American Eagle Outfitters' quarterly profit down 68 percent
American Eagle Outfitters' efforts to boost its online sales are paying off but not enough to overcome the weakness that's dogging retailers.
The South Side-based clothing company said profit fell by 68 percent in its third quarter ended Nov. 2 — a performance CEO Robert Hanson characterized as “unsatisfactory.”
The company also was dour on the fourth quarter, which includes the key holiday shopping season, warning that it expected “mid single-digit decline in comparable sales.”
Hanson said 2013 was not “the year we planned for,” and predicted the clothing business will “remain challenging” in 2014.
American Eagle posted net income of $24.9 million, or 13 cents a share, in the 13 weeks ended Nov. 2, down significantly from net income of $78.6 million, or 39 cents a share, in the 13 weeks ended Oct. 27, 2012.
Revenue was $857.3 million, compared with $910.4 million the year before.
Hanson said the company would work to improve merchandise and marketing, reduce expenses and invest to expand sales on the Internet, in factory stores and outside the United States — all in an effort to combat “an intensely promotional North American retail landscape” that is cutting into sales and income.
To jump-start its focus on merchandise, the company said it hired Chad Kessler as chief merchandising and design officer. Kessler, who starts in February, held similar roles at competing clothing companies Urban Outfitters and Abercrombie & Fitch.
Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn., retail consulting firm, wasn't familiar with Kessler but said his experience with Urban Outfitters is a plus because that company “is a great outfit.”
Johnson said American Eagle is seeing weak sales and depressed profit margins because “the entire sector is troubled and facing a huge amount of difficulty” as clothing shoppers expect deep discounts.
But, he said, “Eagle is, we believe, at least beginning to turn the corner.”
Sales at stores open for at least a year were down 5 percent in the quarter, an improvement over the previous quarter when store sales were off by 7 percent.
Sales improved slightly at the start of the Christmas shopping season, Hanson said, though he did not specify a percentage increase. Sales through the company's website between Thanksgiving and Cyber Monday were up, he said, jumping 45 percent year over year.
But, he warned, Christmas online sales have been “promotionally driven, which weakens margins.”
American Eagle's shares tumbled Friday on Wall Street, closing down more than 9 percent at $14.85.
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or email@example.com.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Amusement parks fight off home entertainment threat
- State officials prompt UPMC, Highmark to go to mediation to resolve Medicare dispute
- S&P 500 logs 47th record high close for year
- Caution creeps into economic picture as consumer, business spending taper
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Westinghouse to construct colossal nuke plant in Turkey
- Retailers that won’t open on Thanksgiving hope move pays off
- Household debt on the rise after 5-year decline
- Wilkins woman leads PNC’s multicultural marketing efforts
- BNY Mellon trader fired in conduct probe
- Butler County firm Deep Well Services tackles tough gas wells