American Eagle Outfitters (AEO) says its net revenue totalled $1.3 billion in the third quarter to November 2, reflecting a 1 per cent year-on-year decline. Comparable sales increased by 3 per cent, following 5 per cent growth in the prior year.
Jay Schottenstein, AEO’s executive chairman and CEO, said this decrease was influenced by a retail calendar shift with an adverse effect of nearly $45 million.
“Building on our positive performance in the first half of the year, third-quarter results provide another proof point of the effectiveness of our Powering Profitable Growth Plan,” Schottenstein continued,
“Led by a strong back-to-school season, we achieved comparable sales growth across brands and channels and delivered adjusted operating income at the high end of our guidance range.”
Athleisure brand Aerie saw comparable sales rise by 5 per cent, although this was lower than a 12 per cent increase last year. At the same time, the American Eagle brand posted 3 per cent growth in comparable sales, an improvement over the 2 per cent reported last year.
Gross profit reached $527 million, down 3 per cent from last year, with gross margin down from 41.8 per cent to 40.9 per cent, due to increased markdowns and expenses associated with the retail calendar shift.
Selling, general, and administrative expenses totalled $351 million, down 3 per cent and leveraged by 50 basis points, thanks partly to reduced compensation, lower professional fees, and decreased maintenance costs, despite higher advertising expenses.
The company noted an $18 million impairment and restructuring charge in the third quarter, of which $6 million was non-cash. This was part of ongoing profit improvement initiatives, including transitioning Hong Kong retail operations to a licensed model.
Looking ahead, AEO anticipates its fourth-quarter comparable sales to be up about 1 per cent, with total revenue expected to decline by 4 per cent. This includes an estimated $85 million impact from the retail calendar shift and one less selling week.
“We have entered the well-positioned holiday season, with our leading brands offering high-quality merchandise, great gifts, and an outstanding shopping experience across channels,” Schottenstein added.
“Key selling periods have seen a positive customer response, yet we remain mindful of potential choppiness during non-peak periods. The teams are focused on delivering the quarter, and with our strong year-to-date performance, we remain confident in achieving our long-term strategic objectives.”
