American Eagle Outfitters had second-best holiday season in its history

American Eagle Outfitters (AEO) is feeling positive about its fourth quarter even amid a slight dip from last year.

The apparel and accessories retailer, parent company of American Eagle and Aeire, said that its fourth quarter-to-date brand revenue, through Saturday, January 7, 2023, is down approximately 3%, on the higher end of its expectations. American Eagle tracking slightly ahead and Aerie is in line with expectations, the company said.  In November,  AEO forecast that fourth-quarter revenues would be down by mid-single digits.

The company said its Quiet Logistics business is expected to add 2 percentage points to its fourth-quarter brand revenue. AEO acquired Quiet  acquired at the end of 2021 (when it was known as Quiet Logistics) for approximately $350 million in cash.

[Read More: AEO subsidiary Quiet Platforms offers full supply chain visibility]

AEO expects gross margins to be on the high end of its guidance of 32-33%, reflecting controlled promotions fueled by strong inventory management. Inventory is expected to be down compared to last year, in-line with prior guidance.

“Following record performance last year, we achieved our second highest holiday sales period in company history,” said Jay Schottenstein, executive chairman and CEO. “I am pleased to see profit margins tracking at the high end of our expectations, powered by excellent inventory management and promotional discipline “Looking ahead, we are focused on delivering a leading customer experience across brands, while prioritizing free cash flow and shareholder returns.”

For its most recent quarter, ended Oct. 29, 2022, AEO reported $81.2 million in earnings, or $0.42 per share, compared to $152.22 million, or $0.74 per share, in the year-ago quarter.  Total net revenue fell 2.4% to $1.24 billion; consolidated store revenue declined 4%.

“While significant progress has been made in right-sizing inventory, management is taking a cautious view given what is likely to be a highly promotional holiday season,” Schottenstein said in the company’s third-quarter earnings release.

The company will release fourth quarter and fiscal 2022 results on March 1, 2023.

At the end of its third quarter, AEO had a total of 1,179 stores and more than 260 international locations operated by licensees in 26 countries.