur any other costs associated with such
store closings.

     Income Taxes -- Income taxes are recognized during the year in which
transactions enter into the determination of financial statement income, with
deferred taxes being provided for temporary differences between amounts of
assets and liabilities for financial reporting purposes and such amounts as
measured by the tax laws.

     Pre-Operating Expenses -- The Company expenses new store operating costs as
incurred.

     Deferred Costs -- Deferred financing costs are amortized over the life of
the debt using the straight-line method. Net deferred financing charges were
$155 and $208, net of accumulated amortization of $307 and $12 as of 2000 and
2001, respectively. These amounts are included in other assets in the balance
sheets.

     Deferred Rent -- Rent expense under operating leases providing for rent
abatements and fixed non-contingent escalations is recognized on a straight-line
basis over the term of each individual underlying lease. The cumulative net
excess of recorded rent expense over lease payments made in the amount of $2.0
million and $3.1 million is reflected in other liabilities in the balance sheet
as of 2000 and 2001, respectively.

     Revenue Recognition -- Revenue is recognized at the "point of sale."
Allowances for sales returns are recorded as a component of net sales in the
periods in which the related sales are recognized.

     Marketing -- Marketing costs, which includes newspaper, television, radio
and other media advertising and collegiate athlete conference sponsorships, are
expensed as incurred and were zero, $1,062 and $2,210 for fiscal years ended
1999, 2000 and 2001, respectively.

     Shipping and Handling -- Emerging Issues Task Force ("EITF") Issue 00-10,
Accounting for Shipping and Handling Fees and Costs, requires that all amounts
billed to a customer in a sale transaction related to shipping and handling, if
any, should be classified as revenue. As required, the Company adopted this EITF
in the fourth quarter of 2001 and has reclassified shipping and handling
reimbursements to net sales for all periods. Shipping and handling revenue
amounted to approximately $2 for each of the fiscal years 1999, 2000 and 2001.
The Company has recorded shipping and handling costs in general and
administrative expenses for all periods presented.

     Net Income Per Share -- Basic net income per share is computed by dividing
net income after preferred dividends by the weighted average number of common
shares outstanding for the period. Diluted net income per share also includes
the dilutive effect of potential common shares outstanding during the period.

     Fair Value of Financial Instruments -- The following disclosure is made in
accordance with the requirements of SFAS No. 107, Disclosures about Fair Value
of Financial Instruments. The carrying amounts of cash and cash equivalents and
accounts payable approximate its fair value due to the short-term maturities of
such items. The carrying amount of the revolving credit facility approximates
its fair value due to the variable interest rate it carries. The carrying amount
of the Series B Preferred Stock

                                       F-8
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

approximates its fair value in that it carries a current market dividend rate.
Estimated fair value disclosures have been determined by the Company, using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and estimation
methodologies may have a material effect on the estimated fair value amounts.

     Derivatives -- During the first quarter of fiscal 2001, the Company adopted
SFAS No. 133 and 138, Accounting for Derivative Instruments and Hedging
Activities. SFAS 133 established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities requiring all companies to recognize
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS 138 is an amendment
to SFAS 133, which amended or modified certain issues discussed in SFAS 133.
Implementation of SFAS 133 and SFAS 138 did not have a material impact on the
Company's statement of financial position, results of operations or cash flows.

     Reclassifications -- Certain reclassifications have been made to the
consolidated financial statements in prior periods to conform to the current
period presentation.

     Segment Reporting -- The Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
131 establishes standards for reporting information about a company's operating
segments. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. The Company operates in a
single operating segment -- the operation of mall-based specialty retail stores.
Revenues from external customers are derived from merchandise sales. The
Company's net sales mix by merchandise category for the last three fiscal years
was as follows:

<Table>
<Caption>
MERCHANDISE CATEGORIES                                        1999    2000    2001
----------------------                                        ----    ----    ----
<S>                                                           <C>     <C>     <C>
Young Women's...............................................   37%     42%     49%
Young Men's.................................................   55      47      39
Accessories.................................................    8      11      12
                                                              ---     ---     ---
Total Merchandise Sales.....................................  100%    100%    100%
                                                              ===     ===     ===
</Table>

     The Company does not rely on any major customers as a source of revenue.

     New Accounting Standards -- In June 2001, the Financial Accounting
Standards Board ("FASB") issued two new pronouncements: SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.

     SFAS No. 141 addresses financial accounting and reporting for business
combinations and supersedes APB No. 16, Business Combinations, and FASB
Statement No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises. All business combinations in the scope of this Statement are to be
accounted for using one method, the purchase method. SFAS 141 is effective as
follows: a) use of the pooling-of-interest method is prohibited for business
combinations initiated after June 30, 2001; and b) the provisions of SFAS 141
also apply to all business combinations accounted for by the purchase method
that are completed after June 30, 2001 (that is, the date of the acquisition is
July 2001 or later). The Company has determined that the adoption of this
statement will not have an impact on the financial statements.

     SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB No. 17, Intangible
Assets. It changes the accounting for goodwill from an

                                       F-9
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

amortization method to an impairment only approach. The Company adopted it on
August 5, 2001. The adoption of this statement had $1,632 impact on the
financial statements for the write-off of the net negative goodwill as of August
5, 2001 (see Note 4).

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
of Long-Lived Assets, addresses accounting for and reporting of the impairment
or disposal of long-lived assets that is effective for fiscal years beginning
after December 15, 2001. The Company expects that the adoption of SFAS No. 144
will not have a significant impact on its financial position or results of
operations. However, SFAS No. 144 may modify the presentation of the operating
results of certain closed stores in the Company's statement of operations in the
future.

3. SIGNIFICANT RISKS AND UNCERTAINTIES

     Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles 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.
The accounts requiring the use of significant estimates included inventory,
income tax and certain reserves.

     Certain Risks Concentration -- The Company had three suppliers who in the
aggregate constituted approximately 36% of the Company's purchases for the year
ended August 4, 2001. The loss of any of these suppliers would adversely affect
the Company's operations.

4. CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     In connection with the purchase of all the shares of the Company from
Federated Specialty Stores, Inc. (a wholly-owned subsidiary of Federated
Department Stores, Inc.) on August 3, 1998 ("Acquisition"), the Company recorded
gross negative goodwill in the amount of $12.8 million that was being amortized
over an estimated life of ten years.

     In connection with the decision to discontinue the operations of the
Chelsea Cambell business, an allocation of the negative goodwill was made
between the Aeropostale and the Chelsea Cambell businesses based upon their
relative fair values at the Acquisition date. As a result of such allocation,
approximately $8.8 million of unamortized negative goodwill was written off as
part of the gain on disposal of the Chelsea Cambell business. The remaining
negative goodwill allocated to Aeropostale continue to be amortized over its
estimated life of ten years. Net negative goodwill was approximately $1,866 and
$1,632 as of 2000 and 2001, respectively.

     The Company adopted SFAS 142 on August 5, 2001, the beginning of transition
2001. With the adoption of SFAS 142, the remaining negative goodwill was
recorded as income from a cumulative effect of accounting change.

                                       F-10
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Income from continuing operations for the thirteen weeks ended November 3,
2001 and October 28, 2000 and the three previous fiscal years had been adjusted
to reflect income from continuing operations as though no negative goodwill
amortization was recorded.

<Table>
<Caption>
                                  FISCAL YEAR                    THIRTEEN WEEKS ENDED
                          ---------------------------    ------------------------------------
                           1999      2000      2001      OCTOBER 28, 2000    NOVEMBER 3, 2001
                          ------    ------    -------    ----------------    ----------------
                                                                     (UNAUDITED)
<S>                       <C>       <C>       <C>        <C>                 <C>
Income from continuing
  operations............  $6,230    $9,366    $10,914         $6,007             $14,727
Adjusted income from
  continuing operations
  (unaudited)...........   5,996     9,132     10,680          5,950              14,727
Diluted income from
  continuing operations
  per share.............   54.49     90.32     104.70          62.06              152.01
Adjusted diluted income
  from continuing
  operations per share
  (unaudited)...........   51.94     87.78     102.22          61.45              152.01
</Table>

5. OTHER CURRENT ASSETS

     Other current assets consist of the following:

<Table>
<Caption>
                                                               2000      2001
                                                              ------    ------
<S>                                                           <C>       <C>
Prepaid expenses............................................  $  318    $  706
Prepaid rent................................................   2,653     2,939
Other receivables...........................................   5,271     3,562
Prepaid income taxes........................................   1,397        --
                                                              ------    ------
                                                              $9,639    $7,207
                                                              ======    ======
</Table>

6. FIXTURES, EQUIPMENT AND IMPROVEMENTS -- NET

     Fixtures, equipment and improvements -- net consist of the following:

<Table>
<Caption>
                                                               2000       2001
                                                              -------    -------
<S>                                                           <C>        <C>
Leasehold improvements......................................  $10,913    $25,297
Store fixtures and equipment................................    9,685     16,116
Computer equipment and software.............................    1,678      3,644
Construction in progress....................................    2,487      2,715
                                                              -------    -------
                                                               24,763     47,772
Less accumulated depreciation and amortization..............    1,747      5,428
                                                              -------    -------
                                                              $23,016    $42,344
                                                              =======    =======
Depreciation and amortization expense from continuing operations
  amounted to approximately $77, $1,653 and $3,770 for fiscal years
  1999, 2000 and 2001, respectively.
</Table>

                                       F-11
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. ACCRUED EXPENSES

     Accrued expenses consist of the following:

<Table>
<Caption>
                                                               2000       2001
                                                              -------    -------
<S>                                                           <C>        <C>
Accrued compensation........................................  $ 1,967    $ 3,636
Sales and use tax...........................................      594        808
Accrued rent................................................    2,170      2,223
Accrued gift certificates and credits.......................    1,914      2,571
Income tax payable..........................................       --      1,874
Other.......................................................    4,785      2,195
                                                              -------    -------
                                                              $11,430    $13,307
                                                              =======    =======
</Table>

8. REVOLVING CREDIT FACILITY

     The Company has a revolving credit agreement, as amended, with a bank under
which the Company may borrow or obtain letters of credit up to $55 million (the
"Credit Facility"), letters of credit have a sub-limit of $15 million. The
facility matures by its terms on July 31, 2004. Indebtedness under the Credit
Facility is collateralized by the assets of the Company. Borrowings under the
Credit Facility bear interest, at the Company's option, either at (a) the
lender's prime rate or (b) the Euro Dollar Rate plus 1.50% to 2.00%, depending
on excess availability. Additionally, the Company must pay commitment fees on
any unused portion of the Credit Facility at an annualized rate of 0.375 percent
of the difference between the unused portion and borrowings (including
outstanding letters of credit) at the preceding month-end. In connection with
the Credit Facility, the Company incurred a one-time financing fee of $220,
which is being amortized over the term of the Credit Facility, such amount is
recorded as additional interest expense. The Company was in compliance with the
financial covenants of the credit facility, which require the Company to achieve
certain earnings before interest, income taxes, depreciation and amortization
("EBITDA" as defined in the Agreement) amounts and capital spending limitations.

     At July 29, 2000 and August 4, 2001, the Company had borrowings outstanding
excluding accrued interest under the Credit Facility of $26,987 at an interest
rate of 8.84% and $35,267 at an interest rate of 5.85 percent, respectively. The
average amount of borrowings outstanding during 2000 was $9,188 at a weighted
average interest rate of 10.48%. The average amount of borrowings outstanding
during 2001 was $18,486 at a weighted average interest rate of 8.27%. The
average amount of borrowings outstanding during the thirteen weeks ended
November 3, 2001 and October 28, 2000 was $16,756 and $28,478 at a weighted
average interest rate of 6.40% and 8.67%. There were no issued stand-by or
commercial letters of credit at August 4, 2001.

9. NET INCOME PER SHARE

     In accordance with SFAS No. 128, "Earnings Per Share," basic earnings per
share has been computed based upon the weighted average of common shares and
nonvoting commons shares outstanding, after deducting preferred dividend
requirements. Diluted earnings per share gives effect to outstanding stock
options.

                                       F-12
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Net income per common share have been computed as follows:

<Table>
<Caption>
                                1999                  2000                  2001
                         ------------------    ------------------    ------------------
                          BASIC     DILUTED     BASIC     DILUTED     BASIC     DILUTED
                         -------    -------    -------    -------    -------    -------
<S>                      <C>        <C>        <C>        <C>        <C>        <C>
Income from continuing
  operations...........  $ 6,230    $ 6,230    $ 9,366    $ 9,366    $10,914    $10,914
Preferred stock
  dividends............   (1,235)    (1,235)    (1,040)    (1,040)    (1,048)    (1,048)
                         -------    -------    -------    -------    -------    -------
Income from continuing
  operations available
  for per-share
  calculation..........    4,995      4,995      8,326      8,326      9,866      9,866
Income (loss) from
  discontinued
  operations...........     (268)      (268)     2,002      2,002        405        405
                         -------    -------    -------    -------    -------    -------
Net income available
  for per-share
  calculation..........  $ 4,727    $ 4,727    $10,328    $10,328    $10,271    $10,271
                         =======    =======    =======    =======    =======    =======
Average shares of
  common stock
  outstanding..........   82,502     82,502     82,559     82,559     83,276     83,276
Stock options..........       --      9,163         --      9,625         --     10,950
                         -------    -------    -------    -------    -------    -------
Total average
  equivalent shares....   82,502     91,665     82,559     92,184     83,276     94,226
                         =======    =======    =======    =======    =======    =======
Per Common Share:
Income from continuing
  operations...........  $ 60.54    $ 54.49    $100.85    $ 90.32    $118.48    $104.70
Income (loss) from
  discontinued
  operations...........    (3.24)     (2.92)     24.25      21.72       4.86       4.30
                         -------    -------    -------    -------    -------    -------
Net income.............  $ 57.30    $ 51.57    $125.10    $112.04    $123.34    $109.00
                         =======    =======    =======    =======    =======    =======
</Table>

<Table>
<Caption>
                                                        THIRTEEN WEEKS ENDED
                                              ----------------------------------------
                                               OCTOBER 28, 2000      NOVEMBER 3, 2001
                                              ------------------    ------------------
                                               BASIC     DILUTED     BASIC     DILUTED
                                              -------    -------    -------    -------
<S>                                           <C>        <C>        <C>        <C>
Income from continuing operations...........  $ 6,007    $ 6,007    $14,727    $14,727
Preferred stock dividends...................     (250)      (250)      (283)      (283)
                                              -------    -------    -------    -------
Income from continuing operations available
  for per-share calculation.................    5,757      5,757     14,444     14,444
Cumulative effect of accounting change......       --         --      1,632      1,632
                                              -------    -------    -------    -------
Net income available for per-share
  calculation...............................  $ 5,757    $ 5,757    $16,076    $16,076
                                              =======    =======    =======    =======
Average shares of common stock
  outstanding...............................   82,770     82,770     83,817     83,817
Stock options...............................       --      9,995         --     11,201
                                              -------    -------    -------    -------
Total average equivalent shares.............   82,770     92,765     83,817     95,018
                                              =======    =======    =======    =======
Per Common Share:
Income from continuing operations...........  $ 69.55    $ 62.06    $172.33    $152.01
Cumulative effect of accounting change......       --         --      19.47      17.18
                                              -------    -------    -------    -------
Net income..................................  $ 69.55    $ 62.06    $191.80    $169.19
                                              =======    =======    =======    =======
</Table>

                                       F-13
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. REDEEMABLE PREFERRED STOCK

     Series A Exchangeable Redeemable Preferred Stock -- The Company issued
6,000 shares of its Series A exchangeable, redeemable preferred stock, $0.01 par
value ("Series A Preferred Stock") in connection with the Acquisition. The
Series A Preferred Stock has no voting rights. Dividends accrue at 6 percent per
annum at a liquidation value of $1,000 per share and are cumulative. The shares
are mandatory redeemable at the liquidation value at the earliest of an initial
public offering of the Company's stock, a sale of the Company or 10 years from
the date of issue or at any time at the Company's option. The shares are
exchangeable, at the Company's option on any dividend payment date, into 6
percent Subordinated Notes due 2008. The Series A Preferred Stock was recorded
at its fair value on the date of issue of approximately $4.5 million, the
discount of approximately $1.5 million was being recorded as an additional
dividend over the mandatory redemption period. In November 1999, the Company
exercised its option to redeem the Series A Preferred Stock at a price that
approximated its current fair value plus accrued dividends. The Company recorded
accretion to increase the carrying value to a liquidation value of $6 million.
For the fiscal years ended 1999, 2000 and 2001, the accretion is $48, $19 and
zero, respectively.

     Series B Redeemable Preferred Stock -- The Company issued 6,250 shares of
its Series B redeemable preferred stock $0.01 par value ("Series B Preferred
Stock") for proceeds of $6.25 million in connection with the Acquisition. The
Series B Preferred Stock has no voting rights. Dividends accrue at 12.5 percent
per annum at a liquidation value of $1,000 per share and are cumulative. The
shares are mandatory redeemable at the liquidation value at the earliest of an
initial public offering of the Company's stock, a sale of the Company or 10
years from the date of issue or at any time at the Company's option.

     Cumulative dividends on the Series B Preferred Stock are payable at the
rate of 12.5 percent per annum, quarterly on the first day of November,
February, May, and August, based on face value. Dividends not declared and paid
will also accrue dividends at the same annual rate. Unpaid dividends on a
quarterly basis are then payable in Series B preferred stock. As of July 29,
2000 and August 4, 2001, the Company accrued $1,744 and $2,792, respectively, in
dividends which is recorded as Redeemable Preferred Stock which upon the
liquidation, rank senior to all classes of common stock.

11. STOCKHOLDERS' EQUITY

     Common Stock -- The Company sold a total of 82,500 shares of common
stock -- voting $0.01 par value for proceeds of approximately $950 in connection
with the Acquisition. The common stock is entitled to one vote per share.

     Stock Option Plan -- The Company adopted a stock option plan under which it
may grant non-qualified and qualified stock options to purchase up to 17,500
shares of the Company's Common Stock $0.01 par value (which may be voting or
nonvoting) to executives, consultants, directors, or other key employees (the
"Stock Option Plan"). Options may have a maximum term of up to eight years and
qualified stock options may not be granted at less than the fair market value at
the date of grant. Vesting provisions of the options will be determined by the
Board of Directors at the date of option grants; however, all outstanding
options will immediately vest upon an initial public offering of the Company's
Common Stock or a sale of the Company.

                                       F-14
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes stock option transactions during the three
years ended August 4, 2001 and the thirteen weeks ended November 3, 2001
(unaudited):

<Table>
<Caption>
                                                                                            THIRTEEN WEEKS ENDED
                                 1999                  2000                  2001             NOVEMBER 3, 2001
                          ------------------    ------------------    ------------------    --------------------
                                    WEIGHTED              WEIGHTED              WEIGHTED               WEIGHTED
                                    AVERAGE               AVERAGE               AVERAGE                 AVERAGE
                                    EXERCISE              EXERCISE              EXERCISE               EXERCISE
                          SHARES     PRICE      SHARES     PRICE      SHARES     PRICE      SHARES       PRICE
                          ------    --------    ------    --------    ------    --------    -------    ---------
                                                                                                (UNAUDITED)
<S>                       <C>       <C>         <C>       <C>         <C>       <C>         <C>        <C>
Outstanding, beginning
  of period.............      --     $   --     11,720    $ 11.50     12,310     $42.53     13,839      $ 71.52
  Granted...............  13,300      11.50      2,990     141.08      3,260     162.66        750       320.00
  Exercised.............     (17)     11.50       (158)     11.50     (1,128)     11.50       (125)      147.00
  Forfeited.............  (1,563)     11.50     (2,242)     13.92       (603)     84.84        (21)      178.43
                          ------     ------     ------    -------     ------     ------     ------      -------
Outstanding, end of
  period................  11,720     $11.50     12,310    $ 42.53     13,839     $71.52     14,443      $ 83.61
                          ======     ======     ======    =======     ======     ======     ======      =======
Options exercisable at
  period-end............     543     $11.50      2,609    $ 63.92      2,586     $71.98      2,586      $ 71.98
                          ======     ======     ======    =======     ======     ======     ======      =======
Weighted average fair
  value of options
  granted during the
  year..................             $ 2.53               $ 38.74                $37.74
                                     ======               =======                ======
</Table>

     Qualified stock options granted during the three years ended August 4, 2001
generally vest ratably over a four-year period and have a maximum term of eight
years. Nonqualified stock options granted during the three years ended August 4,
2001 vest at the earlier of the achievement of certain EBITDA targets during the
first three years or 8 years from the date of grant. The vested portion of
nonqualified stock options will be not be exercisable until four years from the
fiscal period beginning January of the year of grant and have a maximum term of
eight years from the date of grant.

     The following table summarizes information concerning currently outstanding
options at August 4, 2001 and November 3, 2001 (unaudited):

<Table>
<Caption>
                                     AVERAGE                                              AVERAGE
                      NUMBER        REMAINING         NUMBER            NUMBER           REMAINING            NUMBER
                  OUTSTANDING AT   CONTRACTUAL    EXERCISABLE AT    OUTSTANDING AT    CONTRACTUAL LIFE    EXERCISABLE AT
EXERCISE PRICES   AUGUST 4, 2001   LIFE (YEARS)   AUGUST 4, 2001   NOVEMBER 3, 2001       (YEARS)        NOVEMBER 3, 2001
---------------   --------------   ------------   --------------   ----------------   ----------------   ----------------
                                                                     (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
<S>               <C>              <C>            <C>              <C>                <C>                <C>
    $ 11.50            8,044           2.1            1,401              8,044               1.8              1,401
     143.00            1,040           3.6            1,040              1,040               3.3              1,040
     147.00            3,630           4.0              145              3,499               3.7                145
     191.00            1,125           4.5               --              1,110               4.3                 --
     320.00               --            --               --                750               5.0                 --
                      ------                          -----             ------                                -----
                      13,839                          2,586             14,443                                2,586
                      ======                          =====             ======                                =====
</Table>

     The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for stock option grants. Accordingly, no
compensation cost has been recognized for employee stock options. Had
compensation cost for the Stock Option Plan been determined based upon the fair
value of such awards at the grant date, consistent with the methods of SFAS No.
123, net income available to common stockholders would have been reduced to the
pro forma amounts of $4, $10 and $23

                                       F-15
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

for the fiscal years ended 1999, 2000 and 2001, respectively. The fair value of
such options was determined using the Black Scholes option pricing model and the
following weighted average assumptions:

<Table>
<Caption>
                                                           1999       2000       2001
                                                          -------    -------    -------
<S>                                                       <C>        <C>        <C>
Risk-free interest rate.................................     5.10%      6.55%      5.41%
Dividend yield..........................................        0          0          0
Weighted average expected life..........................  5 years    5 years    5 years
Volatility..............................................        0          0          0
</Table>

12. EMPLOYEE BENEFIT PLANS

     a. The Company has a retirement plan with a 401(k) salary deferral feature
that covers substantially all of its employees who meet certain requirements.
Under the terms of the plan, employees may contribute up to 14 percent of gross
earnings and the Company will provide a matching contribution of 50 percent of
the first 5 percent of gross earnings contributed by the participants. The
Company may, at its option, make additional contributions. The terms of the plan
provide for vesting in the Company's matching contributions to the plan over a
five-year service period with 50 percent vesting after year three, an additional
25 percent vesting after year four, and participants will be fully vested after
year five. The Company expensed contributions for the retirement plan of
approximately $153, $245 and $278 for the fiscal years ended 1999, 2000 and
2001, respectively.

     b. The Company maintains a supplemental executive retirement plan ("SERP"),
which is an unfunded defined benefit plan. The actuarial present value of
accumulated benefit obligations related to the Company's SERP approximated $1.8
million, $1.6 million and $2.5 million, using a weighted average discount rate
of 4.5% at July 31, 1999 and 7% at August 4, 2001 and July 29, 2000, and an
assumed rate of compensation increase of 4.5% for all years. Pension expense for
the SERP amounted to $210, $171 and $247 for the fiscal years ended 1999, 2000,
and 2001, respectively. Of these amounts, $155 represented interest, $3
represented amortization of prior experienced losses, and $89 represented the
current year service component for the year ended August 4, 2001 and $101
represented interest, ($10) represented amortization of prior experienced gains,
and $80 represented the current year service component for the year ended July
29, 2000 and $110 represented interest and $100 represented the current year
service component for the year ended July 31, 1999.

13. INCOME TAXES

     The provision for income taxes included within continuing operations for
1999, 2000 and 2001 consists of the following:

<Table>
<Caption>
                                                            1999      2000      2001
                                                           ------    ------    ------
<S>                                                        <C>       <C>       <C>
Federal:
  Current................................................  $2,047    $  463    $4,730
  Deferred...............................................     840     4,231     1,074
                                                           ------    ------    ------
                                                            2,887     4,694     5,804
                                                           ------    ------    ------
State and local:
  Current................................................     460       402       758
  Deferred...............................................     182       653       503
                                                           ------    ------    ------
                                                              642     1,055     1,261
                                                           ------    ------    ------
                                                           $3,529    $5,749    $7,065
                                                           ======    ======    ======
</Table>

                                       F-16
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The provision for income taxes for discontinued operations consists of the
following:

<Table>
<Caption>
                                                           1999      2000       2001
                                                          ------    -------    ------
<S>                                                       <C>       <C>        <C>
Federal:
  Current...............................................  $ (354)   $(2,908)   $   --
  Deferred..............................................    (123)    (1,009)      225
                                                          ------    -------    ------
                                                            (477)    (3,917)      225
                                                          ------    -------    ------
State and local:
  Current...............................................     (83)      (679)       --
  Deferred..............................................     (23)      (188)       32
                                                          ------    -------    ------
                                                            (106)      (867)       32
                                                          ------    -------    ------
                                                          $ (583)   $(4,784)   $  257
                                                          ======    =======    ======
Total provision.........................................  $2,946    $   965    $7,322
                                                          ======    =======    ======
</Table>

     Reconciliation of the U.S. statutory rate with the Company's effective tax
rate excluding discontinued operations is summarized as follows:

<Table>
<Caption>
                                                              1999    2000     2001
                                                              ----    -----    ----
<S>                                                           <C>     <C>      <C>
Federal statutory rate......................................  34.0%    34.0%   34.0%
Increase (decrease) in tax resulting from:
  State income taxes (net of federal tax benefits)..........   2.3      4.1     4.6
  Nondeductible goodwill amortization and write-off.........  (0.1)    (0.1)   (0.5)
  Other.....................................................    --       --     1.2
                                                              ----    -----    ----
Effective rate..............................................  36.2%    38.0%   39.3%
                                                              ====    =====    ====
</Table>

     As of July 29, 2000 and August 4, 2001, the components of the net deferred
income tax assets are as follows:

<Table>
<Caption>
                                                               2000      2001
                                                              ------    -------
<S>                                                           <C>       <C>
Current:
  Inventory.................................................  $    5    $(1,376)
  Accrued vacation..........................................     136        167
  Other.....................................................     112        972
  Accrued bonuses...........................................     275        540
  Discontinued operations accruals..........................     565         --
                                                              ------    -------
Total current...............................................   1,093        303
                                                              ------    -------
Noncurrent:
  Fixed assets..............................................   4,823      3,695
  Acquired lease liability..................................   1,259        944
  Deferred rent.............................................     832      1,298
  State income taxes........................................    (532)      (460)
  Net operating loss........................................   1,148         --
                                                              ------    -------
Total noncurrent............................................   7,530      5,477
                                                              ------    -------
Net deferred income tax assets..............................  $8,623    $ 5,780
                                                              ======    =======
</Table>

                                       F-17
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES

     The Company is committed under noncancelable leases for all its store and
office space, expiring at various dates through July 2011. The leases generally
provide for minimum rent plus additional increases in real estate taxes, certain
operating expenses, etc. Certain leases also require contingent rent based on
sales.

     As of August 4, 2001, the aggregate minimum annual rent commitments are as
follows:

<Table>
<Caption>
FISCAL                                                RELATED
YEAR ENDED                                             PARTY      OTHER       TOTAL
----------                                            -------    --------    --------
<S>                                                   <C>        <C>         <C>
2002................................................  $ 6,169    $ 20,415    $ 26,584
2003................................................    6,163      20,605      26,768
2004................................................    5,607      19,198      24,805
2005................................................    4,842      16,963      21,805
2006................................................    4,035      15,032      19,067
Thereafter..........................................   14,784      58,939      73,723
                                                      -------    --------    --------
                                                      $41,600    $151,152    $192,752
                                                      =======    ========    ========
</Table>

     For the fiscal years ended 1999, 2000 and 2001, rent and occupancy expense
included within income from continuing operations was approximately $23.7
million, $28.4 million and $39.0, respectively. Included in rent and occupancy
expense within income from continuing operations for fiscal 1999 is
approximately $8.4 million and for fiscal 2000 and 2001 is approximately $9.6
million paid to a related party shareholder of the Company.

     The above table includes the lease commitments for stores that are expected
to open subsequent to August 4, 2001.

     In connection with the Acquisition, the Company recorded a liability to
reflect leases that were at above-market rental rates. Such liability, which
amounted to approximately $3.1 million as of July 29, 2000 and $2.3 million as
of August 4, 2001, is reflected in the accompanying balance sheet as other
noncurrent liabilities. This liability will be amortized as a reduction of
future rental expenses over the respective lease lives. The amortization was
approximately $1.2 million, $1.1 million and $0.8 million for the fiscal years
ended 1999, 2000 and 2001, respectively. In fiscal 2000, approximately $0.5
million was written off in connection with the discontinued operations and
approximately $0.9 was written off in connection with certain Aeropostale stores
closed.

     Employment Agreements -- As of August 4, 2001, the Company had outstanding
employment contracts expiring in fiscal 2002. The financial liability for these
contracts is approximately $500.

     Legal Proceedings -- Various suits and claims arising in the course of
business are pending against the Company and its subsidiaries. In the opinion of
management, dispositions of these matters are not expected to materially affect
the Company's financial position, cash flows or results from operations.

15. RELATED PARTY TRANSACTIONS

     Sponsor Fee -- The Company has a Management Services Agreement with the
holder of the Series B Preferred Stock and the majority shareholder of the
Company's common stock voting. Such agreement calls for annual payments equal to
the greater of $200 or 3 percent of earnings before interest, income taxes,
depreciation and amortization ("EBITDA," as defined) up to a maximum of $450.
Such fees aggregated $268, $403 and $450 for the fiscal years ended 1999, 2000
and 2001, respectively.

                                       F-18
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Leases -- The Company is the lessee under operating leases where the
landlord is a stockholder of the Company (Note 14).

     Sourcing Agreement -- The Company has a Sourcing Agreement with Federated
Merchandising Group, Inc., ("FMG") a subsidiary of Federated Department Stores,
Inc., the previous owner of the Company. Effective November 1999, FMG ceased to
be a related party due to the Company's redemption of the Series A Preferred
Stock. The Sourcing Agreement provides purchasing, facilitation, and importation
services substantially similar to the manner in which such services were
provided to the Company prior to the Acquisition. The Company pays fees under
the Sourcing Agreement at a flat rate of 6 percent so long as the Company
purchases a minimum of $30 million during a fiscal year. Should the Company fail
to purchase the $30 million minimum, the commission rate will revert to 8
percent. The total purchases of merchandise under the Sourcing Agreement for
fiscal 1999 and the period August 1, 1999 through September 30, 1999 (the date
of redemption) was approximately $55 million and $20 million, respectively,
which included approximately $3.3 million of fees during fiscal 1999 and
approximately $0.9 million of fees for the year ended fiscal 2000.

     Loans to Executives.  In 1999, we repurchased all of our outstanding shares
of Series A Preferred Stock from Federated Department Stores, Inc. This
triggered a loan forgiveness provision contained in loan agreements regarding
loans that Federated had previously made to Mr. Geiger and Mr. Mills. This loan
forgiveness caused Messrs. Geiger and Mills to incur significant tax liability
in 1999. We therefore extended interest free loans in the amount of $70,000 to
both Mr. Geiger and Mr. Mills to cover this tax liability. Mr. Geiger and Mr.
Mills each repaid the full amount of the loan in February 2002 and currently do
not have any outstanding indebtedness to our company.

16. DISCONTINUED OPERATIONS

     During February 2000, the Company's Board of Directors decided to
discontinue the Chelsea Cambell specialty store business at its meeting on
February 25, 2000 (the measurement date) and the Company closed all Chelsea
Cambell stores by the end of December 2000. Accordingly, operating results of
this segment for the fiscal years ended 2001 and 2000 have been reclassified as
income from discontinued operations.

     Operating results of discontinued operations are as follows:

<Table>
<Caption>
                                                                              THIRTEEN
                                                                            WEEKS ENDED
                                           1999       2000       2001     OCTOBER 28, 2000
                                          -------    -------    ------    ----------------
                                                                            (UNAUDITED)
<S>                                       <C>        <C>        <C>       <C>
Net sales...............................  $48,496    $35,117    $2,854         $2,117
                                          =======    =======    ======         ======
Income (loss) from discontinued
  operations:
  Before income taxes...................  $  (851)   $(9,531)   $   --         $   --
  Estimated net gain on disposal........       --      6,749       662             --
  Income tax (expense) benefit..........      583      4,784      (257)            --
                                          -------    -------    ------         ------
Net.....................................  $  (268)   $ 2,002    $  405         $   --
                                          =======    =======    ======         ======
</Table>

     During fiscal 2001, the Company was able to negotiate settlements on future
lease obligations and incurred better than expected profitability on the closing
of the Chelsea Cambell stores and therefore realized a reversal of the estimated
loss on disposal of $662.

     The July 29, 2000 loss from discontinued operations before income taxes
includes ($24,541) in cost of goods sold, ($6,221) in payroll expense, ($14,079)
in nonpayroll expenses, $613 in amortization of

                                       F-19
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

negative goodwill, and an estimated loss from operations during the phase-out
period subsequent to July 29, 2000 of ($806), and other revenue of $386.

     The estimated net gain on disposal includes the write-off of negative
goodwill of $8,838, the lease termination costs of ($2,478), write-offs of
tenant liabilities, acquired lease liabilities, and deferred rent of $1,305 and
other expenses of ($916).

     Included within accrued expenses and other liabilities on the accompanying
balance sheet is an accrual for the costs associated with the disposal of the
Chelsea Cambell business. The major components of the accrual and the activity
through August 4, 2001 were as follows:

<Table>
<Caption>
                                                                ACCRUAL OF
                                       LEASE                     OPERATING
                                    BUY-OUT AND    SEVERANCE      LOSSES
                                     CONTRACT         AND       THROUGH THE
                                    TERMINATION   TERMINATION   DISPOSITION
                                     ON COSTS      BENEFITS        DATE       OTHER    TOTAL
                                    -----------   -----------   -----------   -----   -------
<S>                                 <C>           <C>           <C>           <C>     <C>
Provision at measurement date.....    $ 2,478        $ 566         $ 806      $ 84    $ 4,166
Activity..........................     (1,944)        (352)           --       (49)    (2,572)
                                      -------        -----         -----      ----    -------
Balance, at July 29, 2000.........        534          214           806        35      1,594
                                      -------        -----         -----      ----    -------
Activity..........................       (534)        (214)         (806)      (35)    (1,594)
                                      -------        -----         -----      ----    -------
Balance, at August 4, 2001........    $    --        $  --         $  --      $ --    $    --
                                      =======        =====         =====      ====    =======
</Table>

17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
                                                            THIRTEEN WEEKS ENDED
                                              -------------------------------------------------
                                              OCTOBER 30,   JANUARY 29,   APRIL 29,   JULY 29,
                                                 1999          2000         2000        2000
                                              -----------   -----------   ---------   ---------
<S>                                           <C>           <C>           <C>         <C>
FISCAL 2000
  Net sales.................................    $53,331       $72,164      $40,552     $47,398
  Gross profit..............................     18,593        24,669        8,487       9,723
  Income from continuing operations.........      4,413         7,667       (1,428)     (1,286)
  Income (loss) from discontinued
     operations.............................       (611)       (1,596)      (1,621)      5,830
  Net income................................      3,802         6,071       (3,049)      4,544
  Basic net income (loss) per share:
     From continuing operations.............      49.46         90.14       (20.14)     (18.54)
     From discontinued operations...........      (7.40)       (19.34)      (19.64)      70.56
     Net income.............................      42.06         70.80       (39.78)      52.02
  Diluted income (loss) per share:
     From continuing operations.............      44.43         81.43       (20.14)     (16.49)
     From discontinued operations...........      (6.65)       (17.47)      (19.64)      62.73
     Net income.............................      37.78         63.96       (39.78)      46.24
</Table>

                                       F-20
<PAGE>
                               AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                           THIRTEEN WEEKS ENDED
                                              -----------------------------------------------
                                              OCTOBER 28,   FEBRUARY 3,   MAY 5,    AUGUST 4,
                                                 2000          2001        2001       2001
                                              -----------   -----------   -------   ---------
<S>                                           <C>           <C>           <C>       <C>
FISCAL 2001
  Net sales.................................    $76,831      $107,538     $56,629    $63,769
  Gross profit..............................     25,750        34,008      12,458     13,933
  Income from continuing operations.........      6,007         8,687      (2,049)    (1,731)
  Income (loss) from discontinued
     operations.............................         --           388           2         15
  Net income................................      6,007         9,075      (2,047)    (1,716)
  Basic net income (loss) per share:
     From continuing operations.............      69.55        101.63      (27.67)    (23.94)
     From discontinued operations...........         --          4.67        0.02       0.18
     Net income.............................      69.55        106.30      (27.65)    (23.76)
  Diluted income (loss) per share:
     From continuing operations.............      62.06         89.53      (27.67)    (23.94)
     From discontinued operations...........         --          4.12        0.02       0.18
     Net income.............................      62.06         93.65      (27.65)    (23.76)
</Table>

     The per share amounts are calculated independently for each thirteen-week
period presented. The sum of the thirteen weeks may not equal the full year per
share amounts.

18. SUBSEQUENT EVENTS

     On December 21, 2001, the Company granted 1,504 options with an exercise
price of $320 per share which was at a price less than fair market value of
$1,022 determined through an independent appraisal. The Company anticipates a
non-cash compensation charge of approximately $505,000 as a result of the grant
of these options.

                                       F-21
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                              SHARES

                               [AEROPOSTALE LOGO]

                                  COMMON STOCK

                            ------------------------
                                   PROSPECTUS
                            ------------------------

                          Joint Book-Running Managers
                            BEAR, STEARNS & CO. INC.
                              MERRILL LYNCH & CO.

                            ------------------------

                         BANC OF AMERICA SECURITIES LLC
                           U.S. BANCORP PIPER JAFFRAY
                              WACHOVIA SECURITIES

                                     , 2002

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Aeropostale in connection
with the sale of common stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.

<Table>
<S>                                                           <C>
SEC registration fee........................................  $18,400
NASD filing fee.............................................   20,500
New York Stock Exchange listing fee.........................        *
Printing and engraving costs................................        *
Legal fees and expenses.....................................        *
Accounting fees and expenses................................        *
Blue Sky fees and expenses..................................        *
Directors and Officers Insurance............................        *
Transfer Agent and Registrar fees...........................        *
Miscellaneous expenses......................................        *
                                                              -------
  Total.....................................................        *
                                                              =======
</Table>

---------------
* To be supplied by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

     ARTICLE NINE of our amended and restated certificate of incorporation
provides for the indemnification of directors and officers to the fullest extent
permissible under Delaware law.

     ARTICLE NINE of our amended and restated certificate of incorporation also
provides for the indemnification of officers, directors and third parties acting
on our behalf if such person acted in good faith and in a manner reasonably
believed to be in and not opposed to our best interest, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his or her conduct was unlawful.

     Reference is also made to Section      of the Underwriting Agreement
contained in Exhibit 1.1 hereto, indemnifying officers and directors of
Aeropostale against certain liabilities.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

     In the past three years, we have issued unregistered securities to a
limited number of persons, as described below. None of these transactions
involved any underwriters, underwriting discounts or commissions, or any public
offering, and we believe that each transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof, Regulation
D promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof, and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationships with us, to
information about us.

                                       II-1
<PAGE>

     From inception to February 2, 2002, we issued options to purchase
shares of our non-voting common stock to our employees and options to purchase
       shares of our non-voting common stock to a consultant in connection with
services performed. These options have exercise prices ranging from $       to
$       . During this period, we issued          shares of our common stock
pursuant to option exercises. The issuance of options were all made pursuant to
Rule 701 promulgated under the Act and issuances of common stock pursuant to
option exercises were made in reliance upon Section 4(2) of the Act and Rule 506
promulgated thereunder. The shares of non-voting common stock received upon the
exercise of the options discussed in this paragraph will be converted to
shares of voting common stock simultaneously with the consummation of this
offering.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

<Table>
<C>    <S>
 1.1   Underwriting Agreement.*
 3.1   Form of Amended and Restated Certificate of Incorporation.
 3.2   Form of Amended and Restated By-Laws.
 4.1   Specimen Common Stock Certificate.*
 4.2   Stockholders' Agreement, dated as of August 3, 1998, by and
       among MSS-Delaware, Inc., MSS Acquisition Corp. II,
       Federated Specialty Stores, Inc., Julian R. Geiger, David R.
       Geltzer and John S. Mills.
 5.1   Form of Opinion of Kirkland & Ellis.
10.1   Aeropostale, Inc. 1998 Stock Option Plan.
10.2   Aeropostale, Inc. 2002 Long-Term Incentive Plan.
10.3   Management Services Agreement, dated as of July 31, 1998,
       between MSS-Delaware, Inc. and MSS Acquisition Corp. II.
10.4   Loan and Security Agreement, dated July 31, 1998 between
       Bank Boston Retail Finance Inc., as agent for the lenders
       party thereto (the "Lenders"), the Lenders and MSS-Delaware,
       Inc.
10.5   First Amendment to Loan and Security Agreement, dated
       November 8, 1999, by and between Bank Boston Retail Finance
       Inc., as agent for the Lenders, the Lenders and
       MSS-Delaware, Inc.
10.6   Second Amendment to Loan and Security Agreement, dated May
       2, 2000, by and between Fleet Retail Finance Inc. (f/k/a
       Bank Boston Retail Finance), as agent for the Lenders, the
       Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
10.7   Third Amendment to Loan and Security Agreement, dated June
       13, 2001, by and between Fleet Retail Finance Inc. (f/k/a
       Bank Boston Retail Finance), as agent for the Lenders, the
       Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
10.8   Fourth Amendment to Loan and Security Agreement, dated
       February 2, 2002, by and between Fleet Retail Finance Inc.
       (f/k/a Bank Boston Retail Finance), as agent for the
       Lenders, the Lenders and Aeropostale, Inc. (f/k/a
       MSS-Delaware, Inc.).
10.9   Sublease Agreement, dated February 5, 2002, between the
       United States Postal Services and Aeropostale, Inc.
10.10  Merchandise Servicing Agreement, dated March 1, 1999,
       between American Consolidation, Inc. and MSS-Delaware, Inc.
10.11  Interim Merchandise Servicing Agreement, dated as of
       February 11, 2002, by and between American Consolidation,
       Inc. and Aeropostale, Inc.
10.12  Sourcing Agreement, dated July 31, 1998, by and among
       Federated Department Stores, Inc., Specialty Acquisition
       Corporation and MSS-Delaware, Inc.
10.13  Employment Agreement, dated August 3, 1998, between
       MSS-Delaware, Inc. and Julian R. Geiger.
10.14  Employment Agreement, dated August 3, 1998, between
       MSS-Delaware, Inc. and John S. Mills.
</Table>

                                       II-2
<PAGE>
<Table>
<C>    <S>
21.1   List of subsidiaries of Aeropostale, Inc.
23.1   Consent of Kirkland & Ellis (included in Exhibit 5.1).
23.2   Consent of Deloitte & Touche LLP.
23.3   Power of Attorney (on signature page).
</Table>

---------------
* To be filed by amendment.

(B) FINANCIAL STATEMENT SCHEDULES

     None

     Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

     We hereby undertake to provide to the underwriters at the closing specified
in the underwriting Agreement certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each
purchaser.

     Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

     We hereby undertake that:

          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of Prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of Prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                       II-3
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 8th day of March, 2002.

                                          AEROPOSTALE, INC.

                                          By: /s/   JULIAN R. GEIGER
                                            ------------------------------------
                                                     Julian R. Geiger,
                                                        Chairman and
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Julian R. Geiger and Michael J.
Cunningham and each of them, his attorneys-in-fact, each with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of
1933, as amended, and all post-effective amendments thereto, and to file the
same, with all exhibits thereto and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<Table>
<Caption>
                    SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
<S>     <C>                                          <C>                                <C>

               /s/ JULIAN R. GEIGER                    Chairman and Chief Executive     March 8, 2002
--------------------------------------------------     Officer, Director (Principal
                 Julian R. Geiger                           Executive Officer)


            /s/ MICHAEL J. CUNNINGHAM                  Senior Vice President-Chief      March 8, 2002
--------------------------------------------------     Financial Officer (Principal
              Michael J. Cunningham                         Financial Officer)


               /s/ ALAN C. SIEBELS                      Vice President-Controller       March 8, 2002
--------------------------------------------------    (Principal Accounting Officer)
                 Alan C. Siebels


                /s/ JOHN S. MILLS                     President and Chief Operating     March 8, 2002
--------------------------------------------------          Officer, Director
                  John S. Mills


                /s/ BODIL ARLANDER                               Director               March 8, 2002
--------------------------------------------------
                  Bodil Arlander
</Table>

                                       II-4
<PAGE>

<Table>
<Caption>
                    SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
<S>     <C>                                          <C>                                <C>

            /s/ MARY ELIZABETH BURTON                            Director               March 8, 2002
--------------------------------------------------
              Mary Elizabeth Burton


                 /s/ DAVID EDWAB                                 Director               March 8, 2002
--------------------------------------------------
                   David Edwab


                /s/ JOHN D. HOWARD                               Director               March 8, 2002
--------------------------------------------------
                  John D. Howard


               /s/ RICHARD METRICK                               Director               March 8, 2002
--------------------------------------------------
                 Richard Metrick
</Table>

                                       II-5
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
<C>      <S>
  1.1    Underwriting Agreement.*
  3.1    Form of Amended and Restated Certificate of Incorporation.
  3.2    Form of Amended and Restated By-Laws.
  4.1    Specimen Common Stock Certificate.*
  4.2    Stockholders' Agreement, dated as of August 3, 1998, by and
         among MSS-Delaware, Inc., MSS Acquisition Corp. II,
         Federated Specialty Stores, Inc., Julian R. Geiger, David R.
         Geltzer and John S. Mills.
  5.1    Form of Opinion of Kirkland & Ellis.
 10.1    Aeropostale, Inc. 1998 Stock Option Plan.
 10.2    Aeropostale, Inc. 2002 Long-Term Incentive Plan.
 10.3    Management Services Agreement, dated as of July 31, 1998,
         between MSS-Delaware, Inc. and MSS Acquisition Corp. II.
 10.4    Loan and Security Agreement, dated July 31, 1998 between
         Bank Boston Retail Finance Inc., as agent for the lenders
         party thereto (the "Lenders"), the Lenders and MSS-Delaware,
         Inc.
 10.5    First Amendment to Loan and Security Agreement, dated
         November 8, 1999, by and between Bank Boston Retail Finance
         Inc., as agent for the Lenders, the Lenders and
         MSS-Delaware, Inc.
 10.6    Second Amendment to Loan and Security Agreement, dated May
         2, 2000, by and between Fleet Retail Finance Inc. (f/k/a
         Bank Boston Retail Finance), as agent for the Lenders, the
         Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
 10.7    Third Amendment to Loan and Security Agreement, dated June
         13, 2001, by and between Fleet Retail Finance Inc. (f/k/a
         Bank Boston Retail Finance), as agent for the Lenders, the
         Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
 10.8    Fourth Amendment to Loan and Security Agreement, dated
         February 2, 2002, by and between Fleet Retail Finance Inc.
         (f/k/a Bank Boston Retail Finance), as agent for the
         Lenders, the Lenders and Aeropostale, Inc. (f/k/a
         MSS-Delaware, Inc.).
 10.9    Sublease Agreement, dated February 5, 2002, between the
         United States Postal Services and Aeropostale, Inc.
 10.10   Merchandise Servicing Agreement, dated March 1, 1999,
         between American Consolidation, Inc. and MSS-Delaware, Inc.
 10.11   Interim Merchandise Servicing Agreement, dated as of
         February 11, 2002, by and between American Consolidation,
         Inc. and Aeropostale, Inc.
 10.12   Sourcing Agreement, dated July 31, 1998, by and among
         Federated Department Stores, Inc., Specialty Acquisition
         Corporation and MSS-Delaware, Inc.
 10.13   Employment Agreement, dated August 3, 1998, between
         MSS-Delaware, Inc. and Julian R. Geiger.
 10.14   Employment Agreement, dated August 3, 1998, between
         MSS-Delaware, Inc. and John S. Mills.
 21.1    List of subsidiaries of Aeropostale, Inc.
 23.1    Consent of Kirkland & Ellis (included in Exhibit 5.1).
 23.2    Consent of Deloitte & Touche LLP.
 23.3    Power of Attorney (on signature page).
</Table>

---------------
* To be filed by amendment.
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 2002

                                                      REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------

                               AEROPOSTALE, INC.

             (Exact Name of Registrant as Specified in its Charter)
                             ---------------------
DELAWARE                                 5600                                31-1443880
   (State or other jurisdiction of         (Primary Standard Industrial                 (I.R.S. Employer
   incorporation or organization)           Classification Code Number)              Identification Number)
1372 BROADWAY, 8TH FLOOR
                            NEW YORK, NEW YORK 10018
                                 (646) 485-5398
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                                JULIAN R. GEIGER
                      CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                               AEROPOSTALE, INC.
                            1372 BROADWAY, 8TH FLOOR
                            NEW YORK, NEW YORK 10018
                                 (646) 485-5398
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                             ---------------------
                                   COPIES TO:
JOSHUA N. KORFF, ESQ.                               WILLIAM F. SCHWITTER, ESQ.
                  KIRKLAND & ELLIS                             PAUL, HASTINGS, JANOFSKY & WALKER LLP
                  CITIGROUP CENTER                                        399 PARK AVENUE
                153 EAST 53RD STREET                                 NEW YORK, NEW YORK 10022
              NEW YORK, NEW YORK 10022                                    (212) 318-6000
                   (212) 446-4800
---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date of this Registration Statement.
                             ---------------------

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED MAXIMUM            AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED            AGGREGATE OFFERING PRICE   REGISTRATION FEE(1)
------------------------------------------------------------------------------------------------------------
Common stock, $0.01 par value...............................        $200,000,000               $18,400
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
    amended.
                             ---------------------

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT
NOTICE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                   SUBJECT TO COMPLETION, DATED MARCH 8, 2002

PROSPECTUS

                                                SHARES

                               [AEROPOSTALE LOGO]

                                  COMMON STOCK

                            ------------------------

     This is an initial public offering of           shares of common stock of
Aeropostale, Inc. We are selling           of the shares of common stock offered
under this prospectus, and certain of our stockholders, referred to in this
prospectus as the selling stockholders, are selling the remaining shares.

        There is currently no public market for our shares. We currently
estimate that the initial public offering price of the shares will be between
$     and $     per share. We have applied to have our common stock approved for
quotation on the New York Stock Exchange under the symbol "ARO."

        SEE "RISK FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT RISKS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
                            ------------------------
PER SHARE    TOTAL
                                                              ---------   --------
Public offering price.......................................   $          $
Underwriting discounts and commissions......................   $          $
Proceeds, before expenses, to us............................   $          $
Proceeds, before expenses, to the selling stockholders......   $          $
------------------------

     The underwriters may purchase up to an additional           shares of our
common stock from the selling stockholders at the initial public offering price
less the underwriting discount to cover over-allotments.
     The underwriters expect to deliver the shares against payment in New York,
New York on                , 2002.
                            ------------------------
                          Joint Book-Running Managers
BEAR, STEARNS & CO. INC.                                     MERRILL LYNCH & CO.
                            ------------------------
BANC OF AMERICA SECURITIES LLC

                           U.S. BANCORP PIPER JAFFRAY
                                                             WACHOVIA SECURITIES
                            ------------------------
              The date of this Prospectus is                , 2002
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

     UNTIL           , 2002, ALL DEALERS EFFECTING TRANSACTIONS OF THE COMMON
STOCK OFFERED HEREBY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

                            ------------------------
                               TABLE OF CONTENTS
                            ------------------------
PAGE
                                                              ----
Prospectus Summary..........................................    1
Risk Factors................................................    5
Forward-Looking Statements..................................   10
Use of Proceeds.............................................   10
Dividend Policy.............................................   10
Capitalization..............................................   11
Dilution....................................................   12
Selected Financial and Operating Data.......................   13
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   15
Business....................................................   23
Management..................................................   33
Certain Transactions........................................   41
Principal and Selling Stockholders..........................   43
Description of Capital Stock................................   45
Shares Eligible for Future Sale.............................   47
Underwriting................................................   49
Legal Matters...............................................   52
Experts.....................................................   52
Where You Can Find Additional Information...................   52
Index to Financial Statements...............................  F-1
(i)
PROSPECTUS SUMMARY

     This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all the information that you should consider
before investing in our common stock. You should read the entire prospectus
carefully, especially "Risk Factors" and our consolidated financial statements
and related notes. All share numbers in this prospectus reflect a   -for-1 split
of our common stock and non-voting common stock which will occur immediately
prior to the consummation of this offering. In making comparisons to our
predecessor company, including all financial information from fiscal 1997 and
fiscal 1998, you should note that such information is derived from the
accounting records of our predecessor company and is not comparable to our
financial statements due to, among other things, different accounting policies.
In January 2002, we changed our fiscal year end from the Saturday closest to
July 31 to the Saturday closest to January 31 of each year. References in this
prospectus to fiscal 2002 refer to the fifty-two week period ending on February
2, 2003. Any specific reference to a fiscal year end prior to 2002, "fiscal
1999" for example, refers to the fifty-two or fifty-three week period ended on
the Saturday closest to July 31 of such year.

                                  AEROPOSTALE

     Our company is a fast-growing, mall-based specialty retailer of casual
apparel and accessories that targets both young women and young men aged 11 to
20. We provide our customers with a focused selection of high-quality,
active-oriented, fashion basic merchandise at compelling values. We maintain
complete control over our proprietary brand by designing and sourcing all of our
merchandise. Our products can be purchased only in our stores, which sell
Aeropostale merchandise exclusively. As of February 2, 2002, we operated 278
stores in 33 states and the District of Columbia.

     Our merchandise, which includes graphic t-shirts, tops, bottoms, sweaters,
jeans, outerwear and accessories, emphasizes comfort and style in response to
the demands of our customers' active lifestyles. We believe that a key component
of our success is our ability to understand what our customers want and can
afford. Our "design-driven, merchant-modified" philosophy ensures that our
merchandise styles both reflect the latest trends and are not too fashion
forward for our customers. Today, a significant portion of our merchandise
features either the "Aeropostale" or "Aero" logo, which we feel enhances both
our brand recognition and appeal among our target customers. We employ a
sourcing strategy that maximizes our speed to market and enables us to respond
quickly to our customers' preferences. We believe that by offering desirable
styles, comfort and consistent value, our brand will continue to enjoy
widespread appeal and our stores will continue to be preferred shopping
destinations.

     Our stores are designed to create a high energy, fun shopping environment
through the use of powerful in-store promotional signage, creative visuals,
bright lighting and popular music. Our average store size of approximately 3,500
square feet is generally smaller than that of our mall-based competitors and we
believe that this enables us to achieve higher sales productivity and project a
sense of activity and excitement. To increase customer traffic, we generally
locate our stores in busy, central mall locations near popular teen gathering
spots, such as food courts, music stores and other teen-oriented retailers. We
have successfully and consistently implemented our store model across a wide
range of mall classifications and geographic locations. We believe that our
store model will allow us to continue significant and profitable store growth in
both new and existing markets.

     The Aeropostale brand was created as a department store private label
initiative in the early 1980s by our former parent, R.H. Macy & Co., Inc. Macy's
opened the first mall-based Aeropostale store in 1987. Over the next decade,
Macy's, together with its current parent company, Federated Department Stores,
Inc., opened over 100 Aeropostale stores. The present core concept of the
Aeropostale brand, however, did not begin to materialize until 1996, when our
management team positioned Aeropostale for accelerated growth by expanding the
brand from primarily a young men's brand to a brand that offers casual apparel
and accessories for both young women and young men. In 1998, Federated sold its
specialty store division, which included our company, to our management team and
Bear Stearns Merchant Banking.

                                        1
Since we became an independent company in 1998, our management team has
developed Aeropostale into a differentiated and recognized brand. During this
period, we have:

     - Increased net sales from approximately $141.4 million in fiscal 1998 to
       approximately $304.8 million in fiscal 2001, representing a compound
       annual growth rate of approximately 29.2%;

     - Achieved annual comparable store sales growth of 5.5% in fiscal 1999,
       14.5% in fiscal 2000 and 8.7% in fiscal 2001;

     - Increased our store count by 159 stores from 119 as of August 3, 1998 to
       278 as of February 2, 2002; and

     - Improved sales per square foot from $317 in fiscal 1998 to $392 in fiscal
       2001.

BUSINESS STRENGTHS

     We believe that our business strengths will enable us to continue to expand
our store base and grow profitably. Our principal business strengths include:

     - Differentiated and recognizable brand that offers comfortable,
       high-quality, active-oriented merchandise and reflects mainstream
       fashions at compelling values;

     - Disciplined operating and financial practices through which we maintain
       complete control over all aspects of our business;

     - Flexible operating structure that enables us to react quickly to changes
       in customer preferences;

     - New store economics that provide an attractive return on investment
       across a wide variety of mall classifications and geographic locations;
       and

     - Experienced management team with a demonstrated ability to grow the
       business profitably.

GROWTH STRATEGY

     We intend to capitalize on the strength of our brand and pursue profitable
growth by:

     - Opening approximately 80 new stores in fiscal 2002 in both existing and
       new markets, and continuing to open new stores at a comparable pace in
       future years;

     - Enhancing and expanding our brand awareness and recognition through an
       innovative marketing campaign;

     - Continuing our high levels of store productivity through profitable
       pricing strategies and consistent store level execution; and

     - Investing in and expanding our infrastructure to maximize our economies
       of scale and increase our operating efficiency.

THE TEEN MARKET

     We generally target our merchandise to the teenage segment of the
population. According to the U.S. Census Bureau, the teenage population in the
United States, which is defined as persons 12 to 19 years old, will grow
approximately 37% faster than the overall population, from approximately 32
million in 2000 to approximately 34 million in 2005. The Census Bureau predicts
that the teenage population will continue to grow through 2008. According to
Teenage Research Unlimited, an independent research firm, spending among
teenagers has grown to $172 billion in 2001 from $141 billion in 1998,
reflecting a compound annual growth rate of approximately 6.8%, or more than
double the rate of inflation during this period. We believe that teenage apparel
spending is less susceptible to general economic downturns than adult apparel
spending. In addition, we believe that these demographic and spending trends
offer us strong growth opportunities.

     When we became an independent company, we incorporated in Delaware on
August 3, 1998. Our principal executive offices are located at 1372 Broadway,
8th Floor, New York, New York 10018, and our telephone number is (646) 485-5398.
Our website address is www.aeropostale.com. Information included or referred to
on our website is not a part of this prospectus.

                                        2
THE OFFERING

Common stock offered

  By our company....................              shares

  By the selling stockholders.......              shares

Common stock to be outstanding after
this offering.......................              shares

Use of proceeds.....................       Approximately $     will be used to
                                           redeem all of our outstanding shares
                                           of 12 1/2% Series B redeemable
                                           preferred stock and pay all accrued
                                           and unpaid dividends thereon, and the
                                           remainder will be used for general
                                           corporate purposes, including new
                                           store openings and working capital.

Proposed New York Stock Exchange
symbol..............................       ARO

     Unless otherwise indicated, all information in this prospectus assumes that
the underwriters will not exercise their over-allotment option to purchase
shares of our common stock from the selling stockholders at the price set forth
on the cover page of this prospectus.

     In addition, unless otherwise indicated, all information in this
prospectus, including the outstanding share information above, is based upon the
number of shares outstanding as of February 2, 2002 and gives effect to a
  -for-1 stock split of our common stock and non-voting common stock which will
occur immediately prior to the consummation of this offering and the following
transactions, which will be effected simultaneously with the consummation of
this offering:

     - the conversion of all of our outstanding shares of non-voting common
       stock into a total of           shares of common stock; and

     - the redemption of all of our outstanding shares of 12 1/2% Series B
       redeemable preferred stock and payment of all accrued and unpaid
       dividends thereon for a total of $            .

     The common stock to be outstanding after this offering excludes shares of
common stock issuable upon the exercise of stock options outstanding as of
February 2, 2002 under our 1998 Stock Option Plan at a weighted average exercise
price of $  per share and        additional shares of common stock reserved for
issuance under our 1998 Stock Option Plan and our 2002 Long-Term Incentive Plan.

     Aeropostale(R) and Aero(TM) are trademarks of Aeropostale, and we have
registered the trademark Aeropostale(R) with the U.S. Patent and Trademark
Office. All other trademarks, service marks and trade names referred to in this
prospectus are the property of their respective owners.

                                        3
SUMMARY FINANCIAL AND OPERATING DATA
FISCAL YEAR ENDED(1)                 THIRTEEN WEEKS ENDED
                                                       ------------------------------------      ---------------------------
                                                       JULY 31,     JULY 29,     AUGUST 4,       OCTOBER 28,    NOVEMBER 3,
                                                         1999         2000          2001             2000           2001
                                                       ---------    ---------    ----------      ------------   ------------
                                                                                                         (UNAUDITED)
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED OPERATING DATA)
STATEMENT OF INCOME DATA:
Net sales............................................  $152,506     $213,445      $304,767         $ 76,831       $126,019
Gross profit.........................................    42,017       61,472        86,149           25,750         48,934
Selling, general and administrative expenses.........    32,406       45,680        65,918           15,215         23,695
Operating income.....................................     9,845       16,026        19,650(2)        10,592         25,239
Income before income taxes...........................     9,759       15,115        17,979            9,937         24,957
Income from continuing operations....................     6,230        9,366        10,914            6,007         14,727
Income (loss) from discontinued operations(3)........      (268)       2,002           405               --             --
Cumulative effect of accounting change(4)............        --           --            --               --          1,632
Net income...........................................     5,962       11,368        11,319            6,007         16,359
Diluted net income (loss) per common share:(5)
  From continuing operations.........................
  From discontinued operations.......................
  From cumulative accounting change..................
  Net income per share...............................
SELECTED OPERATING DATA:
Number of stores open at end of period...............       129          178           252              208            277
Comparable store sales increase(6)...................       5.5%        14.5%          8.7%            12.7%          22.8%
Average store sales (in thousands)(7)................  $  1,258     $  1,372      $  1,360         $    387       $    461
Average square footage per store(8)..................     3,687        3,548         3,437            3,490          3,464
Sales per square foot(9).............................  $    339     $    380      $    392         $    111       $    134
AS OF NOVEMBER 3, 2001
                                                              ------------------------
                                                                               AS
                                                               ACTUAL     ADJUSTED(10)
                                                              --------    ------------
                                                                    (UNAUDITED)
                                                                   (IN THOUSANDS)
BALANCE SHEET DATA:
Working capital.............................................  $ 23,386      $
Total assets................................................   137,821
12 1/2% Series B redeemable preferred stock.................     9,326
Total debt..................................................    15,829
Total stockholders' equity..................................    42,384
---------------
 (1) Our results of operations for fiscal 2001 included 53 weeks compared to 52
     weeks for all other fiscal years presented in this prospectus. In January
     2002, we changed our fiscal year end from the Saturday closest to July 31
     to the Saturday closest to January 31 of each year.

 (2) Includes the effect of an $815,000 charge incurred in connection with the
     closing of seven aero kids concept stores.

 (3) On February 25, 2000, we decided to discontinue our Chelsea Cambell
     specialty store business and we closed all Chelsea Cambell stores by the
     end of December 2000. The operating results of this segment for all years
     have been reclassified as discontinued operations.

 (4) On August 5, 2001, we adopted Statement of Accounting Standards No. 142,
     "Goodwill and Other Intangibles." With the adoption, the remaining balance
     of negative goodwill was recorded as a cumulative effect of such accounting
     change.

 (5) All per share information reflects a   -for-1 split of all of our common
     stock which will occur immediately prior to the consummation of this
     offering.

 (6) Our comparable store sales percentages are based on net sales and stores
     are considered comparable beginning on the first day of the fiscal month
     following the fourteenth full fiscal month of sales.

 (7) Our average store sales are based on total net sales divided by the
     weighted average of all open stores in the period.

 (8) Our average square footage per store is based on all open stores at the end
     of the period.

 (9) Our sales per square foot consists of total net sales, divided by the
     weighted average of gross square footage of all open stores.

(10) As adjusted information gives effect to the application of the net proceeds
     from the sale of the     shares of common stock offered by our company at
     an assumed initial public offering price of $  per share and after
     deducting estimated offering expenses and underwriting discounts and
     commissions. The application of our net proceeds will include the
     redemption of all of our outstanding shares of 12 1/2% Series B redeemable
     preferred stock for $6,250,000 and payment of approximately $    of accrued
     and unpaid dividends thereon, which will occur simultaneously with the
     consummation of the offering.

                                        4
RISK FACTORS

     Before you invest in our common stock, you should carefully consider the
various risks, including those described below, together with all of the other
information included in this prospectus. If any of these risks actually occur,
our business, financial condition or operating results could be adversely
affected. In that case, the trading price of our common stock could decline and
you could lose all or part of your investment.

                         RISKS RELATED TO OUR BUSINESS

OUR GROWTH STRATEGY RELIES ON THE CONTINUED ADDITION OF A SIGNIFICANT NUMBER OF
NEW STORES EACH YEAR, WHICH COULD STRAIN OUR RESOURCES AND CAUSE THE PERFORMANCE
OF OUR EXISTING STORES TO SUFFER.

     Our growth will largely depend on our ability to open and operate new
stores successfully. We opened 74 new stores in fiscal 2001 and 57 stores in
fiscal 2000. We plan to open approximately 80 new stores in fiscal 2002, an
increase of approximately 30% over our current store base. We intend to continue
to open a significant number of new stores in future years while remodeling a
portion of our existing store base annually. Our proposed expansion will place
increased demands on our operational, managerial and administrative resources.
These increased demands could cause us to operate our business less effectively,
which in turn could cause deterioration in the financial performance of our
individual stores. In addition, to the extent that our new store openings are in
existing markets, we may experience reduced net sales volumes in existing stores
in those markets.

OUR EXPANSION PLAN IS DEPENDENT ON A NUMBER OF FACTORS, WHICH COULD DELAY OR
PREVENT THE SUCCESSFUL OPENING OF NEW STORES AND SUBSEQUENT PENETRATION INTO NEW
MARKETS.

     We will be unable to open and operate new stores successfully and our
growth will be limited unless we can:

     - identify suitable markets and sites for store locations;

     - negotiate acceptable lease terms;

     - hire, train and retain competent store personnel;

     - maintain a proportion of new stores to mature stores that does not harm
       existing sales;

     - foster current relationships and develop new relationships with vendors
       that are capable of supplying a greater volume of merchandise;

     - manage inventory effectively to meet the needs of new and existing stores
       on a timely basis; and

     - expand our infrastructure to accommodate growth.

     In addition, we will open new stores in regions of the United States in
which we currently have few or no stores. Our experience in these markets is
limited and we cannot assure you that we will be able to develop our brand in
these markets or adapt to competitive, merchandising and distribution challenges
that may be different from those in our existing markets. Our inability to open
new stores successfully and/or penetrate new markets would have a material
adverse effect on our revenue and earnings growth.

OUR NET SALES AND INVENTORY LEVELS FLUCTUATE ON A SEASONAL BASIS, LEAVING OUR
ANNUAL OPERATING RESULTS PARTICULARLY SUSCEPTIBLE TO CHANGES IN BACK-TO-SCHOOL
AND HOLIDAY SHOPPING PATTERNS.

     Our net sales and net income are disproportionately higher from August
through January each year due to increased sales from back-to-school and holiday
shopping. Sales during this period cannot be used as an accurate indicator of
annual results. Our net sales and net income from February through July are
typically lower due, in part, to the traditional retail slowdown immediately
following the winter holiday

                                        5
season. Any significant decrease in sales during the back-to-school and winter
holiday seasons would have a material adverse effect on our financial condition
and results of operations.

     In addition, in order to prepare for the back-to-school and holiday
shopping seasons, we must order and keep in stock significantly more merchandise
than we would carry during other parts of the year. Any unanticipated decrease
in demand for our products during these peak shopping seasons could require us
to sell excess inventory at a substantial markdown, which could reduce our net
sales and gross margins and negatively impact our profitability.

FLUCTUATIONS IN COMPARABLE STORE SALES AND QUARTERLY RESULTS OF OPERATIONS COULD
CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE SUBSTANTIALLY.

     Our quarterly results of operations for our individual stores have
fluctuated in the past and can be expected to continue to fluctuate in the
future. Since the beginning of fiscal 2000, our quarterly comparable store sales
have ranged from an increase of 22.8% to a decrease of 0.4%. In addition, our
recent comparable store sales have been higher than our historical average and
we cannot assure you that we will be able to maintain these levels of comparable
store sales as we expand our business.

     Our comparable store sales and quarterly results of operations are affected
by a variety of factors, including:

     - fashion trends;

     - calendar shifts of holiday or seasonal periods;

     - the effectiveness of our inventory management;

     - changes in our merchandise mix;

     - the timing of promotional events;

     - weather conditions;

     - changes in general economic conditions and consumer spending patterns;
       and

     - actions of competitors or mall anchor tenants.

     If our future comparable store sales fail to meet the expectations of
research analysts, then the market price of our common stock could decline
substantially. You should refer to the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for more
information.

IF WE ARE UNABLE TO IDENTIFY AND RESPOND TO CONSUMERS' FASHION PREFERENCES IN A
TIMELY MANNER, OUR PROFITABILITY WOULD DECLINE.

     We may be unable to keep pace with the rapidly changing fashion trends and
consumer tastes inherent in the apparel industry. Our current design philosophy
is based on the belief that our target customers prefer clothing that suits the
demands of their active lifestyles and that they like to identify with a logo.
Accordingly, we produce casual, comfortable apparel, a majority of which
displays either the "Aeropostale" or "Aero" logo. We cannot assure you that
fashion trends will not move away from casual clothing or that we will not have
to alter our design strategy to reflect a consumer change in logo preference. If
we fail to anticipate, identify or react appropriately to changes in styles,
trends, desired images or brand preferences, we may need to incur higher
markdowns to reduce excess inventory. Utilizing such markdowns would negatively
impact our profitability.

WE RELY ON THIRD PARTIES TO MANAGE THE WAREHOUSING AND DISTRIBUTION ASPECTS OF
OUR BUSINESS. IF THESE THIRD PARTIES DO NOT ADEQUATELY PERFORM THESE FUNCTIONS,
OUR BUSINESS WOULD BE DISRUPTED.

     The efficient operation of our stores is dependent on our ability to
distribute merchandise to locations throughout the United States in a timely
manner. Our distribution facility in Carlstadt, New Jersey is
                                        6
leased and operated by an independent third party. We depend on this third party
to receive, sort, pack and distribute substantially all of our merchandise. In
addition, we rely on this third party to manage a separate warehouse facility
for us that we lease in South River, New Jersey. This third party employs
personnel represented by a labor union. Although there have been no work
stoppages or disruptions since the inception of our relationship with this third
party provider in 1991, we cannot assure you that there will be no disruptions
in the future. We also use a separate third party transportation company to
deliver our merchandise from our warehouses to our stores. Any failure by either
of these third parties to respond adequately to our warehousing and distribution
needs would disrupt our operations and negatively impact our profitability.

WE RELY ON A SMALL NUMBER OF VENDORS TO SUPPLY A SIGNIFICANT AMOUNT OF OUR
MERCHANDISE, AND OUR FAILURE TO MAINTAIN GOOD RELATIONSHIPS WITH ONE OR MORE OF
THEM COULD HARM OUR ABILITY TO SOURCE OUR PRODUCTS.

     For the fifty-two weeks ended February 2, 2002, we sourced approximately
41% of our merchandise from our top three vendors, one of which supplied
approximately 16% of our products. In addition, Federated Merchandising Group,
or FMG, a wholly owned subsidiary of Federated Department Stores, Inc., acted as
our agent with respect to the sourcing of approximately 27% of our merchandise.
Our relationships with our vendors generally are not on a contractual basis and
do not assure adequate supply, quality or acceptable pricing on a long-term
basis. Most of our vendors could discontinue selling to us at any time. If one
or more of our significant vendors were to sever their relationship with us, we
could be unable to obtain replacement products in a timely manner, which could
cause our sales to decrease.

MOST OF OUR MERCHANDISE IS MANUFACTURED BY FOREIGN SUPPLIERS, THEREFORE THE
AVAILABILITY AND COSTS OF THESE PRODUCTS MAY BE NEGATIVELY AFFECTED BY RISKS
ASSOCIATED WITH INTERNATIONAL TRADE.

     Trade restrictions such as increased tariffs or quotas, or both, could
affect the importation of apparel generally and increase the cost and reduce the
supply of merchandise available to us. Much of our merchandise is sourced
directly from foreign vendors in Europe, Asia and Central America. In addition,
many of our domestic vendors maintain production facilities overseas. Some of
these facilities are located in regions where political instability could cause
a disruption in trade. Any reduction in merchandise available to us or any
increase in its cost due to tariffs, quotas or local political issues could have
a material adverse effect on our results of operations.

THE DEPARTURE OF CERTAIN MEMBERS OF OUR SENIOR MANAGEMENT TEAM COULD ADVERSELY
AFFECT OUR BUSINESS.

     The success of our business is dependent upon our senior management closely
supervising all aspects of our business, in particular the operation of our
stores and the designing of our merchandise. If we were to lose the benefit of
this involvement, and in particular if we were to lose the services of Julian R.
Geiger, our Chairman and Chief Executive Officer, John S. Mills, our President
and Chief Operating Officer or Christopher L. Finazzo, our Executive Vice
President-Chief Merchandising Officer, our business could be adversely affected.
In addition, Mr. Geiger and Mr. Finazzo maintain many of our vendor
relationships, and the loss of either of them could negatively impact present
vendor relationships. We do not have employment agreements with any member of
our senior management team other than Mr. Geiger and Mr. Mills. You should refer
to the section entitled "Management" for more information.

OUR FAILURE TO PROTECT OUR TRADEMARKS AEROPOSTALE(R) AND, TO A LESSER EXTENT,
AERO(TM) ADEQUATELY COULD HAVE A NEGATIVE IMPACT ON OUR BRAND IMAGE AND LIMIT
OUR ABILITY TO PENETRATE NEW MARKETS.

     We believe that our trademarks Aeropostale(R) and, to a lesser extent,
Aero(TM) are integral to our logo-driven design strategy. We have obtained a
federal registration of the Aeropostale(R) trademark in the United States and
have applied for or obtained registrations in most foreign countries in which
our vendors are located. We use the term "Aero" in many constantly changing
designs and logos even though we have not registered the mark or variation or
combinations thereof for adult clothing. We cannot assure you that the
registrations we obtained will prevent the imitation of our products or
infringement of our intellectual property rights by others. If any third party
imitates our products in a manner that projects lesser quality
                                        7
or carries a negative connotation, our brand image could be materially adversely
affected. Because we have not obtained federal registration for the Aero(TM)
mark and have not registered the "Aeropostale" mark in all categories or in all
foreign countries in which we now or may in the future source or offer our
merchandise, international expansion and our merchandising of non-apparel
products using these marks could be limited.

     In addition, we cannot assure you that others will not try to block the
manufacture, export or sale of our products as violative of their trademarks or
other proprietary rights. Other entities may have rights to trademarks that
contain the word "Aero" or may have registered similar or competing marks for
apparel and accessories in foreign countries in which our vendors are located.
Our applications for international registration of the Aeropostale(R) mark have
been rejected in a few countries in which our products are manufactured because
third parties have already registered the mark for clothing in those countries.
There may be other prior registrations in other foreign countries of which we
are not aware. In all such countries it may be possible for any third party
owner of the national trademark registration for "Aeropostale" to enjoin the
manufacture, sale or exportation of Aeropostale branded goods to the United
States. If we were unable to reach a licensing arrangement with these parties,
our vendors may be unable to manufacture our products in those countries. Our
inability to register our trademarks or purchase or license the right to use our
trademarks or logos in these jurisdictions could limit our ability to obtain
supplies from or manufacture in less costly markets or penetrate new markets
should our business plan change to include selling our merchandise in those
jurisdictions outside the United States.

OUR ABILITY TO ATTRACT CUSTOMERS TO OUR STORES DEPENDS HEAVILY ON THE SUCCESS OF
THE SHOPPING MALLS IN WHICH WE ARE LOCATED.

     In order to generate customer traffic we must locate our stores in
prominent locations within successful shopping malls. We cannot control the
development of new shopping malls, the availability or cost of appropriate
locations within existing or new shopping malls, or the success of individual
shopping malls. A significant decrease in shopping mall traffic would have a
material adverse effect on our results of operations.

OUR MARKET SHARE MAY BE ADVERSELY IMPACTED AT ANY TIME BY A SIGNIFICANT NUMBER
OF COMPETITORS.

     We operate in a highly competitive environment characterized by low
barriers to entry. We compete against a diverse group of retailers, including
national and local specialty retail stores, mass merchandisers, regional retail
chains, traditional department stores and mail-order retailers. Our market share
and results of operations may be adversely impacted by this significant number
of competitors. Many of our competitors are also larger than us and have
substantially greater resources than we do.

OUR CONCENTRATION OF STORES IN THE EASTERN UNITED STATES MAKES US SUSCEPTIBLE TO
ADVERSE CONDITIONS IN THIS REGION.

     The majority of our stores are located in the eastern half of the United
States. As a result, our operations are more susceptible to regional factors
than the operations of more geographically diversified competitors. These
factors include, among others, economic and weather conditions, as well as
demographic and population changes.

                         RISKS RELATED TO THIS OFFERING

SHARES ELIGIBLE FOR SALE IN THE NEAR FUTURE MAY CAUSE THE MARKET PRICE FOR OUR
COMMON STOCK TO DECLINE.

     Sales of a substantial number of shares of our common stock in the public
market following this offering, or the perception that these sales could occur,
may depress the market price for our common stock. These sales could also impair
our ability to raise additional capital through the sale of our equity
securities in the future.

                                        8
The number of shares of common stock available for sale in the public
market is limited by restrictions under federal securities law and under
agreements that our officers, directors and principal stockholders have entered
into with the underwriters of this offering. Those agreements restrict our
officers, directors and principal stockholders from selling, pledging or
otherwise disposing of their shares for a period of 180 days after the date of
this prospectus without the prior written consent of both Bear, Stearns & Co.
Inc. and Merrill Lynch. However, Bear, Stearns & Co. Inc. and Merrill Lynch may
together in their sole discretion, release all or any portion of the common
stock from the restrictions of the lockup agreements. Upon completion of this
offering we will have outstanding           shares of common stock. Of these
shares,           shares including the           shares sold in this offering,
are freely tradeable. The remaining           shares are eligible for sale in
the public market as follows:
NUMBER OF SHARES                               DATE OF AVAILABILITY FOR SALE
----------------                               ------------------------------
180 days from the date of this
                                               prospectus
                                               , 2002
BEAR STEARNS MERCHANT BANKING HAS THE RIGHT TO DESIGNATE A MAJORITY OF THE
MEMBERS OF OUR BOARD OF DIRECTORS, AND THEREFORE, NO CORPORATE ACTIONS REQUIRING
BOARD APPROVAL CAN BE CONSUMMATED WITHOUT THE APPROVAL OF ITS DESIGNEES.

     Stockholders that will hold      % of our outstanding shares of common
stock upon the completion of this offering have agreed to elect five persons
designated by Bear Stearns Merchant Banking to our board of directors. Our
bylaws provide that our board of directors may not consist of more than nine
persons, therefore, the designees of Bear Stearns Merchant Banking will
represent a majority of our board. In general, the designees of Bear Stearns
Merchant Banking will be able to control most matters requiring board approval.
These matters would include the approval of significant corporate transactions,
including potential mergers, consolidations or sales of all or substantially all
of our assets. This concentration of board representation may have the effect of
impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquiror from making a tender offer for
our shares.

THE SHARES YOU PURCHASE IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND
SUBSTANTIAL DILUTION.

     The initial public offering price of our common stock will be substantially
higher than the pro forma tangible book value per share of our outstanding
common stock. At an assumed initial public offering price of $     per share,
purchasers of our common stock will incur dilution of $     per share in the pro
forma net tangible book value of their purchased shares. The shares of our
common stock owned by existing stockholders will receive a material increase in
the pro forma net tangible book value per share. Investors may also experience
additional dilution if we issue common stock in the future. As a result of this
dilution, investors purchasing stock in this offering may receive significantly
less than the full purchase price that they paid for the shares in the event of
a liquidation.

SINCE OUR COMMON STOCK HAS NEVER BEEN PUBLICLY TRADED, WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP FOR OUR COMMON STOCK, OR WHETHER
YOU WILL BE ABLE TO SELL YOUR STOCK.

     There has not been a public market for our common stock. We cannot predict
the extent to which a trading market will develop or how liquid that market
might become. The initial public offering price will be determined by
negotiations between representatives of the underwriters, the selling
stockholders and us and may not be indicative of prices that will prevail in the
trading market.

                                        9
FORWARD-LOOKING STATEMENTS

     Some of the matters discussed under the captions "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events, including, among
other things:

     - implementation of our growth strategy;

     - our ability to anticipate and respond to fashion trends;

     - competition in our market;

     - consumer spending patterns; and

     - economic conditions in general.

     In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar expressions. These statements are based on our current
beliefs, expectations and assumptions and are subject to a number of risks and
uncertainties. Actual results, levels of activity, performance, achievements and
events may vary significantly from those implied by the forward-looking
statements. A description of risks that could cause our results to vary appears
under the caption "Risk Factors" and elsewhere in this prospectus.

                                USE OF PROCEEDS

     We will receive net proceeds of $     from the sale of           shares of
common stock assuming a public offering price of $     after deducting estimated
offering expenses and underwriting discounts and commissions. We will not
receive any proceeds from shares of common stock sold by the selling
stockholders, nor can we participate in the sale of additional shares relating
to the underwriters' over-allotment option, if exercised.

     The principal purposes of this offering are to obtain additional capital,
create a public market for our common stock and facilitate our future access to
public securities markets.

     Approximately $     of the net proceeds from this offering will be used to
redeem all of our outstanding shares of 12 1/2% Series B redeemable preferred
stock and pay all accrued and unpaid dividends thereon. We expect to use the
remaining net proceeds for general corporate purposes, including new store
openings and working capital.

     Pending use of the remaining net proceeds of this offering, we intend to
invest the net proceeds in short-term, interest-bearing securities.

                                DIVIDEND POLICY

     We have not declared or paid any dividends on our common stock since our
inception. We currently expect to retain future earnings, if any, for use in the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.

                                        10
CAPITALIZATION

     The following table sets forth our cash and capitalization as of November
3, 2001 (i) on an actual basis and (ii) on an adjusted basis to reflect (a) the
conversion of all of our outstanding shares of non-voting common stock into a
total of           shares of common stock and the redemption of all of our
outstanding shares of 12 1/2% Series B redeemable preferred stock and payment of
all accrued and unpaid dividends thereon for a total of $          , each of
which will occur simultaneously with the closing of this offering, and (b) the
receipt by us of the estimated net proceeds from the sale of           shares of
common stock in this offering at an assumed initial public offering price of
$     per share.

     The outstanding share information in the table excludes, as of November 3,
2001,           shares of common stock issuable upon the exercise of outstanding
stock options under our 1998 Stock Option Plan.
AS OF NOVEMBER 3, 2001
                                                              -------------------------
                                                               ACTUAL      AS ADJUSTED
                                                              ---------   -------------
                                                                     (UNAUDITED)
                                                                (IN THOUSANDS, EXCEPT
                                                              SHARE AND PER SHARE DATA)
Cash........................................................   $ 7,313
                                                               =======       =======
Revolving credit facility(1)................................   $15,829
12 1/2% Series B redeemable preferred stock: par value $0.01
  per share, 6,250 shares authorized, issued and
  outstanding, actual; no shares authorized, issued or
  outstanding, as adjusted..................................     9,326
                                                               -------       -------
Stockholders' equity:
  Preferred stock: par value $0.01 per share, no shares
     authorized, issued and outstanding, actual;
     shares authorized, and no shares issued and
     outstanding, as adjusted(2)............................        --
  Common stock: par value $0.01 per share, 200,000 shares
     authorized, 82,500 shares issued and outstanding,
     actual;           shares authorized,      shares issued
     and outstanding, as adjusted...........................         1
  Non-voting common stock: par value $0.01 per share,
     200,000 shares authorized, 1,428 shares issued and
     outstanding, actual; no shares authorized, issued or
     outstanding, as adjusted...............................        --
Additional paid-in capital..................................       981
Retained earnings...........................................    41,402
                                                               -------       -------
Total stockholders' equity..................................    42,384
                                                               -------       -------
Total capitalization........................................   $67,539
                                                               =======       =======
---------------
(1) As of February 2, 2002, there were no amounts outstanding under our credit
    facility.

(2) Reflects the filing of our Amended and Restated Certificate of Incorporation
    upon completion of this offering, creating         shares of common stock,
            shares of undesignated preferred stock and cancelling all other
    classes of preferred stock.

                                        11
DILUTION

     Our pro forma net tangible book value as of November 3, 2001 was
approximately $       , or $
per share of common stock. Pro forma net tangible book value per share
represents total tangible assets less total liabilities, divided by the number
of outstanding shares of common stock after giving effect to the conversion of
all of our outstanding shares of non-voting common stock into a total
of          shares of common stock and the redemption of all of our outstanding
shares of 12 1/2% Series B redeemable preferred stock, which will occur
simultaneously with the consummation of this offering. After giving effect to
the sale of the          shares of common stock offered by us at an assumed
initial public offering price of $     per share and after deducting
underwriting discounts and estimated offering expenses, the pro forma as
adjusted net tangible book value at November 3, 2001 would have been $     or
approximately $
per share of common stock. This represents an immediate increase in net tangible
book value of $     per share to existing stockholders and an immediate dilution
in net tangible book value of $     per share to new investors in this offering.
The following table illustrates this dilution on a per share basis:
Assumed initial public offering price per share.............  $
  Pro forma net tangible book value per share at November 3,
     2001...................................................  $
  Increase per share attributable to this offering..........
                                                              --------
Pro forma as adjusted net tangible book value per share
  after this offering.......................................
                                                              --------
Dilution per share to new investors.........................  $
                                                              ========
The table above excludes, as of November 3, 2001,        shares of common
stock issuable upon exercise of outstanding stock options under our 1998 Stock
Option Plan. To the extent options are exercised, there will be further dilution
to new investors.

     The following table sets forth, on a pro forma as adjusted basis as of
November 3, 2001, the differences between the number of shares of common stock
purchased from us, the total consideration paid and the average price per share
paid by existing stockholders and by new investors, before deducting
underwriting discounts and commissions and estimated offering expenses, at an
assumed initial public offering price of $     per share.
SHARES PURCHASED     TOTAL CONSIDERATION     AVERAGE
                                       -----------------    -------------------      PRICE
                                       NUMBER    PERCENT    AMOUNT     PERCENT     PER SHARE
                                       ------    -------    -------    --------    ---------
Existing stockholders................                  %    $                %      $
New investors........................
                                       -----      -----     ------      -----
  Total..............................             100.0%    $           100.0%
                                       =====      =====     ======      =====
If the underwriters' over-allotment option is exercised in full, the
percentage of shares of common stock held by existing stockholders after this
offering would be reduced to approximately      % and the number of shares of
common stock held by new investors would increase to                or
approximately      % of the total number of shares of common stock outstanding
after this offering.

                                        12
SELECTED FINANCIAL AND OPERATING DATA

     The following selected financial and operating data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," our financial statements and related notes and other
financial information appearing elsewhere in this prospectus. The statement of
income data for the fiscal years ended July 31, 1999, July 29, 2000 and August
4, 2001, and the balance sheet data as of July 29, 2000 and August 4, 2001, are
derived from audited financial statements included elsewhere in this prospectus.
The statement of income data for the fiscal years ended August 2, 1997 and
August 1, 1998, and the balance sheet data as of August 2, 1997 and August 1,
1998 are derived from the accounting records of our predecessor company and are
not comparable to our statements in all respects due to, among other things, the
omission of corporate overhead expense and provision for taxes, different
accounting policies and the effect of purchase accounting. The statement of
income data for the thirteen weeks ended October 28, 2000 and November 3, 2001
and the balance sheet data as of November 3, 2001 have been derived from
unaudited financial statements included elsewhere in this prospectus. The
unaudited financial statements include all normal recurring adjustments, which
in the opinion of our management, are necessary for the operations for those
periods. Our results of operations for the thirteen weeks ended November 3, 2001
are not necessarily indicative of the results that may be expected for the
entire year or for any future period.
PREDECESSOR COMPANY(1)
                                         -----------------------
                                            FISCAL YEAR ENDED              FISCAL YEAR ENDED(2)           THIRTEEN WEEKS ENDED
                                         -----------------------      -------------------------------   -------------------------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                           1997          1998           1999       2000       2001         2000          2001
                                         ---------     ---------      --------   --------   ---------   -----------   -----------
                                                                                                               (UNAUDITED)
                                               (UNAUDITED)                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net sales..............................  $123,821      $141,419       $152,506   $213,445   $304,767      $76,831      $126,019
Cost of sales, including certain
  buying, occupancy and warehousing
  expenses.............................   106,789       111,735        110,489    151,973    218,618       51,081        77,085
                                         --------      --------       --------   --------   --------      -------      --------
Gross profit...........................    17,032        29,684         42,017     61,472     86,149       25,750        48,934
Selling, general and administrative
  expenses.............................    26,156        28,157         32,406     45,680     65,918       15,215        23,695
Store closing expenses(3)..............        --            --             --         --        815           --            --
Amortization of negative goodwill......        --            --           (234)      (234)      (234)         (57)           --
                                         --------      --------       --------   --------   --------      -------      --------
Operating income (loss)................    (9,124)        1,527          9,845     16,026     19,650       10,592        25,239
Interest expense, net..................        --            --             86        911      1,671          655           282
                                         --------      --------       --------   --------   --------      -------      --------
Income (loss) before income taxes......    (9,124)        1,527          9,759     15,115     17,979        9,937        24,957
Provision for income taxes.............        --            --          3,529      5,749      7,065        3,930        10,230
                                         --------      --------       --------   --------   --------      -------      --------
Income (loss) from continuing
  operations...........................    (9,124)        1,527          6,230      9,366     10,914        6,007        14,727
Income (loss) from discontinued
  operations(4)........................      (288)         (978)          (268)     2,002        405           --            --
                                         --------      --------       --------   --------   --------      -------      --------
Cumulative effect of accounting
  change(5)............................        --            --             --         --         --           --         1,632
Net income (loss)......................    (9,412)          549          5,962     11,368     11,319        6,007        16,359
Preferred dividends....................        --            --          1,235      1,040      1,048          250           283
                                         --------      --------       --------   --------   --------      -------      --------
Net income (loss) available to common
  stockholders.........................  $ (9,412)     $    549       $  4,727   $ 10,328   $ 10,271      $ 5,757      $ 16,076
                                         ========      ========       ========   ========   ========      =======      ========
Basic net income (loss) per common
  share:(6)
  From continuing operations(7)........
  From discontinued operations.........
  From cumulative accounting change....
  Net income per share.................
Diluted net income (loss) per common
  share:(6)
  From continuing operations(7)........
  From discontinued operations.........
  From cumulative accounting change....
  Net income per share.................
Basic weighted average number of shares
  outstanding..........................
Diluted weighted average number of
  shares
  outstanding..........................
13
PREDECESSOR COMPANY(1)
                                         -----------------------
                                            FISCAL YEAR ENDED              FISCAL YEAR ENDED(2)           THIRTEEN WEEKS ENDED
                                         -----------------------      -------------------------------   -------------------------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                           1997          1998           1999       2000       2001         2000          2001
                                         ---------     ---------      --------   --------   ---------   -----------   -----------
                                               (UNAUDITED)                                                     (UNAUDITED)
SELECTED OPERATING DATA:
Number of stores open at end of
  period...............................       113           119            129        178        252          208           277
Comparable store sales increase
  (decrease)(8)........................      (7.2)%(9)    10.7%            5.5%      14.5%       8.7%        12.7%         22.8%
Average store sales (in
  thousands)(10).......................  $  1,088      $  1,194       $  1,258   $  1,372   $  1,360      $   387      $    461
Average square footage per store(11)...     3,727         3,719          3,687      3,548      3,437        3,490         3,464
Sales per square foot(12)..............  $    293      $    317       $    339   $    380   $    392      $   111      $    134
PREDECESSOR COMPANY
                                                  AS OF                            AS OF                                 AS OF
                                         -----------------------      -------------------------------                 -----------
                                         AUGUST 2,     AUGUST 1,      JULY 31,   JULY 29,   AUGUST 4,                 NOVEMBER 3,
                                           1997          1998           1999       2000       2001                       2001
                                         ---------     ---------      --------   --------   ---------                 -----------
                                               (UNAUDITED)                    (IN THOUSANDS)                          (UNAUDITED)
BALANCE SHEET DATA:
Working capital........................  $ 25,519      $ 19,833       $ 22,028   $  8,186   $ 10,810                   $ 23,386
Total assets...........................    78,800        56,234         58,899     93,539    121,128                    137,821
6% Series A exchangeable redeemable
  preferred stock......................        --            --          4,885         --         --                         --
12 1/2% Series B redeemable preferred
  stock................................        --            --          7,070      7,995      9,043                      9,326
Total debt.............................    64,538(13)    57,396(13)        565     26,987     35,267                     15,829
Total stockholders' equity (deficit)...   (14,339)      (13,790)         5,676     16,006     26,290                     42,384
---------------
 (1) The predecessor company's results of operations were derived from the
     accounting records of Federated Department Stores, Inc. Prior to August 3,
     1998, when we were sold by Federated, we were included in its consolidated
     financial statements and no corporate expenses or taxes were allocated to
     our financial statements. In addition, our predecessor company's financial
     statements were prepared based on different accounting policies, and do not
     reflect the effect of purchase accounting. Therefore, our results of
     operations could have been materially different if we were reported as a
     standalone company at that time.

 (2) Our results of operations for fiscal 2001 included 53 weeks compared to 52
     weeks for all other fiscal years presented in prospectus. In January 2002,
     we changed our fiscal year end from the Saturday closest to July 31 to the
     Saturday closest to January 31 of each year.

 (3) Reflects charge incurred in connection with the closing of seven aero kids
     concept stores.

 (4) On February 25, 2000, we decided to discontinue our Chelsea Cambell
     specialty store business and we closed all Chelsea Cambell stores by the
     end of December 2000. The operating results of this segment for all years
     have been reclassified as discontinued operations.

 (5) On August 5, 2001, we adopted Statement of Accounting Standards No. 142,
     "Goodwill and Other Intangibles." With the adoption, the remaining balance
     of negative goodwill was recorded as cumulative effect of accounting
     change.

 (6) All per share information reflects a  -for-1 split of all of our common
     stock which will occur immediately prior to the consummation of this
     offering.

 (7) Income from continuing operations per share has been computed after
     deducting preferred dividends.

 (8) Our comparable store sales percentages are based on net sales and stores
     are considered comparable beginning on the first day of the fiscal month
     following the fourteenth full fiscal month of sales.

 (9) Represents period in which our current management did not influence the
     assortment of merchandise in our stores.

(10) Our average store sales are based on total net sales divided by the
     weighted average of all open stores in the period.

(11) Our average square footage per store is based on all open stores at the end
     of the period.

(12) Our sales per square foot consists of total net sales, divided by the
     weighted average of gross square footage of all open stores.

(13) Represents intercompany debt to our former parent company.

                                        14
MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion in conjunction with our
consolidated financial statements and related notes that appear elsewhere in
this prospectus. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs, and which involve risks,
uncertainties and assumptions. Our actual results may differ materially from
those discussed in the forward-looking statements. Factors that might cause
future results to differ materially from those discussed in the forward-looking
statements include, but are not limited to, those discussed in "Risk Factors."

OVERVIEW

     The Aeropostale brand was established by R.H. Macy & Co., Inc. as a
department store private label initiative in the early 1980s targeting men in
their twenties. As a result of the label's initial success, Macy's opened the
first mall-based Aeropostale specialty store in 1987. Over the next decade,
Macy's and then its current parent company, Federated Department Stores, Inc.,
continued new store expansion and opened over 100 stores. In 1996, Federated
hired Julian Geiger as Chief Executive Officer of its specialty store division
which included Aeropostale and another specialty store concept, renamed Chelsea
Cambell after we became an independent company, which targeted career women.
Julian Geiger and management subsequently determined that there was significant
opportunity for Aeropostale to increase its merchandise offering for young
women, whom we recognized as the fastest-growing target demographic.
Additionally, we decided to position our merchandise assortment as more
mainstream, active-oriented casual wear to attract a broader customer base. In
August 1998, Federated sold its specialty store division to our management team
and Bear Stearns Merchant Banking.

     Bear Stearns Merchant Banking and our management team led by Julian Geiger
believed that an opportunity existed to grow our concept nationally by
leveraging our profitable new store model and merchandising strategy. We
undertook a number of initiatives to establish the independence of our business,
including hiring additional senior management, investing in infrastructure and
strengthening vendor relationships. Subsequently, we discontinued the operations
of Chelsea Cambell to focus solely on our brand. Our strong operating results
reflect the initiatives taken by our management team, as well as the increasing
acceptance of our brand and merchandise. Since August 3, 1998, we have increased
our store count by 159 to 278 stores in 33 states and the District of Columbia,
as of February 2, 2002. From the end of fiscal 1998 through fiscal 2001, we have
increased net sales from $141.4 million to $304.8 million. Our sales per square
foot also grew from $317 to $392 during the same period. Furthermore, we
achieved comparable store sales growth of 5.5% for fiscal 1999, 14.5% for fiscal
2000 and 8.7% for fiscal 2001.

GENERAL

     Net sales.  Net sales consist of sales from comparable stores and
non-comparable stores. A store is not included in comparable store sales until
the first day of the fiscal month following the fourteenth full fiscal month of
sales. Non-comparable store sales include sales in the current fiscal year from
our stores opened during the previous fiscal year before they are considered
comparable stores and new stores opened during the current fiscal year. In
addition, all sales generated from stores that we have closed and through our
arrangements with colleges and universities for organized sales events are
included in non-comparable store sales.

     Cost of sales.  Cost of sales includes the cost of merchandise,
distribution and warehousing, freight from the distribution center and warehouse
to the stores, payroll for our design, buying and merchandising personnel and
store occupancy costs. Store occupancy costs include rent, contingent rents,
common area maintenance, real estate taxes, utilities, repairs, maintenance and
depreciation.

     Selling, general and administrative expenses.  Selling, general and
administrative expenses include selling, store management and corporate
expenses, including payroll and employee benefits, other than for our design,
buying and merchandising personnel, employment taxes, management information
systems,

                                        15
marketing, insurance, legal, store pre-opening and other corporate level
expenses. Store pre-opening expenses include store level payroll, grand opening
event marketing, travel, supplies and other store opening expenses. Corporate
level expenses are primarily attributable to our corporate offices in New York,
New York, and Wayne, New Jersey.

     Store closing expenses.  In fiscal 2000, we tested a new store concept by
opening seven aero kids stores which targeted children 6 to 12 years old.
Although the concept showed growth potential, we decided that there was
significant expansion opportunity for our core Aeropostale store format, and we
determined to focus our resources solely on this concept. We recorded a noncash
charge of $815,000 in fiscal 2001 to reflect the write-down of leasehold
improvements and store fixtures and equipment to the net realizable value and
subsequently closed the seven aero kids' stores by October 2001.

     Interest expense, net.  Interest expense, net of interest income, includes
interest relating to our revolving credit facility and amortization of financing
intangibles.

     Discontinued operations.  On February 25, 2000, we decided to discontinue
our Chelsea Cambell specialty store business and we closed all Chelsea Cambell
stores by the end of December 2000. The operating results of this segment for
all years have been reclassified as discontinued operations.

     Cumulative effect of accounting change.  On August 5, 2001, we adopted
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets, which requires companies to no longer amortize negative
goodwill. The cumulative effect of this change resulted in a gain of $1.6
million in the thirteen weeks ended November 3, 2001.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the appropriate application of certain
accounting policies, many of which require us to make estimates and assumptions
about future events and their impact on amounts reported in our financial
statements and related notes. Since future events and their impact cannot be
determined with certainty, the actual results will inevitably differ from our
estimates. Such differences could be material to the financial statements.

     We believe application of accounting policies, and the estimates inherently
required therein, are reasonable. These accounting policies and estimates are
constantly reevaluated, and adjustments are made when facts and circumstances
dictate a change. Historically, we have found our application of accounting
policies to be appropriate, and actual results have not differed materially from
those determined using necessary estimates except for the change in estimated
useful lives described in Note 2 to the financial statements.

     Our accounting policies are more fully described in Note 2 to the financial
statements, located elsewhere in this prospectus. We have identified certain
critical accounting policies which are described below.

     Merchandise inventory.  Our merchandise inventory is carried at the lower
of cost or market on a first-in, first-out basis. We make certain assumptions to
adjust inventory based on historical experience and current information in order
to assess that inventory is recorded properly at the lower of cost or market.
These assumptions can have a significant impact on current and future operating
results and financial position.

     Long-lived assets.  In evaluating the fair value and future benefits of
long-lived assets, we perform an analysis of the anticipated undiscounted future
net cash flows of the related long-lived assets and reduce their carrying value
by the excess, if any, of the result of such calculation. We believe at this
time that the long-lived assets' carrying values and useful lives continues to
be appropriate.

                                        16
FISCAL YEAR

     In January 2002, our board of directors resolved to change our fiscal year
end from the Saturday closest to July 31 to the Saturday closest to January 31
of each year. We changed our fiscal year end to conform with the practice
generally followed in our industry.

RESULTS OF OPERATIONS

     The following table sets forth our results of operations expressed as a
percentage of total net sales for the period indicated:
FISCAL YEAR ENDED               THIRTEEN WEEKS ENDED
                                  ---------------------------------    --------------------------
                                  JULY 31,    JULY 29,    AUGUST 4,    OCTOBER 28,    NOVEMBER 3,
                                    1999        2000        2001          2000           2001
                                  --------    --------    ---------    -----------    -----------
                                                                              (UNAUDITED)
Net sales.......................   100.0%      100.0%       100.0%        100.0%         100.0%
Gross profit....................    27.6        28.8         28.3          33.5           38.8
Selling, general and
  administrative expenses.......    21.2        21.4         21.6          19.8           18.8
Store closing expenses..........      --          --          0.3            --             --
Amortization of negative
  goodwill......................     0.2         0.1          0.1           0.1             --
Operating income................     6.5         7.5          6.4          13.8           20.0
Interest expense, net...........     0.1         0.4          0.5           0.9            0.2
Income before income taxes......     6.4         7.1          5.9          12.9           19.8
Provision for income taxes......     2.3         2.7          2.3           5.1            8.1
Income from continuing
  operations....................     4.1         4.4          3.6           7.8           11.7
Income (loss) from discontinued
  operations....................    (0.2)        0.9          0.1            --             --
Cumulative effect of accounting
  change........................      --          --           --            --            1.3
Net income......................     3.9         5.3          3.7           7.8           13.0
Thirteen weeks ended November 3, 2001 compared to thirteen weeks ended October
  28, 2000.

     Net sales.  Our net sales for the thirteen weeks ended November 3, 2001
increased to approximately $126.0 million from approximately $76.8 million for
the thirteen weeks ended October 28, 2000, an increase of approximately $49.2
million. Of this increase, comparable store sales contributed approximately
$16.0 million and non-comparable store sales contributed approximately $33.2
million. Comparable store sales increased by 22.8% for the thirteen weeks ended
November 3, 2001, compared to an increase of 12.7% in comparable store sales in
the thirteen weeks ended October 28, 2000. This increase was due to higher
comparable sales of young women's merchandise and accessories, partially offset
by a decrease in young men's comparable sales. The increase in non-comparable
store sales was primarily due to 74 additional stores open at the beginning of
the thirteen week period ended November 3, 2001 as compared to the prior period.

     Gross profit.  Our gross profit, which represents net sales less cost of
sales, increased approximately $23.1 million in the thirteen weeks ended
November 3, 2001 to approximately $48.9 million from approximately $25.8 million
for the thirteen weeks ended October 28, 2000. As a percentage of net sales,
gross profit increased to 38.8% from 33.5% during these periods. This increase
is primarily attributable to an approximate 3.6% increase in merchandise margins
due to a shift in our merchandise mix as we sold a greater percentage of young
women's apparel, which has higher margins than young men's merchandise.
Furthermore, occupancy and payroll costs, which are relatively fixed, were lower
as a percentage of net sales than in the prior period which caused margins to
increase.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $8.5 million for the thirteen
weeks ended November 3, 2001 to approximately

                                        17
$23.7 million from approximately $15.2 million for the thirteen weeks ended
October 28, 2000. This increase was partially due to an approximate $6.6 million
increase in payroll expenses that resulted from new store growth in addition to
compensation costs incurred in connection with incentive bonus programs. As a
percent of net sales, selling, general and administrative expenses decreased to
18.8% from 19.8%. This decrease as a percentage of sales volume was due
primarily to the increased leverage of store payroll.

     Interest expense.  Our interest expense decreased approximately $0.4
million, from $0.7 million for the thirteen weeks ended October 28, 2000 to
approximately $0.3 million for the thirteen weeks ended November 3, 2001
primarily due to lower average borrowings.

     Income taxes.  Our effective tax rate of 41.0% for the thirteen weeks ended
November 3, 2001 compares to an effective tax rate of 39.5% for the thirteen
weeks ended October 28, 2000. Our effective tax rate increased as a result of
the increase in income in states with higher tax rates, partially offset by the
elimination of the negative goodwill amortization.

     Income from continuing operations.  Our income from continuing operations
increased approximately $8.7 million for the thirteen weeks ended November 3,
2001 to approximately $14.7 million from approximately $6.0 million for the
thirteen weeks ended October 28, 2000. This increase was primarily due to
increased sales and gross profit.

     Income from discontinued operations.  All Chelsea Cambell stores were
closed by the end of December 2000; therefore, no activity occurred during the
thirteen week period ended November 3, 2001. For the thirteen weeks ended
October 28, 2000, our Chelsea Cambell stores had net sales of $2.1 million and
expenses of $2.1 million.

     Net income.  Our net income increased by approximately $10.4 million, to
approximately $16.4 million in the thirteen weeks ended November 3, 2001 from
approximately $6.0 million in the thirteen weeks ended October 28, 2000. As a
percentage of net sales, net income increased to 13.0% from 7.8% during these
periods.

 Fiscal year 2001 compared to fiscal year 2000.

     Net sales.  Our net sales for fiscal 2001 increased to approximately $304.8
million from approximately $213.4 million in fiscal 2000, an increase of
approximately $91.4 million. Of this increase, comparable store sales
contributed approximately $17.1 million and non-comparable store sales
contributed approximately $74.3 million. Comparable store sales increased by
8.7% in fiscal 2001, compared to an increase of 14.5% in comparable store sales
in fiscal 2000. This increase was due to higher comparable sales of young
women's merchandise and accessories, partially offset by a decrease in young
men's comparable sales. The increase in non-comparable store sales was primarily
due to an increase in our store count by 74 stores in fiscal 2001.

     Gross profit.  Our gross profit increased approximately $24.6 million in
fiscal 2001 to approximately $86.1 million from approximately $61.5 million for
fiscal 2000. As a percentage of net sales, gross profit decreased to 28.3% from
28.8% during these periods. This decrease was primarily attributable to lower
merchandise margins of approximately 0.5% due to higher markdowns across all
merchandise categories.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $20.2 million in fiscal 2001 to
approximately $65.9 million from approximately $45.7 million in fiscal 2000. Our
payroll expenses increased by approximately $14.7 million in fiscal 2001 over
the prior fiscal year principally as a result of new store growth, in addition
to compensation costs incurred in connection with incentive bonus programs. The
remaining increase was due to variable sales expenses. In addition, part of this
increase was attributable to increased marketing initiatives for which we spent
approximately $2.2 million in fiscal 2001 as compared to approximately $1.1
million in fiscal 2000. As a percentage of net sales, selling, general and
administrative expenses increased to 21.6% in fiscal 2001 from 21.4% in fiscal
2000.

                                        18
Interest expense.  Our interest expense increased by approximately $0.8
million from $0.9 million in fiscal 2000 to approximately $1.7 million in fiscal
2001 primarily due to higher seasonal borrowings necessitated by our higher
store count.

     Income taxes.  Our effective tax rate of 39.3% in fiscal 2001 compares to
an effective tax rate of 38.0% in fiscal 2000. This increase was the result of
an increase in income in states with higher tax rates.

     Income from continuing operations.  Our income from continuing operations
increased approximately $1.5 million in fiscal 2001 to approximately $10.9
million from approximately $9.4 million in fiscal 2000. This increase was
primarily due to increased sales and gross profit.

     Income (loss) from discontinued operations.  In fiscal 2001, we recognized
a gain of approximately $0.4 million from the discontinuation of our Chelsea
Cambell business after having recognized a gain of approximately $2.0 million in
fiscal 2000. The amount recognized in fiscal 2001 represents actual amounts
compared to estimated loss on disposal for fiscal 2000.

     Net income.  Our net income in fiscal 2001 decreased to approximately $11.3
from approximately $11.4 million in fiscal 2000, a decrease of $0.1 million. As
a percentage of net sales, net income decreased to 3.7% from 5.3% during these
periods.

 Fiscal year 2000 compared to fiscal year 1999

     Net sales.  Our net sales for fiscal 2000 increased to approximately $213.4
million from approximately $152.5 million in fiscal 1999, an increase of
approximately $60.9 million. Of this increase, comparable store sales
contributed approximately $21.4 million and non-comparable store sales
contributed approximately $39.5 million. Comparable store sales increased by
14.5% in fiscal 2000, compared to an increase of 5.5% in comparable store sales
in fiscal 1999. This increase was due to higher comparable sales in all
merchandise categories. The increase in non-comparable store sales was primarily
due to an increase in our store count by 49 stores in fiscal 2000.

     Gross profit.  Our gross profit increased approximately $19.5 million in
fiscal 2000 to approximately $61.5 million from approximately $42.0 million in
fiscal 1999. As a percentage of net sales, gross profit increased to 28.8% from
27.6% during these periods. Included in this increase was a 1.6% decrease in
occupancy costs as a percentage of sales in fiscal 2000 as compared to fiscal
1999.

     Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased approximately $13.3 million in fiscal 2000 to
approximately $45.7 million from approximately $32.4 million in fiscal 1999.
This increase was mainly due to an increase of approximately $7.5 million in
payroll expenses attributable to new store growth and an increase of
approximately $1.1 million of marketing expenditures. The remaining increase was
due to variable sales expenses. As a percentage of net sales, selling, general
and administrative expenses increased to 21.4% in fiscal 2000 from 21.2% in
fiscal 1999.

     Interest expense.  Our interest expense increased by approximately $0.8
million from $0.1 million in fiscal 1999 to approximately $0.9 million in fiscal
2000, primarily due to higher seasonal borrowing.

     Income taxes.  Our effective tax rate of 38.0% for fiscal 2000 compares to
an effective tax rate of 36.2% for fiscal 1999. This increase was the result of
an increase in income in states with higher tax rates.

     Income from continuing operations.  Our income from continuing operations
increased approximately $3.2 million in fiscal 2000, to approximately $9.4
million from approximately $6.2 million in fiscal 1999. This increase was
primarily due to increased sales and gross profit partially offset by increased
income taxes.

     Income (loss) from discontinued operations.  We recorded a $2.0 million
gain in fiscal 2000 attributable to the discontinuation of our Chelsea Cambell
business after having recognized a loss of approximately $0.3 million in fiscal
1999. The gain recognized in fiscal 2000 includes loss from Chelsea Cambell
operations and estimated loss on disposal, offset by the associated tax benefit
and a negative goodwill write off.

                                        19
Net income.  Our net income in fiscal 2000 increased to approximately $11.4
million from approximately $6.0 million in fiscal 1999, an increase of
approximately $5.4 million. As a percentage of net sales, net income increased
to 5.3% from 3.9% during these periods. This increase was primarily due to
increases in sales and gross profit and a gain on discontinued business
operations.

QUARTERLY RESULTS AND SEASONALITY

     The following table sets forth our historical unaudited quarterly
consolidated statements of operations data for each of the eight fiscal quarters
ended August 4, 2001, and for the thirteen weeks ended November 3, 2001 and such
information expressed as a percentage of our revenue. This unaudited quarterly
information has been prepared on the same basis as the annual audited financial
statements appearing elsewhere in this prospectus, and includes all necessary
adjustments, consisting only of normal recurring adjustments, that we consider
necessary to present fairly the financial information for the quarters
presented. The quarterly data should be read in conjunction with the audited
consolidated financial statements and the related notes appearing elsewhere in
this prospectus.
FISCAL 2000                                 FISCAL 2001
                               ------------------------------------------   ---------------------------------------   THIRTEEN
                                          THIRTEEN WEEKS ENDED                       THIRTEEN WEEKS ENDED              WEEKS
                               ------------------------------------------   ---------------------------------------    ENDED
                               OCT. 30,   JAN. 29,   APRIL 29,   JULY 29,   OCT. 28,   FEB. 3,    MAY 5,    AUG. 4,   NOV. 3,
                                 1999       2000       2000        2000       2000       2001      2001      2001       2001
                               --------   --------   ---------   --------   --------   --------   -------   -------   --------
STATEMENT OF INCOME DATA:
  Net sales..................  $53,331    $72,164     $40,552    $47,398    $76,831    $107,538   $56,629   $63,769   $126,019
  Gross profit...............   18,593     24,669       8,487      9,723     25,750      34,008    12,458    13,933     48,934
  Income (loss) from
    continuing operations....    4,413      7,667      (1,428)    (1,286)     6,007       8,687    (2,049)   (1,731)    14,727
  Income (loss) from
    discontinued
    operations...............     (611)    (1,596)     (1,621)     5,830         --         388         2        15         --
  Net income (loss)..........    3,802      6,071      (3,049)     4,544      6,007       9,075    (2,047)   (1,716)    16,359(1)
AS A PERCENTAGE OF NET SALES:
  Net sales..................    100.0%     100.0%      100.0%     100.0%     100.0%      100.0%    100.0%    100.0%     100.0%
  Gross profit...............     34.9       34.2        20.9       20.5       33.5        31.6      22.0      21.8       38.8
  Income (loss) from
    continuing operations....      8.3       10.6        (3.5)      (2.7)       7.8         8.1      (3.6)     (2.7)      11.7
  Net income (loss)..........      7.1        8.4        (7.5)       9.6        7.8         8.4      (3.6)     (2.7)      13.0
Diluted income (loss) per
  share:
  From continuing
    operations...............
  From discontinued
    operations...............
  From cumulative accounting
    change...................
  From net income............
SELECTED OPERATING DATA:
  Comparable store sales
    increase (decrease)......     18.6%      19.0%       10.1%       6.8%      12.7%       15.9%      3.4%     (0.4)%     22.8%
The per share amounts are calculated independently for each thirteen week
period presented. The sum of the thirteen weeks may not equal the full year per
share amounts.
---------------

(1) On August 5, 2001, we adopted Statement of Accounting Standards No. 142
    "Goodwill and Other Intangibles." With the adoption, we recorded income from
    cumulative effect of such accounting change of $1.6 million.

LIQUIDITY AND CAPITAL RESOURCES

     Our cash requirements are primarily for working capital, the construction
of new stores, the remodeling of existing stores and the improvement to our
information systems. Historically, these cash requirements have been met through
cash flow from operations and borrowings under our credit facility with Fleet
Retail Finance, Inc. At November 3, 2001, we had working capital of
approximately $23.4 million.

                                        20
During fiscal 2001 our net cash provided by operations was approximately
$19.6 million, generated by our operating earnings and increased current
liabilities and offset by purchases of merchandise inventory and other assets.

     For the thirteen weeks ended November 3, 2001, our net cash provided by
operations was approximately $28.1 million. Our net cash provided by operations
was due to a decrease in working capital.

     Our cash used in investing activities for fiscal 2001 and for the thirteen
weeks ended November 3, 2001, was entirely used for capital expenditures. These
expenditures, consisting primarily of the construction of new stores, remodeling
of existing stores and investments in technology, were approximately $7.8
million for the thirteen weeks ended November 3, 2001 and approximately $23.9
million for fiscal 2001. Our future capital requirements will depend primarily
on the number of new stores we open and the number of existing stores we remodel
and the timing of these expenditures. We opened 74 new stores in fiscal 2001, 34
stores in the twenty-six week period ended February 2, 2002 and expect to open
approximately 80 stores in fiscal 2002. Projected capital expenditures for
fiscal 2002 are approximately $27.5 million, to be used primarily to fund new
store openings and technology investments. Historically, we have financed such
capital expenditures with cash from operations and borrowings under our credit
facility. We believe that we will continue to finance capital expenditures in
this manner during fiscal 2002.

     In fiscal 2001 we had net borrowings of approximately $8.3 million. For the
thirteen weeks ended November 3, 2001 we had a net repayment under our credit
facility of approximately $19.4 million. Our secured revolving credit facility
with Fleet, as agent, provides us with up to $55 million based upon our
inventory balances, seasonal advance rates and third party credit card balances.
Borrowings bear interest at our option at either the rate per annum at which
deposits on U.S. dollars are offered to Fleet in the Eurodollar market, referred
to as the eurodollar rate, plus 1.50% to 2.00% or the base rate announced from
time to time by Fleet, dependent upon excess availability. As of February 2,
2002, there was no balance under the revolving credit facility. The revolving
credit facility contains financial performance and capital expense covenants,
and has a termination date of July, 2004. There are fees for early termination.
The revolving credit facility contains a minimum EBITDA covenant, tested
monthly. The facility also contains a maximum capital expenditures covenant,
tested quarterly.

     Events of default under the credit facility include, subject to grace
periods and notice provisions in certain circumstances, failure to pay principal
amounts when due, failure to perform covenant or liability requirements,
misrepresentation, default of leases, excess uninsured casualty loss, excess
uninsured judgment or restraint of business, business failure or application for
bankruptcy, indictment of or institution of any legal process or proceeding
under federal, state, municipal or civil statutes, legal challenges to loan
documents, death, disability or failure of selected key employees, and a change
in control, other than an initial public offering. If an event of default
occurs, the lenders under the credit facility will be entitled to take various
actions, including the acceleration of amounts due and requiring that all such
amounts be immediately paid in full as well as possession and sale of all assets
that have been used for collateral.

     We have not issued any letters of credit for the purchase of merchandise
inventory or any capital expenditure.

     We are committed under noncancelable leases for all store and office
spaces, expiring at various dates through 2011. The leases generally provide for
minimum rent plus additional increases in real estate taxes, certain operating
expenses, etc. Certain leases also require contingent rent based on sales. As of
November 3, 2001, our aggregate rent commitments were approximately $184.0
million through 2011, which includes $40.2 million to related parties.

     As of February 2, 2002 we had approximately $39.5 million in cash available
to fund operations and future store growth. In addition, we had approximately
$27.3 million available for borrowings under our credit facility as of February
2, 2002, which availability is limited by the credit facility's borrowing base
collateral requirements. In general, the borrowing base equals a seasonally
adjusted percentage of the retail value of our inventory and 80% of our third
party credit card balances. We believe that cash flows from operations, our
current cash balance, funds available under our revolving credit facility and
cash proceeds

                                        21
from this offering will be sufficient to meet our working capital needs and
planned capital expenditures for fiscal 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued two new
pronouncements: SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill
and Other Intangible Assets.

     SFAS No. 141 addresses financial accounting and reporting for business
combinations and supersedes APB No. 16, Business Combinations, and FASB
Statement No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises. Under SFAS No. 141, all business combinations are to be accounted
for using one method, the purchase method. SFAS 141 prohibits the use of the
pooling-of-interest method for business combinations initiated after June 30,
2001 and applies to all business combinations accounted for by the purchase
method that are completed after June 30, 2001. We have determined that the
adoption of this statement will not have an impact on our financial statements.

     SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes ABP No. 17, Intangible
Assets. This pronouncement changes the accounting for goodwill from an
amortization method to an impairment only approach. SFAS 142 is effective for
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized in an entity's statement of financial position at
that date, regardless of when those assets were initially recognized. The
adoption of this statement had an approximately $1.6 million impact on our
financial statements for the write-off of the net negative goodwill as of August
5, 2001.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121 but
retains the fundamental provisions of SFAS No. 121 for recognition and
measurement of the impairment of long-lived assets to be held and used and
measurement of long-lived assets to be disposed of by sale. However, SFAS No.
144 applies the fair value method for testing of impairment, which differs from
SFAS No. 121. SFAS No. 144 also supersedes the accounting and reporting
provisions of APB Opinion No. 30 as it pertains to disposal of a business
segment but retains the requirement of that opinion to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or is classified as held
for sale. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. We are evaluating the impact of the adoption of this standard and have
not yet determined the effect of its adoption on our financial position and
results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest rates.  Our market risks relate primarily to changes in interest
rates. We bear this risk in two specific ways. First, our revolving credit
facility carries a variable interest rate that is tied to market indices and,
therefore, our statement of income and our cash flows will be exposed to changes
in interest rates. As of November 3, 2001, we had approximately $15.8 million of
principal outstanding. Outstanding balances under our credit facility bear
interest at our option at either the eurodollar rate plus 1.50% to 2.00% or the
base rate announced from time to time by Fleet. Based on the weighted average
borrowings outstanding during 2001, a 100 basis point change in interest rates
would result in an approximate $188,000 change to our annual interest expense.
The second component of interest rate risk involves the short term investment of
excess cash in short term, investment grade interest bearing securities. These
investments are considered to be cash equivalents and are shown that way on our
balance sheet. If there are changes in interest rates, those changes would
affect the investment income we earn on these investments and, therefore, impact
our cash flows and results of operations.

INFLATION

     We do not believe that inflation has had a material adverse impact on our
business or operating results during the periods presented. We cannot assure
you, however, that our business will not be affected by inflation in the future.

                                        22
BUSINESS

OVERVIEW

     Our company is a fast-growing, mall-based specialty retailer of casual
apparel and accessories that targets both young women and young men aged 11 to
20. We provide our customers with a focused selection of high-quality,
active-oriented, fashion basic merchandise at compelling values. We maintain
complete control over our proprietary brand by designing and sourcing all of our
merchandise. Our products can be purchased only in our stores, which sell
Aeropostale merchandise exclusively. We create a fun and high energy shopping
experience through the use of creative visual merchandising, colorful in-store
signage, bright lighting, popular music and an enthusiastic, well-trained sales
force. Our average store size of approximately 3,500 square feet is generally
smaller than that of our mall-based competitors and we believe that this enables
us to achieve higher sales productivity and project a sense of activity and
excitement. As of February 2, 2002, we operated 278 stores in 33 states and the
District of Columbia.

     A key differentiating aspect of our design and merchandising strategy is to
keep our styles and product offerings geared towards the demands of our target
customers' active lifestyles. We believe in maintaining a brand that minimizes
fashion risk by reflecting mainstream fashion rather than cutting-edge trends.
Our merchandise consists primarily of fashion basic apparel that projects a
casual and comfortable image. We provide a focused assortment of high-quality
merchandise, including graphic t-shirts, tops, bottoms, sweaters, jeans,
outerwear and accessories. Today, much of our merchandise features our
"Aeropostale" or "Aero" logo with which many of our customers have come to
identify. Through our integrated in-house design and merchandising teams and
quick-turn sourcing relationships, we are able to interpret and react quickly to
mainstream fashion trends and replenish fast-selling inventory rapidly.

BUSINESS STRENGTHS

     We believe that our key business strengths will enable us to continue to
expand our store base and grow profitably.

     Differentiated and recognizable brand.  We have created an active lifestyle
brand image for both young women and young men aged 11 to 20. In an effort to
differentiate the Aeropostale brand from that of our competitors, our design and
merchandising teams focus on what our customers want and can afford. As a
result, our merchandise is comprised of high-quality, comfortable,
active-oriented apparel and accessories that reflect widely accepted fashion
trends. Our "Aeropostale" and "Aero" logos further strengthen our brand
recognition and create an association with which many of our customers have come
to identify. We believe that in the markets we serve, our brand is recognized by
our target customers and our stores are viewed as preferred shopping
destinations.

  Disciplined operating and financial practices.

     - Operating discipline. Our operating discipline extends throughout all
       aspects of our company. Our design and merchandising teams work closely
       together to identify and capitalize on proven fashion trends that have
       broad appeal among our target customer base. Our designers and
       merchandisers are able to control the quality, consistency and timing of
       our merchandise because we sell only our proprietary products. We test
       our products on an ongoing basis to ensure that our products are well
       received by our customers. We source all of our products so we can offer
       them at attractive prices. Finally, we make site selections based upon
       rigorous due diligence, including extensive market research, site visits
       and assessments of mall dynamics.

     - Financial discipline. We have successfully executed a store growth
       strategy that emphasizes profitability. Since we became an independent
       company, substantially all of our stores in operation have produced
       positive store-level operating cash flows. Our gross profit margins grew
       from 33.5% for the thirteen weeks ended October 28, 2000 to 38.8% for the
       thirteen weeks ended November 3, 2001. In addition, our operating income
       margins grew from 13.8% for the thirteen weeks ended October 28, 2000 to
       20.0% for the thirteen weeks ended November 3, 2001. Our store growth and

                                        23
other capital expenditures have been funded with cash from operations.
       Consistent with our financial discipline, we employ incentive
       compensation programs based upon key financial performance indicators for
       all levels of management.

     Operating flexibility.  We maintain significant flexibility in the
operation of our business so that we can react quickly to changes in customer
preferences. We conduct daily reviews of the sales performance of our
merchandise to identify and respond to changing trends and consumer preferences.
We pursue a sourcing strategy that maximizes our speed to market. We have
established strong and loyal relationships with our vendors which allow us to
source and replenish our merchandise quickly. Currently, we are able to
replenish a majority of our merchandise within 45 to 90 days. We believe that
our warehouse and distribution facilities can adequately support our merchandise
replenishment needs and are sufficient to accommodate our planned new store
growth. Our store layout allows for a constant renewal of merchandise. We
frequently update our presentation tables, in-store promotions, signage and
window displays to create excitement in our stores.

     Attractive new store economics.  Since we became an independent company, we
have successfully and consistently implemented our store format across a wide
variety of mall classifications and geographic locations. Our average net
investment to open a new store has been approximately $285,000, which includes
capital expenditures adjusted for landlord contributions and initial inventory
at cost net of payables. Our stores have achieved average net sales of
approximately $1.2 million during their first twelve months of operations, sales
per square foot of approximately $360, store-level operating cash flow of
approximately $200,000 and an average pretax cash return on investment of
approximately 69%. Substantially all new stores have become profitable within
the first thirteen weeks of operation. In addition, the Aeropostale stores that
have been open for two full years achieved an average net sales increase of
approximately 10% in their second year of operation.

     Experienced and proven management team.  Since 1996, we have continually
increased the strength of our brand as evidenced by our successful store
expansion and improved financial results. We have a highly experienced
management team with an average of 23 years in the apparel retailing business.
Our management team maintains a corporate culture that makes our company an
enjoyable place to work. We reinforce our corporate culture through ongoing
training programs that motivate and prepare our employees to offer our customers
an enjoyable shopping experience. We believe that with the significant retail
experience of our senior management team and the enthusiasm of our sales team,
we are well positioned for future growth.

GROWTH STRATEGY

     Based upon our business strengths, we intend to pursue the following
strategies for growth:

     Open new stores.  We believe that our merchandise and stores have broad
national appeal that provides substantial new store expansion opportunities. In
the last two years, we rapidly expanded our store base, opening 57 new stores in
fiscal 2000 and 74 in fiscal 2001. We believe that we can continue to grow our
store base without compromising our new store economics. We plan to open
approximately 80 new stores in fiscal 2002, and continue to open new stores at a
comparable pace in future years. We plan to open stores both in markets in which
we currently operate and in new markets. The four states that have the largest
teenage populations in the United States are California, Florida, New York and
Texas according to data derived from information published by the U.S. Census
Bureau. New York is the only one of these four states in which we currently have
a major presence. We plan to expand into Texas by the end of 2002.

     Enhance and expand our brand.  We intend to capitalize on the success of
our brand and continue to enhance our brand recognition. As part of this
strategy, we have engaged an independent marketing firm to develop a new
campaign to increase awareness of our brand. Later this year, we intend to
supplement our current marketing strategy with two initiatives which we believe
will appeal to our target teen customers. The first is an interactive website
that will feature a web-based rewards program. We intend to follow this
initiative with an innovative television advertising campaign. We will also
continue to utilize our logo on a

                                        24
significant portion of the merchandise that we sell in order to increase
awareness of our brand and to reinforce our active, youth-oriented image. We
believe that as our brand gains increased familiarity and national recognition,
our stores will continue to be preferred shopping destinations.

     Continue high levels of store productivity.  We seek to continue to produce
high levels of comparable store sales growth and average sales per square foot
by maintaining consistent store-level execution. We intend to continue employing
profitable promotional pricing strategies to maintain high levels of customer
traffic. We will also continue testing products so that we can identify
developing trends and evolve with the changing tastes of our customers.

     Further improve profitability.  As we grow our business and open new
stores, we intend to continue maximizing our economies of scale and leveraging
our low-cost infrastructure to increase operational efficiency and improve
profitability. We intend to increase our efficiency by:

     - capitalizing on the value of our brand nationally;

     - maintaining our strong vendor relationships and increasing volume
       purchasing power;

     - leveraging our expertise in new store openings;

     - optimizing our warehousing and distribution capabilities; and

     - investing in and deploying technological enhancements throughout our
       stores and operations.

THE TEEN MARKET

     We generally target our merchandise to the teenage segment of the
population. According to the U.S. Census Bureau, the teenage population in the
United States, which is defined as persons 12 to 19 years old, will grow
approximately 37% faster than the overall population, from approximately 32
million in 2000 to approximately 34 million in 2005. The Census Bureau predicts
that the teenage population will continue to grow through 2008. According to
Teenage Research Unlimited, an independent research firm, spending among
teenagers has grown to $172 billion in 2001 from $141 billion in 1998,
reflecting a compound annual growth rate of approximately 6.8%, or more than
double the rate of inflation during this period. We believe that teenage apparel
spending is less susceptible to general economic downturns than adult apparel
spending. Teen retailers further benefit from the fact that teenagers are still
growing and therefore need to replace their clothing more often than adults. We
believe that these demographic and spending trends offer us strong growth
opportunities.

                              U.S. TEEN POPULATION
[U.S. TEEN POPULATION GRAPH]
1999                                                                            31.378
2000                                                                            31.616
2001                                                                            31.958
2002                                                                            32.374
2003                                                                            32.809
2004                                                                            33.289
2005                                                                            33.576
2006                                                                            33.772
2007                                                                            33.912
2008                                                                            33.944
---------------
Source: U.S. Census Bureau

                           GROWTH IN TEEN SPENDING(1)
[BAR GRAPH OF TEEN SPENDING]
1997                                                                              122
1998                                                                              141
1999                                                                              153
2000                                                                              155
2001                                                                              172
---------------
Source: Teenage Research Unlimited
(1) Represents a compound annual growth rate of 9.0% over the periods presented.

                                        25
PRICING

     We believe that a key component of our success is our ability to understand
what our customers want and can afford. Our merchandise, which we believe is of
comparable quality to that of our primary competitors, is generally priced lower
than their merchandise, with most of our products falling within a price range
of approximately $10.00 to $39.50 per item and an average sales price of
approximately $14.00. We use a demand-driven promotional pricing strategy to
emphasize the value we offer relative to our competitors and to encourage our
customers to keep returning to our stores. We offer promotions throughout the
year and a significant portion of the merchandise selection in our stores is on
promotion at any given time. Each promotion typically lasts for approximately
two to four weeks, depending on the demand for the product.

DESIGN AND MERCHANDISING

     Our coordinated design and merchandising teams focus on designing
merchandise that meets the demands of our core customers' lifestyles. We
maintain a separate dedicated design and merchandising group for each of the
young women's, young men's and accessories product lines. Each group is overseen
by a merchandising manager to ensure consistency with the desires of our
customers.

     Design.  We offer a focused collection of fashion basic apparel, including
graphic t-shirts, tops, bottoms, sweaters, jeans, outerwear and accessories. Our
"design-driven, merchant-modified" philosophy ensures that our merchandise
styles both reflect the latest trends and are not too fashion forward for our
customers. Much of our merchandise features our "Aeropostale" or "Aero" logo. We
believe that our logo apparel appeals to our young customers and reinforces our
brand image.

     Our design process is highly disciplined and carefully supervised, enabling
us to develop exclusive merchandise and offer a consistent assortment within a
season. About nine months prior to a selling season, the product development
process begins with our designers, merchandisers and senior management working
together to review the prior season's results and new trends and to discuss the
classifications and styles that we should develop for the upcoming season. We
continuously test our products in our stores. Our design group supplements this
analysis with market research from focus groups, travel, retail shopping, trade
shows and input from a design consultant.

     Our merchandising planning process determines the quantities of units
needed for each product category. We then consider sourcing options and
establish price targets. Once approved, we place production orders with the
appropriate vendors. This occurs approximately four months after the initial
review meeting. We typically receive initial orders within three to five months
after order placement. We then allocate merchandise to individual stores based
upon recent selling trends and current inventory levels. By monitoring sales of
each style and color and employing our flexible sourcing capabilities, we are
able to adjust our merchandise on order for later in the season and future
seasons.

     Merchandising.  Our merchandise mix has evolved with the demands of our
target customers. Over the past three years, we have increased the percentage of
our merchandise for female customers as our young women's line has grown
increasingly popular and we have added more accessories to complement our
apparel offering. In addition, we have developed a narrower and deeper
merchandise assortment in response to our customers' preferences.

     The following chart provides a historical breakdown of our merchandise mix
as a percentage of sales:
THIRTEEN WEEKS
                                              FISCAL YEAR ENDED                         ENDED
                               ------------------------------------------------    ----------------
                               JULY 31, 1999    JULY 29, 2000    AUGUST 4, 2001    NOVEMBER 3, 2001
                               -------------    -------------    --------------    ----------------
Young Women's................       37%              42%               49%                61%
Young Men's..................       55               47                39                 31
Accessories..................        8               11                12                  8
26
SOURCING

     We employ a sourcing strategy that maximizes our speed to market and allows
us to respond quickly to our customers' preferences. We believe that we have
developed strong relationships with our vendors, some of whom rely upon us for a
significant portion of their business. The majority of our vendors can refill
orders within 45 to 90 days, enabling quick inventory replenishment. We believe
that our strong relationships have also provided us with the ability to
negotiate favorable pricing, further improving our overall cost structure. We
ensure the quality of our vendors' products by inspecting pre-production
samples, making periodic site visits to our vendors' foreign production
factories and by selectively inspecting inbound shipments at our distribution
center.

     We utilize numerous sourcing arrangements for the production of our
merchandise. During the fifty-two weeks ended February 2, 2002, Federated
Merchandising Group, or FMG, a wholly owned subsidiary of our former parent
company Federated Department Stores, Inc., acted as our agent in sourcing
approximately 27% of our merchandise. FMG oversees compliance with all laws
relating to production quotas, tariffs and customs clearance. We believe that
all transactions with FMG have been negotiated at arm's length. Our current
contract with FMG comes due for renewal in July 2003. In the event of an early
or unexpected termination of this contract, we believe that our company
possesses the ability to perform all of the sourcing functions provided by FMG
without significant interruption.

     We directly source all other production not covered by our arrangement with
FMG. During the past three years, we have sought to reduce the number of vendors
that we utilize in order to streamline our sourcing operations and to exercise
greater influence over our vendors. Approximately 70% of our merchandise was
directly sourced from our top ten vendors during the fifty-two weeks ended
February 2, 2002, although no single vendor supplied more than 17% of our total
merchandise during that period. Most of our vendors maintain sourcing offices in
the United States with the majority of their production factories located in
Europe, Asia and Central America. All payments are made in U.S. dollars to
minimize currency risk.

                                        27
STORES

     Existing stores.  As of February 2, 2002 we operated 278 stores in 33
states and the District of Columbia. Our stores are typically located in
regional shopping malls in areas with high concentrations of our target
customers.

     The following map and store list shows the number of our stores in each
state as of February 2, 2002:

                 [Map Of Store Locations In The United States]
---------------

Shaded regions indicate states with largest teenage populations (derived from
U.S. Census Bureau data).

                          NUMBER OF AEROPOSTALE STORES
                             AS OF FEBRUARY 2, 2002
NUMBER
STATE                                OF STORES
-----                                ---------
Alabama..........................        4
Arizona..........................        4
California.......................        6
Connecticut......................        8
Delaware.........................        3
Florida..........................        3
Georgia..........................        8
Illinois.........................       15
Indiana..........................       13
Iowa.............................        4
Kansas...........................        2
Kentucky.........................        3
Louisiana........................        1
Massachusetts....................       12
Maryland.........................        7
Maine............................        2
Michigan.........................       13
NUMBER
STATE                                OF STORES
-----                                ---------
Minnesota........................        6
Missouri.........................        6
North Carolina...................       10
Nebraska.........................        4
New Hampshire....................        5
New Jersey.......................       19
New York.........................       35
Ohio.............................       23
Pennsylvania.....................       30
Rhode Island.....................        1
South Carolina...................        3
Tennessee........................        9
Virginia.........................        9
Vermont..........................        2
Wisconsin........................        3
West Virginia....................        4
District of Columbia.............        1
28
The following table highlights the number of stores opened and closed in
each of the last three fiscal years and the twenty-six week period ended
February 2, 2002:

                          STORE OPENINGS AND CLOSINGS
TOTAL NUMBER
                                                      STORES     STORES      OF STORES AT
FISCAL YEAR                                           OPENED    CLOSED(1)    END OF PERIOD
-----------                                           ------    ---------    -------------
Fiscal 1999.........................................    11           1            129
Fiscal 2000.........................................    57           8            178
Fiscal 2001.........................................    74           0            252
Twenty-six weeks ended February 2, 2002.............    34           8(2)         278
---------------
(1) Does not include Chelsea Cambell stores, a concept we discontinued in fiscal
    2000.

(2) Includes the closing of seven aero kids stores.

     Store design and environment.  We design our stores to create an energetic
shopping environment, featuring powerful in-store promotional signage, creative
visuals, bright lighting and popular music. The enthusiasm of our associates is
integral to our store environment. Our stores feature display windows which
provide high visibility for mall traffic. The front of the store features the
newest and most desirable merchandise to draw shoppers into the store. We keep
our merchandise assortments fresh and exciting by updating our floor sets
approximately 11 times per year. Visual merchandising directives are initiated
at the corporate level to maintain consistency throughout all of our stores. We
generally locate our stores in central mall locations near popular teen
gathering spots, including food courts, music stores and other teen-oriented
retailers. In addition, we generally implement broad-scale renovations at every
store lease expiry.

     Our stores generally range in size from 2,500 to 6,000 square feet, with an
average square footage of approximately 3,500. We believe that by keeping our
store size generally smaller than that of many of our competitors, we are able
to achieve a high level of productivity and reinforce the sense of activity and
energy that we want our stores to project.

     Store management and training.  Our stores are organized into regions and
districts. Each of our 3 regions is managed by a regional director and
encompasses approximately 10 districts; each district is managed by a district
manager and encompasses approximately 7 to 10 individual stores. We usually
staff each store with one store manager, two assistant managers and 10 to 15
part-time sales associates, the number of which generally increases during our
peak selling seasons. Store managers are primarily responsible for hiring and
training store level associates, while our merchandise assortments, store
layout, inventory management and in-store visuals are directed by our corporate
headquarters.

     We seek to instill enthusiasm and dedication in all our employees. To
promote this strategy, we compensate our district and store managers with a base
salary plus incentive bonus payments based on store sales performance and loss
prevention. We designed our "Career Development Program" to provide managers
with training to improve both operational expertise and supervisory skills.
Training programs are completed in modules which allow managers to customize the
program to meet their individual needs.

     Our sales associates are a critical element to achieving our marketing and
customer satisfaction goals. We strive to hire employees who possess high energy
levels and excitement for our brand. All sales associates receive customer
service and product information training which enables them to assist customers
in a friendly, helpful manner. Sales associates receive hourly wages and the
potential for additional compensation through various contests and motivational
programs. We believe that our continued success is dependent on our ability to
attract, retain and motivate quality employees.

     Expansion opportunities and site selection.  Over the past two years, we
have aggressively opened new stores to capitalize on our profitable store model.
We plan to increase our store base in fiscal 2002 by

                                        29
opening approximately 80 stores and to continue an aggressive pace of new store
openings in future years. We have identified mall locations in both existing and
new markets for potential new store opportunities.

     In selecting a specific site, we target high traffic, prime real estate
locations in malls with suitable demographics and favorable lease economics. As
a result, we generally locate our stores in malls in which comparable
teen-oriented retailers have performed well. Primary site evaluation criteria
include average sales per square foot, co-tenancies, traffic patterns and
occupancy costs. Historically, we have been able to locate and open stores
profitably in a wide variety of mall classifications by negotiating lease terms
that we believe are favorable, based on our expectations for store activity and
a store size of approximately 3,500 square feet. Prior to committing to each
store lease, at least one member of our senior management team visits and
approves each individual site location. After our real estate committee approves
a site, approximately 23 weeks are required to finalize the lease, design the
layout, build out the property, hire and train associates and equip and stock
the store before opening.

     Since we became an independent company, we have successfully and
consistently implemented our store format across a wide variety of mall
classifications and geographic locations. Our average net investment to open a
new store has been approximately $285,000, which includes capital expenditures
adjusted for landlord contributions and initial inventory at cost net of
payables. Our stores have achieved average net sales of approximately $1.2
million during their first twelve months of operations, sales per selling foot
of approximately $360, store-level operating cash flow of approximately $200,000
and an average pretax cash return on investment of approximately 69%.
Substantially all new stores have become profitable within the first thirteen
weeks of operation. In addition, the Aeropostale stores that have been open for
two full years achieved an average net sales increase of approximately 10% in
their second year of operation.

MARKETING AND ADVERTISING

     We employ numerous initiatives to maximize the impact of our marketing and
advertising programs. We view the enthusiasm and commitment of our store-level
employees as a key element to establishing the credibility of our brand with our
target customers. To reinforce our image with our customers, we seek to locate
our stores in mall locations near popular teen gathering spots and utilize our
window and in-store displays with colorful and brand-focused presentations. We
view the use of our logo on our merchandise as an effective means for increasing
brand awareness among our target customers.

     Over the past few years, we have developed a marketing program that allows
us to gain additional exposure for our brand on college campuses. We believe
that our target customers value and aspire to an active, collegiate lifestyle.
Accordingly, we sponsor a number of collegiate athletic conferences by providing
them with co-branded apparel and donating various scholarships. In addition, we
have entered into agreements with numerous colleges and universities that enable
us to sell and market our products on campuses through organized sales events.

     We have historically relied on these methods as effective advertising tools
and have utilized traditional media advertising on a very limited basis. We have
recently engaged an independent marketing firm to develop a multi-faceted
campaign to increase the recognition of the Aeropostale brand as we expand into
new geographical areas. The campaign will involve the use of an interactive
website that will feature a web-based customer rewards program and television
advertisements directed at our target customer base.

DISTRIBUTION

     The timely and efficient replenishment of current styles is key to our
overall business strategy. We utilize a third party operator for merchandise
processing. This third party operates a 200,000 square foot distribution
facility in New Jersey, where our merchandise is processed by using an automated
picking and packing carousel. Our vendors ticket virtually all of our
merchandise and approximately 25% of incoming merchandise is ready for direct
shipment to our stores. This reduces labor costs and processing time as does the
facility's use of an automated sorting system for separating freight by shipping
zone. We also rely on a third party transportation company to deliver our
merchandise from our warehouse to our stores.

                                        30
In order to accommodate our planned store growth, we recently signed a
lease for a 315,000 square foot facility also in New Jersey for a period of five
years with a five-year renewal option. We plan to use this building to warehouse
inventory needed to replenish and backstock all of our stores. This building
will also serve all of our general warehousing needs, such as storage of new
store merchandise, floor set merchandise and packaging supplies, with additional
capacity for processing as our growth requires. We expect this facility to be
fully operational by fall 2002. The staffing and management of this facility has
been outsourced to the same third party provider that operates the distribution
facility. This third party employs personnel represented by a labor union. There
have been no work stoppages or disruptions since the inception of our
relationship with this third party in 1991. We believe the relationship with the
employees to be good. Currently, we sublease unused space at this facility and
will continue to do so until we need it for our operations. We believe that our
current facilities are large enough to handle our expected store growth over the
next five years.

MANAGEMENT INFORMATION SYSTEMS

     Our management information systems and electronic data processing systems
provide a full range of retail, financial and merchandising applications. We
utilize a combination of customized and industry standard software systems to
provide various functions related to:

     - point-of-sales;

     - inventory management;

     - design;

     - planning and distribution; and

     - financial reporting.

     We communicate with each store on a daily basis to gather all information
on sales, merchandise transfers and sales trends and to transmit details
regarding price changes and pending deliveries. By updating our sales
information daily from each store's point of sale terminal, we can evaluate such
information to implement merchandising decisions, pricing changes and inventory
allocation.

     We view the use of technology as an important part of our growth strategy.
Over the next few years we intend to invest in new technology as appropriate.

COMPETITION

     The teen apparel market is highly competitive. We compete with a wide
variety of retailers including other specialty stores, department stores, mail
order retailers and mass merchandisers. Specifically, we compete with other teen
apparel retailers including, but not limited to, Abercrombie & Fitch, American
Eagle Outfitters, Gap, Hot Topic, Pacific Sunwear, Too, Urban Outfitters and Wet
Seal. Stores in our sector compete primarily on the bases of design, price,
quality, service and selection. We believe that our competitive advantage lies
with our differentiated brand and our unique combination of quality, comfort and
value. Moreover, we believe that we target a younger, value-oriented, customer,
while many of our competitors cater to a customer who is either older or seeking
cutting-edge fashion.

PROPERTIES

     We lease all of our store locations. Most of our leases have an initial
term of ten years with percentage rent clauses and do not contain extension
options. Generally, our leases allow for termination by us after a certain
period of time if sales at that site do not exceed specified levels.

     We currently lease approximately 18,500 square feet of office space at 1372
Broadway in New York, New York for our corporate headquarters and our design,
sourcing and production teams. This lease expires in January 2004.

                                        31
We also rent a facility in Wayne, New Jersey on a month-to-month basis.
This facility occupies approximately 9,000 square feet and is used as
administrative offices for finance, operations and information systems
personnel. In addition, we recently signed a lease for a 315,000 square foot
facility in South River, New Jersey for a five-year term with a five-year
renewal option. We anticipate that this facility will be fully operational in
fall 2002 and we will use it to warehouse inventory needed to replenish and
backstock all of our stores as well as serve all of our general warehousing
needs.

TRADEMARKS

     We have registered the Aeropostale(R) trademark and design with the U.S.
Patent and Trademark Office as a trademark for clothing and for a variety of
accessories, including sunglasses, belts and hats, and as a service mark for
retail clothing stores. We have also filed an intent-to-use application with the
U.S. Patent and Trademark Office to register aero(TM) for children's clothing
and accessories. We intend to file a statement of use for the aero(TM) mark for
children's clothing and accessories with the U.S. Patent and Trademark office.
Additionally, we have applied for or have obtained a registration for the
Aeropostale mark in 26 foreign countries where we obtain supplies, manufacture
goods or have the potential of doing so in the future.

EMPLOYEES

     As of February 2, 2002, we employed 1,080 full-time and 2,437 part-time
employees. We employ 126 of our employees at our corporate offices, and 3,391 at
our store locations. The number of part-time employees fluctuates depending on
our seasonal needs. None of our employees are represented by a labor union and
we consider the relationship with our employees to be good.

LEGAL PROCEEDINGS

     We are party to various legal proceedings in the ordinary course of
business. There are currently no material legal proceedings pending against us.

                                        32
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth information with respect to our executive
officers and directors as of February 2, 2002.
NAME                       AGE                        POSITION
----                       ----                       --------
Julian R. Geiger.........   56     Chairman and Chief Executive Officer, Director
John S. Mills............   54     President and Chief Operating Officer,
                                   Director
Michael J. Cunningham....   44     Senior Vice President -- Chief Financial
                                   Officer
Christopher L. Finazzo...   46     Executive Vice President -- Chief
                                   Merchandising Officer
Thomas P. Johnson........   43     Senior Vice President -- Director of Stores
Laura W. Moran...........   52     Senior Vice President -- Director of Human
                                   Resources
Olivera Lazic-Zangas.....   39     Senior Vice President -- Director of Design
Bodil Arlander...........   38     Director
Mary Elizabeth Burton....   50     Director
David Edwab..............   47     Director
John D. Howard...........   49     Director
Richard Metrick..........   60     Director
Julian R. Geiger has served as our Chairman and Chief Executive Officer
since August 1998. From 1996 to 1998, he held the position of President and
Chief Executive Officer of Federated Specialty Stores, a division of Federated
Department Stores, Inc., which included Aeropostale. Before joining Federated,
he was President of the Eagle Eye Kids wholesale and retail divisions of Asian
American Partners from 1993 to 1996. Prior to then, Mr. Geiger directed a wide
range of merchandising positions from 1975 to 1993 at R.H. Macy & Co., Inc.,
including President of Merchandising for Macy's East responsible for Young
Men's, Juniors, Misses Coats and Misses Swimwear.

     John S. Mills has served as our President and Chief Operating Officer since
February 2000, and as a director since August 1998. He previously served as our
Executive Vice President -- Director of Operations from 1998 to 2000. From 1994
through 1998 he held positions as Vice President of Operations and then Senior
Vice President of Operations for Federated Specialty Stores. Before joining the
specialty store division of R.H. Macy & Co., Inc. in 1988 as Vice President of
Operations, Mr. Mills held various executive positions with the Bamberger's
division of R.H. Macy & Co., Inc., Abraham & Strauss and M. Fortunoff's from
1969 until 1988.

     Michael J. Cunningham has served as our Senior Vice President -- Chief
Financial Officer since August 2000. He previously served as Chairman and
Co-Founder of Compass International Services Corporation from 1997 to 1999. He
also held various senior executive positions for American Express Company from
1984 to 1997, including Vice President -- Operations, Vice President -- Finance,
and Director of Corporate Finance. Mr. Cunningham is a Certified Public
Accountant.

     Christopher L. Finazzo was promoted to Executive Vice President -- Chief
Merchandising Officer in February 2002 after serving as Senior Vice
President -- General Merchandise Manager from 1999 to February 2002, and as Vice
President, Divisional Merchandise Manager for Aeropostale Men's from 1996 to
1999. From 1994 to 1996, he was President of C&E Marketing and from 1992 to
1994, Director of Merchandise for Shalor Designs. From 1991 to 1992, Mr. Finazzo
was Director of Merchandise for his own company, In the Paint, Inc. Prior to
then, Mr. Finazzo held various merchandise positions with R.H. Macy's & Co.,
Inc. including Sales Manager, Assistant Buyer, Buyer and Administrator.

     Thomas P. Johnson rejoined us in January 2001 as our Senior Vice
President -- Director of Stores after having served as Senior Vice President,
Vice President, Regional Manager and District Manager with

                                        33
Federated Specialty Stores from 1989 to 1996. In the interim, he served as
Senior Vice President -- Director of Stores for David's Bridal, Inc. in 2000 and
as Senior Vice President -- Director of Stores for Brooks Brothers, Inc. from
1997 to 2000. Mr. Johnson also held various field positions at Gap, Inc. as
Regional Manager for Banana Republic, District Manager and Store Manager for
Gap, Inc. from 1981 to 1989.

     Laura W. Moran has served as our Senior Vice President -- Director of Human
Resources since August 1998 and previously as Vice President -- Director of
Human Resources with Federated Specialty Stores. Between 1978 and 1998, Mrs.
Moran held several human resources positions with Bamberger's, including
Assistant Store Manager for Sales Support, Personnel Manager for Merchandising
Services, Personnel Manager and Employment Manager.

     Olivera Lazic-Zangas was promoted to Senior Vice President -- Director of
Design in February 2002. She rejoined Aeropostale in 1998 as Vice
President -- Director of Design after serving as a women's designer for Old Navy
for nine months. Prior to Old Navy, she was the Vice President -- Design
Director for Aeropostale, a position she held since 1997, after serving as the
Design Director for Women's Aeropostale from 1996 to 1997 and Women's Designer
from 1995 to 1996. Prior to 1996, Ms. Lazic-Zangas was a Men's Knit Designer for
the Federated Merchandising Group from 1988 to 1995.

     Bodil Arlander has served as a director since August 1998 and currently is
a Senior Managing Director at Bear, Stearns & Co. Inc. and a Principal of Bear
Stearns Merchant Banking, which she joined in April 1997. Between 1991 and 1997,
she worked in the Mergers and Acquisitions Group of Lazard Freres & Co. LLC.
Prior to entering the finance industry, Ms. Arlander worked throughout Europe in
the fashion and beauty industry. She also currently serves as a director of
Standard Holdings LLC and Uniscribe Professional Services, Inc.

     Mary Elizabeth Burton has served as a director since April 2001 and
currently is Chairman and Chief Executive Officer of BB Capital, Inc., a company
she founded in 1992 to provide advisory services to and make investments in
small to medium-sized retail businesses. Previously, Ms. Burton served as Chief
Executive Officer of a number of companies including Supercuts, Inc., PIP
Printing and Cosmetic Center, Inc. Ms. Burton also currently serves as a
director of The Sports Authority, Inc. and Staples, Inc.

     David Edwab has served as a director since January 2001 and currently is
the Vice Chairman of The Men's Wearhouse, Inc. From 2000 to 2001, Mr. Edwab was
a Senior Managing Director at Bear, Stearns & Co. Inc., serving as the Group
Head for Retail Investment Banking. Prior to then, he held several positions at
The Men's Wearhouse since 1991 including Treasurer, Chief Financial Officer,
Chief Operating Officer and President. Mr. Edwab began his career in public
accounting and was responsible for Deloitte & Touche's Southwest Corporate
Finance and Retail Practice for several years.

     John D. Howard has served as a director since August 1998 and currently is
a Senior Managing Director at Bear, Stearns & Co. Inc. and Head of Bear Stearns
Merchant Banking. From 1990 to 1997, he was a co-CEO of Vestar Capital Partners,
Inc., a private investment firm specializing in management buyouts. Previously,
he was a Senior Vice President of Wesray Capital Corporation, a private
investment firm specializing in leveraged buyouts. Mr. Howard also currently
serves as a director of several corporations, including Fitz and Floyd, Inc. and
Integrated Circuit Systems, Inc.

     Richard Metrick has served as a director since August 1998 and is a Senior
Managing Director at Bear, Stearns & Co. Inc. Prior to joining Bear Stearns in
March 1989, Mr. Metrick served as Chief Financial Officer of American Bakeries
Co. and of Hazeltine Corporation.

BOARD COMMITTEES

     Shortly after the consummation of this offering, we intend to establish an
audit committee and a compensation committee. The audit committee will consist
of three persons who are not employees of, and have no business relationships
with, Aeropostale. The audit committee will be responsible for reviewing our
internal accounting procedures and consulting with and reviewing the services
provided by our independent accountants. The compensation committee will also
consist of three persons who are not employees of, and

                                        34
have no business relationships with, Aeropostale. The compensation committee
will be responsible for reviewing and recommending to the board of directors the
compensation and benefits of all our officers and directors, including stock
compensation and loans and establishing and reviewing general policies relating
to the compensation and benefits of our employees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Currently, our executive committee consisting of John D. Howard and Julian
R. Geiger performs the functions that will be delegated to the compensation
committee. No member of our board of directors serves, and we anticipate that no
member of our compensation committee will serve, as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.

DIRECTOR COMPENSATION

     We currently reimburse members of the board of directors for any reasonable
out-of-pocket expenses incurred by them in connection with attendance at board
and committee meetings. We intend to pay each member of our audit committee and
our compensation committee a nominal fee for each meeting attended.

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

     Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

     - any breach of their duty of loyalty to the corporation or its
       stockholders;

     - acts or omissions not in good faith or which involve intentional
       misconduct or a knowing violation of law;

     - unlawful payments of dividends or unlawful stock repurchases or
       redemptions; or

     - any transaction from which the director derived an improper personal
       benefit.

     The limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

     Our certificate of incorporation provides that we will indemnify our
directors and officers and may indemnify our employees and other agents to the
fullest extent permitted by law. We believe that indemnification under our
certificate of incorporation covers at least negligence and gross negligence on
the part of indemnified parties. Our certificate of incorporation also permits
us to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in their capacity as
an officer, director, employee or other agent.

     The limited liability and indemnification provisions in our certificate of
incorporation may discourage stockholders from bringing a lawsuit against our
directors for breach of their fiduciary duty and may reduce the likelihood of
derivative litigation against our directors and officers, even though a
derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.

     At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted for directors, officers and controlling persons of us pursuant
to the foregoing provisions or otherwise, we have

                                        35
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

EXECUTIVE COMPENSATION

     Summary compensation table.  The following table sets forth the
compensation earned, awarded or paid for services rendered to us in all
capacities for the fiscal year ended August 4, 2001, by our Chief Executive
Officer and our four next most highly compensated executive officers who earned
more than $100,000 in salary and bonus during the fiscal year ended August 4,
2001, to whom we refer in this prospectus collectively as the named executive
officers:

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                               COMPENSATION
                                                               ANNUAL          ------------
                                                            COMPENSATION        SECURITIES
                                                         -------------------    UNDERLYING       ALL OTHER
                                           FISCAL YEAR    SALARY     BONUS     OPTIONS (#)    COMPENSATION(1)
                                           -----------   --------   --------   ------------   ---------------
Julian R. Geiger.........................     2001       $406,606   $358,820       --              $3,675
    Chairman and Chief Executive Officer
John S. Mills............................     2001        292,104    241,880       --               3,675
    President and Chief Operating Officer
Michael J. Cunningham....................     2001        179,327     20,132                        3,522
    Senior Vice President -- Chief
      Financial Officer
Christopher L. Finazzo...................     2001        190,945     25,369                           --
    Executive Vice President -- Chief
      Merchandising Officer
Laura W. Moran...........................     2001        173,451     39,407                        3,675
    Senior Vice President -- Director of
      Human Resources
---------------
(1) Represents amounts we paid pursuant to our Medical Reimbursement Executive
    Plan.

STOCK OPTIONS

     The following table provides information relating to options to purchase
our common stock granted during the fiscal year ended August 4, 2001 to the
executive officers named in the summary compensation table above.

                        INDIVIDUAL GRANTS -- FISCAL 2001
NUMBER OF       % OF TOTAL
                                 SHARES OF     OPTIONS GRANTED
                                AEROPOSTALE    TO EMPLOYEES IN
                                COMMON STOCK     FISCAL YEAR     EXERCISE OR
                                 UNDERLYING         ENDED        BASE PRICE     EXPIRATION     GRANT DATE
                                  OPTIONS      AUGUST 4, 2001      ($/SH)          DATE       PRESENT VALUE
                                ------------   ---------------   -----------   -------------  -------------
Name
------------------------------
Julian R. Geiger..............         --             --               --           --               --
John S. Mills.................         --             --               --           --               --
Michael J. Cunningham.........                      15.3%                      July 31, 2007
                                                     7.7                       July 31, 2007
Christopher L. Finazzo........                       7.7                       July 31, 2007
Laura W. Moran................                       3.1                       July 31, 2007
36
AGGREGATE OPTION EXERCISES DURING LAST FISCAL YEAR
                       AND FISCAL YEAR END OPTION VALUES

     The following table sets forth information with respect to the named
executive officers concerning option exercises for the fiscal year ended August
4, 2001 and exercisable and unexercisable options held as of August 4, 2001. The
value of unexercised in-the-money options is based on price of $     per share,
the fair market value of our common stock on August 4, 2001, minus the per share
exercise price, multiplied by the number of shares underlying the option.
NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                                  FISCAL YEAR ENDED               UNDERLYING OPTIONS              IN-THE-MONEY OPTIONS
                                    AUGUST 4, 2001                AT AUGUST 4, 2001                 AT AUGUST 4, 2001
                             ----------------------------   ------------------------------   -------------------------------
                               SHARES
                             ACQUIRED ON
                             EXERCISE(#)   VALUE REALIZED   EXERCISABLE   UNEXERCISABLE(1)   EXERCISABLE   UNEXERCISABLE(2)
                             -----------   --------------   -----------   ----------------   -----------   -----------------
Julian R. Geiger...........         --             --              --              --          $29,136         $445,160
John S. Mills..............         --             --              --              --           20,784          315,920
Michael J. Cunningham......         --             --              --              --               --           33,000
Christopher L. Finazzo.....                   $37,462                                            2,750           65,202
Laura W. Moran.............                    63,550                                              825           75,265
---------------
(1) All unvested options outstanding shall vest and become exercisable upon the
    consummation of this offering.

(2) Includes non-qualified options that although vested, will not be exercisable
    until the consummation of this offering.

1998 STOCK OPTION PLAN

     In August 1998, our board of directors and stockholders adopted our 1998
Stock Option Plan. The plan is intended to motivate and reward executives and
other key employees and to enable us to obtain and retain the services of
employees and consultants we consider essential to our long-term success. The
plan provides for benefits to be awarded in the form of incentive stock options
or non-qualified stock options. Benefits under the plan may be granted only to
persons who are our or our subsidiaries' executives and other key employees and
consultants. The plan is administered by our board of directors which has
complete authority to determine the terms, conditions and provisions of, and
restrictions relating to, and to grant, the benefits under the plan. As of
February 2, 2002, options to purchase          shares of our common stock were
outstanding under the 1998 Plan, all of which shall vest and become exercisable
upon the consummation of the offering.

     The number of shares of our common stock with respect to which benefits may
be granted under the plan may not exceed          shares in the aggregate. If
there is any change in our common stock, the number and type of shares available
under the plan and/or the price thereof, will be appropriately adjusted. As of
February 2, 2002, there were          shares available for grant under the plan.

     Options granted under the plan which are intended to qualify as incentive
stock options must be exercised within ten years of the date of grant of the
option or the expiration date set forth in the option grant, if earlier, subject
to earlier expiration upon termination of the holder's employment. The exercise
price of all options intended to qualify as incentive stock options must be at
least equal to the fair market value of the underlying shares of common stock on
the date of the grant. Incentive stock options granted to any participant who
owns 10% or more of our outstanding common stock must have an exercise price
equal to or exceeding 110% of the fair market value of a share of common stock
on the date of the grant and must not be exercisable for longer than five years.

     Our board of directors may amend or terminate the plan, but the board may
not amend the plan without the approval or our stockholders, if such amendment
would violate any law or agreement, or the rules of any exchange upon which the
common stock is listed.

     In the event of a change of control, the board may provide that the options
shall become immediately vested and that such options shall terminate if not
exercised on the date of the change in control, or that

                                        37
such options shall represent the right to receive the excess of consideration
per share of common stock offered in such change of control over the exercise
price of such options.

2002 LONG-TERM INCENTIVE PLAN

     Prior to the closing of the offering, we will adopt the Aeropostale 2002
Long-Term Incentive Plan, which will become effective upon the consummation of
this offering. The plan provides for grants of stock options, stock appreciation
rights, restricted stock and performance awards. Our directors, officers and
other employees and persons who engage in services for us are eligible for
grants under the plan. The purpose of the plan is to provide these individuals
with incentives to maximize stockholder value and otherwise contribute to our
success and to enable us to attract, retain and reward the best available
persons for positions of responsibility.

     A total of          shares of our common stock, representing      % of our
common stock outstanding upon completion of this offering, will be available for
issuance under the plan, subject to adjustment in the event of a reorganization,
stock split, merger or similar change in our corporate structure or the
outstanding shares of common stock. Our compensation committee will administer
the plan. Our board also has the authority to administer the plan and to take
all actions that the compensation committee is otherwise authorized to take
under the plan. The terms and conditions of each award made under the plan,
including vesting requirements, will be set forth consistent with the plan in a
written agreement with the grantee.

     Stock options.  Under the plan, the compensation committee or the board may
award grants of incentive stock options and other, non-qualified stock options.
The compensation committee also has the authority to grant options that will
become fully vested and exercisable automatically upon a change in control. The
compensation committee may not, however, award to any one person in any calendar
year options to purchase common stock equal to more than      % of the total
number of shares authorized under the plan, and it may not award incentive
options first exercisable in any calendar year whose underlying shares have a
fair market value greater than $100,000, determined at the time of grant.

     The compensation committee will determine the exercise price and term of
any option in its discretion. The exercise price of an incentive option,
however, may not be less than 100% of the fair market value of a share of common
stock on the date of grant and the option must be exercised within 10 years of
the date of grant. The exercise price of an incentive option awarded to a person
who owns stock constituting more than 10% of our voting power may not be less
than 110% of such fair market value on such date and the option must be
exercised within five years of the date of grant.

     Stock appreciation rights.  The compensation committee may grant stock
appreciation rights, or SARs, alone or in tandem with stock options, subject to
the terms and conditions it determines under the plan. SARs granted in tandem
with options become exercisable only when, to the extent and on the conditions
that the related options are exercisable, and they expire at the same time the
related options expire. The exercise of an option results in the immediate
forfeiture of any related SAR to the extent the option is exercised, and the
exercise of an SAR results in the immediate forfeiture of any related option to
the extent the SAR is exercised.

     Upon exercise of an SAR, the grantee will receive an amount in cash and/or
shares of common stock or other securities equal to the difference between the
fair market value of a share of common stock on the date of exercise and the
exercise price of the SAR or, in the case of an SAR granted in tandem with
options, of the option to which the SAR relates, multiplied by the number of
shares as to which the SAR is exercised.

     Performance awards.  The compensation committee may grant performance
awards contingent upon achievement by the grantee or by us, of set goals and
objectives regarding specified performance criteria, over a specified
performance cycle. Awards may include specific dollar-value target awards,
performance units, the value of which is established at the time of grant,
and/or performance shares, the value of which is equal to the fair market value
of a share of common stock on the date of grant. The value of a

                                        38
performance award may be fixed or fluctuate on the basis of specified
performance criteria. A performance award may be paid out in cash and/or shares
of common stock or other securities.

     Restricted stock.  Under the plan, the compensation committee may award
restricted stock subject to the conditions and restrictions, and for the
duration that it determines in its discretion.

     Amendment and termination of the plan.  The board may amend or terminate
the plan in its discretion, except that no amendment will become effective
without prior approval of our stockholders if such approval is necessary for
continued compliance with the performance-based compensation exception of
Section 162(m) of the Internal Revenue Code or any stock exchange listing
requirements. If not previously terminated by the board, the plan will terminate
on the tenth anniversary of its adoption.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

     We maintain a supplemental executive retirement plan, or SERP, which is an
unfunded defined benefit plan. The actuarial present value of accumulated
benefit obligations related to our SERP approximated $2.5 million at August 4,
2001, $1.6 million at July 29, 2000 and $1.8 million at July 31, 1999, using a
weighted average discount rate of 7% at August 4, 2001 and July 29, 2000 and
4.5% at July 31, 1999, and an assumed rate of compensation increase of 4.5% for
all years. Pension expense for the SERP amounted to $247,000 in fiscal 2001,
$171,000 in fiscal 2000 and $210,000 in fiscal 1999. Of these amounts $155,000
represented interest, $3,000 represented amortization of prior experienced
losses, and $89,000 represented the current year service component for fiscal
2001, $101,000 represented interest, ($10,000) represented amortization of prior
experienced gains, and $80,000 represented the current year service component
for fiscal 2000 and $110,000 represented interest and $100,000 represented the
current year service component for fiscal 1999.

     The following table illustrates, for representative average pensionable
compensation and years of benefit service classifications, the annual retirement
benefit that would be payable to an employee under our SERP if such employee
retired on December 31, 2001 at age 65, based on the straight-life annuity form
of payment. The annual retirement benefit amounts incorporate an offset factor
included in our SERP's benefit formula of a percentage of the employee's
estimated Social Security benefit, and are calculated based on the total salary
and bonus paid to an employee during the calendar year. Our SERP provides that a
maximum of 30 years of benefit service may be credited to a participant. The
number of years of benefit service that have been credited to our named
executive officers, as of December 31, 2001, are 28 years for Mr. Geiger, 30
years for Mr. Mills, 13 years for Mr. Finazzo and 27 years for Mrs. Moran. Mr.
Cunningham does not participate in our SERP. The benefit amounts set forth in
the following table are subject to further offsets attributable to benefits
accrued as of July 31, 1998 under the Supplementary Executive Retirement Plan of
Federated Department Stores, Inc. in the following present value amounts: Mr.
Geiger -- $249,904; Mr. Mills -- $225,242; Mr. Finazzo -- $3,563; and Mrs.
Moran -- $44,029.

                             PENSION PLAN TABLE(1)
YEARS OF SERVICE
                                      ------------------------------------------------
REMUNERATION                             15        20        25        30      35(2)
------------                          --------  --------  --------  --------  --------
$125,000............................  $ 18,600  $ 24,800  $ 31,000  $ 37,200  $ 37,200
 150,000............................    23,700    31,600    39,500    47,400    47,400
 175,000............................    28,800    38,400    48,100    57,700    57,700
 200,000............................    33,900    45,300    56,600    67,900    67,900
 225,000............................    39,000    52,100    65,100    78,100    78,100
 250,000............................    44,200    58,900    73,600    88,400    88,400
 300,000............................    54,400    72,500    90,700   108,800   108,800
 400,000............................    74,800    99,800   124,800   149,700   149,700
 450,000............................    85,100   113,400   141,800   170,200   170,200
 500,000............................    95,300   127,100   158,900   190,600   190,600
---------------
(1) The table reflects the Social Security benefit offset factor, but does not
    incorporate offsets due to benefits accrued under Federated's Supplementary
    Executive Retirement Plan.

(2) The maximum length of benefit service that may be credited to a participant
    under the plan is 30 years.

                                        39
QUALIFIED 401(k) PLAN

     We maintain a qualified 401(k) plan. Employees are permitted to contribute
up to 14% of their annual compensation to our 401(k) plan, not to exceed $11,000
per year. Under the plan, we make matching contributions of 50% of the first 5%
of annual deferral amount per participant, to the extent not limited by IRS
rules. The terms of the plan provide that our matching contributions vest 50%
after the participant has completed three years of service with us, 75% after
four years and 100% after five years. We contributed and expensed approximately
$278,000 in fiscal 2001, $245,000 in fiscal 2000 and $153,000 in fiscal 1999.

EMPLOYMENT AGREEMENTS

     We entered into an employment agreement with Julian R. Geiger in 1998 that
will remain effective through February 1, 2003, with the option to renew for
consecutive one-year terms thereafter. Under the agreement Mr. Geiger currently
receives an annual base salary of $410,000, an annual incentive bonus and
medical and other benefits. In addition, we will pay Mr. Geiger a special bonus
of $82,286 upon the consummation of this offering. Mr. Geiger's bonus is
calculated as a percentage of his annual salary plus the product of the annual
bonus pool available to senior management and the ratio of Mr. Geiger's salary
to the total executive group salary. If we terminate Mr. Geiger's employment
without cause or if Mr. Geiger resigns his position as a consequence of a
material reduction of his responsibilities, movement of our headquarters more
than twenty-five miles from its present location or a material breach of our
agreements with him, he will be entitled to receive his base salary for six
months following termination, however, if he is fired in connection with a sale
of the company, he is entitled to receive his base salary for eighteen months.
In either case, he would also receive his bonus for the period of the preceding
fiscal year that he was still employed at our company.

     We entered into an employment agreement with John S. Mills in 1998 that
will remain effective through February 1, 2003, with the option to renew for
consecutive one-year terms thereafter. Under the agreement Mr. Mills receives an
annual base salary of $300,000, an annual incentive bonus and medical and other
benefits. In addition, we will pay Mr. Mills a special bonus of $58,857 upon the
consummation of this offering. Mr. Mills' bonus is calculated in the same manner
as Mr. Geiger's. In all other respects, Mr. Mills' agreement with us is
substantially identical to Mr. Geiger's agreement described above.

                                        40
CERTAIN TRANSACTIONS

     Since August 2, 1998, we have not been a party to, nor have we currently
proposed, any transaction or series of similar transactions in which the amount
exceeds $60,000, and in which any director, executive officer, holder of more
than 5% of our common stock or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material interest, other
than compensation agreements and other agreements, which are described in the
"Management" section of this prospectus and the transactions described below. We
believe that each of the following transactions, other than the loans to our
executives, are on terms no less favorable than we could obtain from an
unrelated third party.

     Management services.  In July 1998, we entered into a management services
agreement with Bear Stearns Merchant Banking pursuant to which it had provided
management services to us and incurred expenses on our behalf. The services
consisted of formulating and implementing business strategies, including
identifying and assisting us in evaluating corporate opportunities, such as
marketing opportunities and financial strategies. Bear Stearns Merchant Banking
also assisted us with respect to lender, security holder and public and
government relations matters. Under the agreement, we paid Bear Stearns Merchant
Banking $450,000 in fiscal 2001, $403,000 in fiscal 2000 and $268,000 in fiscal
1999. In addition, upon the consummation of this offering Bear Stearns Merchant
Banking will be entitled to a fee equal to one percent of the proceeds we
receive from the sale of common stock in this offering. The agreement will
terminate by its terms upon the consummation of this offering.

     FMG sourcing agreement.  We employ Federated Merchandising Group, or FMG, a
wholly-owned subsidiary of a former holder of our Series A redeemable preferred
stock, Federated Department Stores, Inc., as an independent contractor to source
our merchandise. We paid fees of $0.9 million in fiscal 2000 and $3.3 million in
fiscal 1999 to FMG under our arrangement with them. As of November 9, 1999, FMG
ceased to be a related entity as we repurchased our outstanding shares of Series
A redeemable preferred stock from Federated on that date. Our agreement with FMG
provides that it will perform purchasing, facilitation and importation services
on our behalf in a manner substantially similar to the services provided to our
company when it was still of division of R.H. Macy & Co., Inc. Upon mutual
consent, this agreement may be terminated at any time.

     Loans to executives.  In 1999, we repurchased all of our outstanding shares
of Series A redeemable preferred stock from Federated Department Stores, Inc.
This triggered a loan forgiveness provision contained in loan agreements
regarding loans that Federated had previously made to Mr. Geiger and Mr. Mills.
This loan forgiveness caused Messrs. Geiger and Mills to incur significant tax
liability in 1999. We therefore extended interest free loans in the amount of
$70,000 to both Mr. Geiger and Mr. Mills to cover this tax liability. Mr. Geiger
and Mr. Mills each repaid all amounts outstanding on their respective loans in
February 2002 and currently do not have any outstanding indebtedness to our
company.

     Leases with stockholder.  We lease a number of our stores from the Simon
Property Group, L.P., an affiliate of SI-MSSD, LLC, which has been one of our
stockholders since October 1998. SI-MSSD, LLC holds          shares of our
Series B 12 1/2% redeemable preferred stock, which will be redeemed with a
portion of the proceeds of this offering, and          shares of our common
stock. Our leases with the Simon Property Group typically last ten years. Under
these leases, we generally pay a fixed amount of rent monthly plus a small
percentage of the store's gross sales. In most cases, we have the right to
terminate these leases if the store's gross sales do not meet an agreed upon
level. In many cases, in lieu of termination, we may elect to continue the lease
at a reduced monthly rent. Over our past three fiscal years, we have paid
approximately $9.6 million in the aggregate in rent to the Simon Property Group.

     Stockholders' agreement.  In August 1998, we and stockholders owning   % of
our outstanding common stock entered into an agreement pursuant to which each
party agreed to take all action necessary to ensure that five persons designated
by Bear Stearns Merchant Banking and three persons designated by Julian R.
Geiger, David Geltzer and John S. Mills as a group, referred to herein as the
management

                                        41
group, serve on our board of directors. The number of persons that each of Bear
Stearns Merchant Banking and the management group are entitled to designate to
our board under the agreement will be reduced if the number of shares of our
common stock that they each hold falls beneath set thresholds. Directors
designated by either Bear Stearns Merchant Banking or the management group may
only be removed by the party or parties entitled to nominate them. Pursuant to
this agreement, we also granted holders of          shares of our common stock
the registration rights set forth in "Description of Capital
Stock -- Registration Rights."

                                        42
PRINCIPAL AND SELLING STOCKHOLDERS

     The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of February 2, 2002, and as adjusted
to reflect the sale of common stock in this offering, by (i) each stockholder
known by us to own beneficially more than 5% of our common stock, (ii) each of
the named executive officers, (iii) each of our directors and (iv) all of our
directors and executive officers as a group. The table below assumes no exercise
of the underwriters' over-allotment option. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. Such
rules provide that in calculating the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of common stock
subject to options or warrants held by that person that are currently
exercisable or will become exercisable within 60 days after February 2, 2002 are
deemed outstanding. However, for each person listed below we have included all
options held by such person even if they will not be exercisable within 60 days
of February 2, 2002 because all outstanding options will vest and become
exercisable upon the consummation of this offering. Such shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
Unless otherwise indicated in the footnotes below, (i) the persons and entities
named in the table have sole voting and investment power with respect to all
shares beneficially owned, subject to community property laws where applicable
and (ii) the address of each of the individuals listed in the table is
Aeropostale, Inc., 1372 Broadway, New York, New York 10018. As of February 2,
2002, there were          shares of common stock outstanding, as adjusted to
reflect the conversion of all outstanding shares of non-voting common stock into
common stock upon closing of this offering.
SHARES                              SHARES
                                              BENEFICIALLY OWNED                  BENEFICIALLY OWNED
                                              PRIOR TO OFFERING     NUMBER OF       AFTER OFFERING
                                              ------------------      SHARES      ------------------
                                              NUMBER     PERCENT    OFFERED(1)    NUMBER     PERCENT
                                              -------    -------    ----------    -------    -------
Bear Stearns MB 1998-1999 Pre-Fund,
  LLC(2)....................................
  383 Madison Avenue
  New York, NY 10179
SI-MSSD, LLC(2)(3)..........................
  114 West Washington Street
  15th Floor East
  Indianapolis, IN 46204
David Geltzer...............................
  326 North Post Road
  Princeton Junction, NJ 08550
Julian R. Geiger(4).........................
John S. Mills(5)............................
Michael J. Cunningham(6)....................
Christopher L. Finazzo(7)...................
Thomas P. Johnson(8)........................
Laura W. Moran(9)...........................
Bodil Arlander..............................
Mary Elizabeth Burton(10)...................
David Edwab.................................
John D. Howard..............................
Richard Metrick.............................
All directors and executive officers as a
  group (12 persons)(11)....................
---------------
   * Less than 1% of the outstanding shares of common stock.

 (1) In the event that the underwriters exercise their over-allotment option,
             will sell an additional        shares,         will sell an
     additional        shares,         will sell an additional         shares,
     and             will sell an additional        shares.

                                        43
(2) Includes        shares beneficially owned by SI-MSSD, LLC registered in the
     name of Bear Stearns MB 1998-1999 Pre-Fund, LLC as trustee under a voting
     trust agreement dated October 6, 1998 between SI-MSSD, LLC and a
     predecessor of Bear Stearns MB 1998-1999 Pre-Fund, LLC, pursuant to which
     the Pre-Fund has the voting authority over the shares. The voting trust
     agreement shall terminate by its terms upon the consummation of this
     offering.

 (3) SI-MSSD, LLC is a limited liability company controlled by members of the
     Simon family. The Simon family also collectively owns a significant
     ownership interest in the Simon Property Group, L.P.

 (4) Includes options to purchase        shares of common stock.

 (5) Includes options to purchase        shares of common stock.

 (6) Includes options to purchase        shares of common stock.

 (7) Includes options to purchase        shares of common stock.

 (8) Includes options to purchase        shares of common stock.

 (9) Includes options to purchase        shares of common stock.

(10) Includes options to purchase        shares of common stock.

(11) Includes options to purchase        shares of common stock.

                                        44
DESCRIPTION OF CAPITAL STOCK

GENERAL

     Upon completion of the offering we will be authorized to issue
shares of common stock, $0.01 par value, and           shares of undesignated
preferred stock, $0.01 par value. The following description of our capital stock
does not purport to be complete and is subject to and qualified in its entirety
by our certificate of incorporation and bylaws, which are included as exhibits
to the registration statement of which this prospectus forms a part, and by the
provisions of applicable Delaware law.

COMMON STOCK

     As of February 2, 2002, there were           shares of common stock
outstanding which were held of record by 22 stockholders, giving effect to the
conversion of all outstanding shares of non-voting common stock into common
stock upon the consummation of this offering.

     The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the board of directors out of funds legally available for that
purpose. In the event of a liquidation, dissolution or winding up of our
company, the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
preferred stock, if any, then outstanding. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable, and the shares of common stock
to be issued in this offering will be fully paid and nonassessable.

PREFERRED STOCK

     Upon the closing of this offering, our board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of           shares of
preferred stock, $0.01 par value per share, in one or more series, each of the
series to have such rights and preferences, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by our board of directors. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of
holders of any preferred stock that may be issued in the future. Issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for others to acquire, or of discouraging others from
attempting to acquire, a majority of our outstanding voting stock. We have no
present plans to issue any shares of preferred stock.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

     Provisions of Delaware law and our certificate of incorporation and bylaws
could make it more difficult to acquire us by means of a tender offer, a proxy
contest or otherwise and the removal of incumbent officers and directors. These
provisions, summarized below, are expected to discourage types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us
outweigh the disadvantages of discouraging takeover or acquisition proposals
because, among other things, negotiation of these proposals could result in an
improvement of their terms.

     We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless (with certain exceptions) the "business
combination" or the transaction in which the person became an interested
stockholder is approved in a prescribed manner.

                                        45
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status, did own) 15% or more of a
corporation's voting stock. The existence of this provision would be expected to
have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.

REGISTRATION RIGHTS

     Subject to limitations contained in the Stockholders Agreement, dated
August 3, 1998, between us and the holders of           shares of our common
stock, at any time beginning 180 days after the date of this prospectus, these
holders may require that we use our best efforts to register up to           of
their shares of common stock for public resale. In addition, if we register any
of our securities either for our own account or for the account of other
security holders, the holders of           shares of common stock are entitled
to include their shares of common stock in the registration, subject to the
ability of the underwriters to limit the number of shares included in this
offering. All registration expenses must be borne by us and all selling expenses
relating to registrable securities must be borne by the holders of the
securities being registered.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the common stock is                .

                                        46
SHARES ELIGIBLE FOR FUTURE SALE

     Upon completion of this offering, we will have           shares of common
stock outstanding. Of these shares, all of the shares sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless such shares are purchased by "affiliates" as that term is
defined in Rule 144 under the Securities Act. The remaining           shares of
common stock held by existing stockholders are "restricted securities" as that
term is defined in Rule 144 under the Securities Act, described below. Subject
to such restrictions and applicable law, the holders of           shares of
common stock will be free to sell any and all shares of common stock they
beneficially own at various times commencing 180 days after the date of this
prospectus. The holders of           shares of common stock will be free to sell
any shares of common stock they beneficially own on                , 2002.

     We cannot make any predictions as to the number of shares that may be sold
in the future or the effect, if any, that sales of these shares, or the
availability of these shares for future sale, will have on the prevailing market
prices of our common stock. Sales of a significant number of shares of our
common stock in the public market, or the perception that these sales could
occur, could adversely affect prevailing market prices of our common stock and
could impair our ability to raise equity capital in the future.

LOCK-UP AGREEMENTS

     We, our officers and directors and holders of 5% or more of our common
stock, have agreed that, subject to limited exceptions, we will not, for a
period of 180 days after the date of this prospectus, offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any shares of
common stock or securities convertible into or exchangeable or exercisable for
any shares of common stock, or publicly disclose the intention to make any such
offer, sale, pledge or disposal, without the prior written consent of Bear,
Stearns & Co. Inc. and Merrill Lynch. Bear, Stearns & Co. Inc. and Merrill Lynch
may together release all or a portion of the shares subject to this lock-up
agreement at any time without prior notice.

RULE 144

     In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that do not exceed the greater of:

     - 1% of the number of shares of common stock then outstanding, which will
       equal approximately          shares immediately after this offering; or

     - the average weekly trading volume of the common stock on the Nasdaq
       National Market during the four calendar weeks preceding the filing of a
       notice on Form 144 with respect to the sale.

     Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.

RULE 144(k)

     Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell the shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

RULE 701

     Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirement, of Rule 144. Any of our employees, officers,
directors or consultants who purchased shares under a written compensatory plan
or

                                        47
contract may be entitled to rely on the resale provisions of Rule 701. Rule 701
permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell their shares in reliance on Rule 144
without having to comply with the holding period, public information, volume
limitation or notice provisions of Rule 144. All holders of Rule 701 shares are
required to wait until 90 days after the date of this prospectus before selling
their shares.

     We intend to file a Registration Statement on Form S-8 registering shares
of common stock subject to outstanding options or reserved for future issuance
under our stock plans. As of February 2, 2002, options to purchase a total
          shares were outstanding and           shares were reserved for future
issuance under our stock plans. Common stock issued upon exercise of outstanding
vested options, other than common stock issued to our affiliates is available
for immediate resale in the open market.

REGISTRATION RIGHTS

     Beginning 180 days after the date of this offering, holders of
shares of our common stock will be able to require us to conduct a registered
public offering of their shares. In addition, holders of           shares of our
common stock will be entitled to have their shares included for sale in
subsequent registered offerings of our common stock. See "Description of Capital
Stock -- Registration Rights." Registration of such shares under the Securities
Act would, except for shares purchased by affiliates, result in such shares
becoming freely tradable without restriction under the Securities Act
immediately upon the effectiveness of such registration.

                                        48
UNDERWRITING

     Subject to the terms and conditions of an underwriting agreement, dated
          , 2002, the underwriters named below, acting through their
representatives, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Banc of America Securities LLC, U.S. Bancorp Piper Jaffray Inc.
and Wachovia Securities, have severally agreed with us and the selling
stockholders to purchase from us and the selling stockholders the number of
shares of common stock set forth below opposite their respective names.
NUMBER OF
UNDERWRITERS                                                   SHARES
------------                                                  ---------
Bear, Stearns & Co. Inc. ...................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Banc of America Securities LLC..............................
U.S. Bancorp Piper Jaffray Inc. ............................
Wachovia Securities.........................................
                                                              --------
Total.......................................................
                                                              ========
The underwriters' representatives have advised us that the underwriters
propose to offer the shares of common stock to the public at the public offering
price set forth on the cover page of this prospectus and to certain dealers at
that price less a concession of not in excess of $     per share, of which
$       may be reallowed to other dealers. After this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
representatives. No such reduction shall change the amount of proceeds to be
received by us as set forth on the cover page of this prospectus. The common
stock is offered by the underwriters as stated herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or in
part. The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

     Certain selling stockholders have granted to the underwriters an option,
exercisable within   days after the date of this prospectus, to purchase up to
an aggregate of           shares of common stock from such selling stockholders
to cover over-allotments, if any, at the public offering price less underwriting
discounts and commissions. If the underwriters exercise their over-allotment
option to purchase any of the additional      shares of common stock, each
underwriter, subject to certain conditions, will become obligated to purchase
its pro-rata portion of these additional shares based on the underwriter's
percentage underwriting commitment in the offering as indicated in the table
above. If purchased, these additional shares will be sold by the underwriters on
the same terms as those on which the shares offered hereby are being sold. The
relevant selling stockholders will be obligated, pursuant to the over-allotment
option, to sell shares to the underwriters to the extent the over-allotment
option is exercised. The underwriters may exercise the over-allotment option
only to cover over-allotments made in connection with the sale of the shares of
common stock offered in this offering.

     The following table shows the public offering price, underwriting discounts
and commissions and proceeds before expenses to us and the selling stockholders.
Such amounts are shown assuming both no exercise and full exercise of the
underwriters' over-allotment option to purchase additional shares.
TOTAL
                                                            --------------------------------
                                                    PER        WITHOUT             WITH
                                                   SHARE    OVER-ALLOTMENT    OVER-ALLOTMENT
                                                   -----    --------------    --------------
Public offering prices...........................    $            $                 $
Underwriting discounts...........................    $            $                 $
Proceeds, before expenses, to us.................    $            $                 $
Proceeds, before expenses, to the selling
  stockholders...................................    $            $                 $
49
The expenses of the offering, other than underwriting discounts and
commissions referred to above, are estimated at $          and are payable
entirely by us.

     We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, liabilities arising from
breaches of representations and warranties contained in the underwriting
agreement, or to contribute to payments that the underwriters may be required to
make in respect of those liabilities.

     Each of our executive officers and directors and principal stockholders,
including without limitation, the selling stockholders, has agreed for a period
of 180 days after the date of this prospectus, subject to limited exceptions,
not to:

     - offer to sell, contract to sell, or otherwise sell, dispose of, loan,
       pledge or grant any rights with respect to any shares of common stock or
       any options or warrants to purchase any shares of common stock, or any
       securities convertible into or exchangeable for shares of common stock
       owned as of the date of this prospectus or thereafter acquired directly
       by those holders or with respect to which they have the power of
       disposition; or

     - enter into any swap or other arrangement that transfers all or a portion
       of the economic consequences associated with the ownership of any common
       stock (regardless of whether any of these transactions are to be settled
       by the delivery of common stock, or such other securities, in cash or
       otherwise)

without the prior written consent of Bear, Stearns & Co. Inc. and Merrill Lynch.
Bear, Stearns & Co. Inc. and Merrill Lynch may together, however, in their sole
discretion and at any time or from time to time before the termination of the
180-day period, without notice, release all or any portion of the securities
subject to lock-up agreements.

     In addition, we have agreed that, subject to certain exceptions, during the
180-day lock-up period we will not, without the prior written consent of Bear,
Stearns & Co. Inc. and Merrill Lynch consent to the disposition of any shares
held by stockholders subject to lock-up agreements prior to the expiration of
the lock-up period, or issue, sell, contract to sell, or otherwise dispose of,
any shares of common stock, any options or warrants to purchase any shares of
common stock or any securities convertible into, exercisable for or exchangeable
for shares of common stock other than the sale of common stock in this offering,
the issuance of our common stock upon the exercise of outstanding options or
warrants, and the issuance of options or shares of common stock under existing
stock option and incentive plans.

     Other than in the United States, no action has been taken by us, the
selling stockholders or the underwriters that would permit a public offering of
the shares of common stock offered by this prospectus in any jurisdiction where
action for that purpose is required. The shares of common stock offered by this
prospectus may not be offered or sold, directly or indirectly, nor may this
prospectus or any other offering material or advertisements in connection with
the offer and sale of any such shares of common stock be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that jurisdiction.
Persons into whose possession this prospectus comes are advised to inform
themselves about and to observe any restrictions relating to the offering and
the distribution of this prospectus. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any shares of common stock
offered by this prospectus in any jurisdiction in which such an offer or a
solicitation is unlawful.

     We have submitted an application to list our common stock on the New York
Stock Exchange under the symbol "ARO."

     A prospectus in electronic format may be made available on the Internet
sites or through other online services maintained by one or more of the
underwriters of this offering, or by their affiliates. In those cases,
prospective investors may view offering terms online and, depending upon the
particular underwriter, prospective investors may be allowed to place orders
online. The underwriters may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such allocation for

                                        50
online distributions will be made by the representatives on the same basis as
other allocations. Other than the prospectus in electronic format, the
information on any underwriter's web site and any information contained in any
other web site maintained by an underwriter is not part of the prospectus or the
registration statement of which this prospectus forms a part, has not been
approved and/or endorsed by us or any underwriter in its capacity as underwriter
and should not be relied upon by investors.

     The representatives have advised us that, pursuant to Regulation M under
the Securities Exchange Act, some participants in the offering may engage in
transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, that may have the effect of stabilizing or
maintaining the market price of the shares of common stock at a level above that
which might otherwise prevail in the open market. A "stabilizing bid" is a bid
for or the purchase of shares of common stock on behalf of the underwriters for
the purpose of fixing or maintaining the price of the common stock. A "syndicate
covering transaction" is the bid for or purchase of common stock on behalf of
the underwriters to reduce a short position incurred by the underwriters in
connection with the offering. A "penalty bid" is an arrangement permitting the
representatives to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with this offering if the common
stock originally sold by such underwriter or syndicate member is purchased by
the representatives in a syndicate covering transaction and has therefore not
been effectively placed by such underwriter or syndicate member. The
representatives have advised us that such transactions may be effected on the
New York Stock Exchange or otherwise and, if commenced, may be discontinued at
any time.

     Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for the common stock
offered by this prospectus has been determined though negotiations between us,
the selling stockholders, and the representatives of the underwriters. Among the
factors considered in these negotiations were prevailing market conditions, our
financial information, market valuations of other companies that we and the
representatives of the underwriters believe to be comparable to us, estimate of
our business potential, the present state of our development and other factors
deemed relevant.

     At our request, the underwriters have reserved for sale at the initial
public offering price up to 5% of the shares in this offering to be sold to its
directors, officers, employees and associates. The number of shares available
for sale to the general public will be reduced to the extent such shares are
purchased. Any of these reserved shares not so purchased will be offered by the
underwriters on the same basis as the shares offered by this prospectus.

     Certain of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment banking and other financial and
banking services to us for which they have in the past received, and may in the
future receive, customary fees.

     Management services agreement.  In July 1998, we entered into a management
services agreement with Bear Stearns Merchant Banking pursuant to which it had
provided management services to us and incurred expenses on our behalf. The
services consisted of formulating and implementing business strategies,
including identifying and assisting us in evaluating corporate opportunities,
such as marketing opportunities and financial strategies. Bear Stearns Merchant
Banking also assisted us with respect to lender, security holder and public and
government relations matters. Under the agreement, we paid Bear Stearns Merchant
Banking $450,000 in fiscal 2001, $403,000 in fiscal 2000 and $268,000 in fiscal
1999. In addition, upon the consummation of this offering Bear Stearns Merchant
Banking will be entitled to a fee equal to one percent of the proceeds we
receive from the sale of common stock in this offering. The agreement will
terminate by its terms upon the consummation of this offering.

     Bear, Stearns & Co. Inc. is a member of the National Association of
Securities Dealers, Inc. (NASD). This offering is being conducted in accordance
with the NASD Conduct Rules. Under Rule 2720 of the NASD Conduct Rules, we are
considered an affiliate of Bear Stearns & Co. Inc. Under Rule 2710, because we
intend to use more than 10% of the net proceeds from the sale of common stock in
this offering to redeem all of our outstanding shares of 12 1/2% Series B
redeemable preferred stock, of which 5,357 shares or 86.7% are owned by Bear,
Stearns MB 1998-1999 Pre-Fund LLC, an affiliate of
                                        51
Bear Stearns & Co. Inc., we are deemed to have a conflict of interest with Bear,
Stearns & Co. Inc. Under these rules, when an NASD member participates in the
underwriting of an affiliate's equity securities and there is a conflict of
interest, the public offering price per share can be no lower than that
recommended by a "qualified independent underwriter" meeting certain standards.
Merrill Lynch is assuming the responsibilities of acting as the qualified
independent underwriter in pricing the offering and conducting due diligence.
The initial public offering price of the shares of our common stock will be no
higher than the price recommended by Merrill Lynch which will not receive any
additional compensation in connection with its acting as a qualified independent
underwriter.

     Underwriters.  First Union Securities, Inc. (acting under the trade name
Wachovia Securities) is an indirect, wholly-owned subsidiary of Wachovia
Corporation. Wachovia Corporation conducts its investment banking, institutional
and capital markets businesses through its various bank, broker-dealer and
nonbank subsidiaries (including First Union Securities, Inc.) under the trade
name of Wachovia Securities. Any references to Wachovia Securities in this
prospectus, however, do not include Wachovia Securities, Inc., member NASD/SIPC
and a separate broker-dealer subsidiary of Wachovia Corporation and an affiliate
of First Union Securities, Inc., which may or may not be participating as a
selling dealer in the distribution of the common stock offered by this
prospectus.

                                 LEGAL MATTERS

     The validity of the common stock offered hereby will be passed upon for us
by Kirkland & Ellis, New York, New York. Certain legal matters will be passed
upon for the underwriters by Paul, Hastings, Janofsky & Walker LLP, New York,
New York.

                                    EXPERTS

     The financial statements as of August 4, 2001 and July 29, 2000 and for
each of the three years in the period ended August 4, 2001 included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein and have been so included in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We filed with the Securities and Exchange Commission, Washington, D.C., a
registration statement on Form S-1 under the Securities Act with respect to the
shares of common stock sold in this offering. This prospectus does not contain
all the information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to our company and our
common stock, we refer you to the registration statement and to the exhibits and
schedules that were filed with the registration statement. Statements contained
in this prospectus as to the contents of any contract or other document that is
filed as an exhibit to the registration statement are not necessarily complete,
and we refer you to the full text of the contract or other document filed as an
exhibit to the registration statement. A copy of the registration statement may
be inspected by anyone without charge at the Public Reference Section of the
Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of all or any portion of the
registration statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of prescribed fees. The Securities and Exchange Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Securities and Exchange Commission. The address of the site is
http://www.sec.gov.

     Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934, and,
in accordance with the requirements of the Securities Exchange Act of 1934, will
file periodic reports, proxy statements and other information with the
Securities and Exchange Commission. These periodic reports, proxy statements and
other information will be available for inspection and copying at the regional
offices, public reference facilities and web site of the Securities and Exchange
Commission referred to above.

                                        52
AEROPOSTALE, INC.

                         INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report................................  F-2
Balance Sheets as of July 29, 2000, August 4, 2001 and
  November 3, 2001 (unaudited)..............................  F-3
Statements of Income for the fiscal years ended July 31,
  1999, July 29, 2000 and August 4, 2001, the thirteen weeks
  ended November 3, 2001 (unaudited) and October 28, 2000
  (unaudited)...............................................  F-4
Statements of Stockholders' Equity for the fiscal years
  ended July 31, 1999, July 29, 2000 and August 4, 2001, and
  the thirteen weeks ended November 3, 2001 (unaudited).....  F-5
Statements of Cash Flows for the fiscal years ended July 31,
  1999, July 29, 2000 and August 4, 2001, the thirteen weeks
  ended November 3, 2001 (unaudited) and October 28, 2000
  (unaudited)...............................................  F-6
Notes to Financial Statements...............................  F-7
F-1
INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
of Aeropostale, Inc.

     We have audited the accompanying balance sheets of Aeropostale, Inc. (the
"Company") as of August 4, 2001, and July 29, 2000, and the related statements
of income, stockholders' equity, and cash flows for each of the three fiscal
years in the period ended August 4, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such financial statements present fairly, in all material
respects, the financial position of Aeropostale, Inc. as of August 4, 2001, and
July 29, 2000, and the results of its operations and its cash flows for each of
the three fiscal years in the period ended August 4, 2001 in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

January 26, 2002
New York, New York

                                       F-2
AEROPOSTALE, INC.

                                 BALANCE SHEETS
JULY 29,    AUGUST 4,    NOVEMBER 3,
                                                               2000        2001          2001
                                                             --------    ---------    -----------
                                                                                      (UNAUDITED)
                                                                    (DOLLARS IN THOUSANDS)
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents................................  $ 3,717     $  6,506      $  7,313
  Merchandise inventory....................................   47,966       58,679        66,310
  Deferred income taxes....................................    1,093          303           303
  Other current assets.....................................    9,639        7,207         9,906
                                                             -------     --------      --------
     Total current assets..................................   62,415       72,695        83,832
FIXTURES, EQUIPMENT AND IMPROVEMENTS -- Net................   23,016       42,344        48,757
DEFERRED INCOME TAXES......................................    7,530        5,477         4,628
OTHER ASSETS...............................................      578          612           604
                                                             -------     --------      --------
          TOTAL ASSETS.....................................  $93,539     $121,128      $137,821
                                                             =======     ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Revolving credit facility................................  $26,987     $ 35,267      $ 15,829
  Accounts payable.........................................   15,812       13,311        18,750
  Accrued expenses.........................................   11,430       13,307        25,867
                                                             -------     --------      --------
     Total current liabilities.............................   54,229       61,885        60,446
OTHER NONCURRENT LIABILITIES:
  Negative goodwill net of accumulated amortization of $468
     and $702..............................................    1,866        1,632            --
  Other liabilities........................................   13,443       22,278        25,665
SERIES A EXCHANGEABLE REDEEMABLE PREFERRED STOCK:
  $0.01 par value per share authorized, issued and
     outstanding, liquidation preference, $6,000; 6%
     cumulative............................................       --           --            --
SERIES B REDEEMABLE PREFERRED STOCK:
  $0.01 par value per share authorized, issued and
     outstanding, 6,250 shares liquidation preference,
     $6,250; 12.5% cumulative..............................    7,995        9,043         9,326
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Common stock -- par value, $0.01 per share; 200,000
     shares authorized, 82,500 shares issued and
     outstanding...........................................        1            1             1
  Common stock -- Nonvoting, par value, $0.01 per share;
     200,000 shares authorized, 175, 1,303 and 1,428 shares
     issued and outstanding................................       --           --            --
  Additional paid-in capital...............................      950          963           981
  Retained earnings........................................   15,055       25,326        41,402
                                                             -------     --------      --------
     Total stockholders' equity............................   16,006       26,290        42,384
                                                             -------     --------      --------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............  $93,539     $121,128      $137,821
                                                             =======     ========      ========
See notes to financial statements.
                                       F-3
AEROPOSTALE, INC.

                              STATEMENTS OF INCOME
FOR THE YEAR ENDED            THIRTEEN WEEKS ENDED
                                             -------------------------------   -------------------------
                                             JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                               1999       2000       2001         2000          2001
                                             --------   --------   ---------   -----------   -----------
                                                                               (UNAUDITED)   (UNAUDITED)
                                                    (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
NET SALES..................................  $152,506   $213,445   $304,767      $76,831      $126,019
COST OF SALES (including certain buying,
  occupancy and warehousing expenses)......   110,489    151,973    218,618       51,081        77,085
                                             --------   --------   --------      -------      --------
     Gross profit..........................    42,017     61,472     86,149       25,750        48,934
                                             --------   --------   --------      -------      --------
COSTS AND EXPENSES:
  Selling, general and administrative
     expenses..............................    32,406     45,680     65,918       15,215        23,695
  Store closing expenses...................        --         --        815           --            --
  Amortization of negative goodwill........      (234)      (234)      (234)         (57)           --
                                             --------   --------   --------      -------      --------
     Total costs and expenses..............    32,172     45,446     66,499       15,158        23,695
                                             --------   --------   --------      -------      --------
OPERATING INCOME...........................     9,845     16,026     19,650       10,592        25,239
INTEREST EXPENSE -- Net of interest income
  of $24, $20, $197, $0 and $0.............        86        911      1,671          655           282
                                             --------   --------   --------      -------      --------
INCOME BEFORE INCOME TAXES.................     9,759     15,115     17,979        9,937        24,957
PROVISION FOR INCOME TAXES.................     3,529      5,749      7,065        3,930        10,230
                                             --------   --------   --------      -------      --------
INCOME FROM CONTINUING OPERATIONS..........     6,230      9,366     10,914        6,007        14,727
DISCONTINUED OPERATIONS:
  Loss from operations of discontinued
     Chelsea Cambell business (less
     applicable income tax benefit of $583
     and $2,008)...........................      (268)    (3,212)        --           --            --
  Gain on disposal of Chelsea Cambell
     business (less applicable benefit of
     $2,776 and expense of $257)...........        --      5,214        405           --            --
                                             --------   --------   --------      -------      --------
  Income (loss) on discontinued
     operations............................      (268)     2,002        405           --            --
CUMULATIVE EFFECT OF ACCOUNTING CHANGE.....        --         --         --           --         1,632
                                             --------   --------   --------      -------      --------
NET INCOME.................................  $  5,962   $ 11,368   $ 11,319      $ 6,007      $ 16,359
                                             ========   ========   ========      =======      ========
BASIC NET INCOME (LOSS) PER COMMON SHARE
  From continuing operations...............  $  60.54   $ 100.85   $ 118.48      $ 69.55      $ 172.33
  From discontinued operations.............     (3.24)     24.25       4.86           --            --
  From cumulative accounting change........        --         --         --           --         19.47
                                             --------   --------   --------      -------      --------
  Net income per share.....................  $  57.30   $ 125.10   $ 123.34      $ 69.55      $ 191.80
                                             ========   ========   ========      =======      ========
DILUTED NET INCOME (LOSS) PER COMMON SHARE:
  From continuing operations...............  $  54.49   $  90.32   $ 104.70      $ 62.06      $ 152.01
  From discontinued operations.............     (2.92)     21.72       4.30           --            --
  From cumulative accounting change........        --         --         --           --         17.18
                                             --------   --------   --------      -------      --------
  Net income per share.....................  $  51.57   $ 112.04   $ 109.00      $ 62.06      $ 169.19
                                             ========   ========   ========      =======      ========
Basic weighted average number of shares
  outstanding..............................    82,502     82,559     83,276       82,770        83,817
Diluted weighted average number of shares
  outstanding..............................    91,665     92,184     94,226       92,765        95,018
See notes to financial statements.
                                       F-4
AEROPOSTALE, INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK
                                         COMMON STOCK        NONVOTING      ADDITIONAL
                                        ---------------   ---------------    PAID-IN     RETAINED
                                        SHARES   AMOUNT   SHARES   AMOUNT    CAPITAL     EARNINGS    TOTAL
                                        ------   ------   ------   ------   ----------   --------   -------
                                                              (DOLLARS IN THOUSANDS)
BALANCE, AUGUST 1, 1998:..............  82,500    $ 1        --     $--        $948      $    --    $   949
  Net income..........................      --     --        --      --          --        5,962      5,962
  Stock options exercised.............      --     --        17      --          --           --         --
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,187)    (1,187)
  Accretion of Series A Preferred
    Stock.............................      --     --        --      --          --          (48)       (48)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, JULY 31, 1999:...............  82,500      1        17      --         948        4,727      5,676
  Net income..........................      --     --        --      --          --       11,368     11,368
  Stock options exercised.............      --     --       158      --           2           --          2
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,021)    (1,021)
  Accretion of Series A Preferred
    Stock.............................      --     --        --      --          --          (19)       (19)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, JULY 29, 2000:...............  82,500      1       175      --         950       15,055     16,006
  Net income..........................      --     --        --      --          --       11,319     11,319
  Stock options exercised.............      --     --     1,128      --          13           --         13
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --       (1,048)    (1,048)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, AUGUST 4, 2001:..............  82,500      1     1,303      --         963       25,326     26,290
  Net income..........................      --     --        --      --          --       16,359     16,359
  Stock options exercised.............      --     --       125      --          18           --         18
  Accrued dividend -- redeemable
    preferred stock...................      --     --        --      --          --         (283)      (283)
                                        ------    ---     -----     ---        ----      -------    -------
BALANCE, NOVEMBER 3, 2001
  (unaudited):........................  82,500    $ 1     1,428     $--        $981      $41,402    $42,384
                                        ======    ===     =====     ===        ====      =======    =======
See notes to financial statements.
                                       F-5
AEROPOSTALE, INC.

                            STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED            THIRTEEN WEEKS ENDED
                                                      -------------------------------   -------------------------
                                                      JULY 31,   JULY 29,   AUGUST 4,   OCTOBER 28,   NOVEMBER 3,
                                                        1999       2000       2001         2000          2001
                                                      --------   --------   ---------   -----------   -----------
                                                                                        (UNAUDITED)   (UNAUDITED)
                                                                        (AMOUNTS IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................  $ 5,962    $ 11,368   $ 11,319     $  6,007      $ 16,359
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization...................      244       3,799      3,938          731         1,428
    Amortization of leases..........................     (997)     (1,451)    (1,917)        (389)         (610)
    Impairment charge...............................       --          --        815           --            --
    Amortization of negative goodwill...............   (1,284)       (847)      (234)         (57)           --
    Gain on disposal of discontinued operations.....      851       2,782       (662)          --            --
    Deferred rent, net..............................      843         916      1,132          262            87
    Pension expense.................................      210         171        247           75           100
    Deferred income taxes...........................      678       2,068      2,843          577           849
    Cumulative effect of accounting change..........       --          --         --           --        (1,632)
    Changes in operating assets and liabilities:
      Merchandise inventory.........................   (3,203)    (20,964)   (10,713)     (11,039)       (7,631)
      Other current assets..........................   (1,092)     (6,520)     2,432          826        (2,699)
      Other assets..................................     (210)       (357)        21          (15)           (9)
      Accounts payable..............................    5,914       5,317     (2,501)      (2,325)        5,439
      Accrued expenses and other liabilities........    5,188       8,129     12,844        5,980        16,370
                                                      -------    --------   --------     --------      --------
         Net cash provided by operating
           activities...............................   13,104       4,411     19,564          633        28,051
                                                      -------    --------   --------     --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of fixtures, equipment and
    improvements....................................   (4,461)    (19,656)   (23,916)      (6,452)       (7,824)
                                                      -------    --------   --------     --------      --------
    Cash used in investing activities...............   (4,461)    (19,656)   (23,916)      (6,452)       (7,824)
                                                      -------    --------   --------     --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised...........................       --           2         13            3            18
  Net borrowings under revolving credit facility....   (3,801)     26,563      8,280        7,632       (19,438)
  Payment of deferred finance costs.................       --          --       (220)          --            --
  Redemption of Series A preferred stock............       --      (4,537)        --           --            --
  Payment of dividends..............................       --        (463)        --           --            --
                                                      -------    --------   --------     --------      --------
    Cash (used in) provided by financing
      activities....................................   (3,801)     21,565      8,073        7,635       (19,420)
                                                      -------    --------   --------     --------      --------
    Cash used in discontinued operations............   (5,346)     (6,513)      (932)        (101)           --
                                                      -------    --------   --------     --------      --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....     (504)       (193)     2,789        1,715           807
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......    4,414       3,910      3,717        3,717         6,506
                                                      -------    --------   --------     --------      --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............  $ 3,910    $  3,717   $  6,506     $  5,432      $  7,313
                                                      =======    ========   ========     ========      ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Income taxes paid.................................  $ 1,193    $  1,369   $  1,953     $     31      $  2,110
                                                      =======    ========   ========     ========      ========
  Interest expense paid.............................  $   210    $    785   $  1,724     $    617      $    294
                                                      =======    ========   ========     ========      ========
SIGNIFICANT NONCASH INVESTING AND FINANCING
  TRANSACTIONS:
  Accrued dividends on Series A Exchangeable
    Redeemable Preferred Stock......................  $   367    $     96   $     --     $     --      $     --
                                                      =======    ========   ========     ========      ========
  Accrued dividends on Series B Redeemable Preferred
    Stock...........................................  $   820    $    925   $  1,048     $    250      $    283
                                                      =======    ========   ========     ========      ========
  Accretion on Series A Exchangeable Redeemable
    Preferred Stock.................................  $    48    $     19   $     --     $     --      $     --
                                                      =======    ========   ========     ========      ========
See notes to financial statements.
                                       F-6
AEROPOSTALE, INC.

                         NOTES TO FINANCIAL STATEMENTS
         (AMOUNTS IN THOUSANDS, EXCEPT SHARE, PER SHARE AND STORE DATA)

1. BUSINESS

     Description of Business -- Aeropostale, Inc. (the "Company") is a
mall-based specialty retailer of casual apparel and accessories for young women
and young men with a total of 252 stores as of August 4, 2001 located in 32
states and the District of Columbia. In February 2000, the Company decided to
discontinue the operations of its Chelsea Cambell stores (Note 16).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Fiscal Year -- The Company elected to change its fiscal year from a 52/53
week year that ends on the Saturday nearest to July 31 to a 52/53 week year that
ends on the Saturday nearest to January 31, effective for the transition period
ended on February 2, 2002. For tax purposes, the Company has retained its July
year-end. As used herein, "Fiscal 2001" refers to the year end August 4, 2001,
"Transition 2001" refers to the thirteen week period from August 5, 2001 to
November 3, 2001. Similarly, "2000" and "1999" refer to the fiscal years ended
July 29, 2000 and July 31, 1999 and "Transition 2000" refers to the thirteen
week period from July 30, 2000 to October 28, 2000. All references to amounts
related to the thirteen weeks ended October 28, 2000 and November 3, 2001 are
unaudited.

     Interim Financial Information -- The accompanying unaudited consolidated
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information 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. Operating results for the thirteen week ended October 28, 2000 and
November 3, 2001 are not necessarily indicative of the results that may be
expected for the period ending February 2, 2002.

     Cash Equivalents -- The Company considers credit card receivables and all
short-term investments with an original maturity of three months or less as cash
equivalents.

     Merchandise Inventory -- Inventory consists of finished goods and is valued
at the lower of cost or market determined on a first-in, first-out basis.
Merchandise inventory includes warehousing, freight, merchandise and design
costs as an inventory product cost.

     Fixtures, Equipment and Improvements -- Fixtures, equipment and
improvements are stated at cost. Depreciation and amortization are provided for
by the straight-line method over the following estimated useful lives:
Store fixtures and equipment...  10 years
Leasehold improvements.........  Lesser of life of the asset or life of lease
Computer equipment and
  software ....................  5 years
Effective the first quarter of 2001, the Company adjusted the estimated
useful lives for store fixtures and equipment from 7 to 10 years and computer
equipment and software from 3 to 5 years. The Company examined and reviewed its
accounting policies and practices and determined that revised useful lives
reflect a more accurate timing of the economic benefits to be received from such
assets. The change in estimate had a $574 (net of tax benefit of $382) impact on
the current year's results.

     Impairment of Long-Lived and Intangible Assets -- The Company follows
Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to

                                       F-7
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

be generated by those assets are less than the assets' carrying amount. In
evaluating the fair value and future benefits of long-lived assets, the Company
performs an analysis of the anticipated undiscounted future net cash flows of
the related long-lived assets and reduces their carrying value by the excess, if
any, of the result of such calculation. Management believes at this time that
the long-lived assets' carrying value and useful life continues to be
appropriate, after adjusting for the impairment disclosed below.

     In accordance with SFAS No. 121, the Company recorded noncash store closing
expenses of $815 to reflect the write-down of leasehold improvements and stores
fixtures and equipment to their net realizable value, in seven stores closed by
October 2001. The Company did not incur any other costs associated with such
store closings.

     Income Taxes -- Income taxes are recognized during the year in which
transactions enter into the determination of financial statement income, with
deferred taxes being provided for temporary differences between amounts of
assets and liabilities for financial reporting purposes and such amounts as
measured by the tax laws.

     Pre-Operating Expenses -- The Company expenses new store operating costs as
incurred.

     Deferred Costs -- Deferred financing costs are amortized over the life of
the debt using the straight-line method. Net deferred financing charges were
$155 and $208, net of accumulated amortization of $307 and $12 as of 2000 and
2001, respectively. These amounts are included in other assets in the balance
sheets.

     Deferred Rent -- Rent expense under operating leases providing for rent
abatements and fixed non-contingent escalations is recognized on a straight-line
basis over the term of each individual underlying lease. The cumulative net
excess of recorded rent expense over lease payments made in the amount of $2.0
million and $3.1 million is reflected in other liabilities in the balance sheet
as of 2000 and 2001, respectively.

     Revenue Recognition -- Revenue is recognized at the "point of sale."
Allowances for sales returns are recorded as a component of net sales in the
periods in which the related sales are recognized.

     Marketing -- Marketing costs, which includes newspaper, television, radio
and other media advertising and collegiate athlete conference sponsorships, are
expensed as incurred and were zero, $1,062 and $2,210 for fiscal years ended
1999, 2000 and 2001, respectively.

     Shipping and Handling -- Emerging Issues Task Force ("EITF") Issue 00-10,
Accounting for Shipping and Handling Fees and Costs, requires that all amounts
billed to a customer in a sale transaction related to shipping and handling, if
any, should be classified as revenue. As required, the Company adopted this EITF
in the fourth quarter of 2001 and has reclassified shipping and handling
reimbursements to net sales for all periods. Shipping and handling revenue
amounted to approximately $2 for each of the fiscal years 1999, 2000 and 2001.
The Company has recorded shipping and handling costs in general and
administrative expenses for all periods presented.

     Net Income Per Share -- Basic net income per share is computed by dividing
net income after preferred dividends by the weighted average number of common
shares outstanding for the period. Diluted net income per share also includes
the dilutive effect of potential common shares outstanding during the period.

     Fair Value of Financial Instruments -- The following disclosure is made in
accordance with the requirements of SFAS No. 107, Disclosures about Fair Value
of Financial Instruments. The carrying amounts of cash and cash equivalents and
accounts payable approximate its fair value due to the short-term maturities of
such items. The carrying amount of the revolving credit facility approximates
its fair value due to the variable interest rate it carries. The carrying amount
of the Series B Preferred Stock

                                       F-8
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

approximates its fair value in that it carries a current market dividend rate.
Estimated fair value disclosures have been determined by the Company, using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and estimation
methodologies may have a material effect on the estimated fair value amounts.

     Derivatives -- During the first quarter of fiscal 2001, the Company adopted
SFAS No. 133 and 138, Accounting for Derivative Instruments and Hedging
Activities. SFAS 133 established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities requiring all companies to recognize
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS 138 is an amendment
to SFAS 133, which amended or modified certain issues discussed in SFAS 133.
Implementation of SFAS 133 and SFAS 138 did not have a material impact on the
Company's statement of financial position, results of operations or cash flows.

     Reclassifications -- Certain reclassifications have been made to the
consolidated financial statements in prior periods to conform to the current
period presentation.

     Segment Reporting -- The Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
131 establishes standards for reporting information about a company's operating
segments. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. The Company operates in a
single operating segment -- the operation of mall-based specialty retail stores.
Revenues from external customers are derived from merchandise sales. The
Company's net sales mix by merchandise category for the last three fiscal years
was as follows:
MERCHANDISE CATEGORIES                                        1999    2000    2001
----------------------                                        ----    ----    ----
Young Women's...............................................   37%     42%     49%
Young Men's.................................................   55      47      39
Accessories.................................................    8      11      12
                                                              ---     ---     ---
Total Merchandise Sales.....................................  100%    100%    100%
                                                              ===     ===     ===
The Company does not rely on any major customers as a source of revenue.

     New Accounting Standards -- In June 2001, the Financial Accounting
Standards Board ("FASB") issued two new pronouncements: SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.

     SFAS No. 141 addresses financial accounting and reporting for business
combinations and supersedes APB No. 16, Business Combinations, and FASB
Statement No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises. All business combinations in the scope of this Statement are to be
accounted for using one method, the purchase method. SFAS 141 is effective as
follows: a) use of the pooling-of-interest method is prohibited for business
combinations initiated after June 30, 2001; and b) the provisions of SFAS 141
also apply to all business combinations accounted for by the purchase method
that are completed after June 30, 2001 (that is, the date of the acquisition is
July 2001 or later). The Company has determined that the adoption of this
statement will not have an impact on the financial statements.

     SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB No. 17, Intangible
Assets. It changes the accounting for goodwill from an

                                       F-9
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

amortization method to an impairment only approach. The Company adopted it on
August 5, 2001. The adoption of this statement had $1,632 impact on the
financial statements for the write-off of the net negative goodwill as of August
5, 2001 (see Note 4).

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
of Long-Lived Assets, addresses accounting for and reporting of the impairment
or disposal of long-lived assets that is effective for fiscal years beginning
after December 15, 2001. The Company expects that the adoption of SFAS No. 144
will not have a significant impact on its financial position or results of
operations. However, SFAS No. 144 may modify the presentation of the operating
results of certain closed stores in the Company's statement of operations in the
future.

3. SIGNIFICANT RISKS AND UNCERTAINTIES

     Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles 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.
The accounts requiring the use of significant estimates included inventory,
income tax and certain reserves.

     Certain Risks Concentration -- The Company had three suppliers who in the
aggregate constituted approximately 36% of the Company's purchases for the year
ended August 4, 2001. The loss of any of these suppliers would adversely affect
the Company's operations.

4. CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     In connection with the purchase of all the shares of the Company from
Federated Specialty Stores, Inc. (a wholly-owned subsidiary of Federated
Department Stores, Inc.) on August 3, 1998 ("Acquisition"), the Company recorded
gross negative goodwill in the amount of $12.8 million that was being amortized
over an estimated life of ten years.

     In connection with the decision to discontinue the operations of the
Chelsea Cambell business, an allocation of the negative goodwill was made
between the Aeropostale and the Chelsea Cambell businesses based upon their
relative fair values at the Acquisition date. As a result of such allocation,
approximately $8.8 million of unamortized negative goodwill was written off as
part of the gain on disposal of the Chelsea Cambell business. The remaining
negative goodwill allocated to Aeropostale continue to be amortized over its
estimated life of ten years. Net negative goodwill was approximately $1,866 and
$1,632 as of 2000 and 2001, respectively.

     The Company adopted SFAS 142 on August 5, 2001, the beginning of transition
2001. With the adoption of SFAS 142, the remaining negative goodwill was
recorded as income from a cumulative effect of accounting change.

                                       F-10
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Income from continuing operations for the thirteen weeks ended November 3,
2001 and October 28, 2000 and the three previous fiscal years had been adjusted
to reflect income from continuing operations as though no negative goodwill
amortization was recorded.
FISCAL YEAR                    THIRTEEN WEEKS ENDED
                          ---------------------------    ------------------------------------
                           1999      2000      2001      OCTOBER 28, 2000    NOVEMBER 3, 2001
                          ------    ------    -------    ----------------    ----------------
                                                                     (UNAUDITED)
Income from continuing
  operations............  $6,230    $9,366    $10,914         $6,007             $14,727
Adjusted income from
  continuing operations
  (unaudited)...........   5,996     9,132     10,680          5,950              14,727
Diluted income from
  continuing operations
  per share.............   54.49     90.32     104.70          62.06              152.01
Adjusted diluted income
  from continuing
  operations per share
  (unaudited)...........   51.94     87.78     102.22          61.45              152.01
5. OTHER CURRENT ASSETS

     Other current assets consist of the following:
2000      2001
                                                              ------    ------
Prepaid expenses............................................  $  318    $  706
Prepaid rent................................................   2,653     2,939
Other receivables...........................................   5,271     3,562
Prepaid income taxes........................................   1,397        --
                                                              ------    ------
                                                              $9,639    $7,207
                                                              ======    ======
6. FIXTURES, EQUIPMENT AND IMPROVEMENTS -- NET

     Fixtures, equipment and improvements -- net consist of the following:
2000       2001
                                                              -------    -------
Leasehold improvements......................................  $10,913    $25,297
Store fixtures and equipment................................    9,685     16,116
Computer equipment and software.............................    1,678      3,644
Construction in progress....................................    2,487      2,715
                                                              -------    -------
                                                               24,763     47,772
Less accumulated depreciation and amortization..............    1,747      5,428
                                                              -------    -------
                                                              $23,016    $42,344
                                                              =======    =======
Depreciation and amortization expense from continuing operations
  amounted to approximately $77, $1,653 and $3,770 for fiscal years
  1999, 2000 and 2001, respectively.
F-11
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. ACCRUED EXPENSES

     Accrued expenses consist of the following:
2000       2001
                                                              -------    -------
Accrued compensation........................................  $ 1,967    $ 3,636
Sales and use tax...........................................      594        808
Accrued rent................................................    2,170      2,223
Accrued gift certificates and credits.......................    1,914      2,571
Income tax payable..........................................       --      1,874
Other.......................................................    4,785      2,195
                                                              -------    -------
                                                              $11,430    $13,307
                                                              =======    =======
8. REVOLVING CREDIT FACILITY

     The Company has a revolving credit agreement, as amended, with a bank under
which the Company may borrow or obtain letters of credit up to $55 million (the
"Credit Facility"), letters of credit have a sub-limit of $15 million. The
facility matures by its terms on July 31, 2004. Indebtedness under the Credit
Facility is collateralized by the assets of the Company. Borrowings under the
Credit Facility bear interest, at the Company's option, either at (a) the
lender's prime rate or (b) the Euro Dollar Rate plus 1.50% to 2.00%, depending
on excess availability. Additionally, the Company must pay commitment fees on
any unused portion of the Credit Facility at an annualized rate of 0.375 percent
of the difference between the unused portion and borrowings (including
outstanding letters of credit) at the preceding month-end. In connection with
the Credit Facility, the Company incurred a one-time financing fee of $220,
which is being amortized over the term of the Credit Facility, such amount is
recorded as additional interest expense. The Company was in compliance with the
financial covenants of the credit facility, which require the Company to achieve
certain earnings before interest, income taxes, depreciation and amortization
("EBITDA" as defined in the Agreement) amounts and capital spending limitations.

     At July 29, 2000 and August 4, 2001, the Company had borrowings outstanding
excluding accrued interest under the Credit Facility of $26,987 at an interest
rate of 8.84% and $35,267 at an interest rate of 5.85 percent, respectively. The
average amount of borrowings outstanding during 2000 was $9,188 at a weighted
average interest rate of 10.48%. The average amount of borrowings outstanding
during 2001 was $18,486 at a weighted average interest rate of 8.27%. The
average amount of borrowings outstanding during the thirteen weeks ended
November 3, 2001 and October 28, 2000 was $16,756 and $28,478 at a weighted
average interest rate of 6.40% and 8.67%. There were no issued stand-by or
commercial letters of credit at August 4, 2001.

9. NET INCOME PER SHARE

     In accordance with SFAS No. 128, "Earnings Per Share," basic earnings per
share has been computed based upon the weighted average of common shares and
nonvoting commons shares outstanding, after deducting preferred dividend
requirements. Diluted earnings per share gives effect to outstanding stock
options.

                                       F-12
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Net income per common share have been computed as follows:
1999                  2000                  2001
                         ------------------    ------------------    ------------------
                          BASIC     DILUTED     BASIC     DILUTED     BASIC     DILUTED
                         -------    -------    -------    -------    -------    -------
Income from continuing
  operations...........  $ 6,230    $ 6,230    $ 9,366    $ 9,366    $10,914    $10,914
Preferred stock
  dividends............   (1,235)    (1,235)    (1,040)    (1,040)    (1,048)    (1,048)
                         -------    -------    -------    -------    -------    -------
Income from continuing
  operations available
  for per-share
  calculation..........    4,995      4,995      8,326      8,326      9,866      9,866
Income (loss) from
  discontinued
  operations...........     (268)      (268)     2,002      2,002        405        405
                         -------    -------    -------    -------    -------    -------
Net income available
  for per-share
  calculation..........  $ 4,727    $ 4,727    $10,328    $10,328    $10,271    $10,271
                         =======    =======    =======    =======    =======    =======
Average shares of
  common stock
  outstanding..........   82,502     82,502     82,559     82,559     83,276     83,276
Stock options..........       --      9,163         --      9,625         --     10,950
                         -------    -------    -------    -------    -------    -------
Total average
  equivalent shares....   82,502     91,665     82,559     92,184     83,276     94,226
                         =======    =======    =======    =======    =======    =======
Per Common Share:
Income from continuing
  operations...........  $ 60.54    $ 54.49    $100.85    $ 90.32    $118.48    $104.70
Income (loss) from
  discontinued
  operations...........    (3.24)     (2.92)     24.25      21.72       4.86       4.30
                         -------    -------    -------    -------    -------    -------
Net income.............  $ 57.30    $ 51.57    $125.10    $112.04    $123.34    $109.00
                         =======    =======    =======    =======    =======    =======
THIRTEEN WEEKS ENDED
                                              ----------------------------------------
                                               OCTOBER 28, 2000      NOVEMBER 3, 2001
                                              ------------------    ------------------
                                               BASIC     DILUTED     BASIC     DILUTED
                                              -------    -------    -------    -------
Income from continuing operations...........  $ 6,007    $ 6,007    $14,727    $14,727
Preferred stock dividends...................     (250)      (250)      (283)      (283)
                                              -------    -------    -------    -------
Income from continuing operations available
  for per-share calculation.................    5,757      5,757     14,444     14,444
Cumulative effect of accounting change......       --         --      1,632      1,632
                                              -------    -------    -------    -------
Net income available for per-share
  calculation...............................  $ 5,757    $ 5,757    $16,076    $16,076
                                              =======    =======    =======    =======
Average shares of common stock
  outstanding...............................   82,770     82,770     83,817     83,817
Stock options...............................       --      9,995         --     11,201
                                              -------    -------    -------    -------
Total average equivalent shares.............   82,770     92,765     83,817     95,018
                                              =======    =======    =======    =======
Per Common Share:
Income from continuing operations...........  $ 69.55    $ 62.06    $172.33    $152.01
Cumulative effect of accounting change......       --         --      19.47      17.18
                                              -------    -------    -------    -------
Net income..................................  $ 69.55    $ 62.06    $191.80    $169.19
                                              =======    =======    =======    =======
F-13
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. REDEEMABLE PREFERRED STOCK

     Series A Exchangeable Redeemable Preferred Stock -- The Company issued
6,000 shares of its Series A exchangeable, redeemable preferred stock, $0.01 par
value ("Series A Preferred Stock") in connection with the Acquisition. The
Series A Preferred Stock has no voting rights. Dividends accrue at 6 percent per
annum at a liquidation value of $1,000 per share and are cumulative. The shares
are mandatory redeemable at the liquidation value at the earliest of an initial
public offering of the Company's stock, a sale of the Company or 10 years from
the date of issue or at any time at the Company's option. The shares are
exchangeable, at the Company's option on any dividend payment date, into 6
percent Subordinated Notes due 2008. The Series A Preferred Stock was recorded
at its fair value on the date of issue of approximately $4.5 million, the
discount of approximately $1.5 million was being recorded as an additional
dividend over the mandatory redemption period. In November 1999, the Company
exercised its option to redeem the Series A Preferred Stock at a price that
approximated its current fair value plus accrued dividends. The Company recorded
accretion to increase the carrying value to a liquidation value of $6 million.
For the fiscal years ended 1999, 2000 and 2001, the accretion is $48, $19 and
zero, respectively.

     Series B Redeemable Preferred Stock -- The Company issued 6,250 shares of
its Series B redeemable preferred stock $0.01 par value ("Series B Preferred
Stock") for proceeds of $6.25 million in connection with the Acquisition. The
Series B Preferred Stock has no voting rights. Dividends accrue at 12.5 percent
per annum at a liquidation value of $1,000 per share and are cumulative. The
shares are mandatory redeemable at the liquidation value at the earliest of an
initial public offering of the Company's stock, a sale of the Company or 10
years from the date of issue or at any time at the Company's option.

     Cumulative dividends on the Series B Preferred Stock are payable at the
rate of 12.5 percent per annum, quarterly on the first day of November,
February, May, and August, based on face value. Dividends not declared and paid
will also accrue dividends at the same annual rate. Unpaid dividends on a
quarterly basis are then payable in Series B preferred stock. As of July 29,
2000 and August 4, 2001, the Company accrued $1,744 and $2,792, respectively, in
dividends which is recorded as Redeemable Preferred Stock which upon the
liquidation, rank senior to all classes of common stock.

11. STOCKHOLDERS' EQUITY

     Common Stock -- The Company sold a total of 82,500 shares of common
stock -- voting $0.01 par value for proceeds of approximately $950 in connection
with the Acquisition. The common stock is entitled to one vote per share.

     Stock Option Plan -- The Company adopted a stock option plan under which it
may grant non-qualified and qualified stock options to purchase up to 17,500
shares of the Company's Common Stock $0.01 par value (which may be voting or
nonvoting) to executives, consultants, directors, or other key employees (the
"Stock Option Plan"). Options may have a maximum term of up to eight years and
qualified stock options may not be granted at less than the fair market value at
the date of grant. Vesting provisions of the options will be determined by the
Board of Directors at the date of option grants; however, all outstanding
options will immediately vest upon an initial public offering of the Company's
Common Stock or a sale of the Company.

                                       F-14
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes stock option transactions during the three
years ended August 4, 2001 and the thirteen weeks ended November 3, 2001
(unaudited):
THIRTEEN WEEKS ENDED
                                 1999                  2000                  2001             NOVEMBER 3, 2001
                          ------------------    ------------------    ------------------    --------------------
                                    WEIGHTED              WEIGHTED              WEIGHTED               WEIGHTED
                                    AVERAGE               AVERAGE               AVERAGE                 AVERAGE
                                    EXERCISE              EXERCISE              EXERCISE               EXERCISE
                          SHARES     PRICE      SHARES     PRICE      SHARES     PRICE      SHARES       PRICE
                          ------    --------    ------    --------    ------    --------    -------    ---------
                                                                                                (UNAUDITED)
Outstanding, beginning
  of period.............      --     $   --     11,720    $ 11.50     12,310     $42.53     13,839      $ 71.52
  Granted...............  13,300      11.50      2,990     141.08      3,260     162.66        750       320.00
  Exercised.............     (17)     11.50       (158)     11.50     (1,128)     11.50       (125)      147.00
  Forfeited.............  (1,563)     11.50     (2,242)     13.92       (603)     84.84        (21)      178.43
                          ------     ------     ------    -------     ------     ------     ------      -------
Outstanding, end of
  period................  11,720     $11.50     12,310    $ 42.53     13,839     $71.52     14,443      $ 83.61
                          ======     ======     ======    =======     ======     ======     ======      =======
Options exercisable at
  period-end............     543     $11.50      2,609    $ 63.92      2,586     $71.98      2,586      $ 71.98
                          ======     ======     ======    =======     ======     ======     ======      =======
Weighted average fair
  value of options
  granted during the
  year..................             $ 2.53               $ 38.74                $37.74
                                     ======               =======                ======
Qualified stock options granted during the three years ended August 4, 2001
generally vest ratably over a four-year period and have a maximum term of eight
years. Nonqualified stock options granted during the three years ended August 4,
2001 vest at the earlier of the achievement of certain EBITDA targets during the
first three years or 8 years from the date of grant. The vested portion of
nonqualified stock options will be not be exercisable until four years from the
fiscal period beginning January of the year of grant and have a maximum term of
eight years from the date of grant.

     The following table summarizes information concerning currently outstanding
options at August 4, 2001 and November 3, 2001 (unaudited):
AVERAGE                                              AVERAGE
                      NUMBER        REMAINING         NUMBER            NUMBER           REMAINING            NUMBER
                  OUTSTANDING AT   CONTRACTUAL    EXERCISABLE AT    OUTSTANDING AT    CONTRACTUAL LIFE    EXERCISABLE AT
EXERCISE PRICES   AUGUST 4, 2001   LIFE (YEARS)   AUGUST 4, 2001   NOVEMBER 3, 2001       (YEARS)        NOVEMBER 3, 2001
---------------   --------------   ------------   --------------   ----------------   ----------------   ----------------
                                                                     (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
$ 11.50            8,044           2.1            1,401              8,044               1.8              1,401
     143.00            1,040           3.6            1,040              1,040               3.3              1,040
     147.00            3,630           4.0              145              3,499               3.7                145
     191.00            1,125           4.5               --              1,110               4.3                 --
     320.00               --            --               --                750               5.0                 --
                      ------                          -----             ------                                -----
                      13,839                          2,586             14,443                                2,586
                      ======                          =====             ======                                =====
The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for stock option grants. Accordingly, no
compensation cost has been recognized for employee stock options. Had
compensation cost for the Stock Option Plan been determined based upon the fair
value of such awards at the grant date, consistent with the methods of SFAS No.
123, net income available to common stockholders would have been reduced to the
pro forma amounts of $4, $10 and $23

                                       F-15
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

for the fiscal years ended 1999, 2000 and 2001, respectively. The fair value of
such options was determined using the Black Scholes option pricing model and the
following weighted average assumptions:
1999       2000       2001
                                                          -------    -------    -------
Risk-free interest rate.................................     5.10%      6.55%      5.41%
Dividend yield..........................................        0          0          0
Weighted average expected life..........................  5 years    5 years    5 years
Volatility..............................................        0          0          0
12. EMPLOYEE BENEFIT PLANS

     a. The Company has a retirement plan with a 401(k) salary deferral feature
that covers substantially all of its employees who meet certain requirements.
Under the terms of the plan, employees may contribute up to 14 percent of gross
earnings and the Company will provide a matching contribution of 50 percent of
the first 5 percent of gross earnings contributed by the participants. The
Company may, at its option, make additional contributions. The terms of the plan
provide for vesting in the Company's matching contributions to the plan over a
five-year service period with 50 percent vesting after year three, an additional
25 percent vesting after year four, and participants will be fully vested after
year five. The Company expensed contributions for the retirement plan of
approximately $153, $245 and $278 for the fiscal years ended 1999, 2000 and
2001, respectively.

     b. The Company maintains a supplemental executive retirement plan ("SERP"),
which is an unfunded defined benefit plan. The actuarial present value of
accumulated benefit obligations related to the Company's SERP approximated $1.8
million, $1.6 million and $2.5 million, using a weighted average discount rate
of 4.5% at July 31, 1999 and 7% at August 4, 2001 and July 29, 2000, and an
assumed rate of compensation increase of 4.5% for all years. Pension expense for
the SERP amounted to $210, $171 and $247 for the fiscal years ended 1999, 2000,
and 2001, respectively. Of these amounts, $155 represented interest, $3
represented amortization of prior experienced losses, and $89 represented the
current year service component for the year ended August 4, 2001 and $101
represented interest, ($10) represented amortization of prior experienced gains,
and $80 represented the current year service component for the year ended July
29, 2000 and $110 represented interest and $100 represented the current year
service component for the year ended July 31, 1999.

13. INCOME TAXES

     The provision for income taxes included within continuing operations for
1999, 2000 and 2001 consists of the following:
1999      2000      2001
                                                           ------    ------    ------
Federal:
  Current................................................  $2,047    $  463    $4,730
  Deferred...............................................     840     4,231     1,074
                                                           ------    ------    ------
                                                            2,887     4,694     5,804
                                                           ------    ------    ------
State and local:
  Current................................................     460       402       758
  Deferred...............................................     182       653       503
                                                           ------    ------    ------
                                                              642     1,055     1,261
                                                           ------    ------    ------
                                                           $3,529    $5,749    $7,065
                                                           ======    ======    ======
F-16
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The provision for income taxes for discontinued operations consists of the
following:
1999      2000       2001
                                                          ------    -------    ------
Federal:
  Current...............................................  $ (354)   $(2,908)   $   --
  Deferred..............................................    (123)    (1,009)      225
                                                          ------    -------    ------
                                                            (477)    (3,917)      225
                                                          ------    -------    ------
State and local:
  Current...............................................     (83)      (679)       --
  Deferred..............................................     (23)      (188)       32
                                                          ------    -------    ------
                                                            (106)      (867)       32
                                                          ------    -------    ------
                                                          $ (583)   $(4,784)   $  257
                                                          ======    =======    ======
Total provision.........................................  $2,946    $   965    $7,322
                                                          ======    =======    ======
Reconciliation of the U.S. statutory rate with the Company's effective tax
rate excluding discontinued operations is summarized as follows:
1999    2000     2001
                                                              ----    -----    ----
Federal statutory rate......................................  34.0%    34.0%   34.0%
Increase (decrease) in tax resulting from:
  State income taxes (net of federal tax benefits)..........   2.3      4.1     4.6
  Nondeductible goodwill amortization and write-off.........  (0.1)    (0.1)   (0.5)
  Other.....................................................    --       --     1.2
                                                              ----    -----    ----
Effective rate..............................................  36.2%    38.0%   39.3%
                                                              ====    =====    ====
As of July 29, 2000 and August 4, 2001, the components of the net deferred
income tax assets are as follows:
2000      2001
                                                              ------    -------
Current:
  Inventory.................................................  $    5    $(1,376)
  Accrued vacation..........................................     136        167
  Other.....................................................     112        972
  Accrued bonuses...........................................     275        540
  Discontinued operations accruals..........................     565         --
                                                              ------    -------
Total current...............................................   1,093        303
                                                              ------    -------
Noncurrent:
  Fixed assets..............................................   4,823      3,695
  Acquired lease liability..................................   1,259        944
  Deferred rent.............................................     832      1,298
  State income taxes........................................    (532)      (460)
  Net operating loss........................................   1,148         --
                                                              ------    -------
Total noncurrent............................................   7,530      5,477
                                                              ------    -------
Net deferred income tax assets..............................  $8,623    $ 5,780
                                                              ======    =======
F-17
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES

     The Company is committed under noncancelable leases for all its store and
office space, expiring at various dates through July 2011. The leases generally
provide for minimum rent plus additional increases in real estate taxes, certain
operating expenses, etc. Certain leases also require contingent rent based on
sales.

     As of August 4, 2001, the aggregate minimum annual rent commitments are as
follows:
FISCAL                                                RELATED
YEAR ENDED                                             PARTY      OTHER       TOTAL
----------                                            -------    --------    --------
2002................................................  $ 6,169    $ 20,415    $ 26,584
2003................................................    6,163      20,605      26,768
2004................................................    5,607      19,198      24,805
2005................................................    4,842      16,963      21,805
2006................................................    4,035      15,032      19,067
Thereafter..........................................   14,784      58,939      73,723
                                                      -------    --------    --------
                                                      $41,600    $151,152    $192,752
                                                      =======    ========    ========
For the fiscal years ended 1999, 2000 and 2001, rent and occupancy expense
included within income from continuing operations was approximately $23.7
million, $28.4 million and $39.0, respectively. Included in rent and occupancy
expense within income from continuing operations for fiscal 1999 is
approximately $8.4 million and for fiscal 2000 and 2001 is approximately $9.6
million paid to a related party shareholder of the Company.

     The above table includes the lease commitments for stores that are expected
to open subsequent to August 4, 2001.

     In connection with the Acquisition, the Company recorded a liability to
reflect leases that were at above-market rental rates. Such liability, which
amounted to approximately $3.1 million as of July 29, 2000 and $2.3 million as
of August 4, 2001, is reflected in the accompanying balance sheet as other
noncurrent liabilities. This liability will be amortized as a reduction of
future rental expenses over the respective lease lives. The amortization was
approximately $1.2 million, $1.1 million and $0.8 million for the fiscal years
ended 1999, 2000 and 2001, respectively. In fiscal 2000, approximately $0.5
million was written off in connection with the discontinued operations and
approximately $0.9 was written off in connection with certain Aeropostale stores
closed.

     Employment Agreements -- As of August 4, 2001, the Company had outstanding
employment contracts expiring in fiscal 2002. The financial liability for these
contracts is approximately $500.

     Legal Proceedings -- Various suits and claims arising in the course of
business are pending against the Company and its subsidiaries. In the opinion of
management, dispositions of these matters are not expected to materially affect
the Company's financial position, cash flows or results from operations.

15. RELATED PARTY TRANSACTIONS

     Sponsor Fee -- The Company has a Management Services Agreement with the
holder of the Series B Preferred Stock and the majority shareholder of the
Company's common stock voting. Such agreement calls for annual payments equal to
the greater of $200 or 3 percent of earnings before interest, income taxes,
depreciation and amortization ("EBITDA," as defined) up to a maximum of $450.
Such fees aggregated $268, $403 and $450 for the fiscal years ended 1999, 2000
and 2001, respectively.

                                       F-18
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Leases -- The Company is the lessee under operating leases where the
landlord is a stockholder of the Company (Note 14).

     Sourcing Agreement -- The Company has a Sourcing Agreement with Federated
Merchandising Group, Inc., ("FMG") a subsidiary of Federated Department Stores,
Inc., the previous owner of the Company. Effective November 1999, FMG ceased to
be a related party due to the Company's redemption of the Series A Preferred
Stock. The Sourcing Agreement provides purchasing, facilitation, and importation
services substantially similar to the manner in which such services were
provided to the Company prior to the Acquisition. The Company pays fees under
the Sourcing Agreement at a flat rate of 6 percent so long as the Company
purchases a minimum of $30 million during a fiscal year. Should the Company fail
to purchase the $30 million minimum, the commission rate will revert to 8
percent. The total purchases of merchandise under the Sourcing Agreement for
fiscal 1999 and the period August 1, 1999 through September 30, 1999 (the date
of redemption) was approximately $55 million and $20 million, respectively,
which included approximately $3.3 million of fees during fiscal 1999 and
approximately $0.9 million of fees for the year ended fiscal 2000.

     Loans to Executives.  In 1999, we repurchased all of our outstanding shares
of Series A Preferred Stock from Federated Department Stores, Inc. This
triggered a loan forgiveness provision contained in loan agreements regarding
loans that Federated had previously made to Mr. Geiger and Mr. Mills. This loan
forgiveness caused Messrs. Geiger and Mills to incur significant tax liability
in 1999. We therefore extended interest free loans in the amount of $70,000 to
both Mr. Geiger and Mr. Mills to cover this tax liability. Mr. Geiger and Mr.
Mills each repaid the full amount of the loan in February 2002 and currently do
not have any outstanding indebtedness to our company.

16. DISCONTINUED OPERATIONS

     During February 2000, the Company's Board of Directors decided to
discontinue the Chelsea Cambell specialty store business at its meeting on
February 25, 2000 (the measurement date) and the Company closed all Chelsea
Cambell stores by the end of December 2000. Accordingly, operating results of
this segment for the fiscal years ended 2001 and 2000 have been reclassified as
income from discontinued operations.

     Operating results of discontinued operations are as follows:
THIRTEEN
                                                                            WEEKS ENDED
                                           1999       2000       2001     OCTOBER 28, 2000
                                          -------    -------    ------    ----------------
                                                                            (UNAUDITED)
Net sales...............................  $48,496    $35,117    $2,854         $2,117
                                          =======    =======    ======         ======
Income (loss) from discontinued
  operations:
  Before income taxes...................  $  (851)   $(9,531)   $   --         $   --
  Estimated net gain on disposal........       --      6,749       662             --
  Income tax (expense) benefit..........      583      4,784      (257)            --
                                          -------    -------    ------         ------
Net.....................................  $  (268)   $ 2,002    $  405         $   --
                                          =======    =======    ======         ======
During fiscal 2001, the Company was able to negotiate settlements on future
lease obligations and incurred better than expected profitability on the closing
of the Chelsea Cambell stores and therefore realized a reversal of the estimated
loss on disposal of $662.

     The July 29, 2000 loss from discontinued operations before income taxes
includes ($24,541) in cost of goods sold, ($6,221) in payroll expense, ($14,079)
in nonpayroll expenses, $613 in amortization of

                                       F-19
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

negative goodwill, and an estimated loss from operations during the phase-out
period subsequent to July 29, 2000 of ($806), and other revenue of $386.

     The estimated net gain on disposal includes the write-off of negative
goodwill of $8,838, the lease termination costs of ($2,478), write-offs of
tenant liabilities, acquired lease liabilities, and deferred rent of $1,305 and
other expenses of ($916).

     Included within accrued expenses and other liabilities on the accompanying
balance sheet is an accrual for the costs associated with the disposal of the
Chelsea Cambell business. The major components of the accrual and the activity
through August 4, 2001 were as follows:
ACCRUAL OF
                                       LEASE                     OPERATING
                                    BUY-OUT AND    SEVERANCE      LOSSES
                                     CONTRACT         AND       THROUGH THE
                                    TERMINATION   TERMINATION   DISPOSITION
                                     ON COSTS      BENEFITS        DATE       OTHER    TOTAL
                                    -----------   -----------   -----------   -----   -------
Provision at measurement date.....    $ 2,478        $ 566         $ 806      $ 84    $ 4,166
Activity..........................     (1,944)        (352)           --       (49)    (2,572)
                                      -------        -----         -----      ----    -------
Balance, at July 29, 2000.........        534          214           806        35      1,594
                                      -------        -----         -----      ----    -------
Activity..........................       (534)        (214)         (806)      (35)    (1,594)
                                      -------        -----         -----      ----    -------
Balance, at August 4, 2001........    $    --        $  --         $  --      $ --    $    --
                                      =======        =====         =====      ====    =======
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THIRTEEN WEEKS ENDED
                                              -------------------------------------------------
                                              OCTOBER 30,   JANUARY 29,   APRIL 29,   JULY 29,
                                                 1999          2000         2000        2000
                                              -----------   -----------   ---------   ---------
FISCAL 2000
  Net sales.................................    $53,331       $72,164      $40,552     $47,398
  Gross profit..............................     18,593        24,669        8,487       9,723
  Income from continuing operations.........      4,413         7,667       (1,428)     (1,286)
  Income (loss) from discontinued
     operations.............................       (611)       (1,596)      (1,621)      5,830
  Net income................................      3,802         6,071       (3,049)      4,544
  Basic net income (loss) per share:
     From continuing operations.............      49.46         90.14       (20.14)     (18.54)
     From discontinued operations...........      (7.40)       (19.34)      (19.64)      70.56
     Net income.............................      42.06         70.80       (39.78)      52.02
  Diluted income (loss) per share:
     From continuing operations.............      44.43         81.43       (20.14)     (16.49)
     From discontinued operations...........      (6.65)       (17.47)      (19.64)      62.73
     Net income.............................      37.78         63.96       (39.78)      46.24
F-20
AEROPOSTALE, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THIRTEEN WEEKS ENDED
                                              -----------------------------------------------
                                              OCTOBER 28,   FEBRUARY 3,   MAY 5,    AUGUST 4,
                                                 2000          2001        2001       2001
                                              -----------   -----------   -------   ---------
FISCAL 2001
  Net sales.................................    $76,831      $107,538     $56,629    $63,769
  Gross profit..............................     25,750        34,008      12,458     13,933
  Income from continuing operations.........      6,007         8,687      (2,049)    (1,731)
  Income (loss) from discontinued
     operations.............................         --           388           2         15
  Net income................................      6,007         9,075      (2,047)    (1,716)
  Basic net income (loss) per share:
     From continuing operations.............      69.55        101.63      (27.67)    (23.94)
     From discontinued operations...........         --          4.67        0.02       0.18
     Net income.............................      69.55        106.30      (27.65)    (23.76)
  Diluted income (loss) per share:
     From continuing operations.............      62.06         89.53      (27.67)    (23.94)
     From discontinued operations...........         --          4.12        0.02       0.18
     Net income.............................      62.06         93.65      (27.65)    (23.76)
The per share amounts are calculated independently for each thirteen-week
period presented. The sum of the thirteen weeks may not equal the full year per
share amounts.

18. SUBSEQUENT EVENTS

     On December 21, 2001, the Company granted 1,504 options with an exercise
price of $320 per share which was at a price less than fair market value of
$1,022 determined through an independent appraisal. The Company anticipates a
non-cash compensation charge of approximately $505,000 as a result of the grant
of these options.

                                       F-21
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                              SHARES

                               [AEROPOSTALE LOGO]

                                  COMMON STOCK

                            ------------------------
                                   PROSPECTUS
                            ------------------------

                          Joint Book-Running Managers
                            BEAR, STEARNS & CO. INC.
                              MERRILL LYNCH & CO.

                            ------------------------

                         BANC OF AMERICA SECURITIES LLC
                           U.S. BANCORP PIPER JAFFRAY
                              WACHOVIA SECURITIES

                                     , 2002

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Aeropostale in connection
with the sale of common stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.
SEC registration fee........................................  $18,400
NASD filing fee.............................................   20,500
New York Stock Exchange listing fee.........................        *
Printing and engraving costs................................        *
Legal fees and expenses.....................................        *
Accounting fees and expenses................................        *
Blue Sky fees and expenses..................................        *
Directors and Officers Insurance............................        *
Transfer Agent and Registrar fees...........................        *
Miscellaneous expenses......................................        *
                                                              -------
  Total.....................................................        *
                                                              =======
---------------
* To be supplied by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

     ARTICLE NINE of our amended and restated certificate of incorporation
provides for the indemnification of directors and officers to the fullest extent
permissible under Delaware law.

     ARTICLE NINE of our amended and restated certificate of incorporation also
provides for the indemnification of officers, directors and third parties acting
on our behalf if such person acted in good faith and in a manner reasonably
believed to be in and not opposed to our best interest, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his or her conduct was unlawful.

     Reference is also made to Section      of the Underwriting Agreement
contained in Exhibit 1.1 hereto, indemnifying officers and directors of
Aeropostale against certain liabilities.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

     In the past three years, we have issued unregistered securities to a
limited number of persons, as described below. None of these transactions
involved any underwriters, underwriting discounts or commissions, or any public
offering, and we believe that each transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof, Regulation
D promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof, and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationships with us, to
information about us.

                                       II-1
From inception to February 2, 2002, we issued options to purchase
shares of our non-voting common stock to our employees and options to purchase
       shares of our non-voting common stock to a consultant in connection with
services performed. These options have exercise prices ranging from $       to
$       . During this period, we issued          shares of our common stock
pursuant to option exercises. The issuance of options were all made pursuant to
Rule 701 promulgated under the Act and issuances of common stock pursuant to
option exercises were made in reliance upon Section 4(2) of the Act and Rule 506
promulgated thereunder. The shares of non-voting common stock received upon the
exercise of the options discussed in this paragraph will be converted to
shares of voting common stock simultaneously with the consummation of this
offering.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS
1.1   Underwriting Agreement.*
 3.1   Form of Amended and Restated Certificate of Incorporation.
 3.2   Form of Amended and Restated By-Laws.
 4.1   Specimen Common Stock Certificate.*
 4.2   Stockholders' Agreement, dated as of August 3, 1998, by and
       among MSS-Delaware, Inc., MSS Acquisition Corp. II,
       Federated Specialty Stores, Inc., Julian R. Geiger, David R.
       Geltzer and John S. Mills.
 5.1   Form of Opinion of Kirkland & Ellis.
10.1   Aeropostale, Inc. 1998 Stock Option Plan.
10.2   Aeropostale, Inc. 2002 Long-Term Incentive Plan.
10.3   Management Services Agreement, dated as of July 31, 1998,
       between MSS-Delaware, Inc. and MSS Acquisition Corp. II.
10.4   Loan and Security Agreement, dated July 31, 1998 between
       Bank Boston Retail Finance Inc., as agent for the lenders
       party thereto (the "Lenders"), the Lenders and MSS-Delaware,
       Inc.
10.5   First Amendment to Loan and Security Agreement, dated
       November 8, 1999, by and between Bank Boston Retail Finance
       Inc., as agent for the Lenders, the Lenders and
       MSS-Delaware, Inc.
10.6   Second Amendment to Loan and Security Agreement, dated May
       2, 2000, by and between Fleet Retail Finance Inc. (f/k/a
       Bank Boston Retail Finance), as agent for the Lenders, the
       Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
10.7   Third Amendment to Loan and Security Agreement, dated June
       13, 2001, by and between Fleet Retail Finance Inc. (f/k/a
       Bank Boston Retail Finance), as agent for the Lenders, the
       Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
10.8   Fourth Amendment to Loan and Security Agreement, dated
       February 2, 2002, by and between Fleet Retail Finance Inc.
       (f/k/a Bank Boston Retail Finance), as agent for the
       Lenders, the Lenders and Aeropostale, Inc. (f/k/a
       MSS-Delaware, Inc.).
10.9   Sublease Agreement, dated February 5, 2002, between the
       United States Postal Services and Aeropostale, Inc.
10.10  Merchandise Servicing Agreement, dated March 1, 1999,
       between American Consolidation, Inc. and MSS-Delaware, Inc.
10.11  Interim Merchandise Servicing Agreement, dated as of
       February 11, 2002, by and between American Consolidation,
       Inc. and Aeropostale, Inc.
10.12  Sourcing Agreement, dated July 31, 1998, by and among
       Federated Department Stores, Inc., Specialty Acquisition
       Corporation and MSS-Delaware, Inc.
10.13  Employment Agreement, dated August 3, 1998, between
       MSS-Delaware, Inc. and Julian R. Geiger.
10.14  Employment Agreement, dated August 3, 1998, between
       MSS-Delaware, Inc. and John S. Mills.
II-2
21.1   List of subsidiaries of Aeropostale, Inc.
23.1   Consent of Kirkland & Ellis (included in Exhibit 5.1).
23.2   Consent of Deloitte & Touche LLP.
23.3   Power of Attorney (on signature page).
---------------
* To be filed by amendment.

(B) FINANCIAL STATEMENT SCHEDULES

     None

     Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

     We hereby undertake to provide to the underwriters at the closing specified
in the underwriting Agreement certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each
purchaser.

     Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

     We hereby undertake that:

          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of Prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of Prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                       II-3
SIGNATURES

     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 8th day of March, 2002.

                                          AEROPOSTALE, INC.

                                          By: /s/   JULIAN R. GEIGER
                                            ------------------------------------
                                                     Julian R. Geiger,
                                                        Chairman and
                                                  Chief Executive Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Julian R. Geiger and Michael J.
Cunningham and each of them, his attorneys-in-fact, each with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of
1933, as amended, and all post-effective amendments thereto, and to file the
same, with all exhibits thereto and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
/s/ JULIAN R. GEIGER                    Chairman and Chief Executive     March 8, 2002
--------------------------------------------------     Officer, Director (Principal
                 Julian R. Geiger                           Executive Officer)

            /s/ MICHAEL J. CUNNINGHAM                  Senior Vice President-Chief      March 8, 2002
--------------------------------------------------     Financial Officer (Principal
              Michael J. Cunningham                         Financial Officer)

               /s/ ALAN C. SIEBELS                      Vice President-Controller       March 8, 2002
--------------------------------------------------    (Principal Accounting Officer)
                 Alan C. Siebels

                /s/ JOHN S. MILLS                     President and Chief Operating     March 8, 2002
--------------------------------------------------          Officer, Director
                  John S. Mills

                /s/ BODIL ARLANDER                               Director               March 8, 2002
--------------------------------------------------
                  Bodil Arlander
II-4
SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
/s/ MARY ELIZABETH BURTON                            Director               March 8, 2002
--------------------------------------------------
              Mary Elizabeth Burton

                 /s/ DAVID EDWAB                                 Director               March 8, 2002
--------------------------------------------------
                   David Edwab

                /s/ JOHN D. HOWARD                               Director               March 8, 2002
--------------------------------------------------
                  John D. Howard

               /s/ RICHARD METRICK                               Director               March 8, 2002
--------------------------------------------------
                 Richard Metrick
II-5
EXHIBIT INDEX
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
1.1    Underwriting Agreement.*
  3.1    Form of Amended and Restated Certificate of Incorporation.
  3.2    Form of Amended and Restated By-Laws.
  4.1    Specimen Common Stock Certificate.*
  4.2    Stockholders' Agreement, dated as of August 3, 1998, by and
         among MSS-Delaware, Inc., MSS Acquisition Corp. II,
         Federated Specialty Stores, Inc., Julian R. Geiger, David R.
         Geltzer and John S. Mills.
  5.1    Form of Opinion of Kirkland & Ellis.
 10.1    Aeropostale, Inc. 1998 Stock Option Plan.
 10.2    Aeropostale, Inc. 2002 Long-Term Incentive Plan.
 10.3    Management Services Agreement, dated as of July 31, 1998,
         between MSS-Delaware, Inc. and MSS Acquisition Corp. II.
 10.4    Loan and Security Agreement, dated July 31, 1998 between
         Bank Boston Retail Finance Inc., as agent for the lenders
         party thereto (the "Lenders"), the Lenders and MSS-Delaware,
         Inc.
 10.5    First Amendment to Loan and Security Agreement, dated
         November 8, 1999, by and between Bank Boston Retail Finance
         Inc., as agent for the Lenders, the Lenders and
         MSS-Delaware, Inc.
 10.6    Second Amendment to Loan and Security Agreement, dated May
         2, 2000, by and between Fleet Retail Finance Inc. (f/k/a
         Bank Boston Retail Finance), as agent for the Lenders, the
         Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
 10.7    Third Amendment to Loan and Security Agreement, dated June
         13, 2001, by and between Fleet Retail Finance Inc. (f/k/a
         Bank Boston Retail Finance), as agent for the Lenders, the
         Lenders and Aeropostale, Inc. (f/k/a MSS-Delaware, Inc.).
 10.8    Fourth Amendment to Loan and Security Agreement, dated
         February 2, 2002, by and between Fleet Retail Finance Inc.
         (f/k/a Bank Boston Retail Finance), as agent for the
         Lenders, the Lenders and Aeropostale, Inc. (f/k/a
         MSS-Delaware, Inc.).
 10.9    Sublease Agreement, dated February 5, 2002, between the
         United States Postal Services and Aeropostale, Inc.
 10.10   Merchandise Servicing Agreement, dated March 1, 1999,
         between American Consolidation, Inc. and MSS-Delaware, Inc.
 10.11   Interim Merchandise Servicing Agreement, dated as of
         February 11, 2002, by and between American Consolidation,
         Inc. and Aeropostale, Inc.
 10.12   Sourcing Agreement, dated July 31, 1998, by and among
         Federated Department Stores, Inc., Specialty Acquisition
         Corporation and MSS-Delaware, Inc.
 10.13   Employment Agreement, dated August 3, 1998, between
         MSS-Delaware, Inc. and Julian R. Geiger.
 10.14   Employment Agreement, dated August 3, 1998, between
         MSS-Delaware, Inc. and John S. Mills.
 21.1    List of subsidiaries of Aeropostale, Inc.
 23.1    Consent of Kirkland & Ellis (included in Exhibit 5.1).
 23.2    Consent of Deloitte & Touche LLP.
 23.3    Power of Attorney (on signature page).
---------------
* To be filed by amendment.