American Eagle Outfitters’ Q3 FY24 revenue dips 1%, profit down 3% YoY

American Eagle Outfitters (AEO), Inc, a clothing and accessories retailer, has reported a net revenue of $1.29 billion in the third quarter (Q3) of fiscal 2024 (FY24) ended November 2, 2024, a slight decline of 1 per cent year over year (YoY). The gross profit of $527 million decreased 3 per cent YoY. The gross margin in Q3 FY24 was 40.9 per cent compared to 41.8 per cent in the same period of the last fiscal.

Total comparable sales increased 3 per cent, following 5 per cent reported comp growth last fiscal. Selling, general, and administrative expenses (SG&A) reduced to $351.4 million (27.3 per cent of revenue), a decrease of 3 per cent YoY and leveraged 50 basis points, AEO said in a press statement.

American Eagle Outfitters has reported a revenue of $1.29 billion in Q3 FY24, down 1 per cent YoY, with gross profit at $527 million and net income at $80 million.
Nine-month revenue rose to $3.7 billion, with net income up to $225 million.
Aerie’s revenue grew, while other revenue fell sharply.
FY24 outlook includes 3 per cent comparable sales growth and operating income of $428-$433 million.

Net income of the company dropped to $80.0 million (6.2 per cent of revenue) from $96.7 million (7.4 per cent), with diluted earnings per share decreasing to $0.41 from $0.49 in the last fiscal. The operating income fell to $106.1 million from $125.4 million YoY, reflecting an operating margin of 8.2 per cent.

The adjusted operating margin of 9.6 per cent was flat to last fiscal. Total ending inventory increased 5 per cent to $804 million. Capital expenditures totalled $61 million in the third quarter (Q3).

Segment-wise, the American Eagle net revenue stood at $831.9 million, down from $857.4 million in the last fiscal, Aerie’s revenue grew to $410.4 million from $393.0 million in the last fiscal. Other revenue decreased significantly to $56.6 million from $111.8 million in FY23.

Nine-month (9M) financials

For the 9M or 39 weeks period, American Eagle Outfitters, has reported total net revenue of $3.7 billion, up from $3,582.9 million in the prior fiscal. Gross profit of the company increased to $1.49 billion from $1.4 billion in the last fiscal.

SG&A expenses increased slightly to $1.03 billion from $1 billion. Impairment, restructuring, and other charges reduced to $17.6 million from $21.3 million in the last fiscal. The operating income improved significantly to $285.0 million from $213.5 million. Net income grew to $225.0 million (6.0 per cent of revenue) from $163.7 million (4.6 per cent), with diluted earnings per share rising to $1.14 from $0.83 in FY23.

Segment-wise, American Eagle’s revenue rose to $2,384.3 million from $2,295.5 million in 9M FY23 period, and Aerie segment revenue increased to $1,198.7 million from $1,132.5 million. Other revenue dropped sharply to $169.0 million from $329.5 million in the prior fiscal.

Outlook

For the fourth quarter (Q4), AEO expects comparable sales to go up approximately 1 per cent, with total revenue down 4 per cent including a roughly $85 million impact from the combination of the retail calendar shift and one less selling week. Operating income is expected to be in the range of $125-$130 million.

For full fiscal 2024, the company expects capital expenditures in the range of $225-$245 million, and comparable sales growth of approximately 3 per cent, with total revenue up 1 per cent, including the impact of one less selling week. Adjusted operating income is expected to be in the range of $428 to $433 million compared to adjusted operating income of $375 million in 2023.

“Building on our positive performance in the first half of the year, third quarter results provide another proof point of the effectiveness of our powering profitable growth plan. Led by a strong back-to-school season, we achieved comparable sales growth across brands and channels and delivered adjusted operating income at the high end of our guidance range,” said Jay Schottenstein, AEO’s executive chairman of the board and chief executive officer (CEO).

“We have entered the holiday season well positioned, with our leading brands offering high-quality merchandise, great gifts and an outstanding shopping experience across channels. Key selling periods have seen a positive customer response, yet we remain cognizant of potential choppiness during non-peak periods. The teams are focused on delivering the quarter and with our strong year-to-date performance, we remain confident in achieving our long-term strategic objectives,” he concluded.

Fibre2Fashion News Desk (SG)