Bloomberg News

American Eagle Shares Jump as Sales, Profit Top Estimates

August 20, 2014

American Eagle Outfitters Inc. (AEO:US) shares jumped the most in more than two years after second-quarter sales and profit declined less steeply than predicted, signaling that the teen apparel chain’s comeback plan may be gaining traction.

Earnings amounted to 3 cents a share in the period, which ended Aug. 2, the Pittsburgh-based company said today in a statement. Analysts had been projecting a break-even quarter on average, according to data compiled by Bloomberg. Sales fell 2.3 percent to $710.6 million, beating the $689.7 million estimate.

Like its peers in the teen-clothing business, American Eagle has been coping with a broader retail slump and a lack of major new fashion trends. To get the company back on track, interim Chief Executive Officer Jay Schottenstein has been clearing out merchandise and closing underperforming stores. Schottenstein, who also serves as executive chairman, stepped into the interim CEO role after Robert Hanson left the chain in January.

“Although the second quarter results were slightly ahead of our expectations, they do not reflect our potential,” Schottenstein said in the statement. “We did, however, make significant progress on our priorities to build a sustainable path to higher profitability.”

The stock rose 12 percent to $12.98 at the close in New York, the biggest gain since May 2012. The shares had fallen 20 percent this year through yesterday.

American Eagle has reduced its inventory level by 15 percent compared with last year, and the cost of its merchandise per square foot -- a measure of how efficient a retailer is -- shrank 18 percent. Same-store sales declined 7 percent last quarter, better than the 8 percent drop estimated by Consensus Metrix.

The company expects third-quarter earnings of 17 cents to 19 cents a share, in line with the 18 cents projected by analysts. Same-store sales will probably decline in the mid-single-digits, American Eagle said.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear


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Companies Mentioned

  • AEO
    (American Eagle Outfitters Inc)
    • $13.63 USD
    • 0.10
    • 0.73%
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