Stock Quote Header

American Eagle Outfitters Reports Record Third Quarter Revenue

December 11, 2019

Comparable Sales Rose 5%, Marking 19 Consecutive Quarters of Growth

American Eagle Comps Rose 2%, Aerie Increased 20%

PITTSBURGH--(BUSINESS WIRE)-- American Eagle Outfitters, Inc. (NYSE: AEO) today reported EPS of $0.48 for the quarter ended November 2, 2019, compared to $0.48 for the quarter ended November 3, 2018.

Jay Schottenstein, AEO’s Chairman and Chief Executive Officer commented, “Strong top line performance across brands and channels led to our 19th consecutive quarter of comparable sales growth and record third quarter revenue. In a tough environment, we reported EPS in line with our guidance. We continued to deliver on our strategic pillars, with Aerie and American Eagle Jeans demonstrating strong sales and profit growth. Softer demand in certain AE apparel categories led to higher markdowns and has persisted into the fourth quarter. The team has been working hard to quickly course correct, and our focus is squarely on continuing to capitalize on the strength of our brands, accelerating the growth of Aerie, and creating shareholder value.”

Third Quarter 2019 Results

  • Total net revenue increased $63 million, or 6% to a record $1.07 billion compared to $1.00 billion last year.
  • Consolidated comparable sales increased 5%, following an 8% comparable sales increase last year, and were positive across both store and digital channels.
  • By brand, American Eagle’s comparable sales increased 2%, following a 5% increase last year. Aerie’s comparable sales increased 20%, building on a 32% increase last year and marking the 20th consecutive quarter of double-digit sales growth.
  • Gross profit rose 2% to $407 million from $399 million. The gross margin rate of 38.2% compared to 39.8% last year. The decline primarily reflected increased markdowns.
  • Selling, general and administrative expense of $259 million increased 4% from $248 million last year, reflecting higher store salaries and professional fees, partly offset by lower incentive expense. As a rate to revenue, SG&A improved to 24.3% compared to 24.8% last year.
  • Depreciation expense increased 6% to $45 million from $42 million last year and was 4.2% as a rate to revenue, flat to last year.
  • Operating income of $103 million compared to $109 million last year. As a rate to revenue, operating income of 9.7% compared to 10.8% last year.
  • Other income of $3 million compared to $4 million last year. The decrease is primarily attributable to a benefit from a vendor settlement recorded last year.
  • EPS of $0.48 was flat to last year.

Inventory

Total ending inventories at cost increased 9% to $647 million. The increase largely reflects inventory to support strong demand for AE Jeans, including new styles and expanded sizes. New store openings, primarily for Aerie, also contributed to the increase.

Capital Expenditures

In the third quarter, capital expenditures totaled $58 million, primarily related to store remodeling projects and new openings, with the balance to support the digital business and corporate IT. On a year-to-date basis, capital expenditures have totaled $150 million. We continue to expect annual capital expenditures to be in the range of $200 to $215 million.

Shareholder Returns, Cash and Investments

During the third quarter, the company returned $55 million to shareholders through cash dividends and share repurchases. We paid cash dividends of $23 million and repurchased 2.0 million shares for $32 million. Year to date, we have repurchased a total of 6.3 million shares for a total of $112 million and have 35.4 million shares remaining under the current authorization. We ended the third quarter with total cash and investments of $265 million.

Store Information

During the quarter, the company opened 6 American Eagle stores, ending with 945 American Eagle stores, including 170 Aerie side-by-side locations. Additionally, the company opened 12 Aerie stand-alone stores and closed 1, ending with 142 Aerie stand-alone stores. Internationally, the company ended the quarter with 241 licensed stores compared to 223 last year. For additional store information, see the accompanying table.

Fourth Quarter Outlook

Management expects fourth quarter 2019 EPS to be in the range of $0.34 to $0.36, with comparable sales approximately flat. This guidance excludes potential asset impairment and restructuring charges. Last year, the company reported EPS of $0.43 for the fourth quarter.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or 1-201-689-8562 (international) and provide the Conference ID 13695188 or go to http://investors.ae.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company’s website.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. Our purpose is to show the world that there’s REAL power in the optimism of youth. The company operates more than 1,000 stores in the United States, Canada, Mexico and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 24 countries. For more information, please visit www.aeo-inc.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including fourth quarter 2019 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company’s control. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," “potential,” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of the company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 and in any subsequently-filed Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results for fourth quarter 2019 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

November 2,

February 2,

November 3,

2019

2019

2018

 
 
ASSETS
Cash and cash equivalents

$

 

214,514

 

$

 

333,330

 

$

 

279,872

 

Short-term investments

50,000

 

92,135

 

79,856

 

Merchandise inventory

647,329

 

424,404

 

591,671

 

Accounts receivable

112,304

 

93,477

 

84,074

 

Prepaid expenses and other

54,427

 

102,907

 

87,995

 

Total current assets

1,078,574

 

1,046,253

 

1,123,468

 

Property and equipment, net

764,350

 

742,149

 

735,714

 

Operating lease right-of-use assets

1,486,133

 

-

 

-

 

Intangible assets, including goodwill

55,466

 

58,167

 

59,062

 

Non-current deferred income taxes

16,833

 

14,062

 

12,796

 

Other assets

50,896

 

42,747

 

50,442

 

Total Assets

$

 

3,452,252

 

$

 

1,903,378

 

$

 

1,981,482

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable

$

 

366,676

 

$

 

240,671

 

$

 

343,360

 

Current portion of operating lease liabilities

292,312

 

-

 

-

 

Accrued income and other taxes

18,421

 

20,064

 

29,340

 

Accrued compensation and payroll taxes

43,473

 

82,173

 

56,991

 

Unredeemed gift cards and gift certificates

32,411

 

53,997

 

30,392

 

Other current liabilities and accrued expenses

56,859

 

145,740

 

147,064

 

Total current liabilities

810,152

 

542,645

 

607,147

 

Non-current operating lease liabilities

1,353,819

 

-

 

-

 

Other non-current liabilities

27,896

 

73,178

 

78,923

 

Total non-current liabilities

1,381,715

 

73,178

 

78,923

 

Commitments and contingencies

-

 

-

 

-

 

Preferred stock

-

 

-

 

-

 

Common stock

2,496

 

2,496

 

2,496

 

Contributed capital

574,391

 

574,929

 

565,316

 

Accumulated other comprehensive income

(35,861

)

(34,832

)

(39,138

)

Retained earnings

2,127,312

 

2,054,654

 

2,002,687

 

Treasury stock

(1,407,953

)

(1,309,692

)

(1,235,949

)

Total stockholders' equity

1,260,385

 

1,287,555

 

1,295,412

 

Total Liabilities and Stockholders' Equity

$

 

3,452,252

 

$

 

1,903,378

 

$

 

1,981,482

 

 
Current Ratio

1.33

 

1.93

 

1.85

The Company adopted ASC 842, Leases as of February 3, 2019 under the modified retrospective approach and has not revised comparative periods.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share amounts)

(unaudited)

 
 

GAAP Basis

13 Weeks Ended

November 2,

% of

November 3,

% of

2019

Revenue

2018

Revenue

 
Total net revenue

$

 

1,066,412

100.0

%

$

 

1,003,707

100.0

%

Cost of sales, including certain buying,
occupancy and warehousing expenses

659,350

61.8

%

604,220

60.2

%

Gross profit

407,062

38.2

%

399,487

39.8

%

Selling, general and administrative expenses

258,973

24.3

%

248,438

24.8

%

Restructuring charges

-

0.0

%

-

0.0

%

Depreciation and amortization

44,987

4.2

%

42,416

4.2

%

Operating income

103,102

9.7

%

108,633

10.8

%

Other income, net

2,577

0.2

%

4,330

0.4

%

Income before income taxes

105,679

9.9

%

112,963

11.2

%

Provision for income taxes

24,918

2.3

%

27,491

2.7

%

Net income

$

 

80,761

7.6

%

$

 

85,472

8.5

%

 
Net income per basic share

$

 

0.48

$

 

0.48

Net income per diluted share

$

 

0.48

$

 

0.48

 
Weighted average common shares
outstanding - basic

167,912

176,938

Weighted average common shares
outstanding - diluted

168,693

178,122

 

GAAP Basis

39 Weeks Ended

November 2,

% of

November 3,

% of

2019

Revenue

2018

Revenue

 
Total net revenue

$

 

2,993,581

100.0

%

$

 

2,791,522

100.0

%

Cost of sales, including certain buying,
occupancy and warehousing expenses

1,879,027

62.8

%

1,734,491

62.1

%

Gross profit

1,114,554

37.2

%

1,057,031

37.9

%

Selling, general and administrative expenses

742,764

24.8

%

692,644

24.8

%

Restructuring charges

4,272

0.1

%

1,568

0.1

%

Depreciation and amortization

134,648

4.5

%

127,090

4.6

%

Operating income

232,870

7.8

%

235,729

8.5

%

Other income, net

10,749

0.3

%

5,692

0.2

%

Income before income taxes

243,619

8.1

%

241,421

8.7

%

Provision for income taxes

57,125

1.9

%

55,687

2.0

%

Net income

$

 

186,494

6.2

%

$

 

185,734

6.7

%

 
Net income per basic share

$

 

1.09

$

 

1.05

Net income per diluted share

$

 

1.09

$

 

1.04

 
Weighted average common shares
outstanding - basic

170,463

177,033

Weighted average common shares
outstanding - diluted

171,697

178,278

AMERICAN EAGLE OUTFITTERS, INC.

COMPARABLE SALES RESULTS BY BRAND

(unaudited)

 

Third Quarter
Comparable Sales

2019

2018

American Eagle Outfitters, Inc. (1)

5

%

8

%

 
AE Total Brand (1)

2

%

5

%

aerie Total Brand (1)

20

%

32

%

 
(1) AEO Direct is included in consolidated and total brand comparable sales.

YTD Third Quarter
Comparable Sales

2019

2018

American Eagle Outfitters, Inc. (1)

4

%

9

%

 
AE Total Brand (1)

1

%

5

%

aerie Total Brand (1)

17

%

32

%

 
(1) AEO Direct is included in consolidated and total brand comparable sales.

AMERICAN EAGLE OUTFITTERS, INC.

STORE INFORMATION

(unaudited)

Third Quarter

YTD Third Quarter

Fiscal 2019

2019

2019

Guidance

Consolidated stores at beginning of period

1,075

 

1,055

 

1,055

Consolidated stores opened during the period
AE Brand

6

 

19

 

25 - 30
Aerie stand-alone

12

 

29

 

35 - 40
Tailgate Clothing Co.

1

 

1

 

1

Todd Snyder

1

 

1

 

1

Consolidated stores closed during the period
AE Brand

0

 

(8

)

(10) - (15)
Aerie stand-alone

(1

)

(2

)

(5) - (10)
Tailgate Clothing Co.

0

 

(1

)

Total consolidated stores at end of period

1,094

 

1,094

 

1,092 - 1,112
AE Brand

945

 

Aerie stand-alone

142

 

Aerie side-by-side(2)

170

 

Tailgate Clothing Co.

5

 

Todd Snyder

2

 

 
Stores remodeled and refurbished during the period

18

 

35

 

40 - 50
Total gross square footage at end of period (in '000)

6,837

 

6,837

 

Not Provided
 
International license locations at end of period (1)

241

 

241

 

261

 
Aerie Openings
Aerie stand-alone

12

 

29

 

35 - 40
Aerie side-by-side stores (2)
New AE store

3

 

8

 

10 - 15
Remodeled AE store

9

 

15

 

15 - 20
Total side-by-side

12

 

23

 

25 - 35
Total Aerie Openings

24

 

52

 

60 - 75
(1) International license locations are not included in the consolidated store data or the total gross square footage calculation.
(2) Aerie side-by-side stores are included in the AE Brand store count as they are considered part of the AE Brand store to which they are attached.

 

Olivia Messina
412-432-3300
LineMedia@ae.com

Source: American Eagle Outfitters, Inc.

Sign up for investor Email Alerts

Email Address *
Mailing Lists * *
 
Enter the code shown above.

Investor Contact

AEO INVESTOR RELATIONS77 Hot Metal Street, Pittsburgh, PA 15203CALL: 412-432-3300Privacy Notices
#AEOSTYLE#AERIEREAL
legal