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American Eagle Outfitters Inc., showing further signs its new strategic roadmap is bearing some fruit, reported on Thursday second-quarter top- and bottom-line gains with strength seen across both American Eagle and Aerie, as well as channels.
Net income in the period ended Aug. 3 rose to $77.3 million, or 39 cents per diluted share, from $48.57 million, or 25 cents per diluted share in the year-ago period. Revenue rose 8 percent to $1.3 billion from $1.2 billion.
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Operating income of $101 million increased 55 percent, surpassing company expectations earlier in the year for operating income in the range of $95 million to $100 million. The gain included approximately $20 million from the retail calendar shift. The operating margin expanded 240 basis points to 7.8 percent.
The operator of the American Eagle and Aerie brands slightly raised its outlook for 2024 operating income to $455 million to $465 million, from previous guidance of $445 million to $465 million. AEO also slightly lowered its guidance for total 2024 revenues to up 2 to 3 percent, from previous guidance for revenues to be up 2 to 4 percent. The company expects comparable sales in 2024 to increase approximately 4 percent and total 2024 revenues to be up 2 to 3 percent versus previous guidance of up 2 to 4 percent.
“We’ve exceeded our original plans and guidance for the first quarter and second quarter,” Michael Mathias, executive vice president and chief financial officer, told WWD. “Our second-quarter results were strong and build upon our strong first-quarter performance as well.”
Mathias cited strength across both the American Eagle and Aerie brands, as well as in stores and online during the second quarter.
American Eagle, he said, was fueled by the women’s side of the business. Menswear is “still a work in progress,” though some progress has been made, he added. At Aerie, the Offline subbrand has been driving growth, Mathias said.
Reports of consumers holding back on spending, particularly on discretionary products, have proliferated, but Mathias said, “We feel good about the consumer. Our value equation resonates with consumers. We are in that middle sweet spot where we can navigate the challenges of any specific consumer group.”
AEO’s customer, on average, tends to be in the middle or a bit above the average household income in the U.S., Mathias said. “We are a good alternative to other brands out there. We are less expensive. We are not the least expensive, but the quality of our product for the price is very attractive.”