PITTSBURGH--(BUSINESS WIRE)--
American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS of $0.14
for the first quarter ended April 29, 2017. Excluding restructuring and
related charges of $0.02 per diluted share, the company’s adjusted EPS
was $0.16 for the first quarter.
Jay Schottenstein, Chief Executive Officer commented, "The first quarter
results reflected mall traffic headwinds, especially early in the
quarter, with improved trends over Easter and a strong digital business
throughout. As we look ahead, we are taking the right steps to improve
our results and adjust our business for today’s rapidly evolving retail
environment. We are creating efficiencies across our organization, as we
aim to continue capitalizing on the strength of our brands, product
leadership and other competitive advantages. The six million shares
repurchased this quarter reflects the company’s strong cash flow,
healthy balance sheet and confidence in our brands and long-term
strategic initiatives."
First Quarter 2017 Results
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Total net revenue increased 2% to $762 million from $749 million last
year.
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Consolidated comparable sales were up 2%, following a 6% increase last
year.
-
Gross profit decreased to $278 million from $293 million last year
with a gross margin rate of 36.5% to revenue compared to 39.2% last
year, a 270 basis point decline. The margin declined primarily due to
increased promotional activity and higher shipping costs related to a
strong digital business.
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Selling, general and administrative expense declined 1% to $195
million compared to $196 million last year, and leveraged 60 basis
points to a rate of 25.6% to revenue. Higher advertising expense was
offset by lower compensation expense and favorability across a number
of other expense categories.
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Operating income of $37 million, which includes $5 million of
restructuring charges, compared to $59 million last year. Adjusted
operating income* of $42 million compared to $59 million last year
with a rate of 5.6% to revenue compared to 7.8% last year.
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The effective tax rate decreased to 32.4% compared to 36.4% last year,
reflecting the impact of discrete items this quarter.
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EPS of $0.14 compared to EPS of $0.22 last year. Adjusted EPS* of
$0.16 compared to EPS of $0.22 last year.
* The preceding adjusted amounts are based on Non-GAAP results, as
presented in the accompanying GAAP to Non-GAAP reconciliation.
Restructuring and Related Charges
In the first quarter, the company had charges totaling $5.4 million,
approximately $0.02 per share, consisting primarily of severance and
related charges corresponding to home office restructuring and the
previously announced initiative to explore the closure or conversion of
company owned and operated stores in Hong Kong, China, and the United
Kingdom to licensed partnerships.
Shareholder Returns, Cash
During the first quarter, the company returned $110 million to
shareholders through cash dividends and share repurchases. We paid
dividends of $22 million and repurchased six million shares for $88
million. The remaining authorization under the current repurchase
program is 19 million shares. We ended the quarter with total cash of
$225 million compared to $239 million last year.
Inventory
Total ending inventories at cost increased 9% to $364 million. Ending
units were flat compared to last year, while the average unit cost was
up 9% to last year. The increase in average unit cost reflects a higher
mix of AE bottoms and Aerie apparel, consistent with our merchandise
strategy.
Capital Expenditures
In the first quarter, capital expenditures totaled $40 million. We
continue to expect fiscal year 2017 capital expenditures in the range of
$160 million to $170 million, with roughly half of the spend related to
store remodeling projects and new openings, and the balance to support
the e-commerce business, omni-channel tools and general corporate
maintenance.
Store Information
In fiscal 2017, the company plans to open a total of 35 American Eagle
Outfitters and Aerie stores throughout the U.S., Canada and Mexico.
Management plans to close between 25 and 40 store locations in 2017.
Internationally, the company plans to open 45 licensed stores and close
2 licensed locations. For additional store information, see the
accompanying table.
Second Quarter Outlook
Based on anticipated comparable store sales in the range of flat to a
low single digit decline, management expects second quarter 2017 EPS to
be approximately $0.15 to $0.17. This guidance excludes potential asset
impairment and restructuring charges, and compares to EPS of $0.23 last
year.
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
internationally dial 1-201-689-8562 or go to http://investors.ae.com
to access the webcast and audio replay. Also, a financial results
presentation is posted on the company’s website.
Non-GAAP Measures
This press release includes information on non-GAAP financial measures
(“non-GAAP” or “adjusted”), including earnings per share information and
the consolidated results of operations excluding non-GAAP items. These
financial measures are not based on any standardized methodology
prescribed by U.S. generally accepted accounting principles (“GAAP”) and
are not necessarily comparable to similar measures presented by other
companies. The company believes that this non-GAAP information is useful
as an additional means for investors to evaluate the company’s operating
performance, when reviewed in conjunction with the company’s GAAP
financial statements. These amounts are not determined in accordance
with GAAP and therefore, should not be used exclusively in evaluating
the company’s business and operations.
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
Outfitters® and Aerie® brands. The company operates more than 1,000
stores in the United States, Canada, Mexico, China, Hong Kong and the
United Kingdom, and ships to 81 countries worldwide through its
websites. American Eagle Outfitters and Aerie merchandise also is
available at more than 170 international locations operated by
licensees. For more information, please visit www.ae.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,
including second quarter 2017 results. 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 the company’s
operating, financial and capital plans may not be achieved and the 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.
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AMERICAN EAGLE OUTFITTERS, INC.
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CONSOLIDATED BALANCE SHEETS
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(Dollars in thousands)
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April 29,
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January 28,
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April 30,
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2017
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2017
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2016
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(unaudited)
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(unaudited)
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ASSETS
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Cash and cash equivalents
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$
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225,197
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$
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378,613
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$
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238,976
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Merchandise inventory
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364,274
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358,446
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334,301
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Accounts receivable
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79,432
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86,634
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73,283
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Prepaid expenses and other
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94,769
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77,536
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82,767
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Total current assets
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763,672
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901,229
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729,327
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Property and equipment, net
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710,500
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707,797
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706,221
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Intangible assets, net
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48,462
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49,373
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51,432
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Goodwill
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14,772
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14,887
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17,520
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Non-current deferred income taxes
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33,408
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49,250
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38,903
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Other assets
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62,379
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60,124
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52,893
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Total Assets
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$
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1,633,193
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$
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1,782,660
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$
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1,596,296
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable
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$
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208,857
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$
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246,204
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$
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202,692
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Accrued compensation and payroll taxes
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31,106
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54,184
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34,838
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Accrued rent
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78,018
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78,619
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77,477
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Accrued income and other taxes
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12,446
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12,220
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6,915
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Unredeemed gift cards and gift certificates
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39,744
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52,966
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38,508
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Current portion of deferred lease credits
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12,743
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12,780
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12,850
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Other current liabilities and accrued expenses
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37,677
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36,810
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45,206
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Total current liabilities
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420,591
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493,783
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418,486
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Deferred lease credits
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56,551
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45,114
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54,738
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Non-current accrued income taxes
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4,655
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4,537
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4,675
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Other non-current liabilities
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33,523
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34,657
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41,089
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Total non-current liabilities
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94,729
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84,308
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100,502
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Commitments and contingencies
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-
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-
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-
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Preferred stock
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-
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-
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-
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Common stock
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2,496
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2,496
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2,496
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Contributed capital
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582,512
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603,890
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583,689
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Accumulated other comprehensive income
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(32,671
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)
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(36,462
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(24,484
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)
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Retained earnings
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1,774,315
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1,775,775
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1,675,031
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Treasury stock
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(1,208,779
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(1,141,130
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(1,159,424
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Total stockholders' equity
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1,117,873
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1,204,569
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1,077,308
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Total Liabilities and Stockholders' Equity
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$
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1,633,193
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$
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1,782,660
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$
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1,596,296
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Current Ratio
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1.82
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1.83
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1.74
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AMERICAN EAGLE OUTFITTERS, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(Dollars and shares in thousands, except per share amounts)
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(unaudited)
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GAAP Basis
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13 Weeks Ended
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April 29,
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% of
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April 30,
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% of
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2017
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Revenue
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2016
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Revenue
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Total net revenue
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$
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761,836
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100.0
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%
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$
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749,416
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100.0
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%
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Cost of sales, including certain buying, occupancy and warehousing
expenses
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484,014
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63.5
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%
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455,964
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60.8
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%
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Gross profit
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277,822
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36.5
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%
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293,452
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39.2
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%
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Selling, general and administrative expenses
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194,979
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25.6
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%
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195,993
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26.2
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%
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Restructuring charges
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5,448
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0.7
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%
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-
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0.0
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%
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Depreciation and amortization
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40,446
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5.3
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%
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38,783
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5.1
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%
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Operating income
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36,949
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4.9
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%
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58,676
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7.8
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%
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Other income (expense), net
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403
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0.0
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%
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4,935
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0.7
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%
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Income before income taxes
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37,352
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4.9
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%
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63,611
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8.5
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%
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Provision for income taxes
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12,116
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1.6
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%
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23,135
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3.1
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%
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Net income
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$
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25,236
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3.3
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%
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$
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40,476
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5.4
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%
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Net income per diluted share
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$
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0.14
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$
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0.22
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Weighted average common shares outstanding - basic
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179,312
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180,697
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Weighted average common shares outstanding - diluted
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181,678
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182,927
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AMERICAN EAGLE OUTFITTERS, INC.
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GAAP TO NON-GAAP RECONCILIATION
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(Dollars in thousands, except per share amounts)
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(unaudited)
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13 Weeks Ended
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April 29, 2017
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Operating income
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Diluted income
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(loss)
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Net income
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per common share
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GAAP Basis
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$
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36,949
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$
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25,236
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$
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0.14
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% of Revenue
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4.9
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%
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3.3
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%
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Add:Restructuring Charges (1):
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5,448
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3,439
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0.02
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Non-GAAP Basis
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$
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42,397
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$
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28,675
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$
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0.16
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% of Revenue
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5.6
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%
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3.7
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%
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(1) $5.4 million pre-tax restructuring charges for severance
and related charges, which includes corporate overhead reductions and
charges for the United Kingdom, Hong Kong, and China.
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AMERICAN EAGLE OUTFITTERS, INC.
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COMPARABLE SALES RESULTS BY BRAND
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(unaudited)
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First Quarter
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Comparable Sales
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2017
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2016
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American Eagle Outfitters, Inc. (1)
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2
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%
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6
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%
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AE Total Brand (1)
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-1
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%
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4
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%
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aerie Total Brand (1)
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25
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%
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32
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%
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(1) AEO Direct is included in consolidated and total
brand comparable sales.
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AMERICAN EAGLE OUTFITTERS, INC.
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STORE INFORMATION
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(unaudited)
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First Quarter
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Fiscal 2017
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2017
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Guidance
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Consolidated stores at beginning of period
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1,050
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1,050
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Consolidated stores opened during the period
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AE Brand
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3
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15-20
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aerie
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2
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15
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Tailgate Clothing Co.
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0
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1
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Todd Snyder
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1
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1
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Consolidated stores closed during the period
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AE Brand
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(2)
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(20) - (30)
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aerie
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(1)
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(5) - (10)
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Total consolidated stores at end of period
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1,053
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1,042 - 1,062
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Stores remodeled and refurbished during the period
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14
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50
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Total gross square footage at end of period
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6,637,435
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Not Provided
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International license locations at end of period (1)
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189
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221
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(1) International license locations are not included in
the consolidated store data or the total gross square footage
calculation.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170517005600/en/
Source: American Eagle Outfitters, Inc.