American Eagle Outfitters to ramp up Aerie store expansion

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American Eagle Outfitters to ramp up Aerie store expansion

By Marianne Wilson - 08/29/2018
American Eagle Outfitters, which on Wednesday reported its 14th consecutive quarter of same-store sales growth, is bullish on its fast-growing intimate apparel brand Aerie.

In the chain’s second-quarter earnings call, American Eagle CEO Jay Schottenstein described Aerie’s performance as “nothing short of spectacular, marking nearly four years of consecutive double-digit growth.

“Aerie represents a meaningful growth engine for AEO [American Eagle Outfitters],” he said. “Anchored on the body positivity movement, we continue to register record growth and market share gain across the intimate space. … Our sights are set on reaching our next brand milestone of $1 billion in sales.”

To help reach that target, the retailer plans to ramp up Aerie’s store opening plans for next year with up to 50 to 80 locations, including a number of new markets.

“Stores remain an important tool in building the Aerie brand and we see tremendous runway for growth,” Jennifer Foyle, global brand president, Aerie, said on the call. She added that Aerie’s online business is “simply spectacular, producing a 30% sales gain in the quarter.”

American Eagle Outfitters topped analysts’ estimates in the second quarter, buts its third-quarter earnings outlook fell short. The teen apparel retailer reported net income of $60.3 million, or 34 cents a share, in the quarter, up from $21.2 million, or 12 cents a share, in the year-ago period. Analysts had expected earnings of 31 cents a share.

Revenue rose to $964.9 million from $844.6 million, which was better than expected. Consolidated same-store sales rose 9%, also more than expected.

American Eagle’s comparable sales increased 7%. Aerie’s comparable sales increased 27%, lower than the 30% increase analysts had expected.

“The second quarter results exceeded our expectations, delivering record sales and 79% growth in adjusted earnings, “ stated Schottenstein in a release. “This marked our 14th consecutive quarter of comparable sales growth, with the American Eagle and Aerie brands posting positive results across both stores and e-commerce.

The retailer is now expecting third-quarter EPS of 45 cents to 47 cents and same-store sales growth in the high-single digits. Analysts were looking for third-quarter EPS of 49 cents.

During the quarter, the company opened four American Eagle stores and had no closures, ending with 939 American Eagle stores, including 131 Aerie side-by-side locations. The company opened one Aerie stand-alone store and closed one, ending with 109 Aerie stand-alone stores.