WWD: Another Successful Quarter, Improving on Top and Bottom Lines

By Kellie Ell / Link to article

American Eagle Outfitters does it again.

First-quarter results for fiscal year 2019 are in, with the company, which includes sister brand Aerie under the company umbrella, improving on both top and bottom lines.

“American Eagle and Aerie continue to leverage strong brand equity, compelling product and leading customer engagement across stores and digital,” Jay Schottenstein, American Eagle’s executive chairman and chief executive officer, said in a statement. “[American Eagle’s] ongoing market share gains are led by its dominant jeans business, and Aerie’s consistent double-digit growth has been fueled by the brand’s strong appeal to both existing and new customers. Looking ahead, we see significant runway for each of our brands. We are committed to improved profit flow through as we begin to lap our 2018 investments, to support continued earnings growth and attractive shareholder returns.”

Revenues for the three-month period ending May 4 rose 8 percent to $886 million, up from $823 million the same time last year. Net income also increased, from $39.9 million to $40.7 million. In addition, the company repurchased $20 million worth of shares during the quarter and had its 17th consecutive quarter of positive comp growth.

By brand, American Eagle’s comparable sales increased 4 percent, while Aerie’s comparable store sales jumped 14 percent. That’s on top of a 38 percent increase the same time last year. It’s also Aerie’s 18th consecutive quarter of double-digit comps.

The retailer has been on fire in recent years, benefiting from a thriving denim cycle as American fashion becomes increasingly casual — even in the workplace. Meanwhile, Aerie’s popularity continues to grow with its AerieReal campaign, which showcases un-airbrushed models.

Chad Kessler, global brand president of American Eagle, added that American Eagle has learned a lot from Aerie, a brand that is build on inclusivity.

“I think Aerie has been an inspiration to the whole sector,” Kessler told WWD. “What Jen [Foyle] and the Aerie team started with AerieReal in 2014 and showing, bravely showing unretouched models, really inspired anyone who was paying attention. And we’re so lucky at AE to have a front seat at the table, seeing what Aerie has accomplished.”

As a whole, the company surpassed $1 billion in sales during a single quarter last fall. Last quarter, as more and more retailers revealed store closures, Aerie said it would open between 60 and 75 more stores this year.

The 42-year-old company also celebrated its 25-year run on the public market in April, with executives like Schottenstein; Kessler; Foyle, Aerie global brand president, and Stacey McCormick, vice president of marketing at Aerie, along with AerieReal role model Iskra Lawrence, ringing the opening bell at the New York Stock Exchange. Later that night the AEO gang accepted the American Apparel and Footwear Association’s Retailer of the Year award.

American Eagle is continuing the momentum by expanding its bottoms business with additional sizes, as well as introducing the curvy jeans collection. The curvy line, available online starting today and in stores at the end of June, will range from sizes double zero to 20 and have a slightly new hip-to-waist ratio than other jeans.

In addition, Kessler said starting at the end of July, all American Eagle bottoms will be available in sizes double zero to 24 in every store. Previously, they were only available up to a size 16, size 20 in select stores.

“That’s a really exciting development around our brand platform of inclusivity,” Kessler said, adding that he thinks American Eagle has the potential to continue to grow its jeans business each quarter. “We’re really trying to make sure that American Eagle is famous for fit, inclusivity and for innovation. And I think this year we have really exciting deliverables on each of those pillars of our jeans business. I don’t think anyone makes a jean that fits better or provides better value or better quality than our jeans.”