PITTSBURGH--(BUSINESS WIRE)--American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS of $0.15 for the first quarter ended May 2, 2015, a significant increase from EPS of $0.02 for the comparable quarter last year, and above EPS guidance of $0.09 to $0.12. The EPS figures refer to diluted earnings per share.
Jay Schottenstein, Interim CEO commented, “Our strong first quarter results reflected outstanding merchandise and customer-focused execution. Both AE and aerie performed well, achieving higher sales and earnings, proving successful in a price promotional retail climate. We will continue to raise the bar by offering great product quality, innovation, style and value. Across the organization, we are focused on the market opportunity to leverage our competitive strengths in merchandising, new technologies and capabilities to gain further market share and deliver earnings growth.”
First Quarter 2015 Results
- Total net revenue increased 8% to $700 million from $646 million last year.
- Consolidated comparable sales increased 7%, compared to a 10% decrease last year.
- Gross profit increased 16% to $262 million and rose 260 basis points to 37.5% as a rate to revenue. A reduction in the markdown rate led to approximately 290 basis points of merchandise margin expansion, which was partially offset by 30 basis points of buying, occupancy and warehousing deleverage.
- Selling, general and administrative expense of $185 million was flat to last year. As a rate to revenue, SG&A leveraged 210 basis points to 26.5% compared to 28.6% last year. Our expense reduction initiatives offset increases in incentive and variable selling expense, driven by strong sales performance.
- Operating income increased to $42 million from $8 million last year, and the operating margin expanded 470 basis points to 6.0% as a rate to revenue.
- Other income of $6 million is primarily comprised of currency gains related to cash held in Canadian dollars.
- EPS of $0.15, a significant increase from EPS of $0.02 last year.
Inventory
Total merchandise inventories at the end of the
first quarter increased 1% to $333 million compared to $329 million last
year. At cost per foot, inventory was flat. Second quarter 2015 ending
inventory at cost per foot is expected to be up in the mid single-digits
due to merchandise investments and positive sales trends.
Capital Expenditures
In the first quarter, capital
expenditures totaled $42 million. For fiscal 2015, the company continues
to expect capital expenditures of approximately $150 million, which
includes the chain-wide roll-out of the point of sale system, supporting
technologies and the completion of our new fulfillment center, as well
as new and remodeled store investments.
Store Information
In the quarter, the company opened four
new factory stores, including one in Mexico, and closed six locations,
including three AE and three aerie stores. Ten international licensed
stores opened during the quarter, including five stores in Japan, four
stores in Israel and the first store in Qatar. For additional first
quarter 2015 actual and fiscal 2015 projected store information, see the
accompanying table.
Cash and Investments
The company ended the quarter with
total cash and investments of $327 million compared to $328 million last
year.
Second Quarter Outlook
Based on a high single digit increase
in comparable sales, management expects second quarter 2015 EPS to be
approximately $0.11 to $0.14. This guidance excludes potential asset
impairment and restructuring charges, and compares to EPS of $0.03 last
year.
Conference Call and Supplemental Financial Information
Today,
management will host a conference call and real time webcast at 11:00
a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or
internationally dial 1-201-689-8562 or go to http://investors.ae.com
to access the webcast and audio replay. Also, a financial results
presentation is posted on the company’s website.
Non-GAAP Measures
The company has provided merchandise
margin, a non-GAAP financial measure defined as gross margin excluding
buying, occupancy and warehousing costs. This measure is not based on
any standardized methodology prescribed by GAAP and is not necessarily
comparable to similar measures presented by other companies. This amount
is not determined in accordance with GAAP and therefore, should not be
used exclusively in evaluating the Company's business and operations.
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 Outfitters® and
Aerie® brands. The company operates more than 1,000 stores in the United
States, Canada, Mexico, China, Hong Kong and the United Kingdom, and
ships to 81 countries worldwide through its websites. American Eagle
Outfitters and Aerie merchandise also is available at 111 international
stores operated by licensees in 17 countries. For more information,
please visit www.ae.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, including second quarter 2015 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors beyond the company's control. Such factors include, but are not limited to the risk that the company’s operating, financial and capital plans may not be achieved and the risks described in the Risk Factor Section of the company's Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized.
| AMERICAN EAGLE OUTFITTERS, INC. | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
|
(Dollars in thousands) |
||||||||||||||
| May 2, | January 31, | May 3, | ||||||||||||
| 2015 | 2015 | 2014 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
|
ASSETS |
||||||||||||||
| Cash and cash equivalents | $ | 326,907 | $ | 410,697 | $ | 327,699 | ||||||||
| Merchandise inventory | 332,645 | 278,972 | 329,249 | |||||||||||
| Accounts receivable | 64,010 | 67,894 | 67,720 | |||||||||||
| Prepaid expenses and other | 77,503 | 73,848 | 90,227 | |||||||||||
| Deferred income taxes | 58,574 | 59,102 | 46,057 | |||||||||||
| Total current assets | 859,639 | 890,513 | 860,952 | |||||||||||
| Property and equipment, net | 706,885 | 694,856 | 680,378 | |||||||||||
| Intangible assets, net | 47,419 | 47,206 | 49,087 | |||||||||||
| Goodwill | 13,243 | 13,096 | 13,598 | |||||||||||
| Non-current deferred income taxes | 9,129 | 14,035 | 11,663 | |||||||||||
| Other assets | 36,445 | 37,202 | 36,199 | |||||||||||
| Total Assets | $ | 1,672,760 | $ | 1,696,908 | $ | 1,651,877 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Accounts payable | $ | 203,239 | $ | 191,146 | $ | 195,703 | ||||||||
| Accrued compensation and payroll taxes | 40,379 | 44,884 | 31,219 | |||||||||||
| Accrued rent | 78,741 | 78,567 | 74,023 | |||||||||||
| Accrued income and other taxes | 6,504 | 33,110 | 7,756 | |||||||||||
| Unredeemed gift cards and gift certificates | 37,385 | 47,888 | 35,578 | |||||||||||
| Current portion of deferred lease credits | 13,125 | 12,969 | 13,155 | |||||||||||
| Other current liabilities and accrued expenses | 49,415 | 50,529 | 38,303 | |||||||||||
| Total current liabilities | 428,788 | 459,093 | 395,737 | |||||||||||
| Deferred lease credits | 57,162 | 54,516 | 61,562 | |||||||||||
| Non-current accrued income taxes | 10,884 | 10,456 | 11,063 | |||||||||||
| Other non-current liabilities | 30,521 | 33,097 | 34,357 | |||||||||||
| Total non-current liabilities | 98,567 | 98,069 | 106,982 | |||||||||||
| Commitments and contingencies | - | - | - | |||||||||||
| Preferred stock | - | - | - | |||||||||||
| Common stock | 2,496 | 2,496 | 2,496 | |||||||||||
| Contributed capital | 563,709 | 569,675 | 556,054 | |||||||||||
| Accumulated other comprehensive income | (11,044 | ) | (9,944 | ) | 16,093 | |||||||||
| Retained earnings | 1,545,674 | 1,543,085 | 1,542,106 | |||||||||||
| Treasury stock | (955,430 | ) | (965,566 | ) | (967,591 | ) | ||||||||
| Total stockholders' equity | 1,145,405 | 1,139,746 | 1,149,158 | |||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,672,760 | $ | 1,696,908 | $ | 1,651,877 | ||||||||
| Current Ratio | 2.00 | 1.94 | 2.18 | |||||||||||
| AMERICAN EAGLE OUTFITTERS, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
|
(Dollars and shares in thousands, except per share amounts) |
|||||||||||||
|
(unaudited) |
|||||||||||||
| GAAP Basis | |||||||||||||
| 13 Weeks Ended | |||||||||||||
| May 2, | % of | May 3, | % of | ||||||||||
| 2015 | Revenue | 2014 | Revenue | ||||||||||
| Total net revenue | $ | 699,520 | 100.0 | % | $ | 646,129 | 100.0 | % | |||||
| Cost of sales, including certain buying, | |||||||||||||
| occupancy and warehousing expenses | 437,308 | 62.5 | % | 420,284 | 65.1 | % | |||||||
| Gross profit | 262,212 | 37.5 | % | 225,845 | 34.9 | % | |||||||
| Selling, general and administrative expenses | 185,091 | 26.5 | % | 185,058 | 28.6 | % | |||||||
| Depreciation and amortization | 35,127 | 5.0 | % | 32,362 | 5.0 | % | |||||||
| Operating income | 41,994 | 6.0 | % | 8,425 | 1.3 | % | |||||||
| Other income, net | 5,970 | 0.9 | % | 686 | 0.1 | % | |||||||
| Income before income taxes | 47,964 | 6.9 | % | 9,111 | 1.4 | % | |||||||
| Provision for income taxes | 18,909 | 2.6 | % | 5,245 | 0.8 | % | |||||||
| Net income | $ | 29,055 | 4.4 | % | $ | 3,866 | 0.6 | % | |||||
| Net income per basic share | $ | 0.15 | $ | 0.02 | |||||||||
| Net income per diluted share | $ | 0.15 | $ | 0.02 | |||||||||
|
Weighted average common shares outstanding - basic |
194,975 | 194,060 | |||||||||||
|
Weighted average common shares outstanding - diluted |
195,880 | 194,702 | |||||||||||
| AMERICAN EAGLE OUTFITTERS, INC. | |||
|
GAAP TO NON-GAAP RECONCILIATION |
|||
|
(unaudited) |
|||
|
13 Weeks Ended |
|||
|
May 2, 2015 |
|||
| GAAP Gross Margin Basis Point Improvement | 260 | ||
| Add back: Buying, Occupancy and Warehousing Cost Basis Point Leverage | 30 | ||
| Non-GAAP Merchandise Margin Basis Point Improvement | 290 | ||
| AMERICAN EAGLE OUTFITTERS, INC. | |||||
| COMPARABLE SALES RESULTS BY BRAND | |||||
| (unaudited) | |||||
| First Quarter | |||||
| Comparable Sales | |||||
| 2015 | 2014 | ||||
|
American Eagle Outfitters, Inc. (1) |
7% | -10% | |||
|
AE Total Brand (1) |
7% | -11% | |||
|
aerie Total Brand (1) |
12% | -4% | |||
(1) AEO Direct is included in consolidated and total brand comparable sales.
| AMERICAN EAGLE OUTFITTERS, INC. | |||||||
| STORE INFORMATION | |||||||
| (unaudited) | |||||||
| First Quarter | Fiscal 2015 | ||||||
| Fiscal 2015 | Guidance | ||||||
| Consolidated stores at beginning of period | 1,056 | 1,056 | |||||
| Consolidated stores opened during the period | |||||||
| AE Brand | 4 | 20 | |||||
| aerie | - | 2 | |||||
| Consolidated stores closed during the period | |||||||
| AE Brand | (3) | (45-50) | |||||
| aerie | (3) | (20-25) | |||||
|
Total consolidated stores at end of period |
1,054 | 1,003 - 1,013 | |||||
| Stores remodeled and refurbished during the period | 10 | 25-30 | |||||
| Total gross square footage at end of period | 6,617,032 | Not Provided | |||||
|
International license stores at end of period (1) |
109 | 141 | |||||
(1) International license stores are not included in the consolidated store data or the total gross square footage calculation.