American Eagle Outfitters Q3 earnings accelerate 59 percent

American Eagle Outfitters posted EPS from continuing operations of 0.35 dollar for the third quarter ended October 31, 2015, a 59 percent increase from adjusted EPS of 0.22 dollar for the comparable quarter last year.

Commenting on the company’s performance, Jay Schottenstein, Chief Executive Officer said, “We are extremely pleased with our third quarter results. Both the American Eagle and Aerie brands performed exceptionally well, delivering increased sales and profitability. It is gratifying to see positive momentum, which speaks volumes to the strength of our teams, brands and operations.”

Positive performance in the third quarter

Total net revenue increased 8 percent to 919 million dollars from 854 million dollars last year. Consolidated comparable sales increased 9 percent, compared to a 5 percent decrease last year.

Gross profit increased 17 percent to 368 million dollars and the gross margin rate leveraged 310 basis points to 40 percent. The company said that approximately 250 basis points of margin improvement was due to lower markdowns as the company continued to reduce promotional activity. Operating income increased to 109 million dollars from 74 million dollars last year, and the operating margin expanded 320 basis points to 11.9 percent as a rate to revenue.

Retail expansion and outlook

In the quarter, the company opened 12 new stores, including six mainline, five factory and one Aerie standalone stores, and closed one AE store. Internationally, the company opened 13 licensed stores during the quarter, including the first stores in Chile and Greece.

Based on an anticipated mid-single-digit increase in comparable sales, management expects fourth quarter 2015 EPS to be approximately 0.40 dollar to 0.42 dollar.