Retail

Why American Eagle Outfitters Is Bucking the Retail Trend

Chris Lange

Published: August 23, 2017 10:45 am

Last Updated: January 12, 2020 8:52 am

American Eagle Outfitters Inc. (NYSE: AEO) reported its fiscal second-quarter financial results before the markets opened on Wednesday. It seems that this retailer was able to buck the trend with these most recent results, and on the back of solid comparable sales.

The company said that it had $0.19 in earnings per share (EPS) and $845 million in revenue. That compared with consensus estimates from Thomson Reuters of $0.16 in EPS and revenue $824.04 million. The same period of last year reportedly had EPS of $0.23 and $822.59 million in revenue.

Comparable sales rose 2% in the quarter, largely driven by its lingerie line Aerie, which saw its comparable sales rise by 26%. This number is absolutely crushing, even if total sales don’t match up with competitors. For a basis of comparison, Victoria’s Secret — the lingerie segment of L Brands — had a 14% decline in comparable sales this quarter.

In terms of the outlook for the third quarter, American Eagle Outfitters expects to see EPS in the range of $0.36 to $0.38. Consensus estimates call for $0.38 in EPS and $950.3 million in revenue.

On the books, American Eagle Outfitters cash and cash equivalents totaled $192.56 million at the end of the quarter, down from $378.61 million at the end of the previous fiscal year.

Jay Schottenstein, CEO of American Eagle, commented:

In the second quarter, we achieved sales and earnings above our expectations in a challenging retail environment. Sales trends improved and I’m proud of the continued growth in jeans, bottoms, women’s apparel and Aerie, with encouraging signs in men’s tops beginning to emerge. Our brands are strong and we have significant opportunity for further growth. I’m optimistic as we enter the second half of the year, and we remain focused on delivering product innovation, strengthening customer engagement and improving profit flow-through.

Shares of American Eagle were last seen up about 5% at $11.80, with a consensus analyst price target of $12.78 and a 52-week range of $10.23 to $19.02.