American Eagle\u00a0on Wednesday said it\u2019s 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.\u00a0<\/p>\n
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.\u00a0<\/p>\n
Shares fell about 5% in extended trading on Wednesday.<\/p>\n
Here\u2019s how the apparel company did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:<\/p>\n
The company\u2019s 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.\u00a0<\/p>\n
Sales rose to $1.14 billion, up about 6% from $1.08 billion a year earlier.<\/p>\n
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\u2019s slightly below estimates of up 3.4%, according to StreetAccount.\u00a0<\/p>\n
Finance chief Mike Mathias told CNBC that American Eagle is maintaining a \u201ccautious\u201d 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 \u201cnoise\u201d around the upcoming presidential election.\u00a0<\/p>\n
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.\u00a0<\/p>\n
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.\u00a0<\/p>\n
The apparel company, which runs its namesake banner and intimates brand Aerie, is in the midst of a new strategy to\u00a0boost growth. It\u2019s looking to grow sales by 3% to 5% each year over the next three years and get its operating margin to about 10%.<\/p>\n
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.\u00a0<\/p>\n
American Eagle\u2019s strategy has also focused on revamping its product assortment, removing items that weren\u2019t working for its customers and drilling down on the categories that are resonating.\u00a0<\/p>\n
Jennifer Foyle, American Eagle\u2019s president and executive creative director, told CNBC that the company was just \u201cover-skued\u201d \u2014 meaning it had too many different individual products, often referred to in the industry as SKUs, for consumers to choose from.\u00a0<\/p>\n
\u201cWe knew we could do more with less,\u201d said Foyle. \u201cSo deeper investments in our bottoms but less SKUs so that we are servicing our customer on the fits that they\u2019re demanding from us.\u201d\u00a0<\/p>\n
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 \u201coutpacing the balance of the chain,\u201d said Foyle.\u00a0<\/p>\n
\u201cWe\u2019re excited about remodeling our stores with a new feeling for the brand that I think expresses exactly what we\u2019ve been up to,\u201d said Foyle. \u201cThe customer, obviously is loving what they see in that store design based on the results.\u201d<\/p>\n<\/p>\n
American Eagle\u00a0on Wednesday said it\u2019s 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.\u00a0 While revenue came in slightly below estimates, it was 6% higher than the year ago period and marked a new record for […]<\/p>\n","protected":false},"author":0,"featured_media":5090,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-5089","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5089","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=5089"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5089\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/5090"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=5089"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=5089"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=5089"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}