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Aerie drives sales growth at American Eagle Outfitters

By Prachi Singh

Mar 5, 2020

Management

American Eagle Outfitters, Inc. (AEO) reported total net revenue for the fourth quarter increased 70 million dollars or 6 percent to 1.31 billion dollars, while consolidated comparable sales increased 2 percent, following a 6 percent increase last year. By brand, American Eagle comparable sales decreased 3 percent, compared to a 3 percent increase last year, while Aerie’s comparable sales increased 26 percent, following a 23 percent increase last year.

Commenting on the trading performance, Jay Schottenstein, AEO’s Chairman and Chief Executive Officer said in a statement: “Although we faced some challenges in 2019, we made good progress on our strategic growth pillars, posting record revenues. Aerie delivered exceptional growth, led by its unique brand positioning and strong customer connection, and has significant runway ahead. American Eagle saw growth in its signature jeans and bottoms categories, where we continue to gain meaningful market share.”

Highlights of AEO’s fourth quarter and full year results

EPS were 3 cents for the 13 weeks ended February 1, 2020 compared to 43 cents for the same period last year, while adjusted EPS were 37 cents excluding 34 cents of impairment, restructuring and related charges. For the 52 weeks, the company reported EPS of 1.12 dollars compared to 1.47 dollars for last year, while adjusted EPS were 1.48 dollars excluding 36 cents of impairment, restructuring and related charges. Based on an anticipated comparable sales increase in the low single digits, management expects first quarter 2020 EPS to be approximately 20 cents to 22 cents.

Total net revenue for the full year increased 272 million dollars or 7 percent to 4.3 billion dollars, while consolidated comparable sales increased 3 percent, following an 8 percent increase last year. By brand, American Eagle comparable sales were up slightly, compared to a 5 percent increase last year and Aerie’s comparable sales increased 20 percent, following a 29 percent increase in 2018.

Gross profit for the quarter decreased 23 million dollars or 5 percent to 408 million dollars and the gross margin rate of 31 percent declined from 34.6 percent last year. Higher markdowns were the primary cause of the reduction to last year. Full year gross profit increased 35 million dollars or 2 percent to 1.52 billion dollars and the gross margin rate decreased 160 basis points to 35.3 percent of revenue compared to 36.9 percent last year.

The company ended the year with a total of 1,095 stores. During the year, the company opened 27 AE stores and closed 21, ending the year with 940 AE stores. Included in the AE store count are 174 Aerie side-by-side locations, of which 28 opened and one closed in 2019. Additionally, the company opened 37 Aerie standalone stores and closed four, ending the year with 148 Aerie stand-alone locations and 322 total Aerie stores. Internationally, the company ended the year with 217 licensed stores.

Picture:Facebook/American Eagle