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American Eagle Outfitters Q4 sales top Street; raises outlook

A big increase in digital sales and increased demand for its Aerie brand helped American Eagle Outfitters end the year on a strong note, with the chain reporting its 12th straight quarter of same-store sales growth.

Total net revenue increased 12% to $1.23 billion for the quarter ended Jan. 28, which included an extra week, beating analysts’ estimates of $1.12 billion. The 53rd week provided an additional $43 million of sales.

Same-store sales rose 8%, also better than expected. Online sales rose more than 20% in the quarter.

Net income rose to $93.96 million, or 52 cents per share, from $54.62 million, or 30 cents per share, a year earlier. Excluding non-recurring items, including a benefit from recent tax legislation, adjusted earnings per share came to 44 cents, in line with estimates.

“I’m pleased that we ended 2017 with a strong quarter, achieving record sales and an EPS increase over last year,” said Jay Schottenstein, American Eagle’s CEO. “In the fourth quarter, we saw an acceleration in sales, continued sequential margin improvement and EPS growth that was on the high end of our guidance. The digital business continued its exceptional growth, rising over 20% in the quarter, and we were encouraged with improved brick-and-mortar trends, delivering positive sales comps in both American Eagle and Aerie stores.”

For the year, American Eagle had total revenue of $3.80 billion compared to $3.61 billion for the 52 week period last year. Consolidated comparable sales for the 53 weeks increased 4% over the same period last year.

The company ended the year with a total of 1,047 stores, which includes 109 Aerie stores. Internationally, the company ended the year with 214 licensed stores.

During the fiscal year, the company also incurred restructuring and related charges totaling $30 million, or approximately $0.11 per share. This consisted primarily of charges related to the closure or conversion of international owned and operated stores to licensed partnerships, home office restructuring activities and charges related to the planned exit of a joint business venture.

The company also raised its quarterly dividend 10%, to $0.1375 per share, marking the company’s 55th consecutive quarterly dividend.

Looking ahead, American Eagle is confident that it is positioned for growth.

“We started the spring season with positive momentum, positioning us well for strong results in 2018, Schottenstein said. “The dividend increase we announced today reflects confidence in our business, strong free cash flow and our continued commitment to delivering returns to shareholders.”

The company forecast same-store sales in its first quarter will rise by mid-single digits and expects EPS of 20-22 cents, above consensus views for 19 cents.
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