American Eagle Outfitters Inc. beat third-quarter earnings projections and clocked big-time traffic over Black Friday, but the retailer is being just a little bit cautious, wondering if January will bring back some of the slower trends seen earlier in the fall.
Net earnings for the quarter fell 17.3 percent to $80 million, or 41 cents a diluted share, from $96.7 million, or 49 cents, a year earlier. However, on an adjusted basis profits came to 48 cents a share, 2 cents ahead of the 46 cents that analysts projected, according to Yahoo Finance.
Revenues for the three months ended Nov. 2 dipped 0.9 percent to $1.29 billion from $1.3 billion a year earlier, reflecting a $45 million hit from the retail calendar shift this quarter.
Comparable sales painted a stronger picture for the retailer, rising 3 percent on top of a 5 percent gain a year earlier.
The American Eagle division drove its comps up 3 percent, on top of a 2 percent rise a year earlier. And Aerie comped up 5 percent, building on the 12 percent jump from a year earlier.
Mike Mathias, chief financial officer of AEO, described the quarter as “another proof point” that the company’s Powering Profitable Growth Plan was working.
“We’ve now seen three successful quarters operating against that plan,” Mathias said. “We’re delivering adjusted operating income of $124 million at the high end of our guidance. The work we’ve done to manage expenses, improve our operating rate on an annual basis, is continuing to produce for us. Now we’re turning our attention to holiday.”
Aerie continues to shine at AEO.
Courtesy
Black Friday came unusually late in November this year and consumers were clearly ready to get out to shop after what was a politically distracting and unseasonably warm fall.
“We’ve seen good customer response, especially this last week or so through Thanksgiving in the Black Friday weekend,” the CFO said. “We experienced double-digit traffic growth over that period. I feel really good about the third quarter and our position going into this fourth quarter.
“But we want to be cognizant of what we saw mid-September through early November and how that may affect the post-Christmas business,” he said, describing the outlook as conscious of “slower demand periods versus the holiday peak.”
Adjusted operating income for the year is now slated to range from $428 million to $433 million, down from the $455 million to $465 million forecast in August, but better than the $375 million achieved last year.
Comp sales are expected to rise by approximately 3 percent, a decrease from the roughly 4 percent increase seen in August.
Jay Schottenstein, AEO’s executive chairman and chief executive officer, said in a statement that the company is on track.
“The teams are focused on delivering the quarter and with our strong year-to-date performance, we remain confident in achieving our long-term strategic objectives,” he said.
