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Sales, profit surge as American Eagle sharpens styles, operations

About Kim Leonard
Kim Leonard 412-380-5606
Assistant Metro Editor
Pittsburgh Tribune-Review

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By Kim Leonard

Published: Wednesday, Nov. 28, 2012, 8:48 a.m.

American Eagle Outfitters Inc. had “record sales” on Black Friday and the days around it, CEO Robert Hanson said on Wednesday after the South Side-based retailer reported third-quarter profit grew almost 50 percent.

“Black Friday spread to a Black Friday weekend,” Hanson said in a conference call with analysts. “It was a five-day event, more so than a single-day event,” from Wednesday through Sunday.

The weekend offset business lost earlier in November when Hurricane Sandy forced closings of some stores, but Hanson, who took over in January as American Eagle's top executive, gave no specifics on holiday kickoff sales.

The 13-week period ended Oct. 27 was American Eagle's third straight with 30 percent-plus profit growth, Hanson said, as the company worked to sharpen styles for teenagers and young adults, tighten inventory and turn over merchandise assortments quicker, limit clearance sales and make online shopping easier and more appealing.

American Eagle reported a profit of $78.6 million, or 39 cents a share, including a 2-cent loss related to the closing of its 77kids children's clothing unit. The results compare with a profit of $52.4 million, or 27 cents, a year ago.

Total sales increased 11 percent to $910 million.

The stock closed at $20.77, up $1.38, or 7.1 percent.

Jennifer Davis of Lazard Capital Markets said American Eagle's strong back-to-school season bodes well for holiday sales. The retailer's earnings per share beat the consensus estimate by 3 cents, Davis said.

New styles moving into stores on Friday are “important, especially to the teen customer who was out shopping over the Black Friday weekend,” Davis said. More new merchandise to arrive Dec. 23 will appeal to customers who get gift cards, she added.

Wi-Fi service so customers' smartphones can connect to the Internet was added to 225 stores this holiday season, Hanson said, and tablet computers are being tried as “look books” for customers to view items that are not in stores.

Hanson said the company plans to expand in big-city markets as it closes unprofitable stores and renovates others, builds its network of factory outlets and puts more emphasis on electronic commerce. Online sales grew 27 percent in the third quarter, and 21 percent a year earlier.

American Eagle has “opportunities to open a large number of A-plus locations in underpenetrated markets, primarily in influential urban areas in the United States and Canada,” he said.

Next year, “we expect to open at least six new American Eagle Outfitters stores, including locations in New York, Miami and Los Angeles,” Hanson said.

An existing AE brand store on 34th Street in Manhattan will be extensively remodeled, and about 50 stores will be renovated annually in coming years.

But 35 to 40 underperforming stores will close this year, and 25 to 40 will shut down annually for the next several years, he said, although AEO Factory locations could grow to 150 to 175. Of the 13 stores that opened through the third quarter, 12 were AEO Factory outlet stores, said Mary Boland, chief financial and administrative officer.

Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or kleonard@tribweb.com.

 

 
 


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