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American Eagle Q3 sales hit $1 billion mark, lowers quarterly outlook

Despite strong back-to-school and fall seasons that helped American Eagle Outfitters hit its first $1 billion third quarter, the company is hedging its bets for the upcoming fourth quarter.

The teen apparel retailer reported net income of $85.5 million, or 48 cents a share, for the quarter ended Nov. 3. This is up from $63.7 million, or 36 cents a share, in the year-ago period. Analysts expected earnings of 47 cents a share.

Revenue rose to $1 billion in third quarter for the first time. However, this just missed expectations of $1.02 billion. Consolidated same-store sales rose 8%, beating a 3% increase last year.

American Eagle’s comparable sales increased 5%, building on a 1% increase last year. Aerie’s comparable sales increased 32%, following a 19% increase last year. This also marks the brand’s 16th consecutive quarter of double-digit comp growth.

“I am proud to announce another outstanding performance this period for AEO [American Eagle Outfitters], marking record sales and our first $1 billion third quarter,” said American Eagle CEO Jay Schottenstein. “American Eagle and Aerie had extremely well-executed back-to-school and fall seasons, fueling strong sales across stores and double-digit growth in digital, on lower promotional activity across channels.”

Going forward, the retailer expects its fourth quarter EPS to range between 40 cents to 42 cents, and comparable sales in the positive mid- single digits and total revenue growth in the low single digits. Analysts were looking for fourth quarter EPS of 47 cents. This guidance reflects approximately $60 million of lost revenue and 7 cents of reduced EPS due to operating with one less week in the fourth quarter than last year as a result of the 53rd week in fiscal 2017.

During the quarter, the company opened five American Eagle stores and closed three, ending with 941 stores, including 142 Aerie side-by-side locations. The company opened two Aerie stand-alone stores and closed 1, ending with 110 Aerie stand-alone stores. Internationally, the company ended the quarter with 223 licensed stores.

The holiday season is off to a positive start,” Schottenstein added. “Looking forward, we will leverage our momentum and brand strength as we continue to drive growth and deliver returns to our shareholders.”
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