American Eagle Outfitters denim sales top $1B - Retail Dive

Brief

Published

March 7, 2019

Dive Brief:

• American Eagle Outfitters on Wednesday reported that 13-week fourth quarter net revenue rose 1%, or $15 million, to $1.24 billion from $1.23 billion for the previous-year quarter, which was 14 weeks long. The one-week net revenue loss was about $60 million, according to a company press release.

• Consolidated comparable sales rose 6% year over year (following an 8% increase in the year-ago quarter), the 16th straight quarter of positive comps, the company said. By brand, American Eagle comps rose 3%, and Aerie comps rose 23%, the lingerie brand's 17th consecutive quarter of double-digit comp growth.

• Gross profit in the quarter increased by $5 million or 1% to $431 million, and the gross margin rate was flat at 34.6% as lower markdowns were offset by higher distribution and compensation costs. Net income rose 6.1% to $76.2 million. For the year, net revenue rose $240 million or 6% to a record $4 billion, the company said. Total revenue was down by some $40 million due to the lost selling week. Net income in the year rose 6.5% to $261.9 million, per the release.

Dive Insight:

After a few years when apparel shoppers seemed satisfied with the styles — especially in denim — that were already in their closets, new trends are captivating consumers, American Eagle executives told analysts on Wednesday.

Last year the retailer surpassed $1 billion in jeans sales, which were the foundation for much of the quarter's growth, and executives hinted at a new fashion release for spring. "This year is going to be huge year for jeans in American Eagle," CEO Jay Schottenstein told analysts, according to a transcript from Seeking Alpha. "I don't want to share what we have planned because back to school is still several months away, but I am really excited for 2019 ... for jeans and AE. We're going to continue bringing innovations and fabric wash and cooperating the innovations and fabric wash and value and quality that we do."

The company is also expanding its size range despite the inventory complexities, according to Global Brand President Chad Kessler.

At a time when rival Gap, which is shuttering hundreds of stores and will soon be unmoored from its better performing Old Navy sibling, is hoping to revive its fortunes with denim, American Eagle, though a smaller company, is moving steadily forward. The teen retailer is proving to be a well-rounded company, with sales growing both on and offline and doing well among both men and women, the company said.

Its Aerie lingerie brand is also succeeding on the basis of its merchandising as well as its marketing and is accelerating store growth to 60 to 75 openings this year, according to Global Brand President Jennifer Foyle. And in an effort to test yet more categories, American Eagle's New York store in SoHo this weekend will open a space selling sneakers, a partnership with premium sneakerhead brand Urban Necessity, that Kessler said capitalizes on new fashion trends. The retailer also is expanding overseas.

Filed Under: Corporate News

Top image credit: Cara Salpini for Retail Dive

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