American Eagle Outfitters Inc. (AEO:US), the teen-apparel chain that brought in a new chief executive officer in January, plans to reward shareholders with the company’s biggest special dividend as sales rise.
American Eagle will distribute $1.50 a share in addition to its regular quarterly payout of 11 cents a share to stockholders of record on Sept. 26, the Pittsburgh-based company said in a statement today. The one-time payment is about $295 million based on shares outstanding, and the company’s first such dividend since 2010, according to data compiled (AEO:US) by Bloomberg.
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, propelling a 49 percent rally in the shares this year through yesterday.
“The special cash dividend is a component of our capital allocation plan, which balances continued investment in our business with top tier shareholder returns,” Hanson said in today’s statement.
American Eagle rose 3.3 percent to $23.46 at the close in New York, the highest closing price since Feb. 1, 2008. It was the biggest one-day increase since Aug. 22, when the company reported second-quarter earnings. American Eagle has gained 53 percent this year.
American Eagle had $696.1 million of cash and equivalents as of July 28, according to its most recent quarterly filing.
The retailer, 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, according to its Aug. 22 earnings statement.
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