American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS of
$0.41 for the third quarter ended October 29, 2016, a 17% increase
from EPS from continuing operations of $0.35 for the comparable
quarter last year. The EPS figures refer to diluted earnings per
share.
“I’m pleased that we continued to deliver strong results in a
tough retail climate, with the third quarter reaching record sales
and marking the 9th consecutive quarter of profit improvement,”
said Chief Executive Officer, Jay Schottenstein. “We are sharply
focused on delivering the best innovation, consistent quality and
outstanding value to our customers day-in and day-out. The holiday
season is off to a solid start and our brands are well-positioned.
We will continue to leverage our leading capabilities to maintain
momentum and build on the progress we’ve made over the past few
years.”
Third Quarter 2016 Results
- Total net revenue increased 2% to $941
million from $919 million last year.
- Consolidated comparable sales increased
2%, following a 9% increase last year.
- Total gross profit increased 3% to $378
million from $368 million last year. The gross margin rose 20 basis
points to a rate of 40.2%. The increase was the result of an
improved IMU, partially offset by a slight increase in markdowns.
Buying, occupancy and warehousing costs were flat as a rate to
sales.
- Selling, general and administrative
dollars were down slightly to $220 million and leveraged 60 basis
points to a rate of 23.4%. Increased investments in advertising
were offset by well-controlled expenses.
- Operating income increased 8% to $118
million from $109 million last year, and the operating margin
expanded by 70 basis points to 12.6% as a rate to revenue.
- EPS of $0.41 increased 17% from EPS
from continuing operations of $0.35 last year. Net income per share
last year, which included a $0.03 EPS gain from discontinued
operations, was $0.38.
Inventory
Total merchandise inventories at the end of the third quarter
increased 3% to $493 million, with ending units down 5%. Fourth
quarter 2016 ending inventory at cost is expected to be up in the
high-single digits, with units expected to be down in the
mid-single digits. Strong inventory management is driving units
down, which is offset by an increase in the average unit cost due
to product mix and continued investments in merchandise
composition.
Capital Expenditures
For the quarter, capital expenditures totaled $47 million and
$108 million for the year to date period. We continue to expect
fiscal 2016 capital expenditures to be approximately $160 million,
with nearly half related to store remodeling projects and new
openings, and the remaining half supporting digital and
omni-channel investments.
Cash and Investments
We ended the quarter with total cash of $292 million compared to
$363 million last year. Lower cash was the result of $212 million
in share buybacks in the fourth quarter last year. In addition, we
returned $92 million in cash dividends and spent $152 million in
capital expenditures over the past year.
Store Information
In the quarter, we opened 4 AE stores, 6 aerie stores and 1
Tailgate store. In the same period, 3 AE stores were closed.
Additionally, we opened 8 licensed locations, while closing 3
licensed locations. For additional third quarter actual and fiscal
2016 projected store information, see the accompanying table.
Fourth Quarter Outlook
We are providing fourth quarter EPS guidance of $0.37 to $0.39
based on comparable sales in the range of flat to a low single
digit increase. This guidance excludes potential asset impairment
and restructuring charges. Last year’s fourth quarter reported EPS
of $0.42 included approximately $0.07 of non-recurring items,
including a gain on the sale of a distribution center and a lower
tax rate related to income tax settlements, federal tax credits and
tax strategies. Excluding these items, last year’s fourth quarter
adjusted EPS was $0.35. See the accompanying table for the GAAP to
Non-GAAP reconciliation.
Conference Call and Supplemental Financial
Information
Today, management will host a conference call and real time
webcast at 9:00 am Eastern Time. To listen to the call, dial
1-877-407-0789 or internationally dial 1-201-689-8562 or go to
http://investors.ae.com to access the webcast and audio replay.
Also, a financial results presentation is posted on our
website.
Non-GAAP Measures
This press release includes information on non-GAAP financial
measures (“non-GAAP” or “adjusted”), including earnings per share
information and the consolidated results of operations excluding
non-GAAP items. These financial measures are not based on any
standardized methodology prescribed by U.S. generally accepted
accounting principles (“GAAP”) and are not necessarily comparable
to similar measures presented by other companies. The company
believes that this non-GAAP information is useful as an additional
means for investors to evaluate the company’s operating
performance, when reviewed in conjunction with the company’s GAAP
financial statements. These amounts are not determined in
accordance with GAAP and therefore, should not be used exclusively
in evaluating the company’s business and operations.
About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global
specialty retailer offering high-quality, on-trend clothing,
accessories and personal care products at affordable prices under
its American Eagle Outfitters® and Aerie® brands. The company
operates more than 1,000 stores in the United States, Canada,
Mexico, China, Hong Kong and the United Kingdom, and ships to 81
countries worldwide through its websites. American Eagle Outfitters
and Aerie merchandise also is available at more than 160
international locations operated by licensees. For more
information, please visit www.ae.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking
statements, which represent our expectations or beliefs concerning
future events, including fourth quarter 2016 results. All
forward-looking statements made by the company involve material
risks and uncertainties and are subject to change based on factors
beyond the company's control. Such factors include, but are not
limited to the risk that the company’s operating, financial and
capital plans may not be achieved and the risks described in the
Risk Factor Section of the company's Form 10-K and Form 10-Q filed
with the Securities and Exchange Commission. Accordingly, the
company's future performance and financial results may differ
materially from those expressed or implied in any such
forward-looking statements. The company does not undertake to
publicly update or revise its forward-looking statements even if
future changes make it clear that projected results expressed or
implied will not be realized.
AMERICAN EAGLE
OUTFITTERS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in
thousands)
October 29, January 30,
October 31, 2016 2016 2015
(unaudited) (unaudited) ASSETS Cash and
cash equivalents $ 291,667 $ 260,067 $ 363,116 Merchandise
inventory 492,602 305,178 479,729 Accounts receivable 74,812 80,912
63,775 Prepaid expenses and other 77,768 77,218 78,091 Total
current assets 936,849 723,375 984,711 Property and equipment, net
708,488 703,586 709,261 Intangible assets, net 49,993 51,832 46,756
Goodwill 17,315 17,186 12,978 Non-current deferred income taxes
49,627 64,927 82,688 Other assets 60,268 51,340 51,442 Total Assets
$
1,822,540 $
1,612,246 $
1,887,836
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $
314,111 $ 182,789 $ 304,989 Accrued compensation and payroll taxes
56,939 79,302 66,466 Accrued rent 79,255 77,482 77,892 Accrued
income and other taxes 29,373 22,223 43,721 Unredeemed gift cards
and gift certificates 30,130 48,274 28,259 Current portion of
deferred lease credits 12,783 12,711 13,055 Other current
liabilities and accrued expenses 40,288 40,901 43,761 Total current
liabilities 562,879 463,682 578,143 Deferred lease credits 47,677
50,104 53,877 Non-current accrued income taxes 4,573 4,566 4,876
Other non-current liabilities 35,451 42,518 41,667 Total
non-current liabilities 87,701 97,188 100,420 Commitments and
contingencies - - - Preferred stock - - - Common stock 2,496 2,496
2,496 Contributed capital 597,919 590,820 588,293 Accumulated other
comprehensive income (31,160) (29,868) (19,797) Retained earnings
1,744,227 1,659,267 1,602,550 Treasury stock (1,141,522)
(1,171,339) (964,269) Total stockholders' equity 1,171,960
1,051,376 1,209,273 Total Liabilities and Stockholders' Equity $
1,822,540 $
1,612,246 $
1,887,836
Current Ratio 1.66 1.56 1.70
AMERICAN EAGLE
OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)
13 Weeks Ended October 29,
% of October 31, % of 2016
Revenue 2015
Revenue Total net revenue $
940,609 100.0% $ 919,072 100.0%
Cost of sales, including certain buying,
occupancy and warehousing expenses
562,793 59.8% 551,540 60.0% Gross profit 377,816
40.2% 367,532 40.0% Selling, general and administrative expenses
219,912 23.4% 220,798 24.0% Depreciation and amortization 39,636
4.2% 37,623 4.1% Operating income 118,268 12.6%
109,111 11.9% Other expense, net 603 0.0% 521 0.0%
Income before income taxes 118,871 12.6% 109,632 11.9% Provision
for income taxes 43,111 4.6% 40,367 4.4% Income from
continuing operations 75,760 8.0% 69,265 7.5% Gain
from discontinued operations, net of tax - 0.0% 4,847
0.5% Net income $ 75,760 8.0% $ 74,112 8.0%
Basic income per common share: Income from continuing operations $
0.42 $ 0.35 Gain from discontinued operations - 0.03 Net income per
basic share $ 0.42 $ 0.38 Diluted income per common share:
Income from continuing operations $ 0.41 $ 0.35 Gain from
discontinued operations - 0.03 Net income per diluted share $ 0.41
$ 0.38
Weighted average common shares outstanding
- basic
181,819 195,215
Weighted average common shares outstanding
- diluted
184,615 197,478
39 Weeks Ended October
29, % of October 31, % of 2016
Revenue
2015 Revenue Total net
revenue $ 2,512,619 100.0% $ 2,416,020 100.0%
Cost of sales, including certain buying,
occupancy and warehousing expenses
1,534,194 61.1% 1,501,237 62.1% Gross profit 978,425
38.9% 914,783 37.9% Selling, general and administrative expenses
615,503 24.5% 601,680 24.9% Depreciation and amortization 117,319
4.6% 108,861 4.5% Operating income 245,603 9.8%
204,242 8.5% Other income, net 2,403 0.1% 4,254 0.1%
Income before income taxes 248,006 9.9% 208,496 8.6% Provision for
income taxes 90,179 3.6% 76,915 3.2% Net income
157,827 6.3% 131,581 5.4% Gain (loss) from
discontinued operations, net of tax - 0.0% 4,847 0.2%
Net income $ 157,827 6.3% $ 136,428 5.6% Basic
income per common share: Income from continuing operations $ 0.87 $
0.67 Gain from discontinued operations - 0.02 Net income per basic
share $ 0.87 $ 0.69 Diluted income per common share: Income
from continuing operations $ 0.86 $ 0.67 Gain from discontinued
operations - 0.02 Net income per diluted share $ 0.86 $ 0.69
Weighted average common shares outstanding
- basic
181,196 195,308
Weighted average common shares outstanding
- diluted
183,651 197,017
AMERICAN EAGLE OUTFITTERS, INC. GAAP TO NON-GAAP
RECONCILIATION (Dollars in thousands, except per share amounts)
(unaudited)
13 Weeks Ended
January 30, 2016
Selling, general&
administrativeexpenses
Operatingincome (loss)
Net income
Dilutedincome
percommonshare
GAAP Basis $ 233,020 $ 115,636 $ 81,706 $ 0.42 % of Revenue 21.1 %
10.5 % 7.4 % Gain on Sale of Warrendale DC (1): 9,422 (9,422 )
(6,793 ) (0.03 ) Tax (2): - -
(7,443 ) (0.04 ) Non-GAAP Basis $ 242,442 $ 106,214 $
67,470 $ 0.35 % of Revenue 21.9 % 9.6 % 6.1 % (1) - $9.4
million pre-tax gain on sale of previously closed Warrendale
Distribution center. (2) - GAAP tax rate included income tax
settlements, higher federal tax credits, and tax strategies.
Excluding the impact of these items would have resulted in a 35.1%
tax rate versus reported rate of 27.9%.
AMERICAN EAGLE OUTFITTERS, INC. COMPARABLE
SALES RESULTS BY BRAND (unaudited)
Third Quarter
Comparable Sales 2016 2015 American Eagle
Outfitters, Inc. (1) 2% 9% AE Total Brand (1) 0.4% 8% aerie
Total Brand (1) 21% 21%
YTD Third Quarter
Comparable Sales 2016 2015 American Eagle
Outfitters, Inc. (1) 4% 9% AE Total Brand (1) 2% 9% aerie
Total Brand (1) 25% 17% (1) AEO Direct is included in
consolidated and total brand comparable sales.
AMERICAN EAGLE
OUTFITTERS, INC. STORE INFORMATION (unaudited)
Third Quarter YTD Third Quarter Fiscal
2016 2016 2016 Guidance Consolidated
stores at beginning of period 1,044 1,047 1,047 Consolidated stores
opened during the period AE Brand 4 10 10 - 15 aerie 6 7 10 - 15
Tailgate Clothing Co. 1 2 3 Consolidated stores closed during the
period AE Brand (3) (7) (15) - (20) aerie 0
(7) (8) - (10)
Total consolidated
stores at end of period 1,052 1,052 1,047 -
1,050 Stores remodeled and refurbished during the period
21 58 55 - 65 Total gross square footage at end of period 6,638,008
6,638,008 Not Provided International license locations at
end of period (1) 163 163 178 (1) International license
locations are not included in the consolidated store data or the
total gross square footage calculation.
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version on businesswire.com: http://www.businesswire.com/news/home/20161130005705/en/
American Eagle Outfitters, Inc.Kristen McGraw, 412-432-3300
American Eagle Outfitters (NYSE:AEO)
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