Judy Meehan - Vice President, Investor Relations Joan Hilson - Chief Financial Officer, Executive Vice President Susan P. McGalla - President, Chief Merchandising Officer James V. O’Donnell - Chief Executive Officer

Liz Dunn - Thomas Weisel Partners Jeff Black - Lehman Brothers Jeff Klinefelter - Piper Jaffray Kimberly Greenberger - Citigroup Janet Kloppenburg - JJK Research John Morris - Wachovia Securities Robin Murchison - Sun Trust Robinson-Humphrey Paul Lejuez - Credit Suisse Lauren Cooks Levitan - Cowen & Company Lorraine Maikis - Merrill Lynch Mimi Bartow - Telsey Advisory Group

Good morning. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the American Eagle Outfitters second quarter 2007 earnings call. (Operator Instructions) I will now turn the call over to Ms. Judy Meehan, Vice President of Investor Relations. Please go ahead, Madam.

Good morning, everyone. Joining me today are Jim O’Donnell, Chief Executive Officer; Susan P. McGalla, President and Chief Merchandising Officer; and Joan Hilson, Executive Vice President, Chief Financial Officer, AE Brand. If you need a copy of our second quarter press release, it is available on our website, ae.com. Before we begin, I need to remind everyone that during this conference call, members of management will make certain forward-looking statements based upon information which represent the company’s current expectations or beliefs. The results actually realized may differ materially from those expectations or beliefs based on risk factors included in our quarterly and annual reports filed with the SEC. Today, Joan will begin with a review of the financials.

Thanks, Judy and good morning, everyone and thank you for joining us. Our second quarter marked the 14th consecutive quarter of record sales and earnings. This quarter demonstrated our operating strength and ability to drive consistent financial results. While top line sales performance was not as robust as we planned, we managed inventory, controlled expenses, and are well positioned entering the second half of the year. Highlights of the quarter included the following: a higher initial markup driven by lower costs; a selling cadence that led to our targeted inventory position; flat SG&A as relates to sales; a 17.4% operating margin, our second-highest rate for this quarter, leading to a 19% increase in EPS to $0.37 versus $0.31 last year. Total sales in the quarter increased 17% to $703.2 million. Comparable store sales increased 2%, up against a 9% increase for the same period last year. Comps by geographic region were as follows: Canada increased in the mid teens; the Northeast rose in the high single digits; the Midwest and mid-Atlantic regions increased in the mid single digits; the west and Southwest declined in the low single digits; and the Southeast was negative mid single digits. It’s important to note that second quarter comps were negatively affected by later back-to-school and tax-free events, which impacted July. Ae.com performed well in the second quarter, with sales increasing 32%. New site enhancements and redesign, along with unique content, have resulted in a meaningful increase in unique user sessions over the prior year. Our gross margin rate of 45% declined from 45.7% last year. Our merchandise margin declined 50 basis points due to a higher level of markdown, which in part was offset by a strong initial markup. Buying, occupancy and warehousing costs increased 20 basis points. This was primarily due to rent expense from the new aerie stores, which are opening over the next few months. We also experienced start-up costs related to transitioning e-commerce fulfillment in-house. SG&A as a percent of sales was flat to last year’s historically low rate of 23.7%. Within SG&A, incentive compensation was lower and we continued to leverage selling payroll. This was offset by increases in expenditures related to in-store improvements and professional services. Our second quarter effective tax rate was approximately 38%, which is also what we expect for the third quarter. Our operating income margins declined 80 basis points to 17.4% from 18.2%. During the quarter, we repurchased 3.7 million shares of our common stock, bringing our total for the year to 6.5 million shares with an investment of $184.7 million. We have 23.5 million shares available for repurchase. Capital expenditures in the quarter were approximately $55 million. For the year, we continued to expect capital expenditures to be in the range of $240 million to $260 million. This includes new and renovated stores, along with our 37 new aerie stores, IT investments, our new Pittsburgh headquarters, and the completion of our expanded Kansas DC. Total merchandise inventories at the end of the second quarter were $321 million, an increase of $54 million compared to last year. AE Brand inventory, excluding direct, increased 7% on a per square foot basis from a year ago. Looking ahead to the end of the third quarter, we expect inventory to be up in the range of high single digits to low doubles on a cost-per-foot basis. Now, regarding our outlook, we are optimistic about the third quarter and we are pleased with our August sales performance to date. At this early point in the quarter, we are providing third quarter earnings guidance of $0.47 to $0.48 per share. This compares to earnings of $0.44 per share last year. Now I would like to turn the call over to Susan. Susan P. McGalla: Thanks, Joan and good morning, everyone. I’m extremely pleased with many aspects of our second quarter performance. We managed the business well and made quick adjustments where it was needed. Importantly, we ended the quarter well positioned and ready for the back-to-school and fall seasons. During the second quarter, our men’s business was strong, delivering a high single digit comp increase. Strength was broad-based across most major categories, including men’s shorts, knit-tops, and woven shirts. Our overall women’s comp declined slightly with strength in aerie, bare knit-tops, shorts, and dresses offset by declines in graphic tees and polos, skirts, and accessories. Our sales metrics reflected brand strength and an overall positive response to the collections. Second quarter store traffic declined, driven entirely by the month of July and the impact of back-to-school and tax-free calendar changes. However, our conversion rate rose compared to last year, driving a slight increase in sales transactions per store. Our average transaction value increased in the low single digits. Units per transaction increased in the mid single digits and we experienced a slight decline in our average unit retail price. Although our markdown rate increased over a stellar performance last year, we carefully managed our promotions, optimized our margin rates, and ended the season clean. We are now in the midst of the back-to-school season and are pleased with the customer response to our collection. Our new line of women’s knit tanks and tees is a major step forward from spring and summer and a better reflection of what on trend means for our customer. We are also seeing ongoing momentum in denim. Building on our strong jeans business, this season we took our offering to a new level with a significant amount of fashion newness in our blue issue collection and within our fit systems. Both guys and girls are embracing new fits and responding positively to fashion elements. Our Fall One assortment arrives in stores on August 28th. This updated fall collection will capitalize on later back-to-school markets and the Labor Day holiday traffic. Our timing for Fall One is similar to last year, yet this year it will coincide with our fit challenge bounce-back event. Beginning August 28th, customers have two weeks to redeem their ticket for either a free pair of jeans or $10 off coupon. As many of you know, as a corporation we are focused on growth and we are strategically positioned to capitalize on the near, mid and longer term. It’s important to emphasize that near-term, our most powerful opportunity is the AE Brand. Our teams have an unrelenting focus on our maniacal customer connection, in combination with our unique approach to quality, value and on-trend fashion. This positions us to capture a greater share of Destination AE categories, capitalize on expanded assortments and square footage growth. Additionally, we are broadening the reach of our AE lifestyle through AE.com and our creative marketing strategies. “It’s a Mall World” is a great example of creating such an experience. Our new original series is currently airing during MTV’s The Real World and on AE.com, and has been met with great enthusiasm from our customers. We also relaunched AE.com in July with improved functionality, easier navigation, and a dedicated entertainment channel, 77E. An exciting component of our growth initiative, aerie by American Eagle, continues to emerge and develop into its own complete lifestyle brand. This back to school, our new bra launch, katie with lace, and three new undie fits were highly successful. Through the second half of this year and into 2008, you’ll see aerie evolve with newness around all existing categories. In addition, for category expansion this holiday, we are introducing aerie fit, a line of fun and fitness inspired apparel and, just in time for the gift-giving season, we will also launch aerie personal care, including body and cosmetic offerings. We are currently operating 11 aerie freestanding stores. Over the next few months, we have a very active store opening schedule, with two additional stores opening this month, seven in September, 14 in October, five in November and one in December. Next year, we expect to open at least 50 additional aerie stores. Thanks, everyone, and now I will turn the call over to Jim. James V. O’Donnell: Thanks, Susan. Good morning, everyone. Naturally, our main purpose for this call is to provide you with our second quarter results but I would like to share with you our three major corporate goals to drive future growth: first, building brands for growth; two, optimizing our channels of distribution; and three, strengthening our operations for productivity improvements and greater profitability. We continue to build upon the strength of the AE brand. As Susan discussed, this remains one of our top growth opportunities. With aerie, I’m pleased to see that we have successfully leveraged the AE brand and our strong customer base into an exciting new growth venture. Aerie’s proven to be highly productive and profitable from the start. At this very early juncture, sales per square foot for new standalone stores are annualizing at over $400. As the brand builds and assortments expand, I am very optimistic about the contribution aerie will bring to our company. Over the past few months, we have made significant progress on the MARTIN + OSA brand, and I am very pleased with the work Susan and brand President, Laura Dubin Wander, put forth. Responding to customer feedback, they redefined what the brand represents to our targeted customer. While it’s still quite early, our initial reads on the new MARTIN + OSA fall collection show an improvement and we expect continued improvements for holiday around gift-giving categories and importantly into spring of 2008. In fact, we just completed our spring 2008 coordination meetings. The new collections are a major advancement from where we were. We’ve added color and energy. Women’s is more feminine and distinctive. Additionally, we have a more balanced pricing strategy, with an important emphasis on key categories at appropriate opening price points. This will ensure we are an accessible brand. Operations are being strengthened as well as leveraged across critical corporate strengths, particularly within sourcing and production. To sum it up, we remain absolutely committed to MARTIN + OSA and are very optimistic about our prospects. From expanding e-commerce to upgrading and expanding our store base, optimizing our channels of distribution is a top priority. This year, we are on target to grow our square footage by approximately 10% through 32 new and 53 remodeled AE stores, 14 MARTIN + OSA stores and 37 aerie stores. Also, we are opening our first AE new store format. This store is designed to elevate the customer experience and importantly, increase store productivity through the use of new floor and wall fixtures. Today, we have approximately 250 stores targeted for remodel and/or expansion, which we’ll address over the next several years. We continue to see outstanding results from upgrading our stores with meaningful improvements in sales and profitability and overall, our sales per square foot have reached $540 on a trailing 12-month basis, up from $524 in fiscal 2006. As I said earlier, strengthening our operations for productivity improvements and greater profitability is another top priority. In this area, we are continuing to enhance our supply chain and strengthening sourcing and production capabilities. We have placed significant emphasis on redefining our sourcing strategy, managing to our time and action calendar, and improving the technology utilized throughout our global supply chain. The combination of these initiatives have enabled us to strengthen our IMU through a reduction in our product costs and significantly reduce transportation costs per unit. Importantly, we have not only lowered our costs but we have a strong focus on improved product quality and looking ahead, we see ongoing benefits in these areas. Within logistics, we are refining our flow process and bringing product merchandise in closer to need. We are increasing the percent of product coming into our distribution center that is pre-packed and store ready. This is enabling us to move product more efficiently with lower handling costs. We expect to see these improvements during holiday and beyond. I am very pleased with the transition of our direct-to-consumer fulfillment function, which we moved into our Kansas DC this spring. We are already achieving benefits in processing and freight costs. Longer term, the benefits are significant, enabling us to leverage as we grow our e-commerce business and we can provide a more efficient and customized customer experience. To conclude, we are committed to driving growth and building exciting lifestyle brands. Operationally, we are stronger than ever and well positioned to deliver profitable growth. And now we’ll open up for questions.

(Operator Instructions) Your first question will come from the line of Liz Dunn with Thomas Weisel. Liz Dunn - Thomas Weisel Partners: Good morning. I guess my first question relates to the calendar shift. Can you give us some sense of how that’s impacting Q3 versus Q4? Also, on previous calls I believe you backed 15% EPS guidance for the year. Are you still feeling comfortable that you can achieve that? And then also, related to the calendar shift, how did it impact inventories, if at all?

I’ll take those. The calendar shift Q3, Q4, we really see a nominal impact of any calendar shift for Q4, so in terms of, or any calendar shift affecting Q3 with respect to Q4, so nothing there on that. EPS guidance for the year, we are committed to our target of delivering 15% EPS growth on an annual basis, so that has not changed with the guidance that we have given in the third quarter. And inventory shift with respect to our calendar shift and how it affects inventory, a little bit of an effect at the end of the third quarter potential, and we’ve reflected that and considered that in connection with our in-transit inventories, is where we’d see that impact occur. Liz Dunn - Thomas Weisel Partners: So is your third quarter guidance based on a mid single digit comp assumption? And when you say that you are pleased with August, should we expect that you are sort of running in line with that?

What I can tell you about August is that we are pleased. We did see the shift in traffic that we expected to see and in some areas, even better. However, what we have to remember is that there is a number of shifts in the back-to-school calendar that even shift into September, so that’s what we’re keeping our eye on as we are very early in the quarter. We are two weeks into a 13-week quarter. Liz Dunn - Thomas Weisel Partners: Okay, thank you. Good luck.

Your next question will come from the line of Jeff Black with Lehman Brothers. Jeff Black - Lehman Brothers: Thanks. Good morning, everybody. I just had a question on the gross margin side, on the IMU, could you be a little more specific about how much benefit you are still getting from the initiatives you are talking about? And then also, going forward and the guidance you just laid out, what kind of markdown assumptions does that bake in for 3Q? Thanks.

With respect to the second quarter, as we stated, Jeff, we got a significant improvement in IMU for the quarter. That is something that we look at and is contributed -- many things contribute to it. One is lower product costs, but there are also lower transportation costs. Jim referred to improvements in his comments and so we are looking at the complete supply chain to deliver those IMU opportunities and continuing to stay on our calendar. So those are the things that we are doing to continue to contribute to the IMU, but as we look forward in our guidance, we look at it on a more moderate basis and don’t assume that those significant improvements will occur every quarter. With respect to the markdown assumption for the third quarter, what I want you to keep in mind is that third quarter a year ago was a very low markdown rate. It was an historically low markdown rate for us, so included in our guidance for this quarter, for the third quarter, we have factored in a more normalized markdown rate, which is in fact higher than last year. Jeff Black - Lehman Brothers: Okay, fair enough. Thanks. Good luck.

Your next question will come from the line of Jeff Klinefelter with Piper Jaffray. Jeff Klinefelter - Piper Jaffray: Yes, just a couple of quick questions; Joan, I just wanted to revisit again your comp levels that it takes for you to leverage. I know there is kind of an annual level that you’ve talked about and it might change quarter by quarter, given some of the volumes, but again where is that tracking right now? And then also, in terms of the costs associated with MARTIN + OSA and if there are, if you are thinking about it the same way with the aerie initiatives, kind of what you are currently carrying in this year on a run-rate basis for cost for those two initiatives.

Okay, so comp level with respect to SG&A leverage, we are in the same range, Jeff. It’s a mid single digit required to leverage our expense base. In the third quarter, I’d like to share that we have additional costs included in there for, in the positive way, the aerie new store openings. We have roughly 25 new stores opening in the third quarter, so that is a cost that we are seeing there. We’ll see the benefit of that come back to us in the fourth quarter as the stores importantly are open for the holiday selling season. And then, with respect to M+O and the cost base for M+O, we’re still, our view on M+O in terms of M+O guidance is the $0.15 to $0.17 range. We are, in terms of the loss, we are optimistic, as Jim remarked, and we would like to see the third quarter play through here to re-look at that guidance again. Jeff Klinefelter - Piper Jaffray: Okay, that’s great and one last question; on your Canadian business, it’s been highlighted a number of times I know in comp calls as an area of strength. Could you just give us an update on that market, further growth opportunities in that market and maybe what this is leading to in terms of other international considerations? James V. O’Donnell: Our Canadian business continues to be very strong. We have made a major position in market share and I am very pleased to report that it’s been consistent almost from its inception. The growth in Canada for the American Eagle brand will slow down somewhat from a new store base because there are only a limited number of opportunities there, although we are now looking at some of the existing stores and as their leases come up, we will be expanding them more in the line of the same size as the stores in the States. But aerie has a considerable upside in Canada and naturally the jury is still out on MARTIN + OSA for any expansion outside the United States. As far as international, we continue to have conversation with a number of potential business partners throughout the world who have expressed interest in entering into some sort of an agreement joint venture type of transaction. Right now, I am considering the options that are open. I’ve not made any decisions just yet, although more could come later -- later would be next year as far as information on something definitive. Jeff Klinefelter - Piper Jaffray: Okay, great. Thank you.

Your next question will come from the line of Kimberly Greenberger with Citigroup. Kimberly Greenberger - Citigroup: Thank you. Good morning. I was hoping you could comment on how you are addressing the shift of aerie business out of some of the stores where you are opening standalone stores. How are you filling any product gaps in those American Eagle stores when you are opening a standalone aerie store? That would be helpful. And then secondarily, I understand that the balance sheet inventory level is only a point in time and I am wondering if you can comment, relative to either the plus 7% here at the end of second quarter or the high single to low double-digit expectation at the end of third quarter, how are you expecting in-store goods available for sale to be through that period? Can we use 7% or high single digit as a proxy for the in-store inventory levels throughout the quarter? Thanks. Susan P. McGalla: I will address the shift in aerie product. First of all, I would like to preface my explanation to you by saying that we are, the aerie stores that are opening are in very strong markets for us, so that gives us the confidence to do what I’m going to tell you that we are doing. First of all, in the short-term, where we open up an aerie standalone store in a mall, what we are doing if the American Eagle had an expanded shop format of aerie, we are pulling that back to a very small sampling of panties. What you will see is panties and maybe a few pieces from the dorm wear collection, but it’s a little capsule that can still be incremental to the business and make sure that we are promoting brand awareness of aerie. And then what we do with that space if we have taken an expanded shop of aerie out is we are either, depending on the assortment they get, is giving them the most expanded version of the American Eagle brand assortment, if they haven’t already had that, if they didn’t have the space before we moved aerie out to do that. If they did, we are approaching them almost how we approach an expanded square footage flagship approach, and that’s why I prefaced the comment by saying these are in very strong markets that can handle that type of approach. So again, all of these changes keep proving out to be incremental business for us, for the AE brand and for aerie, and we are very pleased with these changes. Joan.

Sure. Kimberly, with respect to the inventory, I think it is fair to say that as you roll through the quarter, in-store inventories at that level would be reasonable. Kimberly Greenberger - Citigroup: Okay, great. That’s very helpful. Thanks.

Your next question will come from the line of Janet Kloppenburg with JJK Research. Janet Kloppenburg - JJK Research: Good morning, everybody. Susan, maybe you could talk a little bit about, maybe you could grade the women’s knit assortments and the accessory assortments here for back-to-school, and maybe you could talk a little bit about how you see those assortments improving, or maybe they are at the levels you expect them to be for the rest of the year and what we could look forward to for Spring ’08. And Jim, I don’t know if I heard -- I heard what MARTIN + OSA might cost this year, or Joan, but I don’t know what aerie’s standalone rollout will cost this year and I would also like if Joan, you could say again what the remaining share repurchase levels could be. Thanks. Susan P. McGalla: All right, Janet. First of all, I’m going to leave the grading up to the customers but I will discuss those knits and accessories with you. First of all, on knits, I mentioned in my opening comments that we are very pleased with the move forward that we’ve made on two fronts. Quite honestly, the knits are selling quite well right now. We’re pleased with the performance from our back-to-school assortment. I just also think that it’s a better reflection of being in the game in the right way. We are very committed at American Eagle with our lifestyle approach to offering a balanced assortment of fashion basics and being in the game in the right way on fashion. This would be the assortment I would tell you in the past year that I am most pleased with that we are starting to strike that balance in a much better way. But when you look forward to the rest of the year and into 2008, as big as this business is in women’s knits for us, it is as much opportunity that’s out there for us to have. I don’t think that we’re the best out there in our space yet and myself, my team will not rest until we are. This is something that is a destination AE business and that’s what that’s about -- it’s about really gaining market share and being a leader in this space, and I think we still have a ways to go there but I am very pleased with the progress. As it relates to accessories, I would tell you that I think what we’ve got out there right now quite honestly is fair, just fair. I think that while we continue to be committed to accessories, it’s a fun factor and a great extension of the lifestyle, we get high marks from our customers on it, I think it is too inconsistent of a performance from our standpoint in terms of how we are delivering the fun, how well it coordinates with the assortment, and quite honestly the sales performance. We always manage to pull the margin out but the top line sales and performance of what we deliver I think still are not up to what we are happy with. You will just see continued improvement and perseverance to get that right. Janet Kloppenburg - JJK Research: Have you made any merchandising management changes there, Susan, to enable a solution to be forthcoming? Susan P. McGalla: Yes, Janet, we actually have. We’ve done a couple of things. On the merchandising front, we have a merchant that is committed with a smaller scope of responsibility to focus on the strategy work associated with accessories, and we also brought in talent from the outside who -- she’s the Vice President of Design who is solely focused on women’s accessories, and that’s been a change within the last two to three months, so you won’t -- it will be a little bit of time before you see the benefits of her talents but we are very pleased to have her with us. I think she’s going to be a game changer. Janet Kloppenburg - JJK Research: Great, and good luck, Susan. And maybe a comment on aerie’s loss, what area will cross the EPS line this year?

Janet, where we can comment on with respect to aerie is as we roll out these stores, we have three so we want to be careful before we put numbers out there and give you an expectation. But our expectation generally is that aerie will be accretive for the back half of the year. Janet Kloppenburg - JJK Research: But for the year, how will that shape up on an earnings basis? Accretive or dilutive?

Accretive, accretive. Janet Kloppenburg - JJK Research: For the year?

Correct. Janet Kloppenburg - JJK Research: Okay, great, and then on the share repurchase, what’s remaining, Joan?

There’s 23.5 million shares remaining, Janet. Janet Kloppenburg - JJK Research: 23.5 million, great. Thanks so much.

Your next question will come from the line of John Morris with Wachovia Securities. John Morris - Wachovia Securities: Thanks. Good morning, everyone. First, for Joan, on the SG&A, the SG&A was very well controlled in the second quarter. Incorporated in your assumptions on Q3, would we expect to see the same kind of run-rate for the third quarter? And then my question following up on inventory is the high single, low double-digit guidance that you are giving for where it would come out in Q3 and kind of the average run-rate, high single I think as you are implying, why wouldn’t we consider that to be aggressive in this kind of an environment? What’s behind that? Maybe you could give us a little bit more color there to give us a read on that. Thanks.

Sure, John. The SG&A, as we look into the third quarter, I mentioned the opening of the 25, roughly 25 aerie freestanding stores, so there’s a little bit higher sales required to leverage the SG&A but generally for the year, the mid single digit is the sales requirement to leverage SG&A. So that’s my expectation there. With respect -- John Morris - Wachovia Securities: Sorry, just to clarify, so you would look for leverage on SG&A in Q3?

I expect to, from a sales perspective, we need to achieve a little bit higher sales than a mid single digit comp to leverage SG&A, which is the clarification to my comment. And then with respect to inventory, the high single to low double, John, is we are positioning our inventory to deliver on our holiday season. We feel good about the content. It’s very balanced in the men’s and the women’s and we are also positioned to deliver on aerie. There’s also a factor in there as well that helps us manage the overall in-transit inventory and we need to have latitude in there to make decisions to bring things in on the time cadence that the business requires, so that’s really the color around the guidance. John Morris - Wachovia Securities: Okay. The stores look great. Good luck for the rest of the season. Thanks.

Your next question will come from the line of Robin Murchison with Sun Trust Robinson-Humphrey. Robin Murchison - Sun Trust Robinson-Humphrey: Thanks very much. Good morning and let me just piggyback off that last question; does it have anything to do, in terms of inventory on the higher levels at the end, with a greater move or where are you with the ocean freight usage you talked about last quarter?

We continue to evaluate ocean freight and ocean versus air. We have factored that in to the thinking as well in our in-transit, so yes, we are able to shift more to ocean as we are on our product development calendar. Robin Murchison - Sun Trust Robinson-Humphrey: Okay, and then just two others, if I could. One is any chance you can characterize the Florida market and maybe the Texas market, in light of the floods and hurricane preparedness? Secondly, Jim, this would be for you; anything you want to describe or talk about in terms of this Unite Here issue that’s out there with regard to the potential for Canadian unions? Thanks. James V. O’Donnell: Sure. First of all, Florida and Texas, both markets were in the month of July, the early part of back-to-school, they had major calendar shifts. The two states, I guess independent of one another, made a decision to have the students go back to school at a later date than they did a year ago. Naturally, that moved our sales cadence from July into August. I can tell you that -- and also the tax-free shifted for both states, also to coincide with their later back to school. I can tell you that there were no surprises for us. We planned into the events accordingly, as we have planned into the events subsequently here in the month of August and so far, we feel that the goals and objectives that we set for sales are being met, and in some cases being exceeded. As far as the storms, I can’t really tell you that it’s had any effect on our business so far. It’s very early on but so far, so good and we’ll keep our fingers crossed that that will be the case. As far as the Unite Here, the quick comment on it is first of all, Unite Here has tried to represent the employees of the NLS organization, which is a distribution center that distributes product for a number of different entities up in Canada. We owned NLS with the acquisition of Braemar back in 2000 and we subsequently sold off NLS in 2006, and we are currently a customer of NLS. When Unite Here tried to represent the employees of NLS, they as a group voted against being represented by NLS and then there was a filing with the Ontario Labor Relations Board by the union that there was undue influence and harassment made by management, NLS management, to influence the vote against the representation of Unite Here. We have really no involvement at all with Unite Here and NLS. Our only involvement with NLS is basically as a customer and there have been some allegations made I think to some of, to the public about it affecting our business. I can tell you right now it has not affected our business. The boycotts have not affected any business. Any activity has not affected any of our business. Our sales and earnings cadence are running exactly as we planned them prior to any of the activity with Unite Here. Robin Murchison - Sun Trust Robinson-Humphrey: Okay, great. Thank you very much. Good luck.

Your next question will come from the line of Paul Lejuez with Credit Suisse. Paul Lejuez - Credit Suisse: Two questions, if I may; first, can you just review for us your CapEx budget and maybe break out the buckets? So what are you spending on stores versus DC, and I don’t know if you can give any granularity in terms of new stores versus remodels, because the number is obviously fairly large. And if you have any preliminary estimates for next year CapEx, that would be helpful. Second, just thinking about MARTIN + OSA, what happens if you get through holiday and you are not happy with the business? Do you at that point think about shutting it down? Do you give it another year? Do you take it in a different direction to maybe sharpen the focus? If you could maybe comment on that. Thanks.

I’ll address CapEx first, Paul. The CapEx for 2007, in our range of $240 million to $260 million, you can think about roughly $130 million of that related to stores and about $40 million to $50 million related to the DC; about $60 million in headquarters and about $20 million related to IT. As we look forward to 2008, we see that number hovering around the $200 million range, slightly north of that, but it is early in our planning for 2008 and we can bring back a more finer range for you. James V. O’Donnell: As it relates to MARTIN + OSA, I don’t look at holiday with Susan and Laura as a great watershed. I do look at it, and I think Susan and Laura would agree, we are looking at it as what are we going to learn, both from a positive as well as things we can do better. I am not pessimistic but I always try to remain optimistic. Right now, we think we know we are in the right space. One of the things I can assure you that we have addressed a number of different missteps from the early openings of the first five stores and we’ve made course corrections accordingly, and those course corrections are being viewed -- again, and it’s early stages -- in a very positive way by our customers. I mentioned spring of 2008 and I am sure that Susan will speak a little more about that probably when we do our call for third quarter and give a little more color around the brand and the productivity of the assortment, both for holiday, fall and holiday, and as much as we can and also give some thoughts on spring. But right now, I don’t really prefer to get a message out there or have anyone perceive that I have made a decision at a certain point in time that I am going to close it. I have basically looked at how fast we can roll it out if and when it’s successful. Paul Lejuez - Credit Suisse: Great. Thanks, and good luck.

Your next question will come from the line of Lauren Levitan with Cowen. Lauren Cooks Levitan - Cowen & Company: Thanks. Good morning. I did want to go back to the SG&A, just to better understand Q2, if we could. I know you had told us we would maybe need a slightly higher leverage point in Q2 also. Is the fact that you were able to bring the expenses in so tightly in Q2 a function of more the aerie openings happening in Q3? Were there any other one-time events that might have pulled that down? Second, on MARTIN + OSA, since you are talking about that, Jim, you mentioned that you had redefined what the brand represents. Could you be more specific in what you mean by that? Also, what does that mean in terms of who you see as the natural competitive set? And does this redefinition have any implications for real estate selection, the types of stores and locations you’d want to be in? And does it have any implications for store design? Do you think that the new redefinition of the brand fits in with the existing stores that are out there? Thanks very much.

I’ll address the SG&A quickly. We did not have one-time events that contributed to the SG&A. It was truly expense discipline and expense control in the second quarter that delivered that result. James V. O’Donnell: Lauren, I think it is only fair for me not to respond to the redefining of the brand, as Susan worked so hard on it, so she will speak to that piece. I will speak to about, and I think your question on positioning of the stores is a very good one and I’ll address that. Susan P. McGalla: Lauren, first of all, on the redefinition of the brand, we’ve been doing some very intense work with some new thinking, with myself and Laura Dubin Wander working with the team. In addition, more importantly even than that is with the feedback from our customers. I don’t want to give too much color on it because we actually have an internal bit of a relaunch on the evolution of this positioning to our entire group the first week of September, so I can share a lot more with you after that. But the one thing that I will tell you is we remain committed to the general space we’ve been speaking to, but there’s a major opportunity for the aesthetic and the lifestyle that we are going to deliver with MARTIN + OSA for a customer that is over 30 years old in the mall. You will be seeing some evolution, some clarification, but the most important thing to me, to Laura, to Jim, is that when we as a MARTIN + OSA team are speaking to this brand, looking at product, making decisions, that we are so succinct on who this customer is, what he and she think about what they want, and that is what we have been working so hard on the last 90 days, and if the team is moving in the same direction, that’s power. That’s what we do with the AE brand and that’s what we’ll be doing with MARTIN + OSA, and that’s the meaningful change you will be seeing in the next couple of months. James V. O’Donnell: As it relates to the store positioning, it’s very interesting that you brought it up because at our recent real estate meeting, we decided, and this was very recent, within the last two weeks, we’ve decided to test some centers but in smaller markets. And what that does is that actually reduces the overhead for the MARTIN + OSA stores. If we see that these types of malls in these types of small cities and mid-sized cities is productive, we’ll be on to something very positive and I believe that we will attain profitability even quicker by going out into these markets. That doesn’t mean we are going to eliminate some of the higher profile markets we are in now and we’ve identified for the future, but I think if we can balance the portfolio out between some of the higher-end, a little more expensive markets versus countering with some of the mid-tier markets, all in eight centers, I think we’ll have a very good business model and can attain profitability in a much quicker way. Lauren Cooks Levitan - Cowen & Company: Do you expect that that gets incorporated into the ’08 real estate strategy for MARTIN + OSA? James V. O’Donnell: Yes, absolutely. Lauren Cooks Levitan - Cowen & Company: Great. Thank you and good luck.

Your next question will come from the line of Lorraine Maikis with Merrill Lynch. Lorraine Maikis - Merrill Lynch: Thank you. Good morning. Would you comment on any changes in spending you’ve seen with your consumer so far this month, and then how you are planning for holiday in this uncertain environment? Thanks. Susan P. McGalla: I’ll take that. In terms of changes in how they are spending, I think it really relates to all of the discussion that we’ve been talking about with the shifting in timing. The business that’s commanded from the timing of back-to-school in our demographic is probably the most important driver at this point in terms of traffic and spending, and we are pleased that when we get them there and the traffic is there, we are converting them with our assortment and we are pleased with our collection. As it relates to our guidance and how we are moving forward into holiday, as Joan talked to you about our comp guidance, our jobs are to make sure that we deliver a collection that can meet or exceed our financial expectations. So we are working very hard on our assortments. As you know, the customer is king for us and we just went through in the last two weeks a very in-depth review of our holiday assortment, and as many of you know, we have receipts that we leave open until a later date, which was within the last couple of weeks, to respond to customer feedback and testing. And that is an exercise that we’ve gone through in the last two weeks to get ourselves ready and fine-tune the assortments to have a powerful holiday. So that’s what we’ve been hard at work doing.

Okay, Dennis, we’re going to take one more call.

And the next question will come from the line of Dana Telsey with Telsey Advisory Group. Mimi Bartow - Telsey Advisory Group: It’s actually Mimi Bartow for Dana. I was just wondering if you could give us any trends or anything you are seeing as far as specifics in the denim category, and then how you are planning for the redemptions coming up at the end of August. Susan P. McGalla: Okay, a couple of things. As it relates to denim trends, we are in a fashion cycle for sure. While I won’t talk too specifically about the elements that are within our assortment, I will tell you that our success and the customer reception to our jean assortment has been quite good. We are very pleased. As you know, and we’ve mentioned, we have over 90% newness that we delivered in our jeans assortment for guys and for girls for the back-to-school time period, and the reception to newness in wash, newness in fashion elements within the wash, and fashion bodies has been very, very widely accepted and I will tell you we’ve learned a lot. So we will be making further adjustments as we move into the back half of this year but we are in a fashion cycle. What was the second part?

Planning for redemption. Susan P. McGalla: The redemption planning -- for us, honestly, and let me just reiterate too that this event that we are running, have been running in the month of July, last year it was a try-on event. This year it was a fit challenge. For us, the reason for running these events for our customer is honestly to delight and add a fun factor to the shopping experience at the AE brand, in addition to hammering home a message, a merchandising product message that we feel is of the moment and very important for that season. So this year, fit challenge was hammering the fact that we know that we get high marks from our customer on the way our jeans fit, the way that we offer them newness in fit, and we wanted to make sure that our stores, our product and our sales associates were all behind that message. We feel very comfortable that we achieved and got that message across, and that to us is a success. An added benefit is this redemption in the back half of August and into the first week of September with either the free jean or $10 off a jean, depending on what you won based on your purchase in July. The inventories are ready for that. We prepare for that in advance but again, it is really more about a marketing message to our customer. Mimi Bartow - Telsey Advisory Group: Great. Thank you. James V. O’Donnell: Thank you for joining us today. We look forward to speaking to you again real soon and have a great day.

Ladies and gentlemen, this does conclude the American Eagle Outfitters second quarter 2007 earnings call. You may now disconnect.