Connect with us

Hi, what are you looking for?

Economy

American Eagle profit soars, but sales grow slower than expected

American Eagle on Wednesday said it’s making gains in boosting profitability as it works to improve its product assortment and tweak operations. Still, its fiscal first-quarter sales came in weaker than Wall Street expected. 

While revenue came in slightly below estimates, it was 6% higher than the year ago period and marked a new record for the company, it said in a news release. 

Shares fell about 5% in extended trading on Wednesday.

Here’s how the apparel company did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

The company’s reported net income for the three-month period that ended May 4 nearly quadrupled compared to the year ago period. American Eagle posted net income of $67.8 million, or 34 cents per share, compared with $18.5 million, or 9 cents per share, a year earlier. 

Sales rose to $1.14 billion, up about 6% from $1.08 billion a year earlier.

American Eagle said its continuing to expect full-year operating income in the range of $445 million to $465 million, reflecting revenue growth of up 2% to 4% compared to the prior year. That’s slightly below estimates of up 3.4%, according to StreetAccount. 

Finance chief Mike Mathias told CNBC that American Eagle is maintaining a “cautious” view for the back half of the year as it prepares to lap some tougher comparisons, awaits interest rate decisions from the Federal Reserve and prepares for “noise” around the upcoming presidential election. 

He added the company is waiting to see how the back-to-school shopping season goes to get a better idea on how the rest of the year plays out. 

For the current quarter, American Eagle expects operating income in the range of $95 million to $100 million, reflecting revenue growth of high single digits, which is in line with the 7.4% uptick that analysts had expected, according to LSEG. 

The apparel company, which runs its namesake banner and intimates brand Aerie, is in the midst of a new strategy to boost growth. It’s looking to grow sales by 3% to 5% each year over the next three years and get its operating margin to about 10%.

Some of its efforts are beginning to bear fruit. During the fiscal first quarter, American Eagle grew its gross margin by 2.4 percentage points. The gains were driven by better inventory management, lower product and transportation costs and leverage on expenses including rent, delivery and distribution and warehousing. 

American Eagle’s strategy has also focused on revamping its product assortment, removing items that weren’t working for its customers and drilling down on the categories that are resonating. 

Jennifer Foyle, American Eagle’s president and executive creative director, told CNBC that the company was just “over-skued” — meaning it had too many different individual products, often referred to in the industry as SKUs, for consumers to choose from. 

“We knew we could do more with less,” said Foyle. “So deeper investments in our bottoms but less SKUs so that we are servicing our customer on the fits that they’re demanding from us.” 

The company has also been working to revamp its stores and introduce new formats. It recently implemented a new store design for American Eagle, which is “outpacing the balance of the chain,” said Foyle. 

“We’re excited about remodeling our stores with a new feeling for the brand that I think expresses exactly what we’ve been up to,” said Foyle. “The customer, obviously is loving what they see in that store design based on the results.”

This post appeared first on NBC NEWS

Enter Your Information Below To Receive Free Trading Ideas, Latest News And Articles.






    Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

    You May Also Like

    Stock

    In this edition of StockCharts TV‘s The Final Bar, Dave shows how breadth conditions have evolved so far in August, highlights the renewed strength in the...

    Stock

    Major equity indexes rose on Friday after a selloff that hit the Technology sector especially hard. But this doesn’t necessarily mean that everything is...

    Latest News

    Britain’s Prince and Princess of Wales have released a new photo of Prince Louis to mark his sixth birthday on Tuesday, the first image...

    Latest News

    President Joe Biden travels to Triangle, Virginia, Monday to mark Earth Day, where he’ll unveil $7 billion in grant funding for solar power under...

    Disclaimer: Dealwithbiz.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 Dealwithbiz.com