Retail

American Eagle Outfitters Earnings Make the Case Against Recession

Chris Lange

Published: June 5, 2019 8:40 am

Last Updated: January 30, 2020 8:00 pm

American Eagle Outfittters Inc. (NYSE: AEO) reported its fiscal first-quarter financial results before the markets opened on Wednesday. While some retailers are acting as if they face a recession, American Eagle Outfitters seems to be bucking this trend after this earnings report.

The retailer said that it had $0.24 in earnings per share (EPS) and $886.3 million in revenue, which compares with consensus estimates of $0.21 per share and $854.88 million. The same period of last year reportedly had EPS of $0.23 on $822.96 million in revenue.

During the most recent quarter, total revenues increased 8% year over year. Consolidated comparable sales increased 6%, following a 9% comparable sales increase last year.

By brand, American Eagle’s comparable sales increased 4%, following a 4% increase last year. Aerie’s comparable sales increased 14%, building on a 38% increase last year and marking the 18th consecutive quarter of double-digit comps.

Looking ahead to the fiscal second quarter, the company expects to see EPS in the range of $0.30 to $0.32. Consensus estimates call for $0.35 in EPS and $1.01 billion in revenue for the coming quarter.

Jay Schottenstein, board chair and chief executive, commented:

2019 is off to a positive start and we are especially pleased to deliver first quarter sales and EPS growth ahead of our expectations. American Eagle and Aerie continue to leverage strong brand equity, compelling product, and leading customer engagement across stores and digital, resulting in our 17th consecutive quarter of positive comparable sales. AE’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.

Shares of American Eagle Outfitters closed Tuesday at $18.52, in a 52-week range of $17.00 to $29.88. The consensus price target is $24.86. Following the announcement, the stock was up over 6% at $19.80 in early trading indications Wednesday.