American Eagle disappoints with lower-than-expected fourth-quarter revenues

By

Robin Driver

Published
Mar 7, 2019

US apparel and accessories retailer American Eagle Outfitters, Inc. reported mixed fourth-quarter results on Wednesday, posting higher-than-expected earnings, while, despite strong growth at its Aerie brand, revenues came in under Wall Street estimates.

 
The company’s total net revenue for the fourth quarter ended February 2, 2019, increased $15 million or 1% to $1.24 billion, compared to $1.23 billion in the prior-year period. According to figures cited by MarketsInsider, analysts had expected American Eagle to report revenues of $1.26 billion.
 
Quarterly comparable sales rose 6%, making for the group’s 16th consecutive quarter of positive comparable sales.

Comparable sales at the company’s flagship American Eagle brand increased 3%, on top of the 5% rise reported in Q4 2017, while the Aerie label continued to see accelerated comps growth of 23%, building on the 34% reported in the prior-year period.
 
The company’s net income for the quarter totaled $76.2 million, or $0.43 per diluted share, compared to $94.0 million, or $0.52 per diluted share in the equivalent period in the previous year.
 
Full-year net revenues increased $240 million or 6% to a record $4.0 billion, compared to $3.8 billion in 2017. Comparable sales rose 8% across the whole company, 5% at the American Eagle brand and 29% at Aerie.

Annual net income totaled $261.9 million, or $1.47 per diluted share, compared to $204.2 million, or $1.13 per diluted share.
 
“As we head into 2019, we will continue to leverage the strength of our brands, selling channels and the team’s commitment to continually raising the bar for our customers,” commented American Eagle Outfitters Chairman and CEO Jay Schottenstein in a release. “I’m extremely proud of our results over the past several years. The strength of our balance sheet and free cash flow enables us to make important investments in our business to fuel market share gains, future growth and returns to our shareholders.”

For the first quarter of fiscal 2019, American Eagle Outfitters expects comparable sales to increase in the low single digits. EPS is predicted to be between $0.19 and $0.21.
 
The company finished the year with 1,055 stores across its brand portfolio.
 
Having recently announced the expansion of its American Eagle and Aerie brands to Europe through a licensing deal with AEO EU, as well as projects pushing the growth of its retail footprint in India, the group has now further revealed that it is planning to open between 60 and 75 Aerie locations in 2019.
 
Following the publication of American Eagle Outfitters’ financial results, shares in the company fell 4% in the extend session on Wednesday.