American Eagle's sales up to USD832 million

Wednesday, 30 November 2011

American Eagle Outfitters, Inc. (NYSE:AEO) Wednesday announced earnings for the third quarter ended October 29, 2011 of $0.27 per diluted share. Total sales for the quarter increased 11% to $832 million, while third quarter comparable store sales increased 5%.

Jim O’Donnell, chief executive officer, said, “I am encouraged by our progress in the third quarter and the continued momentum into the holiday season. Strong top line growth is evidence of the success of our key item strategy and merchandise improvements. Looking ahead to 2012, we have tremendous opportunity to capitalize on the strength of our brands and drive future profitable growth.”

Total sales for the quarter increased 11% to $832 million, compared to $752 million last year. Third quarter comparable store sales increased 5%, compared to a 1% increase last year. Gross profit was $309 million, or 37.1% as a rate to sales, compared to $312 million, or 41.6% as a rate to sales, last year. While merchandise profit dollars increased slightly due to stronger sales, higher cotton costs and markdowns pressured the merchandise margin, which decreased 480 basis points. Buying, occupancy and warehousing costs improved 30 basis points as a rate to sales, primarily due to top line growth driven by a 5% comparable store sales increase.


In the third quarter, online sales reached a record third quarter high increasing 21% due to increased traffic and conversion. The company’s online business includes ae.com, aerie.com and 77kids.com.

For the third quarter, capital expenditures were $31 million, compared to $26 million last year. Of the third quarter capital expenditures, approximately $22 million related to new and remodeled stores. The balance of the capital expenditures related to distribution center, information technology and other home office projects. For Fiscal 2011, the company expects capital expenditures to be approximately $100 million, which includes the holiday accessory expansion initiative.

The company ended the third quarter with total cash and investments of $482 million. During the quarter, 1.4 million shares were repurchased for a total of $15 million. Regarding fourth quarter earnings, the company expects EPS to be in the range of $0.40 to $0.44 per diluted share. The guidance assumes that sales momentum continues, particularly during peak holiday shopping periods. Additionally, the company expects margin pressure related to higher cotton costs and its planned promotional strategy. For the year, SG&A dollars are expected to increase in the low single-digits.

Elsewhere, Aeropostale, Inc. (ARO: News ) is due to post quarterly results. For the third quarter, the specialty retailer of casual apparel is expected to earn $0.28 per share versus $0.67 per share last year, with revenues estimated at $578.78 million. On the NYSE, ARO closed Tuesday's session at $14.74. (The stock rose almost 1% in Q1; MA(50)- $13.74; MA(100)- $13.61; 52-wk H/L $27.73/$9.16).

Also Coldwater Creek Inc. (CWTR: News ) is scheduled to report third-quarter results. Loss and revenue for the quarter are expected to be $0.33 per share and $185.58 million respectively. A year earlier, the company reported loss of $0.12 per share on revenues of $232.41 million. On Tuesday, the stock closed at $0.86. (The stock declined around 17% in Q1; MA(50)- $1.10; MA(100)- $1.12; 52-wk H/L $3.50/$0.80)

Last but not least in reporting results on Wednesday was Guess' Inc. (GES: News ). Earnings for the third quarter are expected to decline year-over-year to $0.73 per share from $0.75 per share. Also, the apparel and accessories company is anticipated to record revenues of $654.98 million compared to $613.90 million a year ago. The shares closed Tuesday at $26.99. (The stock plunged about 16% in Q1; MA(50)- $30.11; MA(100)- $32.57; 52-wk H/L $49.90/$25.99)

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