American Eagle Outfitters (AEO) Raises 2023 Financial Targets

(BUSINESS WIRE)-- After strong holiday sales, American Eagle Outfitters, Inc. (NYSE: AEO) is on track to achieve $600 million in operating income for fiscal 2021.

With a year of strong execution across the “Real Power. Real Growth.” value creation plan, the company is on track to surpass its fiscal 2023 operating income and margin goals two years ahead of schedule. Building on this momentum, AEO is raising its 2023 financial targets. The plan will continue to focus on pursuing growth opportunities for Aerie’s powerful brand platform through innovation, expanding deeper into key markets and growing its customer base. Having successfully driven significant and structural improvement in profitability at American Eagle, the brand will now pursue a dual agenda of modest growth and maintaining healthy profit flow-through.

AEO will continue to leverage its leading customer-focused and operational capabilities and maintain its ROI discipline, while building on the power of its people, culture and purpose.

“I am extremely proud of the team’s outstanding execution throughout the past year, which has instilled real structural improvements within our company. Inventory and real-estate optimization combined with strong demand fueled by product improvements have reignited profitability at the American Eagle brand. Aerie cemented another year of industry-leading growth and achieved a substantial inflection in profitability as its powerful brand platform continued to scale. Operational excellence drove solid results amidst external disruptions. We closed out a milestone year for our supply chain, anchored by two key acquisitions, which secured cost efficiencies, locked in key strategic advantages and created a new platform for future growth,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “As I look forward, I see tremendous growth potential and opportunities across the organization. I am excited to see us build on our successes as we strive to reach greater heights and create lasting value for our shareholders.”

Fourth Quarter Outlook

Fueled by strong demand and positive pricing, AEO expects record fourth quarter revenue with growth in the mid-to-high teens compared to fourth quarter 2020, and up in the mid-teens from the fourth quarter of 2019. Operating income is expected to be in the range of $90 to $100 million including approximately $80 million in higher freight costs, due to supply chain disruptions as discussed in November. The fourth quarter profit outlook reflects significant progress and meaningful growth compared to the fourth quarter of 2019.

2023 Financial Outlook

AEO targets revenue of approximately $5.8 billion and operating income of $800 million in fiscal 2023, with the operating margin expanding to 13.5%. These targets exclude potential asset impairment and restructuring charges.

Aerie revenue is expected to reflect a high-20%’s compound annual growth rate to fiscal 2019, reaching approximately $2.2 billion and providing significant profit flow through. American Eagle revenue is expected to be up slightly to fiscal 2019, at approximately $3.6 billion, with improved profitability.

AEO’s executive leadership team will discuss its new targets in detail in a fireside chat at the ICR Conference today at 1pm Eastern Time. The event can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com. A replay of the event will be archived and made available online on the company’s website.

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