Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries AEO Inc. Reports Second Quarter Revenue and Operating Profit Above Expectations; Raises Annual Outlook Reflecting Strengthened Demand and Profit Initiatives By: American Eagle Outfitters, Inc. via Business Wire September 06, 2023 at 16:15 PM EDT Record second quarter revenue of $1.2 billion, up slightly to last year Operating profit of $65 million, up significantly, with growth across brands Aerie posted all-time high second quarter revenue American Eagle continued to see a sequential improvement in revenue trends Realizing initial benefits from profit improvement initiatives American Eagle Outfitters, Inc. (NYSE: AEO) today announced financial results for the second quarter ended July 29, 2023. “I am pleased to report second quarter revenue and operating profit that exceeded our expectations. Demand picked up in June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. It’s encouraging to see positive momentum continue into the third quarter, across brands and channels,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “Looking to the second half, we are excited about future product arrivals, leveraging the positive response to early fall goods and delivering innovative customer connections. At the same time, we are keeping a sharp eye on the consumer environment and planning appropriately. We are taking action to position the business for improved profit, with preliminary initiatives included in our increased 2023 outlook. As we continue to optimize our operations, I am confident in our ability to strengthen profitability longer-term.” Second Quarter 2023 Results: Total net revenue of $1.2 billion was up slightly to the second quarter of 2022. Store revenue was up 4%. Digital revenue declined 7%. Aerie revenue of $380 million rose 2% versus second quarter 2022. Comp sales were flat. American Eagle revenue of $767 million declined 1% versus second quarter 2022. Comp sales declined 2%. Gross profit of $453 million increased approximately 22% compared to $370 million in the second quarter of 2022 and reflected a gross margin rate of 37.7% compared to 30.9% last year. Merchandise margin expansion was driven by lower markdowns reflecting inventory control and lower transportation and product costs. Gross profit also benefited from early profit improvement initiatives as well as lower delivery, distribution and warehousing costs. Selling, general and administrative expense of $332 million was up 8% to last year. Higher corporate compensation, incentives and other corporate expense were partially offset by cost efficiencies. SG&A increased 190 basis points as a rate to sales versus second quarter 2022. Operating income was $65 million, reflecting a 5.4% margin. Diluted EPS was $0.25. Average diluted shares outstanding were 196 million. Inventory Total ending inventory declined 7% to $637 million compared to $687 million last year, with units down 11%. The company continues to maintain inventory discipline. Capital Expenditures Capital expenditures totaled $46 million in the second quarter. For 2023, management continues to expect capital expenditures to approximate $150 to $175 million. Profit Improvement Focus This year, the company launched a comprehensive review of its cost structure, with near-term opportunities identified primarily within the gross margin, which represents approximately 70% of the company’s expense base. In the second quarter, initial benefits were realized, contributing to the year-over-year improvement in the gross margin. The increased outlook for fiscal 2023, incorporates additional back half benefits in addition to stronger business trends. The profit improvement project is ongoing with initiatives being launched across the company’s expense base, which are expected to yield results over the next 12 to 24 months. Outlook For the year, management expects revenue to be up low single digits to last year, compared to prior guidance for revenue in the range of flat to down low single digits. Operating income is expected to be in the range of $325 to $350 million, up from prior guidance of $250 to $270 million. This reflects better than expected business performance in the second quarter, in addition to strengthened demand and continued profit improvement in the back half of the year. The outlook includes approximately $25 million in benefits from the company’s profit improvement initiatives. With better business trends, the company is accruing incentives and expects SG&A to be up in the low double digits for the year. For the third quarter, management’s outlook reflects revenue up low single digits with operating income in the range of $115 to $125 million. With incentive accruals skewed to the back half of the year, SG&A is expected to increase in the mid-teens. Depreciation is expected to be similar to the second quarter. Conference Call and Supplemental Financial Information Management will host a conference call and real time webcast today at 4:30 p.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 260 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 third 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 negative impacts of the COVID-19 pandemic and related operational disruptions; 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) July 29, 2023 July 30, 2022 Assets Current assets: Cash and cash equivalents $ 175,315 $ 98,214 Merchandise inventory 636,972 687,046 Accounts receivable, net 271,333 220,803 Prepaid expenses and other 117,871 171,326 Total current assets 1,201,491 1,177,389 Operating lease right-of-use assets 1,038,505 1,210,285 Property and equipment, at cost, net of accumulated depreciation 758,736 775,969 Goodwill 264,964 271,406 Intangible assets, net 90,312 98,651 Non-current deferred income taxes 21,990 37,017 Other assets 55,909 58,500 Total assets $ 3,431,907 $ 3,629,217 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 238,660 $ 198,645 Current portion of operating lease liabilities 309,517 328,348 Unredeemed gift cards and gift certificates 51,156 51,111 Accrued compensation and payroll taxes 74,509 50,788 Accrued income taxes and other 17,372 16,708 Other current liabilities and accrued expenses 71,262 72,461 Total current liabilities 762,476 718,061 Non-current liabilities: Non-current operating lease liabilities 970,862 1,137,656 Long-term debt, net 3,225 376,522 Other non-current liabilities 22,345 24,055 Total non-current liabilities 996,432 1,538,233 Commitments and contingencies - - Stockholders' equity: Preferred stock - - Common stock 2,496 2,496 Contributed capital 334,447 380,959 Accumulated other comprehensive loss (11,566 ) (40,017 ) Retained earnings 2,158,294 2,000,021 Treasury stock (810,672 ) (970,536 ) Total stockholders' equity 1,672,999 1,372,923 Total Liabilities and Stockholders' Equity $ 3,431,907 $ 3,629,217 Current ratio 1.58 1.64 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in thousands, except per share amounts) (unaudited) GAAP Basis 13 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 1,200,879 100.0 % $ 1,198,124 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 747,863 62.3 % 828,107 69.1 % Gross profit 453,016 37.7 % 370,017 30.9 % Selling, general and administrative expenses 331,872 27.6 % 307,832 25.7 % Depreciation and amortization expense 55,854 4.7 % 48,171 4.0 % Operating income 65,290 5.4 % 14,014 1.2 % Debt related charges - 0.0 % 60,066 5.1 % Interest expense, net 951 0.1 % 3,421 0.3 % Other income, net (2,150 ) -0.2 % (1,839 ) -0.2 % Income (loss) before income taxes 66,489 5.5 % (47,634 ) -4.0 % Provision (benefit) for income taxes 17,919 1.5 % (5,168 ) -0.5 % Net income (loss) $ 48,570 4.0 % $ (42,466 ) -3.5 % Net income per basic share $ 0.25 $ (0.24 ) Net income per diluted share $ 0.25 $ (0.24 ) Weighted average common shares outstanding - basic 195,329 180,189 Weighted average common shares outstanding - diluted 196,103 180,189 GAAP Basis 26 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 2,281,805 100.0 % $ 2,253,161 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 1,415,610 62.0 % 1,495,118 66.4 % Gross profit 866,195 38.0 % 758,043 33.6 % Selling, general and administrative expenses 644,217 28.2 % 606,587 26.9 % Impairment, restructuring and other charges 21,275 1.0 % - 0.0 % Depreciation and amortization expense 112,582 4.9 % 95,540 4.2 % Operating income 88,121 3.9 % 55,916 2.5 % Debt related charges - 0.0 % 60,066 2.7 % Interest expense, net 1,642 0.1 % 8,009 0.4 % Other (income), net (5,461 ) -0.2 % (6,283 ) -0.3 % Income (loss) before income taxes 91,940 4.0 % (5,876 ) -0.3 % Provision (benefit) for income taxes 24,918 1.1 % 4,850 0.2 % Net income (loss) $ 67,022 2.9 % $ (10,726 ) -0.5 % Net income (loss) per basic share $ 0.34 $ (0.06 ) Net income (loss) per diluted share $ 0.34 $ (0.06 ) Weighted average common shares outstanding - basic 195,214 174,544 Weighted average common shares outstanding - diluted 196,822 174,544 AMERICAN EAGLE OUTFITTERS, INC. RESULTS BY SEGMENT (Dollars in thousands) (unaudited) For the 13 weeks ended For the 26 weeks ended July 29, 2023 July 30, 2022 July 29, 2023 July 30, 2022 Net Revenue: American Eagle $ 767,018 $ 777,828 $ 1,438,110 $ 1,463,407 Aerie $ 380,413 $ 371,683 $ 739,495 $ 693,395 Total Segment Net Revenue $ 1,147,431 $ 1,149,511 $ 2,177,605 $ 2,156,802 Other (1) $ 108,318 $ 110,393 $ 217,675 $ 200,077 Intersegment Elimination $ (54,870 ) $ (61,780 ) $ (113,475 ) $ (103,718 ) Total Net Revenue $ 1,200,879 $ 1,198,124 $ 2,281,805 $ 2,253,161 Adjusted Operating Income: American Eagle $ 128,664 $ 109,110 $ 234,203 $ 213,015 Aerie $ 57,253 $ 11,830 $ 112,922 $ 54,903 Total Segment Adjusted Operating Income $ 185,917 $ 120,940 $ 347,125 $ 267,918 Other (1) (3) $ (10,341 ) $ (11,507 ) $ (26,648 ) $ (27,732 ) Intersegment Elimination $ - $ - $ - $ - General corporate expenses (2) $ (110,286 ) $ (95,419 ) $ (211,081 ) $ (184,270 ) Total Adjusted Operating Income $ 65,290 $ 14,014 $ 109,396 $ 55,916 Less: Impairment, restructuring and other charges(3) $ - $ - $ (21,275 ) $ - Total Operating Income $ 65,290 $ 14,014 $ 88,121 $ 55,916 Debt related charges $ - $ 60,066 $ - $ 60,066 Interest expense, net $ 951 $ 3,421 $ 1,642 $ 8,009 Other income, net $ (2,150 ) $ (1,839 ) $ (5,461 ) $ (6,283 ) Income before income taxes $ 66,489 $ (47,634 ) $ 91,940 $ (5,876 ) Capital Expenditures American Eagle $ 16,249 $ 18,754 $ 31,192 $ 34,524 Aerie $ 10,889 $ 30,244 $ 22,077 $ 61,259 Other (1) $ 6,154 $ 4,107 $ 11,730 $ 5,132 General corporate expenditures (2) $ 12,810 $ 16,359 $ 26,960 $ 26,943 Total Capital Expenditures $ 46,102 $ 69,464 $ 91,959 $ 127,858 (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 26 weeks ended July 29, 2023. AMERICAN EAGLE OUTFITTERS, INC. STORE INFORMATION (unaudited) Second Quarter YTD Second Quarter 2023 2023 Consolidated stores at beginning of period 1,180 1,175 Consolidated stores opened during the period AE Brand (1) 2 6 Aerie (incl. OFFL/NE) (2) 3 5 Todd Snyder 2 3 Consolidated stores closed during the period AE Brand (1) (3 ) (5 ) Total consolidated stores at end of period 1,184 1,184 AE Brand (1) 866 Aerie (incl. OFFL/NE) (2) 300 Todd Snyder 13 Unsubscribed 5 Total gross square footage at end of period (in '000) 7,293 7,293 International license locations at end of period (3) 279 279 (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/20230906860210/en/Contacts Line Media 412-432-3300 LineMedia@ae.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
AEO Inc. Reports Second Quarter Revenue and Operating Profit Above Expectations; Raises Annual Outlook Reflecting Strengthened Demand and Profit Initiatives By: American Eagle Outfitters, Inc. via Business Wire September 06, 2023 at 16:15 PM EDT Record second quarter revenue of $1.2 billion, up slightly to last year Operating profit of $65 million, up significantly, with growth across brands Aerie posted all-time high second quarter revenue American Eagle continued to see a sequential improvement in revenue trends Realizing initial benefits from profit improvement initiatives American Eagle Outfitters, Inc. (NYSE: AEO) today announced financial results for the second quarter ended July 29, 2023. “I am pleased to report second quarter revenue and operating profit that exceeded our expectations. Demand picked up in June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. It’s encouraging to see positive momentum continue into the third quarter, across brands and channels,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “Looking to the second half, we are excited about future product arrivals, leveraging the positive response to early fall goods and delivering innovative customer connections. At the same time, we are keeping a sharp eye on the consumer environment and planning appropriately. We are taking action to position the business for improved profit, with preliminary initiatives included in our increased 2023 outlook. As we continue to optimize our operations, I am confident in our ability to strengthen profitability longer-term.” Second Quarter 2023 Results: Total net revenue of $1.2 billion was up slightly to the second quarter of 2022. Store revenue was up 4%. Digital revenue declined 7%. Aerie revenue of $380 million rose 2% versus second quarter 2022. Comp sales were flat. American Eagle revenue of $767 million declined 1% versus second quarter 2022. Comp sales declined 2%. Gross profit of $453 million increased approximately 22% compared to $370 million in the second quarter of 2022 and reflected a gross margin rate of 37.7% compared to 30.9% last year. Merchandise margin expansion was driven by lower markdowns reflecting inventory control and lower transportation and product costs. Gross profit also benefited from early profit improvement initiatives as well as lower delivery, distribution and warehousing costs. Selling, general and administrative expense of $332 million was up 8% to last year. Higher corporate compensation, incentives and other corporate expense were partially offset by cost efficiencies. SG&A increased 190 basis points as a rate to sales versus second quarter 2022. Operating income was $65 million, reflecting a 5.4% margin. Diluted EPS was $0.25. Average diluted shares outstanding were 196 million. Inventory Total ending inventory declined 7% to $637 million compared to $687 million last year, with units down 11%. The company continues to maintain inventory discipline. Capital Expenditures Capital expenditures totaled $46 million in the second quarter. For 2023, management continues to expect capital expenditures to approximate $150 to $175 million. Profit Improvement Focus This year, the company launched a comprehensive review of its cost structure, with near-term opportunities identified primarily within the gross margin, which represents approximately 70% of the company’s expense base. In the second quarter, initial benefits were realized, contributing to the year-over-year improvement in the gross margin. The increased outlook for fiscal 2023, incorporates additional back half benefits in addition to stronger business trends. The profit improvement project is ongoing with initiatives being launched across the company’s expense base, which are expected to yield results over the next 12 to 24 months. Outlook For the year, management expects revenue to be up low single digits to last year, compared to prior guidance for revenue in the range of flat to down low single digits. Operating income is expected to be in the range of $325 to $350 million, up from prior guidance of $250 to $270 million. This reflects better than expected business performance in the second quarter, in addition to strengthened demand and continued profit improvement in the back half of the year. The outlook includes approximately $25 million in benefits from the company’s profit improvement initiatives. With better business trends, the company is accruing incentives and expects SG&A to be up in the low double digits for the year. For the third quarter, management’s outlook reflects revenue up low single digits with operating income in the range of $115 to $125 million. With incentive accruals skewed to the back half of the year, SG&A is expected to increase in the mid-teens. Depreciation is expected to be similar to the second quarter. Conference Call and Supplemental Financial Information Management will host a conference call and real time webcast today at 4:30 p.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 260 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 third 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 negative impacts of the COVID-19 pandemic and related operational disruptions; 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) July 29, 2023 July 30, 2022 Assets Current assets: Cash and cash equivalents $ 175,315 $ 98,214 Merchandise inventory 636,972 687,046 Accounts receivable, net 271,333 220,803 Prepaid expenses and other 117,871 171,326 Total current assets 1,201,491 1,177,389 Operating lease right-of-use assets 1,038,505 1,210,285 Property and equipment, at cost, net of accumulated depreciation 758,736 775,969 Goodwill 264,964 271,406 Intangible assets, net 90,312 98,651 Non-current deferred income taxes 21,990 37,017 Other assets 55,909 58,500 Total assets $ 3,431,907 $ 3,629,217 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 238,660 $ 198,645 Current portion of operating lease liabilities 309,517 328,348 Unredeemed gift cards and gift certificates 51,156 51,111 Accrued compensation and payroll taxes 74,509 50,788 Accrued income taxes and other 17,372 16,708 Other current liabilities and accrued expenses 71,262 72,461 Total current liabilities 762,476 718,061 Non-current liabilities: Non-current operating lease liabilities 970,862 1,137,656 Long-term debt, net 3,225 376,522 Other non-current liabilities 22,345 24,055 Total non-current liabilities 996,432 1,538,233 Commitments and contingencies - - Stockholders' equity: Preferred stock - - Common stock 2,496 2,496 Contributed capital 334,447 380,959 Accumulated other comprehensive loss (11,566 ) (40,017 ) Retained earnings 2,158,294 2,000,021 Treasury stock (810,672 ) (970,536 ) Total stockholders' equity 1,672,999 1,372,923 Total Liabilities and Stockholders' Equity $ 3,431,907 $ 3,629,217 Current ratio 1.58 1.64 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in thousands, except per share amounts) (unaudited) GAAP Basis 13 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 1,200,879 100.0 % $ 1,198,124 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 747,863 62.3 % 828,107 69.1 % Gross profit 453,016 37.7 % 370,017 30.9 % Selling, general and administrative expenses 331,872 27.6 % 307,832 25.7 % Depreciation and amortization expense 55,854 4.7 % 48,171 4.0 % Operating income 65,290 5.4 % 14,014 1.2 % Debt related charges - 0.0 % 60,066 5.1 % Interest expense, net 951 0.1 % 3,421 0.3 % Other income, net (2,150 ) -0.2 % (1,839 ) -0.2 % Income (loss) before income taxes 66,489 5.5 % (47,634 ) -4.0 % Provision (benefit) for income taxes 17,919 1.5 % (5,168 ) -0.5 % Net income (loss) $ 48,570 4.0 % $ (42,466 ) -3.5 % Net income per basic share $ 0.25 $ (0.24 ) Net income per diluted share $ 0.25 $ (0.24 ) Weighted average common shares outstanding - basic 195,329 180,189 Weighted average common shares outstanding - diluted 196,103 180,189 GAAP Basis 26 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 2,281,805 100.0 % $ 2,253,161 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 1,415,610 62.0 % 1,495,118 66.4 % Gross profit 866,195 38.0 % 758,043 33.6 % Selling, general and administrative expenses 644,217 28.2 % 606,587 26.9 % Impairment, restructuring and other charges 21,275 1.0 % - 0.0 % Depreciation and amortization expense 112,582 4.9 % 95,540 4.2 % Operating income 88,121 3.9 % 55,916 2.5 % Debt related charges - 0.0 % 60,066 2.7 % Interest expense, net 1,642 0.1 % 8,009 0.4 % Other (income), net (5,461 ) -0.2 % (6,283 ) -0.3 % Income (loss) before income taxes 91,940 4.0 % (5,876 ) -0.3 % Provision (benefit) for income taxes 24,918 1.1 % 4,850 0.2 % Net income (loss) $ 67,022 2.9 % $ (10,726 ) -0.5 % Net income (loss) per basic share $ 0.34 $ (0.06 ) Net income (loss) per diluted share $ 0.34 $ (0.06 ) Weighted average common shares outstanding - basic 195,214 174,544 Weighted average common shares outstanding - diluted 196,822 174,544 AMERICAN EAGLE OUTFITTERS, INC. RESULTS BY SEGMENT (Dollars in thousands) (unaudited) For the 13 weeks ended For the 26 weeks ended July 29, 2023 July 30, 2022 July 29, 2023 July 30, 2022 Net Revenue: American Eagle $ 767,018 $ 777,828 $ 1,438,110 $ 1,463,407 Aerie $ 380,413 $ 371,683 $ 739,495 $ 693,395 Total Segment Net Revenue $ 1,147,431 $ 1,149,511 $ 2,177,605 $ 2,156,802 Other (1) $ 108,318 $ 110,393 $ 217,675 $ 200,077 Intersegment Elimination $ (54,870 ) $ (61,780 ) $ (113,475 ) $ (103,718 ) Total Net Revenue $ 1,200,879 $ 1,198,124 $ 2,281,805 $ 2,253,161 Adjusted Operating Income: American Eagle $ 128,664 $ 109,110 $ 234,203 $ 213,015 Aerie $ 57,253 $ 11,830 $ 112,922 $ 54,903 Total Segment Adjusted Operating Income $ 185,917 $ 120,940 $ 347,125 $ 267,918 Other (1) (3) $ (10,341 ) $ (11,507 ) $ (26,648 ) $ (27,732 ) Intersegment Elimination $ - $ - $ - $ - General corporate expenses (2) $ (110,286 ) $ (95,419 ) $ (211,081 ) $ (184,270 ) Total Adjusted Operating Income $ 65,290 $ 14,014 $ 109,396 $ 55,916 Less: Impairment, restructuring and other charges(3) $ - $ - $ (21,275 ) $ - Total Operating Income $ 65,290 $ 14,014 $ 88,121 $ 55,916 Debt related charges $ - $ 60,066 $ - $ 60,066 Interest expense, net $ 951 $ 3,421 $ 1,642 $ 8,009 Other income, net $ (2,150 ) $ (1,839 ) $ (5,461 ) $ (6,283 ) Income before income taxes $ 66,489 $ (47,634 ) $ 91,940 $ (5,876 ) Capital Expenditures American Eagle $ 16,249 $ 18,754 $ 31,192 $ 34,524 Aerie $ 10,889 $ 30,244 $ 22,077 $ 61,259 Other (1) $ 6,154 $ 4,107 $ 11,730 $ 5,132 General corporate expenditures (2) $ 12,810 $ 16,359 $ 26,960 $ 26,943 Total Capital Expenditures $ 46,102 $ 69,464 $ 91,959 $ 127,858 (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 26 weeks ended July 29, 2023. AMERICAN EAGLE OUTFITTERS, INC. STORE INFORMATION (unaudited) Second Quarter YTD Second Quarter 2023 2023 Consolidated stores at beginning of period 1,180 1,175 Consolidated stores opened during the period AE Brand (1) 2 6 Aerie (incl. OFFL/NE) (2) 3 5 Todd Snyder 2 3 Consolidated stores closed during the period AE Brand (1) (3 ) (5 ) Total consolidated stores at end of period 1,184 1,184 AE Brand (1) 866 Aerie (incl. OFFL/NE) (2) 300 Todd Snyder 13 Unsubscribed 5 Total gross square footage at end of period (in '000) 7,293 7,293 International license locations at end of period (3) 279 279 (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/20230906860210/en/Contacts Line Media 412-432-3300 LineMedia@ae.com
Record second quarter revenue of $1.2 billion, up slightly to last year Operating profit of $65 million, up significantly, with growth across brands Aerie posted all-time high second quarter revenue American Eagle continued to see a sequential improvement in revenue trends Realizing initial benefits from profit improvement initiatives
American Eagle Outfitters, Inc. (NYSE: AEO) today announced financial results for the second quarter ended July 29, 2023. “I am pleased to report second quarter revenue and operating profit that exceeded our expectations. Demand picked up in June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. It’s encouraging to see positive momentum continue into the third quarter, across brands and channels,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “Looking to the second half, we are excited about future product arrivals, leveraging the positive response to early fall goods and delivering innovative customer connections. At the same time, we are keeping a sharp eye on the consumer environment and planning appropriately. We are taking action to position the business for improved profit, with preliminary initiatives included in our increased 2023 outlook. As we continue to optimize our operations, I am confident in our ability to strengthen profitability longer-term.” Second Quarter 2023 Results: Total net revenue of $1.2 billion was up slightly to the second quarter of 2022. Store revenue was up 4%. Digital revenue declined 7%. Aerie revenue of $380 million rose 2% versus second quarter 2022. Comp sales were flat. American Eagle revenue of $767 million declined 1% versus second quarter 2022. Comp sales declined 2%. Gross profit of $453 million increased approximately 22% compared to $370 million in the second quarter of 2022 and reflected a gross margin rate of 37.7% compared to 30.9% last year. Merchandise margin expansion was driven by lower markdowns reflecting inventory control and lower transportation and product costs. Gross profit also benefited from early profit improvement initiatives as well as lower delivery, distribution and warehousing costs. Selling, general and administrative expense of $332 million was up 8% to last year. Higher corporate compensation, incentives and other corporate expense were partially offset by cost efficiencies. SG&A increased 190 basis points as a rate to sales versus second quarter 2022. Operating income was $65 million, reflecting a 5.4% margin. Diluted EPS was $0.25. Average diluted shares outstanding were 196 million. Inventory Total ending inventory declined 7% to $637 million compared to $687 million last year, with units down 11%. The company continues to maintain inventory discipline. Capital Expenditures Capital expenditures totaled $46 million in the second quarter. For 2023, management continues to expect capital expenditures to approximate $150 to $175 million. Profit Improvement Focus This year, the company launched a comprehensive review of its cost structure, with near-term opportunities identified primarily within the gross margin, which represents approximately 70% of the company’s expense base. In the second quarter, initial benefits were realized, contributing to the year-over-year improvement in the gross margin. The increased outlook for fiscal 2023, incorporates additional back half benefits in addition to stronger business trends. The profit improvement project is ongoing with initiatives being launched across the company’s expense base, which are expected to yield results over the next 12 to 24 months. Outlook For the year, management expects revenue to be up low single digits to last year, compared to prior guidance for revenue in the range of flat to down low single digits. Operating income is expected to be in the range of $325 to $350 million, up from prior guidance of $250 to $270 million. This reflects better than expected business performance in the second quarter, in addition to strengthened demand and continued profit improvement in the back half of the year. The outlook includes approximately $25 million in benefits from the company’s profit improvement initiatives. With better business trends, the company is accruing incentives and expects SG&A to be up in the low double digits for the year. For the third quarter, management’s outlook reflects revenue up low single digits with operating income in the range of $115 to $125 million. With incentive accruals skewed to the back half of the year, SG&A is expected to increase in the mid-teens. Depreciation is expected to be similar to the second quarter. Conference Call and Supplemental Financial Information Management will host a conference call and real time webcast today at 4:30 p.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 260 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 third 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 negative impacts of the COVID-19 pandemic and related operational disruptions; 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) July 29, 2023 July 30, 2022 Assets Current assets: Cash and cash equivalents $ 175,315 $ 98,214 Merchandise inventory 636,972 687,046 Accounts receivable, net 271,333 220,803 Prepaid expenses and other 117,871 171,326 Total current assets 1,201,491 1,177,389 Operating lease right-of-use assets 1,038,505 1,210,285 Property and equipment, at cost, net of accumulated depreciation 758,736 775,969 Goodwill 264,964 271,406 Intangible assets, net 90,312 98,651 Non-current deferred income taxes 21,990 37,017 Other assets 55,909 58,500 Total assets $ 3,431,907 $ 3,629,217 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 238,660 $ 198,645 Current portion of operating lease liabilities 309,517 328,348 Unredeemed gift cards and gift certificates 51,156 51,111 Accrued compensation and payroll taxes 74,509 50,788 Accrued income taxes and other 17,372 16,708 Other current liabilities and accrued expenses 71,262 72,461 Total current liabilities 762,476 718,061 Non-current liabilities: Non-current operating lease liabilities 970,862 1,137,656 Long-term debt, net 3,225 376,522 Other non-current liabilities 22,345 24,055 Total non-current liabilities 996,432 1,538,233 Commitments and contingencies - - Stockholders' equity: Preferred stock - - Common stock 2,496 2,496 Contributed capital 334,447 380,959 Accumulated other comprehensive loss (11,566 ) (40,017 ) Retained earnings 2,158,294 2,000,021 Treasury stock (810,672 ) (970,536 ) Total stockholders' equity 1,672,999 1,372,923 Total Liabilities and Stockholders' Equity $ 3,431,907 $ 3,629,217 Current ratio 1.58 1.64 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in thousands, except per share amounts) (unaudited) GAAP Basis 13 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 1,200,879 100.0 % $ 1,198,124 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 747,863 62.3 % 828,107 69.1 % Gross profit 453,016 37.7 % 370,017 30.9 % Selling, general and administrative expenses 331,872 27.6 % 307,832 25.7 % Depreciation and amortization expense 55,854 4.7 % 48,171 4.0 % Operating income 65,290 5.4 % 14,014 1.2 % Debt related charges - 0.0 % 60,066 5.1 % Interest expense, net 951 0.1 % 3,421 0.3 % Other income, net (2,150 ) -0.2 % (1,839 ) -0.2 % Income (loss) before income taxes 66,489 5.5 % (47,634 ) -4.0 % Provision (benefit) for income taxes 17,919 1.5 % (5,168 ) -0.5 % Net income (loss) $ 48,570 4.0 % $ (42,466 ) -3.5 % Net income per basic share $ 0.25 $ (0.24 ) Net income per diluted share $ 0.25 $ (0.24 ) Weighted average common shares outstanding - basic 195,329 180,189 Weighted average common shares outstanding - diluted 196,103 180,189 GAAP Basis 26 Weeks Ended July 29, 2023 % ofRevenue July 30, 2022 % ofRevenue Total net revenue $ 2,281,805 100.0 % $ 2,253,161 100.0 % Cost of sales, including certain buying, occupancy and warehousing expenses 1,415,610 62.0 % 1,495,118 66.4 % Gross profit 866,195 38.0 % 758,043 33.6 % Selling, general and administrative expenses 644,217 28.2 % 606,587 26.9 % Impairment, restructuring and other charges 21,275 1.0 % - 0.0 % Depreciation and amortization expense 112,582 4.9 % 95,540 4.2 % Operating income 88,121 3.9 % 55,916 2.5 % Debt related charges - 0.0 % 60,066 2.7 % Interest expense, net 1,642 0.1 % 8,009 0.4 % Other (income), net (5,461 ) -0.2 % (6,283 ) -0.3 % Income (loss) before income taxes 91,940 4.0 % (5,876 ) -0.3 % Provision (benefit) for income taxes 24,918 1.1 % 4,850 0.2 % Net income (loss) $ 67,022 2.9 % $ (10,726 ) -0.5 % Net income (loss) per basic share $ 0.34 $ (0.06 ) Net income (loss) per diluted share $ 0.34 $ (0.06 ) Weighted average common shares outstanding - basic 195,214 174,544 Weighted average common shares outstanding - diluted 196,822 174,544 AMERICAN EAGLE OUTFITTERS, INC. RESULTS BY SEGMENT (Dollars in thousands) (unaudited) For the 13 weeks ended For the 26 weeks ended July 29, 2023 July 30, 2022 July 29, 2023 July 30, 2022 Net Revenue: American Eagle $ 767,018 $ 777,828 $ 1,438,110 $ 1,463,407 Aerie $ 380,413 $ 371,683 $ 739,495 $ 693,395 Total Segment Net Revenue $ 1,147,431 $ 1,149,511 $ 2,177,605 $ 2,156,802 Other (1) $ 108,318 $ 110,393 $ 217,675 $ 200,077 Intersegment Elimination $ (54,870 ) $ (61,780 ) $ (113,475 ) $ (103,718 ) Total Net Revenue $ 1,200,879 $ 1,198,124 $ 2,281,805 $ 2,253,161 Adjusted Operating Income: American Eagle $ 128,664 $ 109,110 $ 234,203 $ 213,015 Aerie $ 57,253 $ 11,830 $ 112,922 $ 54,903 Total Segment Adjusted Operating Income $ 185,917 $ 120,940 $ 347,125 $ 267,918 Other (1) (3) $ (10,341 ) $ (11,507 ) $ (26,648 ) $ (27,732 ) Intersegment Elimination $ - $ - $ - $ - General corporate expenses (2) $ (110,286 ) $ (95,419 ) $ (211,081 ) $ (184,270 ) Total Adjusted Operating Income $ 65,290 $ 14,014 $ 109,396 $ 55,916 Less: Impairment, restructuring and other charges(3) $ - $ - $ (21,275 ) $ - Total Operating Income $ 65,290 $ 14,014 $ 88,121 $ 55,916 Debt related charges $ - $ 60,066 $ - $ 60,066 Interest expense, net $ 951 $ 3,421 $ 1,642 $ 8,009 Other income, net $ (2,150 ) $ (1,839 ) $ (5,461 ) $ (6,283 ) Income before income taxes $ 66,489 $ (47,634 ) $ 91,940 $ (5,876 ) Capital Expenditures American Eagle $ 16,249 $ 18,754 $ 31,192 $ 34,524 Aerie $ 10,889 $ 30,244 $ 22,077 $ 61,259 Other (1) $ 6,154 $ 4,107 $ 11,730 $ 5,132 General corporate expenditures (2) $ 12,810 $ 16,359 $ 26,960 $ 26,943 Total Capital Expenditures $ 46,102 $ 69,464 $ 91,959 $ 127,858 (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 26 weeks ended July 29, 2023. AMERICAN EAGLE OUTFITTERS, INC. STORE INFORMATION (unaudited) Second Quarter YTD Second Quarter 2023 2023 Consolidated stores at beginning of period 1,180 1,175 Consolidated stores opened during the period AE Brand (1) 2 6 Aerie (incl. OFFL/NE) (2) 3 5 Todd Snyder 2 3 Consolidated stores closed during the period AE Brand (1) (3 ) (5 ) Total consolidated stores at end of period 1,184 1,184 AE Brand (1) 866 Aerie (incl. OFFL/NE) (2) 300 Todd Snyder 13 Unsubscribed 5 Total gross square footage at end of period (in '000) 7,293 7,293 International license locations at end of period (3) 279 279 (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/20230906860210/en/