Teen retailer beats Q4 earnings but gives downbeat view

American Eagle Outfitters topped earnings expectations amid a strong performance by its Aerie division, but issued a cautious note for fiscal 2017.



For the quarter ended Jan 28, the retailer reported better-than-expected earnings of $54.6 million, or 30 cents per share, down from $81.7 million, or 42 cents per share, a year earlier. Excluding one-time items, the chain has earnings of 39 cents per share, beating consensus analysts estimates by a penny.



Total net revenue decreased 1% to $1.10 billion from $1.11 billion last year, just missing expectations.



Total same-store sales grew 0.4% in the quarter, slightly better than expected, fueled by strong sales at its fast-growing intimates banner, Aerie. Same-store sales were down slighting at American Eagle’s namesake brand.



“Away from the balance sheet, the divergence in performance of AEO’s two brands is starker than ever,’ commented Carter Harrison, analyst at GlobalData Retail, commented that. “Aerie is a much younger brand and is still benefitting from its expansion into the market. We believe that its fresh take on lingerie – especially in the sense of using ordinary women as models and its body-positive advertising – is still striking a chord with consumers and is allowing it to take custom from other players. “



For the full year, American Eagle’s total net revenue increased 2% to $3.61 billion from $3.52 billion last year. Aerie saw double-digit sales growth throughout the year, the company said.



Consolidated comparable sales increased 3%, following a 7% increase last year.



The company ended the year with 943 namesake stores, which included 88 Aerie side-by-side locations. Additionally, it had 102 Aerie standalone stores and 176 licensed stores at year end.



Looking ahead, American Eagle said it expects a flat to a low-single-digit decline in comparable-store sales in its current first quarter and adjusted earnings of 15 cents to 17 cents a share. Analysts polled by Thomson Reuters were expecting 21 cents a share.