American Eagle Outfitters Q4 EPS rises, net revenue up 12 percent

American Eagle Outfitters, Inc. reported EPS for the 14 weeks ended February 3, 2018 of 0.52 dollar compared to 0.30 dollar for the 13 weeks ended January 28, 2017. For the same periods, adjusted EPS was 0.44 dollar compared to adjusted EPS of 0.39 dollar last year. Adjusted EPS for the quarter increased 13 percent compared to last year. For the 53 weeks, the company reported EPS of 1.13 dollars compared to 1.16 dollars for the 52 weeks last year. For the same periods, adjusted EPS was 1.16 dollars compared to 1.25 dollars.

Commenting on the company’s performance, Jay Schottenstein, AEO’s Chief Executive Officer, said in a media release: “I’m pleased that we ended 2017 with a strong quarter, achieving record sales and an EPS increase over last year. Looking ahead to 2018, our brands are well‐positioned for growth. The dividend increase we announced today reflects confidence in our business, strong free cash flow and our continued commitment to delivering returns to shareholders.”

Fourth quarter revenue increases 12 percent

Total net revenue for the quarter increased 12 percent to 1.23 billion dollars compared to 1.10 billion dollars for the 13 week period last year. The company said, 53rd week provided an additional 43 million dollars of sales. Consolidated comparable sales for the period increased 8 percent.

Gross profit increased to 425 million dollars from 389 million dollars. The gross margin rate decreased 80 basis points to 34.6 percent of revenue compared to 35.4 percent last year. The reduction in margin rate reflects higher promotional activity. Operating income of 116 million dollars included 2 million dollars of restructuring charges. Adjusted operating income increased 10 percent to 118 million dollars from 107 million dollars last year, deleveraging 20 basis points to 9.6 percent as a rate to revenue. Adjusted EPS of 0.44 dollar increased 13 percent compared to 0.39 dollar last year.

FY17 net revenues rose 5 percent

Total net revenue for the 53 weeks increased 5 percent to 3.80 billion dollars compared to 3.61 billion dollars for the 52 week period last year. Consolidated comparable sales increased 4 percent.

Gross profit was up slightly to 1.37 billion dollars or 36.1 percent as a rate to revenue. Excluding 2 million dollars of restructuring charges, adjusted gross profit as a rate to revenue was 36.2 percent and deleveraged 170 basis points to last year. Operating income was 303 million dollars including 22 million dollars of restructuring and related charges. Adjusted operating income decreased 8 percent to 325 million dollars, deleveraging 120 basis points to 8.6 percent. Adjusted EPS of 1.16 dollars decreased 7 percent compared to adjusted EPS of 1.25 dollars last year.

The company ended the year with a total of 1,047 stores opening 15 AE stores and closing 25, ending the year with 933 AE stores, which included 116 Aerie side-by-side locations. Additionally, the company opened 15 Aerie standalone stores and closed eight, ending the year with 109 Aerie standalone stores. Internationally, the company ended the year with 214 licensed stores.

Q1 comparable sales projected to rise mid-single digits

Based on an anticipated comparable sales increase in the mid-single digits, management expects first quarter 2018 EPS to be approximately 0.20 dollar to 0.22 dollars. Last year’s first quarter reported EPS of 0.14 dollar included approximately 0.02 dollar per share of restructuring and related charges. Excluding these items, last year’s first quarter adjusted EPS was 0.16 dollar.

The company said, as a result of our strong cash position, positive free cash flow, and the benefits associated with US tax legislation, it is raising the quarterly dividend 10 percent to 0.1375 dollar per share. The 0.1375 dollar dividend was declared on March 7, 2018 and is payable on April 27, 2018 to stockholders of record at the close of business on April 13, 2018.

Picture:American Eagle website


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