Bloomberg News

American Eagle Gains After Boosting Full-Year Profit View

August 22, 2012

American Eagle Outfitters Inc. (AEO:US), the teen-apparel chain that brought in a new chief executive officer in January, rose the most in three months after raising its full-year profit forecast amid increasing sales.

The shares gained (AEO:US) 6.2 percent to $22.13 at the close in New York, the biggest one-day jump since May 21. That’s the highest closing price since February 2008. The stock has rallied 45 percent this year.

CEO Robert Hanson, who joined American Eagle from Levi Strauss & Co., has been cutting back inventory, pushing for faster fashion-item turnaround and improving product assortments to boost sales and reduce markdowns. Net sales in the first half rose 14 percent to $1.45 billion from $1.27 billion a year earlier, according to today’s statement.

“We continue to drive for long-term performance improvement through fortifying our brands, further strengthening our products, marketing and customer experience, enhancing operational disciplines and pursuing growth across North America,” Hanson said in the statement.

Full-year profit will be $1.33 to $1.36 a share, up from a previous projection of $1.16 to $1.22 a share, the Pittsburgh- based company said today in a statement. Analysts anticipated $1.33, the average of 24 estimates (AEO:US) compiled by Bloomberg.

‘Leaner Inventories’

American Eagle, which operates more than 1,000 stores, said it sees comparable store sales rising in the mid-single digits in the third quarter and the low-single digits in the fourth quarter.

American Eagle has newer and more fashionable merchandise than rivals Abercrombie & Fitch Co. (ANF:US) and Aeropostale Inc. (ARO:US), “supported by its strength in denim as well as improvement in tops,” Dorothy Lakner, of Caris & Co. in New York, wrote in a note today. The company’s “intense focus on leaner inventories and faster fashion turns is the key to what can be even more substantial improvement to results.”

The company is set up for a strong back-to-school and holiday shopping season, according to Lakner, who has a buy rating on the shares.

Separately, Express Inc. (EXPR:US), a retailer targeting 20- to 30- year-olds, fell 11 percent to $15.03, the biggest one-day decline since May 22, after cutting its annual profit forecast. The shares have lost 25 percent this year.

Annual profit will be as much as $1.79 a share, reduced from a previous forecast of a maximum of $1.89 a share, the Columbus, Ohio-based company said today in a statement. The average of analysts’ estimates was $1.83 a share.

To contact the reporter on this story: James Callan in New York at jcallan2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • AEO
    (American Eagle Outfitters Inc)
    • $13.3 USD
    • -0.37
    • -2.78%
  • ANF
    (Abercrombie & Fitch Co)
    • $27.57 USD
    • -0.15
    • -0.54%
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