Earnings Buzz: American Eagle Outfitters Inc (NYSE: AEO)

On Wednesday, Shares of American Eagle Outfitters Inc (NYSE: AEO) rose 0.38% to $23.98. The stock recorded $23.51 as its minimum price and hit the max level of $24.17, during its most recent trading session. It traded total volume of 1.96M shares lower than the average volume of 4.36M shares.

American Eagle Outfitters, Inc. (AEO) recently stated EPS of $0.22 for the quarter ended May 5, 2018, contrast to $0.14 for the quarter ended April 29, 2017. Excluding restructuring charges of $0.01, the company’s adjusted EPS increased 44% to $0.23, contrast to adjusted EPS of $0.16 last year.

First Quarter 2018 Results:

  • Total net revenue increased 8% to $823.0M contrast to $762.0M last year. Consolidated comparable sales increased 9% over the comparable period ending May 6, 2017. By brand, American eagle’s comparable sales increased 4% and Aerie’s comparable sales increased 38%.
  • Gross profit increased 10% to $304.0M from $278.0M. The gross margin rate increased 50 basis points to 37.0% of revenue contrast to 36.5% last year, reflecting rent leverage and a favorable markdown rate, partially offset by increased digital delivery expense.
  • Selling, general and administrative expense of $210.0M leveraged 10 basis points to 25.5% as a rate to revenue because of strong comparable sales. Higher store compensation and incentive expense drove the majority of the increase from $195.0M last year.
  • Depreciation expense increased 4% to $42.0M from $40.0M last year, leveraging 20 basis points to 5.1% as a rate to revenue.
  • Operating income of $51.0M, which includes $1.60M of restructuring charges, contrast to $37.0M last year. Adjusted operating income increased 23% to $52.0M from $42.0M last year, leveraging 80 basis points to 6.4% as a rate to revenue. EPS of $0.22 increased 57% contrast to EPS of $0.14 last year. Adjusted EPS of $0.23 increased 44% contrast to adjusted EPS of $0.16 last year.

Restructuring Charges:

In the first quarter, the company incurred restructuring charges mainly related to corporate severance, totaling $1.60M, or about $0.01 per share.

Inventory:

Total ending inventories at cost increased 11% to $404.0M, in line with the company’s expectations. The increase reflected the company’s clearance store strategy and the support of strong sales trends in American Eagle and Aerie. Looking forward, we expect second quarter ending inventory to be up in the high-single digits.

Capital Expenditures:

In the first quarter, capital expenditures totaled $47.0M, with more than half related to store remodeling projects and new openings, and the balance to support the digital business, omni-channel tools and general corporate maintenance.

Shareholder Returns, Cash and Investments:

During the first quarter, the company returned $69.0M to shareholders through cash dividends and share repurchases. We repurchased 2.30M shares for $45.0M and paid dividends of $24.0M. As a result of strong free cash flow, we ended the quarter with total cash and investments of $310.0M contrast to $225.0M last year.

AEO has the market capitalization of $4.21B and its EPS growth ratio for the past five years was -4.10%. The return on assets ratio of the Company was 12.40% while its return on investment ratio stands at 16.00%. Price to sales ratio was 1.09 while 89.20% of the stock was owned by institutional investors.

Penny Cook

Penny Cook is passionate about business and finance news with over 5 years in the industry starting as a writer working her way up into senior positions. She is the driving force behind www.nasdaqjournal.com with a vision to broaden the company’s readership throughout 2016. Cook is an editor and reporter of “Services” Category.

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