- Record third quarter revenue of $1.3 billion, up 5% to last
year, with growth across brands and channels
- Operating profit of $125 million, up to last year; Second
highest since 2012
- Aerie posted all-time high third quarter revenue and
operating margin; Comparable sales up 12% to last year
- American Eagle revenue and comparable sales up 2% to last
year, reflecting continued sequential improvement in
trends
- Continued progress on profit improvement
initiatives
American Eagle Outfitters, Inc. (NYSE: AEO) today announced
financial results for the third quarter ended October 28, 2023.
“I am pleased with our third quarter results which demonstrated
the strength of our brands and reflected continued progress on our
growth and profit improvement initiatives. Our strategic
priorities, underpinned by our customer-first focus and commitment
to operational excellence, are propelling us forward,” commented
Jay Schottenstein, AEO’s Executive Chairman of the Board of
Directors and Chief Executive Officer.
“Momentum has continued across the business into the fourth
quarter, driven by strong holiday assortments, engaging marketing
campaigns and solid execution, supporting our improved outlook for
the rest of the year. Looking ahead, we remain focused on advancing
our long-term strategic priorities, as we seek to create consistent
growth across our portfolio of brands and generate efficiencies for
improved profit flow-through. We are set up to deliver on both in
2024.”
Third Quarter 2023 Results compared to Third Quarter 2022
Results:
- Total net revenue of $1.3 billion was up 5%. Store revenue was
up 3%. Digital revenue was up 10%.
- Aerie revenue of $393 million rose 12% with comparable sales up
12%. American Eagle revenue of $857 million rose 2% and comparable
sales increased 2%.
- Gross profit of $544 million increased approximately 13% and
reflected a gross margin rate of 41.8%, up 310 basis points. Margin
expansion was driven by strong demand, lower product and freight
costs and continued benefits from our profit improvement work
including lower markdowns and leverage on rent, distribution and
warehousing and delivery.
- Selling, general and administrative expense of $362 million was
up 16%, consistent with guidance. Aligned with strong business
performance, roughly half of the expense increase was due to
incentive compensation against zero accruals last year. Store
payroll also increased largely due to higher wages.
- Operating income of $125 million reflected a 9.6% margin.
- Diluted earnings per share of $0.49 increased 17%. Average
diluted shares outstanding were 198 million.
Inventory
Total ending inventory declined 4% to $769 million, with units
down 3%. The company continues to maintain inventory
discipline.
Capital Expenditures
Capital expenditures totaled $43 million in the third quarter
and $135 million year-to-date. For Fiscal 2023, management
continues to expect capital expenditures to approximate $150 to
$175 million.
Profit Improvement Focus
Earlier this year, the company launched a comprehensive review
of its cost structure. Early actions have been focused on the
components of gross margin and contributed to margin expansion in
the second and third quarters. Other significant work streams have
been identified, actioned and incorporated into the company’s 2024
plans. The results of these initiatives are expected to yield gross
margin expansion, as well as SG&A and depreciation leverage,
resulting in an improved operating profit rate.
Outlook
For Fiscal 2023, management expects revenue to be up mid-single
digits to last year, compared to prior guidance for revenue up low
single digits. Operating income is expected to be in the range of
$340 to $350 million, at the high end of prior guidance of $325 to
$350 million. This reflects strengthened demand and continued
profit improvement. With better business trends driving higher
incentives, SG&A is expected to be up in the low double digits
for the year.
For the fourth quarter, management’s outlook reflects revenue up
high-single digits and operating income in the range of $105 to
$115 million. The revenue outlook includes a four point positive
contribution from the 53rd week. SG&A is expected to be up
approximately 20% including a 5 point impact from the 53rd week.
Incentive accruals are also expected to be higher, which are skewed
to the back half of the year. Depreciation is expected to be
similar to the third quarter.
Conference Call and Supplemental Financial
Information
Management will host a conference call and real time webcast
today at 11:00 a.m. Eastern Time. To listen to the call, dial
1-877-407-0789 or internationally dial 1-201-689-8562 or go to
www.aeo-inc.com to access the webcast and audio replay.
Additionally, a financial results presentation is posted on the
company’s website.
* * * *
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® and Aerie® brands. Our purpose is to show the
world that there’s REAL power in the optimism of youth. The company
operates stores in the United States, Canada, Mexico, Hong Kong and
Japan, and ships to approximately 80 countries worldwide through
its websites. American Eagle and Aerie merchandise also is
available at more than 300 international locations operated by
licensees in approximately 30 countries. In 2022, AEO released its
first annual Building a Better World report, which outlines two
decades of ESG achievements through the company’s Planet, People
and Practices initiatives. For more information, please visit
www.aeo-inc.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This release and related statements by management contain
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995), which represent our
expectations or beliefs concerning future events, including fourth
quarter and annual fiscal 2023 and annual fiscal 2024 results. All
forward-looking statements made by the company involve material
risks and uncertainties and are subject to change based on many
important factors, some of which may be beyond the company’s
control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," “potential,” and similar
expressions may identify forward-looking statements. Except as may
be required by applicable law, we undertake no obligation to
publicly update or revise any forward-looking statements whether as
a result of new information, future events or otherwise and even if
experience or future changes make it clear that any projected
results expressed or implied therein will not be realized. The
following factors, in addition to the risks disclosed in Item 1A.,
Risk Factors, of our Annual Report on Form 10-K for the fiscal year
ended January 28, 2023 and in any other filings that we may make
with the Securities and Exchange Commission in some cases have
affected, and in the future could affect, the company's financial
performance and could cause actual results for fiscal 2023 and
beyond to differ materially from those expressed or implied in any
of the forward-looking statements included in this release or
otherwise made by management: the risk that the company’s
operating, financial and capital plans may not be achieved; our
inability to anticipate customer demand and changing fashion trends
and to manage our inventory commensurately; seasonality of our
business; our inability to achieve planned store financial
performance; our inability to react to raw material cost, labor and
energy cost increases; our inability to gain market share in the
face of declining shopping center traffic; our inability to respond
to changes in e-commerce and leverage omni-channel demands; our
inability to expand internationally; difficulty with our
international merchandise sourcing strategies; challenges with
information technology systems, including safeguarding against
security breaches; and global economic, public health, social,
political and financial conditions, and the resulting impact on
consumer confidence and consumer spending, as well as other changes
in consumer discretionary spending habits, which could have a
material adverse effect on our business, results of operations and
liquidity.
AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited)
October 28,
2023 October 29, 2022 Assets Current assets: Cash
and cash equivalents $
240,940
$
82,133
Merchandise inventory
769,315
797,731
Accounts receivable, net
239,374
250,879
Prepaid expenses and other
103,789
146,362
Total current assets
1,353,418
1,277,105
Operating lease right-of-use assets
995,023
1,148,832
Property and equipment, at cost, net of accumulated depreciation
742,793
789,809
Goodwill
264,825
271,209
Intangible assets, net
88,201
96,530
Non-current deferred income taxes
20,791
34,135
Other assets
55,735
54,857
Total assets $
3,520,786
$
3,672,477
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $
300,031
$
188,448
Current portion of operating lease liabilities
294,898
332,160
Unredeemed gift cards and gift certificates
47,676
47,531
Accrued compensation and payroll taxes
96,484
36,436
Accrued income taxes and other
19,255
13,056
Other current liabilities and accrued expenses
72,887
67,799
Total current liabilities
831,231
685,430
Non-current liabilities: Non-current operating lease liabilities
927,019
1,089,710
Long-term debt, net
-
411,911
Other non-current liabilities
24,247
22,894
Total non-current liabilities
951,266
1,524,515
Commitments and contingencies
-
-
Stockholders' equity: Preferred stock
-
-
Common stock
2,496
2,496
Contributed capital
343,695
389,726
Accumulated other comprehensive loss
(32,865
)
(41,267
)
Retained earnings
2,234,761
2,080,852
Treasury stock
(809,798
)
(969,275
)
Total stockholders' equity
1,738,289
1,462,532
Total Liabilities and Stockholders' Equity $
3,520,786
$
3,672,477
Current ratio
1.63
1.86
AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars and shares in thousands,
except per share amounts) (unaudited)
GAAP Basis
13 Weeks Ended October 28,2023 % ofRevenue
October 29,2022 % ofRevenue Total net revenue $
1,301,055
100.0
%
$
1,240,583
100.0
%
Cost of sales, including certain buying, occupancy and warehousing
expenses
757,258
58.2
%
760,810
61.3
%
Gross profit
543,797
41.8
%
479,773
38.7
%
Selling, general and administrative expenses
361,992
27.8
%
311,101
25.1
%
Depreciation and amortization expense
56,444
4.4
%
51,124
4.1
%
Operating income
125,361
9.6
%
117,548
9.5
%
Interest (income) expense, net
(2,871
)
-0.2
%
3,878
0.3
%
Other (income) expense, net
(3,984
)
-0.3
%
782
0.1
%
Income before income taxes
132,216
10.1
%
112,888
9.1
%
Provision for income taxes
35,516
2.7
%
31,616
2.5
%
Net income $
96,700
7.4
%
$
81,272
6.6
%
Net income per basic share $
0.50
$
0.44
Net income per diluted share $
0.49
$
0.42
Weighted average common shares outstanding - basic
195,343
186,305
Weighted average common shares outstanding - diluted
198,367
195,776
GAAP Basis 39 Weeks Ended October
28,2023 % ofRevenue October 29,2022 %
ofRevenue Total net revenue $
3,582,859
100.0
%
$
3,493,745
100.0
%
Cost of sales, including certain buying, occupancy and warehousing
expenses
2,172,867
60.6
%
2,255,929
64.5
%
Gross profit
1,409,992
39.4
%
1,237,816
35.5
%
Selling, general and administrative expenses
1,006,210
28.1
%
917,687
26.3
%
Impairment, restructuring and other charges
21,275
0.6
%
-
0.0
%
Depreciation and amortization expense
169,026
4.7
%
146,664
4.2
%
Operating income
213,481
6.0
%
173,465
5.0
%
Debt related charges
-
0.0
%
60,066
1.7
%
Interest (income) expense, net
(1,229
)
0.0
%
11,887
0.3
%
Other (income) expense, net
(9,446
)
-0.3
%
(5,501
)
-0.2
%
Income before income taxes
224,156
6.3
%
107,013
3.2
%
Provision for income taxes
60,434
1.7
%
36,466
1.2
%
Net income $
163,722
4.6
%
$
70,547
2.0
%
Net income per basic share $
0.84
$
0.39
Net income per diluted share $
0.83
$
0.36
Weighted average common shares outstanding - basic
195,467
178,637
Weighted average common shares outstanding - diluted
197,969
207,499
AMERICAN EAGLE OUTFITTERS, INC. RESULTS BY SEGMENT
(Dollars in thousands) (unaudited) For the 13 weeks ended
For the 39 weeks ended October 28, 2023 October 29, 2022 October
28, 2023 October 29, 2022 Net Revenue: American Eagle
$
857,378
$
837,575
$
2,295,487
$
2,301,051
Aerie
$
393,042
$
349,712
$
1,132,537
$
1,043,129
Other (1)
$
111,805
$
115,346
$
329,480
$
315,333
Intersegment Elimination
$
(61,170
)
$
(62,050
)
$
(174,645
)
$
(165,768
)
Total Net Revenue
$
1,301,055
$
1,240,583
$
3,582,859
$
3,493,745
Operating Income: American Eagle
$
184,029
$
174,129
$
418,232
$
387,213
Aerie
$
75,850
$
56,487
$
188,772
$
111,414
Other(1)(3)
$
(8,601
)
$
(11,650
)
$
(35,250
)
$
(39,381
)
Intersegment Elimination
$
-
$
-
$
-
$
-
General corporate expenses (2)
$
(125,917
)
$
(101,418
)
$
(336,998
)
$
(285,781
)
Impairment, restructuring and other charges(3)
$
-
$
-
$
(21,275
)
$
-
Total Operating Income
$
125,361
$
117,548
$
213,481
$
173,465
Debt related charges
$
-
$
-
$
-
$
60,066
Interest (income) expense, net
$
(2,871
)
$
3,878
$
(1,229
)
$
11,887
Other (income) expense, net
$
(3,984
)
$
782
$
(9,446
)
$
(5,501
)
Income before income taxes
$
132,216
$
112,888
$
224,156
$
107,013
Capital Expenditures American Eagle
$
17,219
$
20,477
$
48,411
$
55,000
Aerie
$
9,499
$
24,404
$
31,576
$
85,663
Other (1)
$
9,760
$
20,801
$
21,490
$
25,933
General corporate expenditures (2)
$
6,478
$
5,825
$
33,438
$
32,768
Total Capital Expenditures
$
42,956
$
71,507
$
134,915
$
199,364
(1) The Todd Snyder brand, Unsubscribed brand, and Quiet
Platforms have been identified as separate operating segments;
however, as they do not meet the quantitative thresholds for
separate disclosure, they are presented under the Other caption.
(2) General corporate expenses are comprised of general and
administrative costs that management does not attribute to any of
our operating segments. These costs primarily relate to corporate
administration, information and technology resources, finance and
human resources functional and organizational costs, depreciation
and amortization of corporate assets, and other general and
administrative expenses resulting from corporate-level activities
and projects. (3) $21.3 million of pre-tax impairment,
restructuring and other charges related to Quiet Platforms,
including $10.8 million of long-lived asset impairment charges,
$5.6 million of severance costs, and $4.9 million of contract
related charges for the 39 weeks ended October 28, 2023.
AMERICAN EAGLE OUTFITTERS, INC. STORE INFORMATION
(unaudited)
Third Quarter YTD Third Quarter
2023
2023
Consolidated stores at beginning of period
1,184
1,175
Consolidated stores opened during the period AE Brand (1)
8
14
Aerie (incl. OFFL/NE) (2)
8
13
Todd Snyder
1
4
Consolidated stores closed during the period AE Brand (1)
(1
)
(6
)
Aerie (incl. OFFL/NE) (2)
(1
)
(1
)
Total consolidated stores at end of period
1,199
1,199
AE Brand (1)
873
Aerie (incl. OFFL/NE) (2)
307
Todd Snyder
14
Unsubscribed
5
Total gross square footage at end of period (in '000)
7,333
7,333
International license locations at end of period (3)
301
301
(1) AE Brand includes AE stand alone locations, AE/Aerie
side-by side locations, AE/OFFL/NE side-by-side locations, and
AE/Aerie/OFFL/NE side-by-side locations. (2) Aerie (incl. OFFL/NE)
includes Aerie stand alone locations, OFFL/NE stand alone
locations, and Aerie/OFFL/NE side-by-side locations. (3)
International license locations (retail stores and concessions) are
not included in the consolidated store data or the total gross
square footage calculation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231120708787/en/
Line Media 412-432-3300 LineMedia@ae.com
American Eagle Outfitters (NYSE:AEO)
Historical Stock Chart
From Aug 2024 to Sep 2024
American Eagle Outfitters (NYSE:AEO)
Historical Stock Chart
From Sep 2023 to Sep 2024