American Eagle Outfitters Q4 tops estimates; looks to add $700M in sales
American Eagle Outfitters Inc. has set a goal of becoming a $6 billion business in the next three years.
On the heels of stronger-than-expected fourth-quarter results, the teen apparel and intimates retailer announced a new long-term strategy, dubbed Powering Profitable Growth, to deliver $5.7 to $6.0 billion in revenue by the end of fiscal 2026 and an approximate 10% operating margin.
The plan, which calls for adding more than $700 million in sales, includes enhancing American Eagle’s brands by growing its namesake banner and accelerating the expansion of Aerie and its activewear banner, Offline. In addition, the retailer will focus on financial discipline and optimizing its operations to fuel growth and long-term profit.
“Amplifying American Eagle and Aerie’s stronghold in casual apparel is at the very center of our strategic plan,” said Jay Schottenstein, executive chairman and CEO. “We see incredible growth opportunities as we elevate key businesses and expand into category adjacencies at American Eagle, fuel the #AerieReal movement in under-penetrated markets and accelerate Offline’s significant potential in activewear. These efforts will be supported by a sharp focus on profit expansion.”
The company also reported fourth-quarter earnings that beat analysts’ expectations amid strong demand and lower markdowns.
Net income was $6.32 million, or $0.03 cents per share, for the quarter ended Feb. 3, compared with $54.6 million, or $0.28 cents per share for the year-ago period. Excluding one-time items, adjusted earnings were $0.61per share, topping analysts’ estimates of $0.50 per share. (During the quarter, American Eagle recorded a $131 million impairment and restructuring charge related to the refocusing of its Quiet Platform logistics business to better align with its long-term strategy and core capabilities as a regionalized fulfillment center network.)
Sales rose 12% to $1.68 billion, ahead of estimates of $1.67 billion. Store revenue rose 10%. Total digital revenue increased 19%.
By banner, Aerie’s revenue rose 16% to $538 million, with comp sales up 13%, and American Eagle’s rose 11% $1.1 billion, with comp sales growing 6%.
“I am proud of how the teams executed in the fourth quarter,” stated Schottenstein in the earnings release. “Customers responded well to our strong merchandise collections fueling positive results across brands and channels. We are entering 2024 with momentum and from a position of strength with an exciting line-up of innovation and customer engagement initiatives.”
In the current quarter, American Eagle expects sales to be up by a mid-single digit percentage. For the full year, it expects sales to be up 2% to 4%.
The company ended its fiscal year with 1,182 stores, including 851 American Eagle stores, 310 Aerie locations (includes Offline), 16 Todd Synder stores and five Unsubscribed stores.