WARRENDALE, Pa.--(BUSINESS WIRE)--March 7, 2007--American Eagle
Outfitters, Inc. (NASDAQ:AEOS) today announced that earnings for the
14 weeks ended February 3, 2007 increased 40% to $0.66 per diluted
share from $0.47 per diluted share for the 13 week period ended
January 28, 2006. For the 53 week period ended February 3, 2007,
earnings per share increased 35% to $1.70 from $1.26 per diluted share
for the 52 weeks ended January 28, 2006.
"Fiscal 2006 was a remarkable year, as it was our third
consecutive year of positive comparable store sales growth and record
operating margins," stated CEO Jim O'Donnell. "Our financial
performance reflects the strength of the AE brand, the depth of talent
within our teams, and company-wide commitment to disciplined
operational execution. I am particularly proud of our success this
year in sustaining strong profitability, while enhancing our core AE
brand and launching key growth vehicles, aerie and MARTIN + OSA. For
2007, we remain focused on delivering profitable growth, while
expanding our lifestyle brands and investing in systems to drive
further advances in productivity."
Fourth Quarter Results
Total sales for the 14 weeks ended February 3, 2007 increased 27%
to $973.4 million compared to $769.1 million for the 13 week period
ended January 28, 2006. Due to the 53rd week in fiscal 2006, fourth
quarter comparable store sales are compared to the 14 week period
ended February 4, 2006. On this basis, the company delivered a
comparable store sales increase of 14%.
Gross profit for the fourth quarter increased to $466.5 million,
or 47.9% as a percent to sales, from $356.5 million, or 46.3% as a
percent to sales last year. Gross profit as a percent to sales
improved by 160 basis points, reflecting a higher merchandise margin
and the leveraging of rent.
Selling, general & administrative expenses reflect the company's
investments in talent, brand building and the development of new
concepts. Fourth quarter SG&A expenses of $217.7 million were 22.4% as
a percent to sales. This compared to $164.2 million, or 21.3% as a
percent to sales last year. Incentive compensation, including stock
option expense of approximately 90 basis points, contributed to the
increase in SG&A as a percent to sales. Additionally, the company
continued to absorb incremental expenses related to MARTIN + OSA,
representing approximately 20 basis points of SG&A de-leveraging.
Operating income for the quarter increased 31% to $226.8 million
from $173.3 million last year. As a percent to sales, operating income
increased to 23.2%, a 70 basis points improvement compared to 22.5%
last year.
Other income for the fourth quarter was $16.1 million compared to
$5.3 million last year. The increase reflected a larger investment
balance, as well as a higher yield compared to last year.
2006 Annual Results
Total sales for the 53 weeks ended February 3, 2007 increased 20%
to $2.794 billion from $2.322 billion for the 52 week period ended
January 28, 2006. Due to the 53rd week in fiscal 2006, annual
comparable store sales are compared to the 53 week period ended
February 4, 2006. On this basis, comparable store sales increased 12%
for the year.
Gross profit for the year increased to $1.340 billion, or 48.0% as
a percent to sales, from $1.078 billion, or 46.4% as a percent to
sales last year. Gross profit as a percent to sales improved 160 basis
points, reflecting a higher merchandise margin and the leveraging of
rent.
Selling, general & administrative expenses reflect the company's
investments in talent, brand building and the development of new
concepts. For the year, SG&A expenses of $665.6 million were 23.8% as
a percent to sales. This compared to $540.3 million, or 23.2% as a
percent to sales last year. Incentive compensation, including stock
option expense of approximately 40 basis points, contributed to the
increase in SG&A as a percent to sales. Additionally, the company
continued to absorb incremental expenses related to MARTIN + OSA,
representing approximately 40 basis points of SG&A de-leveraging.
Operating income for the year increased 28% to $586.8 million from
$458.7 million last year. As a percent to sales, operating income
increased to 21.0%, a 120 basis point improvement compared to 19.8%
last year.
Other income for the year was $42.3 million compared to $18.3
million last year. The increase reflected a larger investment balance,
as well as a higher yield compared to last year.
Growth Strategies Advance
In January, the company announced that it will accelerate the
expansion of aerie by American Eagle with the opening of at least 15
stand-alone locations in 2007. Launched in September, the new
intimates sub-brand, featuring a full line of undies, bras and
dorm-wear, is designed to be sweetly-sexy. The brand has been met with
strong customer acceptance. The company's expansion plans are based on
the positive results of three aerie stand-alone test stores. If new
stores continue to perform as well as the test stores, aerie could be
a 350+ store chain by 2012.
In the fourth quarter, American Eagle opened eight new AE stores
and remodeled 20 locations. In 2006, 42 new AE stores opened and 65
remodels were completed. Together with five new MARTIN + OSA stores,
and three new aerie stand-alone test stores, total gross square
footage increased 8% for the year.
In 2007, the company plans to open 45 to 50 AE stores, at least 15
aerie stand-alone stores and approximately 12 new MARTIN + OSA stores.
Additionally, approximately 45 AE store remodels are planned, which
combined with new store openings will generate total 2007 square
footage growth of approximately 10%.
Capital Expenditures
For fiscal 2006, capital expenditures totaled $226 million, which
included investments in new and remodeled stores, new Pittsburgh
headquarters, a new data center and the expansion of the company's
Kansas distribution center. For fiscal year 2007, management expects
capital expenditures to be approximately $240 million, related to
continued real estate expansion and upgrades, new headquarters,
investments in information technology, including a new point of sale
system, as well as the completion of its Kansas distribution facility.
Stock Repurchase
During the quarter, the company completed the repurchase of 2.3
million shares of common stock for approximately $70.2 million. For
the year, the company repurchased 5.3 million shares of common stock
for approximately $146.5 million.
On March 6th, 2007, the company's Board of Directors authorized an
additional 7 million shares for its repurchase program.
First Quarter Guidance
At this time, management is establishing first quarter earnings
guidance of $0.31 to $0.33 cents per share, compared to $0.28 per
share last year.
February Sales
In a separate release this morning, the company announced a
February comparable store sales increase of 6%. To listen to the
recorded sales commentary, please call 800-642-1687, conference code
3282124#.
Conference Call Information
At 9:00 a.m. Eastern Time, on March 7, 2007, the company's
management team will host a conference call to review the financial
results. To listen to the call, dial 1-877-601-0864 five to seven
minutes prior to the scheduled start time. The conference call will
also be simultaneously broadcast over the Internet at www.ae.com or
www.streetevents.com. Anyone unable to listen to the call can access a
replay beginning March 7, 2007 at 12:00 p.m. Eastern Time through
March 21, 2007. To listen to the replay, dial 1-800-642-1687 and
reference confirmation code 4821967#. An audio replay of the
conference call will also be available at www.ae.com.
About American Eagle Outfitters:
American Eagle Outfitters, Inc. (Nasdaq:AEOS) is a leading
retailer that operates under the American Eagle Outfitters and MARTIN
+ OSA brands.
American Eagle Outfitters designs, markets and sells its own brand
of laidback, current clothing targeting 15 to 25 year-olds, providing
high-quality merchandise at affordable prices. AE's original
collection includes standards like jeans and graphic Ts as well as
essentials like accessories, outerwear, footwear, basics and swimwear.
American Eagle currently operates 834 stores in 50 states, the
District of Columbia and Puerto Rico, and 72 AE stores in Canada.
American Eagle also operates ae.com, which offers additional sizes and
styles of favorite AE merchandise and ships around the world. The
American Eagle brand also includes a new collection of dormwear and
intimates, "aerie by American Eagle." aerie is available in American
Eagle stores across the country and at aerie.com. It includes bras,
undies, camis, hoodies, robes, boxers, sweats and leggings for the AE
girl. Designed to be sweetly sexy, comfortable and cozy, aerie offers
AE customers a new way to express their personal style everyday, from
the dormroom to the coffee shop to the classroom.
The company introduced MARTIN + OSA, a new sportswear concept
targeting 25 to 40 year-old women and men. MARTIN + OSA carries
apparel, accessories and footwear, using denim and sport inspiration
to design fun and sport back into sportswear. MARTIN + OSA currently
operates six stores. For additional information and updates, visit
martinandosa.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking statements,
which represent our expectations or beliefs concerning future events,
specifically regarding first quarter sales and earnings, real estate,
aerie, and MARTIN + OSA. All forward-looking statements made by the
Company involve material risks and uncertainties and are subject to
change based on factors beyond the Company's control. Such factors
include, but are not limited to the risk that first quarter sales,
markdowns and/or earnings expectations may not be achieved, real
estate, aerie and MARTIN + OSA growth may not occur as planned and
those other risks described in the Risk Factor Section of the
Company's Form 10-K and Form 10-Q filed with the Securities and
Exchange Commission. Accordingly, the Company's future performance and
financial results may differ materially from those expressed or
implied in any such forward-looking statements. The Company does not
undertake to publicly update or revise its forward-looking statements
even if future changes make it clear that projected results expressed
or implied will not be realized.
AMERICAN EAGLE OUTFITTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
February 3, January 28,
2007 2006
----------- -----------
(Unaudited)
ASSETS
Cash, cash equivalents and short-term
investments $ 827,113 $ 751,518
Merchandise inventory 263,644 210,739
Other current assets 107,497 102,341
Assets held for sale - 12,183
----------- -----------
Total current assets 1,198,254 1,076,781
----------- -----------
Property and equipment, net 481,645 345,518
Goodwill, net 9,950 9,950
Long-term investments 251,644 145,774
Other assets, net 45,991 27,626
----------- -----------
Total Assets $ 1,987,484 $ 1,605,649
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 171,150 $ 139,197
Accrued compensation and payroll taxes 58,371 48,050
Accrued rent 57,543 52,506
Accrued income and other taxes 87,780 43,273
Unredeemed stored value cards and gift
certificates 54,554 43,045
Current portion of deferred lease credits 12,803 10,406
Other current liabilities 18,263 15,010
----------- -----------
Total current liabilities 460,464 351,487
----------- -----------
Deferred lease credits 65,114 60,087
Other non-current liabilities 44,594 38,523
----------- -----------
Total non-current liabilities 109,708 98,610
----------- -----------
Total stockholders' equity 1,417,312 1,155,552
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,987,484 $ 1,605,649
=========== ===========
Current Ratio 2.60 3.06
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
Three Months Ended
--------------------------------------
February 3, % of January 28, % of
2007 Sales 2006 Sales
------------------ ------------------
(Unaudited) (Unaudited)
Net sales $ 973,365 100.0% $ 769,070 100.0%
Cost of sales, including
certain buying, occupancy and
warehousing expenses 506,890 52.1% 412,616 53.7%
------------------ ------------------
Gross profit 466,475 47.9% 356,454 46.3%
Selling, general and
administrative expenses 217,735 22.4% 164,202 21.3%
Depreciation and amortization 21,970 2.3% 18,996 2.5%
------------------ ------------------
Operating income 226,770 23.2% 173,256 22.5%
Other income, net 16,133 1.7% 5,348 0.7%
------------------ ------------------
Income before income taxes 242,903 24.9% 178,604 23.2%
Provision for income taxes 92,744 9.5% 71,468 9.3%
------------------ ------------------
Income from continuing
operations, net of tax 150,159 15.4% 107,136 13.9%
Income from discontinued
operations, net of tax - 0.0% 405 0.1%
------------------ ------------------
Net income $ 150,159 15.4% $ 107,541 14.0%
================== ==================
Basic per common share amounts:
Income from continuing
operations $ 0.68 $ 0.48
Income from discontinued
operations - -
----------- -----------
Net income per basic common
share $ 0.68 $ 0.48
=========== ===========
Diluted per common share
amounts:
Income from continuing
operations $ 0.66 $ 0.47
Income from discontinued
operations - -
----------- -----------
Net income per diluted common
share $ 0.66 $ 0.47
=========== ===========
Weighted average common shares
outstanding - basic 221,470 222,168
Weighted average common shares
outstanding - diluted 227,955 227,192
Twelve Months Ended
--------------------------------------
February 3, % of January 28, % of
2007 Sales 2006 Sales
------------------ ------------------
(Unaudited)
Net sales $ 2,794,409 100.0% $ 2,321,962 100.0%
Cost of sales, including
certain buying, occupancy and
warehousing expenses 1,453,980 52.0% 1,244,213 53.6%
------------------ ------------------
Gross profit 1,340,429 48.0% 1,077,749 46.4%
Selling, general and
administrative expenses 665,606 23.8% 540,332 23.2%
Depreciation and amortization 88,033 3.2% 78,728 3.4%
------------------ ------------------
Operating income 586,790 21.0% 458,689 19.8%
Other income, net 42,277 1.5% 18,278 0.8%
------------------ ------------------
Income before income taxes 629,067 22.5% 476,967 20.6%
Provision for income taxes 241,708 8.6% 183,256 7.9%
------------------ ------------------
Income from continuing
operations, net of tax 387,359 13.9% 293,711 12.7%
Income from discontinued
operations, net of tax - 0.0% 442 0.0%
------------------ ------------------
Net income $ 387,359 13.9% $ 294,153 12.7%
================== ==================
Basic per common share amounts:
Income from continuing
operations $ 1.74 $ 1.29
Income from discontinued
operations - -
----------- -----------
Net income per basic common
share $ 1.74 $ 1.29
=========== ===========
Diluted per common share
amounts:
Income from continuing
operations $ 1.70 $ 1.26
Income from discontinued
operations - -
----------- -----------
Net income per diluted common
share $ 1.70 $ 1.26
=========== ===========
Weighted average common shares
outstanding - basic 222,662 227,406
Weighted average common shares
outstanding - diluted 228,384 233,031
----------------------------------------------------------------------
Total gross square footage at
end of period: 5,173,065 4,772,487
Store count at end of period: 911 869
----------------------------------------------------------------------
CONTACT: American Eagle Outfitters Inc.
Judy Meehan, 724-776-4857
OR
Financial Media Contact
Berns Communications Group
Stacy Berns or Melissa Jaffin, 212-994-4660
SOURCE: American Eagle Outfitters, Inc.