EMPLOYMENT AGREEMENT

Exhibit 99.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) dated and effective on February 1, 2007 (the “Effective Date”), is entered into by and between Aeropostale, Inc., a Delaware corporation (the “Company”), and Olivera Lazic-Zangas, an individual residing at 5 Norvel Lane, Stamford, Connecticut 06905 (the “Executive”).

     WHEREAS, the Company is a mall-based specialty retailer of casual and active apparel for young women and men; and

     WHEREAS, the Executive is presently employed by the Company pursuant to an Employment Agreement dated February 1, 2004 (the “Prior Employment Agreement”). The Company and Executive now wish to further embody and clarify the existing employment relationship in this Agreement and terminate and replace the Prior Employment Agreement with this Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby mutually agreed by and between the parties hereto as follows:

      1.  Definitions .

     For purposes of this Agreement, the terms listed below shall be defined as indicated.

     “ Affiliate ” shall mean a domestic or foreign business entity controlled by, controlling or under common control with the Company.

      “ Annual Bonus ” shall have the meaning ascribed to it in Section 3.2.

     “ Base Salary ” shall have the meaning ascribed to it in Section 4.1.

     “ Board ” shall mean the Board of Directors of the Company.

     “ Cause ” shall have the meaning ascribed to it in Section 8.1.

      “Company Competitors” shall mean those companies listed on Exhibit A hereto, which includes all subsidiaries, related companies and affiliates of those companies listed on Exhibit A.

      “ Confidential Information ” shall mean all secret proprietary information of the Company and its Subsidiaries, not otherwise publicly disclosed (except if disclosed by the Executive in violation of this Agreement), whether or not discovered or developed by Executive, known by Executive as a consequence of Executive’s employment with the Company at any time (including prior to the commencement of this Agreement) as an Executive or agent. Without limiting the generality of the foregoing, such proprietary information shall include (a) customer lists; (b) acquisition, expansion, marketing, financial and other business information and plans; (c) research and development; (d) computer programs; (e) sources of supply; (f) identity of specialized consultants and contractors and confidential information developed by them for the Company and its Subsidiaries; (g) purchasing, operating and other cost data; (h) special customer needs, cost and pricing data; (i) manufacturing methods; (j) quality control information; (k) inventory techniques; (l) Executive information; any of which information is not generally known in the industries in which the Company and its Subsidiaries are conducting business or shall at any time during Executive’s Employment conduct business including (without limitation) the apparel retailing industry. Confidential Information also includes the overall business, financial, expansion and acquisition plans of the Company and its Subsidiaries, and includes information contained in manuals, memoranda, projections, minutes, plans, drawings, designs, formula books, specifications, computer programs and records, whether or not legended or

otherwise identified by the Company and its Subsidiaries as Confidential Information, as well as information which is the subject of meetings and discussions and not so recorded.

      “ Disability ” shall mean the absence of the Executive from the Executive’s duties to the Company on a full-time basis for a total of 120 days during any 12-month period as a result of incapacity due to mental or physical illness which is determined to be permanent by a physician selected by the Company and acceptable to the Executive or the Executive’s legal representative (such agreement as to acceptability not to be withheld unreasonably).

      “ Employment Period ” shall mean, unless earlier terminated as provided in Section 3 hereof.

      “EPS” or “Earnings Per Share” in accordance with Financial Accounting Standard Board Statement No. 128 “Earnings per Share.” Is defined as:

Basic – computed by dividing income available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator).

Diluted – computed with same numerator as basic, but denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.

      “ Fiscal Year ” shall mean the 52 or 53-week period ending on the Saturday closest to January 31 of each calendar year. Fiscal Years shall be referred to herein on the basis of the calendar year that contains 11 months of such Fiscal Year.

      “ Inventions ” shall mean those discoveries, developments, concepts and ideas, whether or not patentable, relating to the present, future and prospective activities and Products and Services of the Company and its Subsidiaries, which such activities and Products and Services are known to Executive by virtue of Executive’s employment with the Company and its Subsidiaries.

      “Operating Income” shall mean the Company’s Operating Income as reported in the Company’s financial statements filed with Securities and Exchange Commission in accordance with Generally Accepted Accounting Procedures consistently applied (“GAAP”).

      “ Prior Employment Agreement ” shall mean that certain Employment Agreement dated February 1, 2004, between the Company and Executive.

     “ Restricted Period ” shall mean the period beginning on the Effective Date and ending on the last day of the fifteenth (15 ^th ) month after termination of Executive’s employment.

      “ Subsidiary ” shall mean any entity of which the Company owns, directly or indirectly, 50% or more of the aggregate voting power of the voting securities.

      2. Employment, Duties and Compensation .

     (a)  Employment by the Company . The Company hereby continues to engage Executive and Executive hereby agrees to continue to provide to the Company her full-time services as Senior Vice President, Design of the Company, reporting to the Company’s Chief Executive Officer. The Executive’s duties shall consist of those duties and responsibilities currently performed by him plus such other duties consistent with those generally applicable to a person bearing said title, and as the Company’s Chief Executive Officer or the Board shall from time to time direct, provided such directives are consistent with the duties of a Senior Vice President, Design. Except during any vacation period and reasonable periods of absence due to sickness, personal injury or other disability throughout the Employment Period, Executive shall devote her full working time and attention during normal business hours to performing her services and duties hereunder to the best of her abilities and utilizing all of her skills, experience and knowledge to advance the business and interests of the Company in a manner consistent with the professional duties and responsibilities of her position. Accordingly, during the Employment Period and any Restricted Period,

Executive shall not, directly or indirectly, engage in or participate in the operation or management of, or render any services to, any Company Competitors. Notwithstanding the foregoing to the contrary, Executive shall not be prevented from investing and managing her assets in such form or manner as will not unreasonably interfere with the services to be rendered by Executive hereunder, or from acting as a director, trustee, officer of, or on a committee of, or a consultant to, any other firm, trust or corporation or deliver lectures, fulfill speaking engagements or teach or coach at educational institutions whether or not for compensation where such positions do not interfere in any way with the services to be rendered by Executive hereunder and where the business of such firm, trust or corporation is not in competition with the Company’s (or any of the Company’s affiliates) business. Executive further agrees that she will not, directly or indirectly, engage or participate in any activities at any time during such employment which conflict with or could reasonably be considered to conflict with the interests of the Company in any way. Furthermore, Executive will not, nor will any family member of Executive, related to Executive by blood, marriage or adoption, maintain any ownership interest whatsoever in any supplier, agent, vendor, independent contractor, professional organization or consultant working for or on behalf of the Company, nor will any of the aforementioned parties maintain any employment relationship with any supplier, agent, vendor, independent contractor, professional organization or consultant working for or on the behalf of the Company.

     (b)  Location of Employment. During the Employment Period, Executive’s principal place of employment shall be located at one of the Company’s principal places of business or principal executive offices, wherever located as designated from time to time by the Chief Executive Officer or the Board.

     (c)  Acceptance of Employment . Executive hereby accepts employment with the Company on the terms and in the manner set forth in this Agreement.

      5.  Employment Period . Executive’s employment hereunder shall be for a period commencing on February 1, 2007 and shall continue, through and including January 31, 2010 (the “Employment Period”). Unless this Agreement is terminated in accordance with the terms and conditions contained in Section 8, or amended by written agreement signed by the parties hereto prior to the end of the Employment Period, or any anniversary of the end of the Employment Period, as the case may be, the Employment Period shall automatically be extended from year to year under the same terms and conditions as shall be in effect on the last termination date. Executive agrees that the covenants set forth in Section 6 and all other provisions of this Agreement related to the enforcement thereof, shall continue throughout the Employment Period, surviving any termination of Executive’s employment hereunder for any reason.

      4. Compensation and Benefits .

     4.1. Base Salary . The Company shall pay to Executive, during the Employment Period, an annual base salary (the “Base Salary”) of $325,000 per annum. The Base Salary shall be reviewed annually by the Company and may be increased if the Company, in its sole and absolute discretion, determines that such an increase is advisable based on such factors as the Company shall consider appropriate from time to time (it is understood that under no circumstances shall such review cause a decrease in Executive’s Base Salary). Executive’s Base Salary shall be payable in accordance with the Company’s customary Executive payroll policy as in effect from time to time (but in no event less frequently than monthly). Such Base Salary, together with any other compensation which may be payable to Executive hereunder, shall be less such deductions as shall be required to be withheld by applicable law and regulations and shall be pro-rated for any period that does not constitute a full twelve (12) month period.

     4.2. Annual Incentive and Bonus Plan .

     4.3. Benefits . In addition to the payments required by Paragraph 4.1 to be paid to the Executive during the Employment Period, the Executive shall also continue to:

     Service with the Company, any Subsidiary, or Federated Department Stores, Inc. (“Federated”) or any affiliate of Federated shall be recognized for vesting purposes under any ben