American Eagle soars past Street in Q4; promotes brand heads

Pittsburgh – American Eagle Outfitters Inc. soared past Wall Street expectations in the fourth quarter, helped by reduced promotions and discounts and the elimination of asset impairments. The teen retailer on Wednesday posted better-than-expected fourth quarter results and issued an upbeat outlook for the first quarter, projecting earnings of $0.09 to $0.12 per share, versus analysts' estimates of $0.07 per share.



In other news, American Eagle has promoted chief merchandising officers, Chad Kessler and Jennifer Foyle to the positions of global brand presidents for the American Eagle Outfitters and Aerie brands, respectively. In this newly-created structure, they will have responsibility for all brand design and merchandising functions.



For the quarter ended Jan. 31, American Eagle posted net income of $61.6 million roughly six times the $10.5 million recorded in the year ago period.



Total net revenue increased 3% to $1.07 billion from $1.04 billion. Consolidated same-store sales were flat.



“After a tough start to fiscal 2014, I’m pleased to see our initiatives and business priorities begin to deliver results,” said Jay Schottenstein, interim CEO. “We achieved a solid fourth quarter, exceeding our expectations. The team executed well through an incredibly challenging macro environment. Improved merchandise assortments, combined with a better customer experience, drove strengthened sales trends and we successfully reduced promotions.”



During fiscal 2015, American Eagle plans to open 20-25 new stores but close 70 stores, for a net closure of 50 stores. The retailer also plans to remodel 45 stores.



The company expects capital expenditures to be approximately $150 million in 2015. This includes the chain-wide roll-out of a new Oracle point-of-sale system, supporting technologies and the completion of a new fulfillment center, as well as new and remodeled store investments



For the full year, American Eagle’s net income dropped 3% to $80.32 million from $82.98 million. Total net revenue decreased 1% to $3.28 billion from $3.31 billion. Same-store sales decreased 5%.



The company also felt the impact of an after-tax hit of $8.5 million due to an arrangement in which a third-party operator assumed the leases for stores that had been part of its 77kids children’s operation, which American Eagle exited in 2012. The retailer became liable for obligations under the lease agreements when the third-party operator didn’t fulfill them.