American Eagle Outfitters (AEO) Misses Q1 EPS by 1c, Comps Up 2%
American Eagle Outfitters (NYSE: AEO) reported Q1 EPS of $0.16, $0.01 worse than the analyst estimate of $0.17. Revenue for the quarter came in at $762 million versus the consensus estimate of $741.7 million.
Jay Schottenstein, Chief Executive Officer commented, '"The first quarter results reflected mall traffic headwinds, especially early in the quarter, with improved trends over Easter and a strong digital business throughout. As we look ahead, we are taking the right steps to improve our results and adjust our business for today’s rapidly evolving retail environment. We are creating efficiencies across our organization, as we aim to continue capitalizing on the strength of our brands, product leadership and other competitive advantages. The six million shares repurchased this quarter reflects the company’s strong cash flow, healthy balance sheet and confidence in our brands and long-term strategic initiatives."
- Total net revenue increased 2% to $762 million from $749 million last year.
- Consolidated comparable sales were up 2%, following a 6% increase last year.
- Gross profit decreased to $278 million from $293 million last year with a gross margin rate of 36.5% to revenue compared to 39.2% last year, a 270 basis point decline. The margin declined primarily due to increased promotional activity and higher shipping costs related to a strong digital business.
- Selling, general and administrative expense declined 1% to $195 million compared to $196 million last year, and leveraged 60 basis points to a rate of 25.6% to revenue. Higher advertising expense was offset by lower compensation expense and favorability across a number of other expense categories.
- Operating income of $37 million, which includes $5 million of restructuring charges, compared to $59 million last year. Adjusted operating income* of $42 million compared to $59 million last year with a rate of 5.6% to revenue compared to 7.8% last year.
- The effective tax rate decreased to 32.4% compared to 36.4% last year, reflecting the impact of discrete items this quarter.
- EPS of $0.14 compared to EPS of $0.22 last year. Adjusted EPS* of $0.16 compared to EPS of $0.22 last year.
Based on anticipated comparable store sales in the range of flat to a low single digit decline, management expects second quarter 2017 EPS to be approximately $0.15 to $0.17. This guidanceexcludes potential asset impairment and restructuring charges, and compares to EPS of $0.23 last year.
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