By: Evan Clark | Link to article

The retailer topped fourth-quarter expectations and laid out a three-year plan to continue growing by 3 to 5 percent a year.

The momentum is picking back up at American Eagle Outfitters Inc. — and the retailer said it has a clear path to profitably add more than $700 million in sales over the next three years. 

It’s a big moment for AEO, which has been working hard to refocus, rationalizing at American Eagle while also revving up Aerie and operating more efficiently.  

The company found a good springboard for its three-year plan in the fourth quarter, when adjusted earnings came in stronger than expected and sales grew by 12 percent, with some help from an extra week. 

All told, revenues tallied $5.26 billion last year and the company is now looking to push that up to $5.7 billion or $6 billion in the next three years, with an operating margin rate of about 10 percent.

“We’re laying out a path to consistent 3 to 5 percent revenue growth,” said Mike Mathias, chief financial officer, in an interview ahead of the company’s meeting with Wall Street on Wednesday. 

Mathias said AEO has been engaged in a lot of “self-help” initiatives around improving profits, cutting costs and investing in capabilities to support its brands — becoming savvier on marketing and media spend and on inventory.

“We spent several years on inventory optimization and efficiencies that have taken hold,” the CFO said. “We’ve really structured ourselves and put a governance process in place around cost management, expense management. All the pieces that are in place now that on this 3 to 5 percent revenue growth, we’re structured now to deliver value from that growth in a different way than we’ve been able to in previous years.”

In the fourth quarter, AEO’s revenues rose to $1.68 billion from $1.5 billion a year earlier — an increase helped along by $57 million in sales during an extra week in the most-recent period.

American Eagle’s sales rose 11 percent to $1.1 billion, with a 6 percent gain in comparable sales. Aerie was up 16 percent to $538 million, with a 13 percent comp.

The adjusted gross margin rate of 37.3 percent represented a 340-basis-point improvement, driven by a combination of stronger consumer demand, lower product and transportation costs, lower markdowns and more.

The bottom line, though, was hit hard by a $131 million, mostly non-cash impairment and restructuring charge that covered the refocusing of the Quiet Platforms logistics business and efforts to streamline.  

Accordingly, net income for the quarter fell to $6.3 million from $54.6 million a year ago. 

But adjusted earnings per share came in at 61 cents, 11 cents ahead of the 50 cents analysts projected, according to FactSet. 

Jay Schottenstein, executive chairman and chief executive officer, said in a statement: “We are entering 2024 with momentum and from a position of strength with an exciting lineup of innovation and customer engagement initiatives. Our balance sheet is healthy and we are seeing early proof points of our new long-term strategy to deliver industry-leading earnings growth and shareholder returns.” 

Much of that momentum is being driven by elements controlled by Jennifer Foyle, president and executive creative director of American Eagle and Aerie. 

After a period of significant change — American Eagle closed some 130 stores over the past three years as Aerie evolved into a growth machine — Foyle said both businesses are ready to charge into the future.

While Foyle said the American Eagle’s women’s business logged “great results” in the fourth quarter and that the business planned to lean in on the category, there is a lot more going on.

“We have new brands that we’re launching or categories that we think will give us age expansion within American Eagle,” she said. “We have men’s AE 24/7, which is ageless. We have our new 77 brand, which is a little bit more premier denim, and we’re seeing early nice results there. And then just leaning into ‘social casual,’ is what we’re calling it. That’s our core day-in and day-out business in AE.”

The American Eagle stores are also being remodeled with what Foyle described as its “Lived In concept,” which welcomes shoppers with expansive storefronts and big fitting rooms. 

All of this marks a significant evolution for the American Eagle business, which fell out of step for a little while. 

“We were chasing comp with a lot of inventory,” Foyle said. “We really just had the team focus on what we do best, our core categories, while then adding on as we sort of walked away from that over assortment. We have focused on profitability while rationalizing, and we did a nice job with that.”

Meanwhile, Aerie is still in the steep part of its growth curve. 

“We’re still not in all markets, so there’s still tons of opportunity to introduce our brand into new markets, particularly on the West Coast,” Foyle said. 

The brands’ active offshoot Offline is also being well received and is clearly getting a spotlight at the company. 

“Over assortment is not what we’re up to,” Foyle said. “We’re focused on delivering comp product year-over-year. Our top 10 items to our top 25 items, we look at every detail.”

That has Aerie pushing the core while also leaving a little left to chase trends as well.

March 7, 2024

PITTSBURGH — (BUSINESS WIRE) – Building upon momentum and strong results achieved in 2023, American Eagle Outfitters, Inc. (NYSE: AEO) today unveiled its new Powering Profitable Growth plan, structured to deliver mid-to-high teens annual operating income expansion on 3-5% annual revenue growth over the next three years, and an approximate 10% operating margin.

Fueled by a shift in strategy, culture and focus to generate stronger profitability on continued growth, the multi-year plan is centered around three key pillars:

• Amplify our brands: Grow American Eagle, powering market leadership in denim and expansion into right-to-win adjacencies; Fuel Aerie’s expansion and Accelerate activewear opportunity with OFFLINE. 
• Execute with financial discipline: Organization structured to deliver consistent profit growth and shareholder returns.
• Optimize operations: Leverage best-in-class operating capabilities to fuel our growth and profit roadmap.

“Amplifying American Eagle and Aerie’s stronghold in casual apparel is at the very center of our strategic plan. We see incredible growth opportunities as we elevate key businesses and expand into category adjacencies at American Eagle, fuel the #AerieReal movement in underpenetrated markets and accelerate OFFLINE’s significant potential in activewear. These efforts will be supported by a sharp focus on profit expansion. We will utilize our leading operating capabilities and leverage new technologies to maximize ongoing efficiencies and deliver the very best and innovative experiences for our customers,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.

“I’m extremely excited about our Powering Profitable Growth Strategy. We have passionate, driven and talented teams surrounded by a renewed focus on performance. Together we look forward to executing and delivering on our plan, creating long-term value for our shareholders,” he continued.

In a separate release today the company reported fourth quarter and full-year fiscal 2023 results, in which management provided fiscal 2024 operating income guidance of $445 to $465 million, based on 2 to 4% revenue growth inclusive of an approximately one point revenue headwind from the shift in the retail calendar, which is consistent with the long-term financial targets stated above. 

First quarter 2024 guidance was also provided reflecting operating income in the range of $65 to $70 million. This reflects revenue up mid-single digits, including an approximately one point positive impact from the retail calendar shift. 

Webcast and Supplemental Financial Information

The company will discuss its financial results and long-term strategy and targets in an extended call beginning at 11:00 AM ET. The event  will feature presentations and a question-and-answer session with members of the company’s executive leadership team. The event can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com. A replay of the webcast will be archived and made available online 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, and Hong Kong 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. To learn more about AEO and the company’s commitment to Planet, People and Practices, 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 management’s expectations or beliefs concerning future events, including first quarter and annual fiscal 2024 results. Words such as “outlook,” “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “may,” “potential,” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company’s control. 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 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.

AEO Reports Record Fourth Quarter Revenue, Reflecting Momentum Across Brands and Continued Progress On Profit Improvement Initiatives

• Record fourth quarter revenue of $1.7 billion rose 12% to last year
• Aerie achieved all-time high fourth quarter revenue with comps up 13%
• American Eagle comps increased 6% reflecting continued sequential improvement

March 7, 2024

PITTSBURGH — (BUSINESS WIRE) – American Eagle Outfitters, Inc. (NYSE: AEO) today announced financial results for the fourth quarter and full year fiscal 2023 ended February 3, 2024.

In a separate release today, the company also announced its new Powering Profitable Growth long-term strategy structured to deliver $5.7 to $6.0 billion in revenue and an approximate 10% operating margin by the end of Fiscal 2026, implying a compounded annual growth rate of mid-to-high teens for operating income and 3-5% for revenue growth.

“I am proud of how the teams executed in the fourth quarter.  As our profit improvement initiatives took hold, we delivered a material improvement in business, underscoring the power of our brands, operations and strategic focus. Customers responded well to our strong merchandise collections fueling positive results across brands and channels,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.

“We are entering 2024 with momentum and from a position of strength with an exciting line-up of innovation and customer engagement initiatives. Our balance sheet is healthy and we are seeing early proof points of our new long-term strategy to deliver industry-leading earnings growth and shareholder returns, which we look forward to sharing today.” 

Fourth Quarter 2023 Results compared to Fourth Quarter 2022 Results:

• Fourth quarter 2023 results are presented for the 14 weeks ending February 3, 2024 compared to the 13 weeks ending January 28, 2023. Comparable sales metrics are presented for the 14 weeks ending February 3, 2024 compared to the 14 weeks ending February 4, 2023.
• Total net revenue of $1.7 billion rose 12%. The 53rd week contributed $57 million or approximately four points to revenue growth in the quarter.
• Store revenue rose 10%. Total digital revenue increased 19%.
• Aerie revenue of $538 million rose 16% with comp sales up 13%. American Eagle revenue of $1.1 billion increased 11% with comp sales growing 6%.
• GAAP Gross profit of $615 million. Adjusted gross profit of $626 million increased 23%. The adjusted gross margin rate of 37.3% rose 340 basis points. Margin expansion was driven by strong demand, lower product and transportation 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 $427 million was up 22%. Aligned with strong business performance, roughly half of the expense increase was due to incentive compensation against zero accruals last year. Store and corporate compensation, advertising as well as the 53rd week contributed to the increase.
• GAAP Operating income of $9 million. Adjusted Operating income of $141 million. Adjusted operating margin of 8.4% expanded 200 basis points to last year. 
• GAAP diluted earnings per share of $0.03. Adjusted diluted earnings per share of $0.61. Average diluted shares outstanding were 200 million.

Fiscal Year 2023 Results compared to Fiscal Year 2022 Results:

• Fiscal Year 2023 results are presented for the 53 weeks ending February 3, 2024 compared to the 52 weeks ending January 28, 2023. Comparable sales metrics are presented for the 53 weeks ending February 3, 2024 compared to the 53 weeks ending February 4, 2023.
• Total net revenue of $5.3 billion rose 5%. The 53rd week contributed $57 million or approximately one point to revenue growth in the year.
• Store revenue rose 6%. Total digital revenue also increased 6%.
• Aerie revenue of $1.7 billion rose 11% with comp sales up 8%. American Eagle revenue of $3.4 billion increased 3% with comp sales growing 1%.
• GAAP Gross profit of $2 billion. Adjusted gross profit of $2 billion increased 17%. The adjusted gross margin rate of 38.7% rose 370 basis points. Margin expansion was driven by strong demand, lower product and transportation costs, lower markdowns and leverage on rent, distribution and warehousing and delivery.
• Selling, general and administrative expense of $1.4 billion was up 13%. Roughly half of the expense increase was due to incentive compensation against zero accruals last year. Store and corporate compensation along with advertising also increased.
• GAAP Operating income of $223 million. Adjusted Operating income of $375 million. Adjusted operating margin of 7.1% expanded 170 basis points to last year. 
• GAAP diluted earnings per share of $0.86. Adjusted diluted earnings per share of $1.52. Average diluted shares outstanding were 197 million.

Inventory

Total ending inventory increased 9% to $641 million, with units up 11%. Inventory levels are healthy and well positioned to fuel growth initiatives.

Capital Expenditures

Capital expenditures totaled $39 million in the fourth quarter and $174 million for the full-year. For Fiscal 2024, management expects capital expenditures to approximate $200 to $250 million.

Restructuring and Impairment Charges

In the fourth quarter, the company recorded a $131 million impairment and restructuring charge, of which $119 million was non-cash.  The company refocused the operations of Quiet Platforms to better align with AEO’s long term strategy and its core capabilities as a regionalized fulfillment center network.  Additionally, as part of its profit improvement project, the company took a number of steps to streamline strategic priorities and strengthen the organization, including restructuring its international operations.  These actions will result in approximately $20 million in annualized savings beginning in 2024.

Outlook

For Fiscal 2024, management expects operating income in the range of $445 to $465 million. This reflects revenue up 2 to 4% to last year, including an approximately one point headwind from one less selling week due to the retail calendar shift.

Due to easier comparisons in the first half of the year, the significance of the shifted retail calendar and one less selling week in the fourth quarter, we expect revenue and profit growth to be skewed to the first half of the year.

For the first quarter, management expects operating income in the range of $65 to $70 million. This reflects revenue up mid-single digits, including an approximately  one point positive impact from the retail calendar shift. 

Webcast and Supplemental Financial Information

The company will discuss its financial results and long-term strategy and targets in an extended call beginning at 11:00 AM ET. The event  will feature presentations and a question-and-answer session with members of the company’s executive leadership team. The event can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com. A replay of the webcast will be archived and made available online 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, and Hong Kong 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. To learn more about AEO and the company’s commitment to Planet, People and Practices, please visit http://www.aeo-inc.com.

Non-GAAP Measures

This press release includes information on non-GAAP financial measures (“non-GAAP” or “adjusted”), including consolidated adjusted gross profit, operating income, net income, and net income per diluted share, excluding non-GAAP items. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.  Management believes that this non-GAAP information is useful for an alternate presentation of the company’s performance, when reviewed in conjunction with the company’s GAAP consolidated financial statements and provides a higher degree of transparency.

These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations.  We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.

The tables included in this press release reconcile the GAAP financial measures to the non-GAAP financial measures discussed above.

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 management’s expectations or beliefs concerning future events, including first quarter and annual fiscal 2024 results. Words such as “outlook,” “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “may,” “potential,” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company’s control. 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 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.

February 14, 2024

PITTSBURGH–(BUSINESS WIRE)– American Eagle Outfitters (NYSE: AEO) will report its fourth quarter and full-year fiscal 2023 results and unveil its new long-term strategy on Thursday, March 7th, 2024.

The company will issue a press releases in the morning. This will be followed by a webcast discussion of its financial results and long-term strategy and financial plan at 11:00 a.m., Eastern Time. The event will feature a presentation and a question-and-answer session with members of the company’s leadership team, and is expected to conclude at approximately 1:00 p.m. Eastern Time.

The webcast can be accessed in the Investor Relations section on AEO’s website, http://www.aeo-inc.com. A replay of the webcast will be archived and made available online 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, and Hong Kong 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. To learn more about AEO and the company’s commitment to Planet, People and Practices, please visit http://www.aeo-inc.com.

The designer hosted an event in TriBeCa on Thursday night before the official start on Friday.

BY JEAN E. PALMIERI / Link to article

Todd Snyder may not be showing in New York this season — he was a featured designer at the Pitti Uomo men’s show in Florence last month — but he still wanted to be involved. So he brainstormed with the CFDA about how best to participate and those conversations culminated in a packed event at Le Frenchette in TriBeCa Thursday night that drew dozens of designers and retailers to celebrate the kickoff of New York Fashion Week.

“I’ve been in business 13 years and looking back on my career, the CFDA really stepped up to help me when I started,” Snyder said. He added that working with the organization “really helps your business build awareness, connects you with mentors — Reed Krakoff was very important to me — and I wanted to give back. And this opportunity came up to cohost the kickoff event for NYFW.”

Steven Kolb, CFDA’s chief executive officer, said the group holds its kickoff event in September at City Hall with the mayor of New York, but the February round is generally less formal.

“Todd was planning to do a dinner and we wanted to do something and was looking for a cohost, so he suggested turning his dinner into a party,” Kolb said. “He really values how CFDA helped him when he started, so we invited all the designers on the calendar. There are a lot of parties around New York Fashion Week, but we’re happy Todd is here and doing this with us.”

He had plenty of company. The event drew everyone from Thom Browne, CFDA’s current chairman, to emerging designers Bach Mai, Tanner Richie and Fletcher Kasey of Tanner Fletcher, Alejandra Alonso Rojas, Henry Zankov, Kobi Halperin, Aurora James and others — all hoping to follow in Snyder’s footsteps.

Spinoso Real Estate and American Eagle Outfitters have amicably settled the lawsuit filed on July 25, 2023 related to Northlake Mall. American Eagle Outfitters recognizes Spinoso Real Estate as a preeminent operator of shopping malls throughout the United States and appreciates the work to create a safe and enjoyable shopping experience at Northlake Mall, which is a vibrant, bright, and prosperous destination for the people of the Charlotte area.