AEO Inc. Reports First Quarter Fiscal 2024 Results Reflecting Strong Execution on Powering Profitable Growth Strategy
American Eagle Outfitters (NYSE: AEO) reported record revenue of $1.1 billion for Q1 FY2024, a 6% increase year-over-year. Operating profit at $78 million and diluted EPS of $0.34 exceeded guidance. Aerie and American Eagle saw comparable sales rise by 6% and 7%, respectively. Gross profit increased by 12% to $464 million, driven by optimized inventory management and cost efficiencies. Despite an increase in SG&A expenses by 7% to $333 million, the company achieved a 76% rise in operating income. Inventory rose 9% to $681 million. AEO returned $60 million to shareholders through dividends and share repurchases. The company projects FY2024 operating income between $445 and $465 million, with revenue growth of 2-4%.
- Record revenue of $1.1 billion, a 6% increase YoY.
- Operating profit of $78 million exceeded guidance.
- Diluted EPS of $0.34.
- Aerie's revenue reached an all-time high with a 6% comp sales increase.
- American Eagle's comp sales rose 7%.
- Gross profit increased by 12% to $464 million.
- Optimized inventory management and cost efficiencies led to a 240 basis point increase in gross margin rate.
- Operating income increased by 76% compared to adjusted results from last year.
- Returned $60 million to shareholders through dividends and share repurchases.
- FY2024 operating income guidance between $445 and $465 million.
- SG&A expenses increased by 7% to $333 million.
- Inventory levels increased by 9%, which includes higher end-of-season merchandise due to a shift in clearance strategy.
- Capital expenditures projected to be between $200 to $250 million for FY2024, which might strain cash flow.
Insights
American Eagle Outfitters' (AEO) first quarter of fiscal 2024 showcases a robust financial performance, marked by a record revenue of
The operating profit of
For investors, the rise in Aerie's revenue by
Looking forward, the company's guidance for fiscal 2024 operating income between
The recent quarterly results for AEO not only depict a strong financial quarter but also reveal the underlying market trends and consumer preferences. The company's focus on casual apparel aligns well with consumer demand for comfortable and versatile clothing, a trend that has been consistently rising, especially post-pandemic.
AEO's ability to post record revenues and show growth across both its American Eagle and Aerie brands indicates a well-executed merchandising strategy and effective market positioning. The sequential acceleration in comparables, with American Eagle comps up
From a market perspective, the continued growth in digital revenue by 12% is key. It shows that AEO's investments in digital channels are paying off, allowing them to capture a broader audience and stay competitive in an omnichannel retail environment. The adoption of a more profitable clearance strategy, which contributed to margin expansion, also demonstrates strategic agility in inventory management, ensuring optimal stock levels and minimizing markdown losses.
Furthermore, the inventory growth by
Overall, these metrics point towards a company that understands its market, can effectively manage its operations and align its strategies with consumer trends, making it a positive outlook for retail investors.
-
Record first quarter revenue of
$1.1 billion 6% to last year -
Operating profit of
$78 million -
Aerie achieved all-time high first quarter revenue with comps up
6% -
American Eagle sequentially accelerated, with comps increasing
7%
“Our strong first quarter results underscore the power of our iconic brand portfolio and demonstrate great progress on our Powering Profitable Growth strategy. We achieved record revenue, amplifying American Eagle’s and Aerie’s leading market positions and opportunity in casual apparel. We continued to offer exciting merchandise collections and customer activations, providing compelling in-store and digital shopping experiences. This, combined with actions to optimize our operations and drive efficiencies across the organization, contributed to meaningful profit expansion, which was ahead of expectations,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.
“As I look forward, I remain confident in our ability to deliver on our plans for 2024 and beyond. We have significant runway across our brands and we continue to execute with discipline as we drive our business to deliver sustained, profitable growth and returns to shareholders,” he continued.
First Quarter 2024 Results compared to First Quarter 2023 Results:
- First quarter 2024 results are presented for the 13 weeks ended May 4, 2024 compared to the 13 weeks ended April 29, 2023. Comparable sales metrics are presented for the 13 weeks ended May 4, 2024 compared to the 13 weeks ended May 6, 2023.
-
Total net revenue of
$1.1 billion 6% . -
Store revenue rose
4% . Digital revenue increased12% . -
Aerie revenue of
$373 million 4% , with comp sales up6% . American Eagle revenue of$725 million 8% , with comp sales growing7% . -
Gross profit of
$464 million 12% , reflecting a gross margin rate of40.6% , expanding 240 basis points. Margin expansion was driven by strong inventory management, the company’s shift to a more profitable clearance strategy, lower product and transportation costs and leverage on expenses including rent, delivery, and distribution and warehousing. -
Selling, general and administrative expense of
$333 million 7% . This was roughly in-line with sales growth and consistent with our guidance. -
Operating income of
$78 million $23 million $44 million 76% and the operating margin of6.8% expanded 270 basis points. -
Diluted earnings per share of
$0.34
Inventory
Total ending inventory increased
Shareholder Returns
In the first quarter, the company returned approximately
This included the repurchase of 1.5 million shares for approximately
Additionally, the company paid a quarterly cash dividend of
Capital Expenditures
Capital expenditures totaled
Outlook
For fiscal 2024, management continues to expect operating income in the range of
For the second quarter, management expects operating income in the range of
Webcast and Supplemental Financial Information
Management will host a conference call and real time webcast today at 4:30 pm Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to www.aeo-inc.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company’s website.
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® and Aerie® brands. Our purpose is to show the world that there’s REAL power in the optimism of youth. The company operates stores in
Non-GAAP Measures
This release includes information on non-GAAP financial measures (“non-GAAP” or “adjusted”), including adjusted operating income for first quarter fiscal 2023. These financial measures are not based on any standardized methodology prescribed by
These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.
The tables included in this release reconcile the GAAP financial measures to the non-GAAP financial measures discussed above.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent management’s expectations or beliefs concerning future events, including, without limitation, second fiscal quarter and annual fiscal 2024 results. Words such as “outlook,” "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," “may,” “potential,” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company’s control. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 and in any other filings that we may make with the Securities and Exchange Commission, in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.
The use of the “company,” “AEO,” “we,” "us," and “our” in this release refers to American Eagle Outfitters, Inc.
| AMERICAN EAGLE OUTFITTERS, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited) | ||||||||
| (In thousands) | May 4, 2024 | April 29, 2023 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
300,518 |
|
$ |
117,841 |
|
||
| Merchandise inventory |
|
681,062 |
|
|
624,851 |
|
||
| Accounts receivable, net |
|
230,934 |
|
|
259,074 |
|
||
| Prepaid expenses and other |
|
98,803 |
|
|
127,735 |
|
||
| Total current assets |
|
1,311,317 |
|
|
1,129,501 |
|
||
| Operating lease right-of-use assets |
|
1,123,649 |
|
|
1,053,938 |
|
||
| Property and equipment, at cost, net of accumulated depreciation |
|
703,551 |
|
|
762,433 |
|
||
| Goodwill, net |
|
225,253 |
|
|
264,896 |
|
||
| Non-current deferred income taxes |
|
89,332 |
|
|
13,034 |
|
||
| Intangible assets, net |
|
45,178 |
|
|
92,399 |
|
||
| Other assets |
|
58,937 |
|
|
57,693 |
|
||
| Total assets | $ |
3,557,217 |
|
$ |
3,373,894 |
|
||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
225,480 |
|
$ |
212,318 |
|
||
| Current portion of operating lease liabilities |
|
303,603 |
|
|
321,430 |
|
||
| Accrued compensation and payroll taxes |
|
64,502 |
|
|
43,550 |
|
||
| Unredeemed gift cards and gift certificates |
|
57,373 |
|
|
57,014 |
|
||
| Accrued income and other taxes |
|
50,716 |
|
|
13,812 |
|
||
| Other current liabilities and accrued expenses |
|
71,655 |
|
|
68,313 |
|
||
| Total current liabilities |
|
773,329 |
|
|
716,437 |
|
||
| Non-current liabilities: | ||||||||
| Non-current operating lease liabilities |
|
1,002,529 |
|
|
987,048 |
|
||
| Long-term debt, net |
|
— |
|
|
30,225 |
|
||
| Other non-current liabilities |
|
29,003 |
|
|
21,168 |
|
||
| Total non-current liabilities |
|
1,031,532 |
|
|
1,038,441 |
|
||
| Commitments and contingencies |
|
— |
|
|
— |
|
||
| Stockholders’ equity: | ||||||||
| Preferred stock |
|
— |
|
|
— |
|
||
| Common stock |
|
2,496 |
|
|
2,496 |
|
||
| Contributed capital |
|
345,922 |
|
|
324,396 |
|
||
| Accumulated other comprehensive loss |
|
(15,722 |
) |
|
(26,777 |
) |
||
| Retained earnings |
|
2,267,785 |
|
|
2,130,108 |
|
||
| Treasury stock |
|
(848,125 |
) |
|
(811,207 |
) |
||
| Total stockholders’ equity |
|
1,752,356 |
|
|
1,619,016 |
|
||
| Total liabilities and stockholders’ equity | $ |
3,557,217 |
|
$ |
3,373,894 |
|
||
| Current |
|
1.70 |
|
|
1.58 |
|
||
| AMERICAN EAGLE OUTFITTERS, INC. | ||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (Dollars and shares in thousands, except per share amounts) | ||||||||||||||
| (unaudited) | ||||||||||||||
| 13 Weeks Ended | ||||||||||||||
| May 4, 2024 | April 29, 2023 | |||||||||||||
| (In thousands) | (Percentage of revenue) |
(In thousands) | (Percentage of revenue) |
|||||||||||
| Total net revenue | $ |
1,143,867 |
|
100.0 |
% |
$ |
1,080,926 |
|
100.0 |
% |
||||
| Cost of sales, including certain buying, occupancy and warehouse expenses |
|
679,628 |
|
59.4 |
|
667,747 |
|
61.8 |
||||||
| Gross profit |
|
464,239 |
|
40.6 |
|
413,179 |
|
38.2 |
||||||
| Selling, general and administrative expenses |
|
333,493 |
|
29.2 |
|
312,345 |
|
28.9 |
||||||
| Impairment and restructuring charges |
|
- |
|
0.0 |
|
21,275 |
|
2.0 |
||||||
| Depreciation and amortization expense |
|
52,910 |
|
4.6 |
|
56,728 |
|
5.2 |
||||||
| Operating income |
|
77,836 |
|
6.8 |
|
22,831 |
|
2.1 |
||||||
| Interest (income) expense, net |
|
(3,439 |
) |
(0.3 ) |
|
690 |
|
0.1 |
||||||
| Other (income), net |
|
(1,396 |
) |
(0.1 ) |
|
(3,311 |
) |
(0.3 ) |
||||||
| Income before income taxes | $ |
82,671 |
|
7.2 |
$ |
25,452 |
|
2.3 |
||||||
| Provision for income taxes |
|
14,919 |
|
1.3 |
|
6,999 |
|
0.6 |
||||||
| Net income | $ |
67,752 |
|
5.9 |
% |
$ |
18,453 |
|
1.7 |
% |
||||
| Net income per basic share | $ |
0.34 |
|
$ |
0.09 |
|
||||||||
| Net income per diluted share | $ |
0.34 |
|
$ |
0.09 |
|
||||||||
| Weighted average common shares outstanding - basic |
|
196,429 |
|
|
194,487 |
|
||||||||
| Weighted average common shares outstanding - diluted |
|
201,310 |
|
|
197,160 |
|
||||||||
| AMERICAN EAGLE OUTFITTERS, INC. | ||||||||||||||
| GAAP to Non-GAAP Reconciliation | ||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||
| 13 Weeks Ended | ||||||||||||||
| April 29, 2023 | ||||||||||||||
| Operating Income |
Provision for Income Taxes |
Net Income |
Earnings per Diluted Share |
|||||||||||
| GAAP Basis | $ |
22,831 |
|
$ |
6,999 |
$ |
18,453 |
|
$ |
0.09 |
||||
| % of Revenue |
|
2.1 |
% |
|
1.7 |
% |
||||||||
| Add: Impairment, restructuring and other charges (1) | $ |
21,275 |
|
$ |
15,424 |
|
$ |
0.08 |
||||||
| Tax effect of the above (2) | $ |
5,851 |
||||||||||||
| Non-GAAP Basis | $ |
44,106 |
|
$ |
12,850 |
$ |
33,877 |
|
$ |
0.17 |
||||
| % of Revenue |
|
4.1 |
% |
|
3.1 |
% |
||||||||
The following footnotes relate to impairment, restructuring, and other charges recorded in the 13 weeks ended April 29, 2023:
(1)
-
$10.8 million -
$5.6 million -
$4.9 million
All impairments were recorded due to insufficient prospective cash flows to support the asset value.
(2) The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and an adjusted non-GAAP basis.
| AMERICAN EAGLE OUTFITTERS, INC. | ||||||
| NET REVENUE BY SEGMENT | ||||||
| (unaudited) | ||||||
| 13 Weeks Ended | ||||||
| (In thousands) | May 4, 2024 | April 29, 2023 | ||||
| Net Revenue: | ||||||
| American Eagle | $ |
724,744 |
|
$ |
671,092 |
|
| Aerie |
|
372,652 |
|
|
359,082 |
|
| Other |
|
54,984 |
|
|
109,357 |
|
| Intersegment Elimination |
|
(8,513 |
) |
|
(58,605 |
) |
| Total Net Revenue | $ |
1,143,867 |
|
$ |
1,080,926 |
|
| AMERICAN EAGLE OUTFITTERS, INC. | ||
| STORE INFORMATION | ||
| (unaudited) | ||
| 13 Weeks Ended | ||
| May 4, 2024 | ||
| Consolidated stores at beginning of period | 1,182 |
|
| Consolidated stores opened during the period | ||
| AE Brand (1) | 3 |
|
| Aerie (incl. OFFL/NE) (2) | 1 |
|
| Todd |
- |
|
| Unsubscribed | - |
|
| Consolidated stores closed during the period | ||
| AE Brand (1) | (8 |
) |
| Aerie (incl. OFFL/NE) (2) | (4 |
) |
| Unsubscribed | (1 |
) |
| Total consolidated stores at end of period | 1,173 |
|
| Stores by Brand | ||
| AE Brand (1) | 846 |
|
| Aerie (incl. OFFL/NE) (2) | 307 |
|
| Todd |
15 |
|
| Unsubscribed | 5 |
|
| Total consolidated stores at end of period | 1,173 |
|
| Total gross square footage at end of period (in '000) | 7,221 |
|
| International license locations at end of period (3) | 315 |
|
| (1) AE Brand includes AE stand alone locations, AE/Aerie side-by side locations, AE/OFFL/NE side-by-side locations, and AE/Aerie/OFFL/NE side-by-side locations. | |
| (2) Aerie (incl. OFFL/NE) includes Aerie stand alone locations, OFFL/NE stand alone locations, and Aerie/OFFL/NE side-by-side locations. | |
| (3) International license locations (retail stores and concessions) are not included in the consolidated store data or the total gross square footage calculation. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240529020707/en/
Line Media
412-432-3300
LineMedia@ae.com
Source: American Eagle Outfitters, Inc.
FAQ
What was American Eagle Outfitters' revenue for Q1 FY2024?
How much did Aerie's revenue increase in Q1 FY2024?
What is the operating profit reported by AEO for Q1 FY2024?
What is the diluted earnings per share (EPS) for AEO in Q1 FY2024?
How much did American Eagle's comparable sales increase in Q1 FY2024?
What was AEO's total gross profit for Q1 FY2024?
What are AEO's capital expenditure expectations for FY2024?
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What is AEO's FY2024 guidance for operating income?
