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American Eagle (AEO) Gives Sneak Peek of Q4 Preliminary Results
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American Eagle Outfitters, Inc. (AEO - Free Report) announced encouraging preliminary fourth-quarter fiscal 2022 results.
Notably, the company’s brand revenues declined 3% from the fourth quarter through Jan 7, which is at the higher end of its previously communicated view of mid-single digits. Its American Eagle brand has shown improvement and Aerie is in sync with expectations. The top line is anticipated to reflect gains of 2 percentage points from Quiet Logistics.
The company’s gross margin is envisioned to be at the higher end of its earlier mentioned 32-33%, driven by lesser promotions and strong inventory management. Its quarter-end inventories are likely to be down year over year, in line with the prior view. Management also noted that it recorded the second-highest holiday sales period in its history.
What Else Do You Need to Know?
American Eagle has been witnessing continued momentum in the e-commerce business. The company’s mobile point-of-sale system in its North America stores is likely to expedite transaction speed and minimize wait time, particularly in peak fall and holiday selling seasons.
Also, its newly-acquired Quiet Platforms partnered with Fanatics to launch same-day and next-day delivery services across 11 markets in the United States.
Some other notable efforts are customer self-checkout, a new instant credit feature for returns, the expansion of its Afterpay capabilities in its mobile app, and the introduction of Shop the Look service, which allows customers to browse and shop head-to-toe looks curated by stylists.
The relaunch of its loyalty program bodes well. Gains from the acquisition of Quiet Logistics also aided delivery. Such well-chalked-out efforts are likely to contribute to the company’s top line in the near term.
AEO’s Aerie brand has long been serving as a key growth driver on strength in OFFLINE activewear. The Aerie brand is on track to reach the next brand milestone of $2 billion in sales, out of which it has already achieved $1 billion in revenues. The company expects revenues for the Aerie brand to reach $2.2 billion by 2023, seeing more than a 20% compound annual growth rate from fiscal 2019.
AEO’s efforts to reduce expenses across store payroll, corporate expenses, professional services and advertising bode well. The move is expected to generate cost savings of $100 million on an annual basis compared with the prior target of $60 million. As a result, SG&A expenses are anticipated to be flat year over year in the fourth quarter of fiscal 2022.
It is also on track with its Real Power Real Growth value creation plan, which has been aiding its performance. The plan is driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain.
As part of the Real Power Real Growth plan, American Eagle will continue to pursue opportunities to grow the Aerie brand through expansion into newer markets, innovation and a growing customer base. Also, it expects to undertake initiatives to deliver growth and sustained profitability for the American Eagle brand.
Driven by the trends and progress on its growth plan, American Eagle raised its 2023 financial targets. The company expects to achieve an operating income of $800 million in fiscal 2023. It also expects revenues of $5.8 billion in fiscal 2023, up from the earlier mentioned $5.5 billion. The operating income is estimated to be $800 million, with the operating margin expanding to 13.5% by 2023.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 48.3% compared with the industry’s growth of 20.7%.
Image Source: Zacks Investment Research
However, elevated freight expenses and higher gas prices are concerning. A tougher macro environment and changing consumer spending behavior are other headwinds.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1 (Strong Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Tecnoglass, the manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.
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American Eagle (AEO) Gives Sneak Peek of Q4 Preliminary Results
American Eagle Outfitters, Inc. (AEO - Free Report) announced encouraging preliminary fourth-quarter fiscal 2022 results.
Notably, the company’s brand revenues declined 3% from the fourth quarter through Jan 7, which is at the higher end of its previously communicated view of mid-single digits. Its American Eagle brand has shown improvement and Aerie is in sync with expectations. The top line is anticipated to reflect gains of 2 percentage points from Quiet Logistics.
The company’s gross margin is envisioned to be at the higher end of its earlier mentioned 32-33%, driven by lesser promotions and strong inventory management. Its quarter-end inventories are likely to be down year over year, in line with the prior view. Management also noted that it recorded the second-highest holiday sales period in its history.
What Else Do You Need to Know?
American Eagle has been witnessing continued momentum in the e-commerce business. The company’s mobile point-of-sale system in its North America stores is likely to expedite transaction speed and minimize wait time, particularly in peak fall and holiday selling seasons.
Also, its newly-acquired Quiet Platforms partnered with Fanatics to launch same-day and next-day delivery services across 11 markets in the United States.
Some other notable efforts are customer self-checkout, a new instant credit feature for returns, the expansion of its Afterpay capabilities in its mobile app, and the introduction of Shop the Look service, which allows customers to browse and shop head-to-toe looks curated by stylists.
The relaunch of its loyalty program bodes well. Gains from the acquisition of Quiet Logistics also aided delivery. Such well-chalked-out efforts are likely to contribute to the company’s top line in the near term.
AEO’s Aerie brand has long been serving as a key growth driver on strength in OFFLINE activewear. The Aerie brand is on track to reach the next brand milestone of $2 billion in sales, out of which it has already achieved $1 billion in revenues. The company expects revenues for the Aerie brand to reach $2.2 billion by 2023, seeing more than a 20% compound annual growth rate from fiscal 2019.
AEO’s efforts to reduce expenses across store payroll, corporate expenses, professional services and advertising bode well. The move is expected to generate cost savings of $100 million on an annual basis compared with the prior target of $60 million. As a result, SG&A expenses are anticipated to be flat year over year in the fourth quarter of fiscal 2022.
It is also on track with its Real Power Real Growth value creation plan, which has been aiding its performance. The plan is driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain.
As part of the Real Power Real Growth plan, American Eagle will continue to pursue opportunities to grow the Aerie brand through expansion into newer markets, innovation and a growing customer base. Also, it expects to undertake initiatives to deliver growth and sustained profitability for the American Eagle brand.
Driven by the trends and progress on its growth plan, American Eagle raised its 2023 financial targets. The company expects to achieve an operating income of $800 million in fiscal 2023. It also expects revenues of $5.8 billion in fiscal 2023, up from the earlier mentioned $5.5 billion. The operating income is estimated to be $800 million, with the operating margin expanding to 13.5% by 2023.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 48.3% compared with the industry’s growth of 20.7%.
Image Source: Zacks Investment Research
However, elevated freight expenses and higher gas prices are concerning. A tougher macro environment and changing consumer spending behavior are other headwinds.
Stocks to Consider
Here are three better-ranked stocks to consider, namely Wingstop (WING - Free Report) , Ross Stores (ROST - Free Report) and Technoglass (TGLS - Free Report) .
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1 (Strong Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Tecnoglass, the manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.