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American Eagle (AEO) Q1 Earnings Top Estimates, Revenues Up

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American Eagle Outfitters, Inc. (AEO - Free Report) reported first-quarter fiscal 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate. Moreover, revenues and earnings increased from first-quarter fiscal 2019 levels. Owing to massive impacts of the coronavirus outbreak in the year-ago quarter, the company believes that comparing results with the first quarter of fiscal 2019 is better suited.

The company witnessed accelerated growth across both the American Eagle (AE) and Aerie brands during the reported quarter. Management was particularly impressed with demand for Aerie’s products which contributed to sales, margins and profitability in the quarter. Also, smooth progress on Real Power, Real Growth value-creation plan aided results.

Shares of the Zacks Rank #1 (Strong Buy) company have surged 34.2% in the past three months against the industry’s 1.8% decline.

American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise


American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise

American Eagle Outfitters, Inc. price-consensus-eps-surprise-chart | American Eagle Outfitters, Inc. Quote


Q1 Details

Adjusted earnings of 48 cents per share beat the Zacks Consensus Estimate of 45 cents. The bottom line increased from 24 cents reported in first-quarter fiscal 2019.

Total net revenues came in at $1,034.6 million, up 17% from first-quarter fiscal 2019 levels. Further, the metric surpassed the Zacks Consensus Estimate of $1,022.1 million. Brand-wise, revenues increased slightly to $728 million for AE, while it surged 89% to $297 million for Aerie.

The company’s digital revenues surged 57% from first-quarter fiscal 2019 levels. Notably, online sales across Aerie and AE brands were up 158% and 20%, respectively. The upside can be attributed to gains from several years of investments to capitalize customer migration to digital and omni-channel e-commerce. Meanwhile, store revenues were unchanged on the back of pandemic-led traffic pressure as well as store closures in Canada. Nevertheless, U.S. store revenues rose in the quarter under review.


Gross profit came in at $436 million, up 34% from $325 million reported in the first quarter of 2019. Further, gross margin expanded 550 basis points (bps) to 42.2%. The upside can be attributed to solid increase in merchandise margins across brands stemming from escalated full-priced sales, reduced promotions as well as inventory optimization efforts. Also, reduced rent costs drove gross margin. However, these upsides were somewhat countered by elevated delivery and distribution center expenses.

Selling, general and administrative expense increased $34 million from first-quarter fiscal 2019 levels to $264.5 million, thanks to higher corporate salaries, variable selling expenses as well as performance-based incentive compensation. These were somewhat offset by reduced travel costs. As a percentage of sales, the metric contacted 40 bps on the back of solid revenue growth.

Adjusted operating margin expanded 730 bps to 12.9% from first-quarter fiscal 2019 levels.

Other Financial Details

American Eagle ended the quarter with cash and short-term investments of $792 million. The cash balance included proceeds from a convertible notes offering of $406 million. Total shareholders’ equity as of May 1, 2021 was $1,175.6 million.

Moreover, the company’s capital expenditures were $37 million in the reported quarter. For fiscal 2021, management anticipates capital expenditures in the band of $250-$275 million, with investments in strategic customer-facing and supply chain.

Store Update

In first-quarter fiscal 2021, American Eagle inaugurated four AE and six Aerie stand-alone stores, while closing 14 AE stores and one Aerie stand-alone. Further, the company remodeled and refurbished three stores during the aforesaid period.    

At the end of the quarter, American Eagle operated 1,074 stores, comprising 891 AE, 179 Aerie stand-alone, 178 Aerie side-by-side and two Todd Synder stores. Additionally, it operated 236 international license outlets.

During the year, the company is looking at opening nearly 60 Aerie stores and more than 30 OFFLINE by Aerie stores. These will be a combination of stand-alone stores and Aerie side-by-side locations.

More Solid Retail Bets

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