By: Evan Clark | Link to article
The retailer, which owns Aerie and American Eagle, also saw its sales perk up.
American Eagle Outfitters Inc. picked up some momentum in its third quarter.
Net income increased 18.9 percent to $96.7 million, or 49 cents a diluted share, from $81.3 million, or 42 cents, a year ago. That put EPS 1 cent ahead of the 48 cents analysts projected, according to FactSet.
Revenues for the three months ended Oct. 28 increased 4.9 percent to $1.3 billion, with a 3 percent increase in the company’s stores and a 10 percent boost online.
In the second quarter, revenues inched up just 0.2 percent.
Jay Schottenstein, AEO’s executive chairman and chief executive officer said the quarter “demonstrated the strength of our brands and reflected continued progress on our growth and profit improvement initiatives.”
Revenues at AEO’s Aerie division gained 12 percent to $393 million, while the American Eagle business rose by 2 percent to $857 million.
Inventories were down 4 percent to $769 million at the end of the quarter, with units decreasing 3 percent, reflecting the company’s push to main discipline.
For the full year, American Eagle projected its operating income would range from $340 million to $350 million, at the high end of its prior guidance calling for $325 million to $350.
Annual revenues are now set to show a midsingle digit increase, instead of the low-single digit gain previously projected.
Schottenstein said: “Momentum has continued across the business into the fourth quarter, driven by strong holiday assortments, engaging marketing campaigns and solid execution, supporting our improved outlook for the rest of the year. Looking ahead, we remain focused on advancing our long-term strategic priorities, as we seek to create consistent growth across our portfolio of brands and generate efficiencies for improved profit flow-through. We are set up to deliver on both in 2024.”
Earlier this year, AEO started to review its cost structure, focusing at first on gross margins and helping to boost results in the most-recent quarter. The company on Tuesday said that “other significant work streams have been identified, actioned and incorporated into the company’s 2024 plans.”
AEO expects the effort to “yield gross margin expansion, as well as SG&A and depreciation leverage, resulting in an improved operating profit rate.”
