American Eagle Outfitters Reports Strong First Quarter Sales and EPS Growth

Sigue a La Raza en Facebook

Comparable Sales Increase 6% and EPS Rises 47% to $0.22

PITTSBURGH–(BUSINESS WIRE)–American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS of $0.22
for the first quarter ended April 30, 2016, a 47% increase from EPS of
$0.15 for the comparable quarter last year. The EPS figures refer to
diluted earnings per share.

Jay Schottenstein, Chief Executive Officer commented, “In a tough retail
environment, AEO delivered a strong first quarter, driven by compelling
merchandise, strategic investments and solid execution across the
organization. We achieved higher sales and profitability following
strong growth last year. I’m proud of how the team delivered, and I’m
optimistic about our future. We’ve built a strong model for success
based on our leading brands, and will remain focused on maximizing our
business and delivering profitable growth.”

First Quarter 2016 Results

  • Total net revenue increased 7% to $749 million from $700 million last
    year.
  • Consolidated comparable sales increased 6%, following a 7% increase
    last year.
  • Gross profit increased 12% to $293 million and rose 170 basis points
    to a rate of 39.2% of revenue. Buying, occupancy and warehousing
    leveraged 110 basis points, due primarily to occupancy cost leverage.
    The remaining 60 basis points of gross margin improvement was the
    result of favorable product costs, offset by an increase in markdowns.
  • Selling, general and administrative expense of $196 million increased
    6% from $185 million last year. Dollars increased due to investments
    in advertising, variable selling expense and strategic initiatives. As
    a rate to revenue, SG&A declined 30 basis points to 26.2%.
  • Operating income increased 40% to $59 million from $42 million last
    year, and the operating margin expanded by 180 basis points to 7.8% as
    a rate to revenue.
  • Other income was comprised of $5 million related to currency gains on
    cash held in Canadian dollars. This compares to other income of $6
    million last year.
  • EPS of $0.22 increased 47% from EPS of $0.15 last year.

Inventory

Total merchandise inventories at the end of the first quarter increased
slightly to $334 million. Second quarter 2016 ending inventory at cost
is expected to be approximately flat.

Capital Expenditures

For the quarter, capital expenditures totaled $24 million. The company
continues to expect capital expenditures to be in the range of $160 to
$170 million for Fiscal 2016.

Cash and Investments

The company ended the quarter with total cash of $239 million compared
to $327 million last year. Over the past year, the company has spent
$227 million in share buybacks, returned $95 million in dividends and
invested $136 million in capex, resulting in a lower cash balance.

Store Information

In the quarter, the company opened 3 stores and closed 4 stores.
Internationally, the company opened 6 licensed stores. For additional
first quarter actual and fiscal 2016 projected store information, see
the accompanying table.

Second Quarter Outlook

Based on an anticipated low single digit increase in comparable sales,
management expects second quarter 2016 EPS to be approximately $0.20 to
$0.21. This guidance excludes potential asset impairment and
restructuring charges, and compares to EPS of $0.17 last year.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at
4:15 p.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or
internationally dial 1-201-689-8562 or go to http://investors.ae.com
to access the webcast and audio replay. Also, a financial results
presentation is posted on the company’s website.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global
specialty retailer offering high-quality, on-trend clothing, accessories
and personal care products at affordable prices under its American Eagle
Outfitters® and Aerie® brands. The company operates more than 1,000
stores in the United States, Canada, Mexico, China, Hong Kong and the
United Kingdom, and ships to 81 countries worldwide through its
websites. American Eagle Outfitters and Aerie merchandise also is
available at 149 international stores operated by licensees in 22
countries. For more information, please visit www.ae.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements, which
represent our expectations or beliefs concerning future events,
including second quarter 2016 results. All forward-looking statements
made by the company involve material risks and uncertainties and are
subject to change based on factors beyond the company’s control. Such
factors include, but are not limited to the risk that the company’s
operating, financial and capital plans may not be achieved and the risks
described in the Risk Factor Section of the company’s Form 10-K and Form
10-Q filed with the Securities and Exchange Commission. Accordingly, the
company’s future performance and financial results may differ materially
from those expressed or implied in any such forward-looking statements.
The company does not undertake to publicly update or revise its
forward-looking statements even if future changes make it clear that
projected results expressed or implied will not be realized.

AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
       
 
April 30, January 30, May 2,
2016 2016 2015
(unaudited) (unaudited)
 
ASSETS
Cash and cash equivalents $ 238,976 $ 260,067 $ 326,907
Merchandise inventory 334,301 305,178 332,645
Accounts receivable 73,283 80,912 64,010
Prepaid expenses and other 82,767   77,218   74,132  
Total current assets 729,327   723,375   797,694  
Property and equipment, net 706,221 703,586 710,256
Intangible assets, net 51,432 51,832 47,419
Goodwill 17,520 17,186 13,243
Non-current deferred income taxes 38,903 64,927 67,703
Other assets 52,893   51,340   36,445  
Total Assets $ 1,596,296   $ 1,612,246   $ 1,672,760  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 202,692 $ 182,789 $ 203,239
Accrued compensation and payroll taxes 34,838 79,302 40,379
Accrued rent 77,477 77,482 78,741
Accrued income and other taxes 6,915 22,223 6,504
Unredeemed gift cards and gift certificates 38,508 48,274 37,385
Current portion of deferred lease credits 12,850 12,711 13,125
Other current liabilities and accrued expenses 45,206   40,901   49,415  
Total current liabilities 418,486   463,682   428,788  
Deferred lease credits 54,738 50,104 57,162
Non-current accrued income taxes 4,675 4,566 10,884
Other non-current liabilities 41,089   42,518   30,521  
Total non-current liabilities 100,502   97,188   98,567  
Commitments and contingencies
Preferred stock
Common stock 2,496 2,496 2,496
Contributed capital 583,689 590,820 563,709
Accumulated other comprehensive income (24,484 ) (29,868 ) (11,044 )
Retained earnings 1,675,031 1,659,267 1,545,674
Treasury stock (1,159,424 ) (1,171,339 ) (955,430 )
Total stockholders’ equity 1,077,308   1,051,376   1,145,405  
Total Liabilities and Stockholders’ Equity $ 1,596,296   $ 1,612,246   $ 1,672,760  
 
Current Ratio 1.74 1.56 1.86
 
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)
       
 
13 Weeks Ended
April 30, % of May 2, % of
2016   Revenue     2015   Revenue
 
Total net revenue $ 749,416 100.0% $ 699,520 100.0%

Cost of sales, including certain buying, occupancy and warehousing
expenses

455,964   60.8% 437,308   62.5%
Gross profit 293,452 39.2% 262,212 37.5%
Selling, general and administrative expenses 195,993 26.2% 185,091 26.5%
Depreciation and amortization 38,783   5.2% 35,127   5.0%
Operating income 58,676 7.8% 41,994 6.0%
Other income, net 4,935   0.7% 5,970   0.9%
Income before income taxes 63,611 8.5% 47,964 6.9%
Provision for income taxes 23,135   3.1% 18,909   2.7%
Net income 40,476   5.4% 29,055   4.2%
 
Net income per basic share $ 0.22 $ 0.15
Net income per diluted share $ 0.22 $ 0.15
 
Weighted average common shares
outstanding – basic 180,697 194,975
Weighted average common shares
outstanding – diluted 182,927 195,880
 
AMERICAN EAGLE OUTFITTERS, INC.
COMPARABLE SALES RESULTS BY BRAND
(unaudited)
       
First Quarter

Comparable Sales

2016 2015
American Eagle Outfitters, Inc. (1) 6% 7%
 
AE Total Brand (1) 4% 7%
aerie Total Brand (1) 32% 12%
 
(1) AEO Direct is included in consolidated and total brand
comparable sales.
 
AMERICAN EAGLE OUTFITTERS, INC.
STORE INFORMATION
(unaudited)
       
First Quarter Fiscal 2016
2016 Guidance
Consolidated stores at beginning of period 1,047 1,047
Consolidated stores opened during the period
AE Brand 2 15-20
aerie 1 10
Tailgate Clothing Co. 1-2
Consolidated stores closed during the period
AE Brand (1) (30) – (35)
aerie   (3)   (15)
Total consolidated stores at end of period 1,046 1,028-1,029
 
Stores remodeled and refurbished during the period 12 55 – 65
Total gross square footage at end of period 6,601,780 Not Provided
 
International license locations at end of period (1) 145 174
 
(1) International license locations are not included in the
consolidated store data or the total gross square footage
calculation.

Contacts

American Eagle Outfitters, Inc.
Kristen Zaccagnini, 412-432-3300