American Eagle profit beats on repeat business
Pedestrians walk past an American Eagle Outfitters store in New York. American Eagle Outfitters Inc’s quarterly profit beat Wall Street estimates, as it drew more repeat customers, had fewer discounts and outperformed rivals. – Reuters picNEW YORK, May 23 – American Eagle Outfitters Inc’s quarterly profit beat Wall Street estimates, as the retailer drew more repeat customers, had fewer discounts and outperformed rivals.
The quarter is typically a clearance season as retailers try to unload unsold items from the holidays. This year, however, many clothing chains sold closer to full price as warm weather in the winter months drew shoppers to colourful spring fashions.
American Eagle has been sprucing up its merchandise and supply system so it can change its clothing lines faster and keep up with its young clientele, something rivals like Abercrombie & Fitch Co have still not been able to get right, analysts have said.
Last week, Chief Executive Officer Robert Hanson, who took over in January, said American Eagle was trying to sell its money-losing 77kids chain. Chief Financial Officer Joan Hilson also stepped down, and the company is seeking a successor.
“We believe Hanson will bring to American Eagle something it has lacked for years – operational discipline, accountability and return on invested capital focus,” Nomura analyst Paul Lejuez said in a note.
The retailer, whose prices are between those of high-end rival Abercrombie and the more affordable Aeropostale Inc , also said today that it would earn between US$1.16 (RM3.65) and US$1.22 a share in the year, excluding losses from 77kids.
Analysts on average expected earnings of US$1.18 per share, according to Thomson Reuters I/B/E/S.
In the first quarter ended on April 28, the company had 20 per cent more repeat customers than a year earlier, and they spent more, Hanson said on a conference call with analysts.
He also said he was planning to increase the company’s international presence.
American Eagle said earlier this month that first-quarter sales had risen 18 per cent to US$719 million.
Sales rose 10 per cent at Abercrombie and 6 per cent at Aeropostale, which both reported lower profits.
American Eagle earned US$39.7 million, or 20 cents a share, compared with US$28.3 million, or 14 cents a share, a year earlier.
Excluding losses from 77kids, the profit was 22 cents a share, while analysts were expecting 20 cents.
Shares of the company were down 0.5 per cent at US$19.69 in morning trading on the New York Stock Exchange. – Reuters
