American Eagle posts 24 percent jump in adjusted EPS

American Eagle Outfitters has reported EPS of 0.30 dollar for the fourth quarter and 1.16 dollars for the year ended January 28, 2017. Excluding asset impairment, restructuring and related charges of 0.09 dollar per diluted share, the company’s adjusted EPS were 0.39 dollar down 11 percent in the fourth quarter but increased 24 percent to 1.25 dollars for the full year.

“I’m extremely proud that our strategic priorities centered on product innovation and customer focus have delivered results and greater consistency throughout 2016, despite a highly competitive and challenging retail landscape. I’m confident that the strength of our brands and focused priorities will enable us to deliver long-term returns to our shareholders,” said Jay Schottenstein, CEO of the company in a statement.

Review of the fourth quarter and FY16 results

Last year, the company reported EPS of 0.42 dollar for the fourth quarter and 1.09 dollars for the year ended January 30, 2016, which included a gain on the sale of a distribution center and a lower tax rate related to income tax settlements, federal tax credits and tax strategies. Excluding these items, last year’s adjusted fourth quarter EPS was 0.35 dollar and annual EPS from continuing operations was 1.01 dollars.

For the fourth quarter, total net revenue decreased 1 percent to 1.10 billion dollars from 1.11 billion last year. Consolidated comparable sales were up slightly, following a 4 percent increase last year. Gross profit increased slightly to 389 million dollars from 388 million dollars. The gross margin rate increased 30 basis points to 35.4 percent of revenue compared to 35.1 percent last year. Operating income was 107 million dollars compared to 106 million dollars last year, improving 20 basis points to 9.8 percent as a rate to revenue.

Total net revenue for the year increased 2 percent to 3.61 billion dollars from 3.52 billion dollars last year. Consolidated comparable sales increased 3 percent, following a 7 percent increase last year. Gross profit increased 5 percent to 1.37 billion dollars and leveraged 90 basis points to 37.9 percent as a rate to revenue. Adjusted EPS from continuing operations of 1.25 dollars increased 24 percent compared to adjusted EPS of 1.01 dollars last year.

In the quarter, the company opened two AE stores and closed 11 AE stores. There were six Aerie standalone stores opened and one Aerie standalone store closed. Additionally, the company opened one Tailgate store and one Todd Snyder store. Internationally, the company opened 15 licensed stores and closed two licensed stores during the quarter. The company ended the year with 943 AE stores, which included 88 Aerie side-by-side locations. Additionally, the company had 102 Aerie stand alone stores and 176 licensed stores at year-end.

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