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OFFON

AMERICAN EAGLE OUTFITTERS, INC.

(AEO)
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American Eagle Outfitters : Reports Record Third Quarter Results with Revenue Rising 24% and Operating Income More Than Doubling. This Reflects Strong Customer Demand and Excellent Execution on the “Real Power. Real Growth.” Value Creation Plan - Form 8-K

11/23/2021 | 12:10pm EST

American Eagle Outfitters Reports Record Third Quarter Results with Revenue Rising 24% and Operating Income More Than Doubling. This Reflects Strong Customer Demand and Excellent Execution on the "Real Power. Real Growth." Value Creation Plan

November 23, 2021

Third Quarter 2021 Highlights Compared to Third Quarter 2020

Record revenue of $1.27 billion increased 24%

Operating income of $210 million more than doubled, reaching a new third quarter high

Strong demand, higher full-priced sales, reduced promotions and controlled costs fueled gross margin expansion to 44.3% and operating margin to 16.5%

American Eagle net revenue rose 21% and operating income was up 68%

Aerie net revenue increased 28% and operating income rose 46%

PITTSBURGH -- (BUSINESS WIRE) - American Eagle Outfitters, Inc. (NYSE: AEO) today announced financial results for the third quarter ended October 30, 2021.

"As strong demand for our merchandise and brands continues, I'm very pleased to report another quarter of record revenue and profit. The work on our Real Power. Real Growth. value creation plan is driving meaningful improvements to our profitability through real estate and inventory optimization; omni-channel and customer focus; and our supply chain initiatives. The power of our brands, operations and talent are clearly evident and we are intensely focused on ensuring these strengths continue to take AEO to new heights," said Jay Schottenstein, AEO's Executive Chairman of the Board and Chief Executive Officer.

"This quarter, we took an important next step in our supply chain transformation with the planned acquisition of Quiet Logistics to ensure ongoing efficiencies and procure a state-of-the-art logistics platform with meaningful growth potential. With our customer-first focus, the teams did a great job bringing in goods to meet strong demand this holiday season. I am extremely proud of the team's ability to execute with precision at a time of volatility and am confident that we will exceed $600 million of operating income for the year, well above the $550 million 2023 target," Jay continued.

Third Quarter 2021 Results

Total net revenue increased $242 million, or 24% to $1.27 billion, compared to $1.03 billion in the third quarter of 2020.

Aerie revenue of $315 million rose 28% from third quarter 2020 on top of 34% growth last year. American Eagle revenue of $941 million rose 21% versus third quarter 2020 following an 11% decline last year.

Consolidated store revenue increased 29%. Total digital revenue increased 10%. Compared to the pre-pandemic third quarter 2019 base, store revenue increased 9% and digital revenue increased 42%.

Gross profit of $565 million rose 36% from $415 million in the third quarter of 2020.

Gross margin of 44.3% expanded 410 basis points from 40.2% in the third quarter of 2020 and reflected the highest rate since 2007. The increase from 2020 largely reflected leverage on rent and delivery, as well as strong product demand, higher full-priced sales, lower promotions and inventory optimization initiatives, partially offset by higher freight costs.

Selling, general and administrative expense leveraged 190 basis points as a rate to sales versus third quarter 2020 due to strong revenue growth and lower incentive compensation.

Depreciation and amortization expense of $41 million compared to $39 million in the third quarter of 2020 and leveraged 60 basis points as a rate to sales due to strong revenue growth.

Operating income was $210 million. This compared to operating income of $96 million in third quarter 2020 or $103 million on an adjusted basis. Aerie's operating income of $52 million increased 46% from $36 million in the third quarter of 2020 and American Eagle's operating income of $261 million increased 68% from $155 million in the third quarter of 2020.

Operating margin of 16.5% reflected the highest rate since 2007. Aerie's operating margin of 16.5% expanded 200 bps from 2020 and American Eagle's operating margin of 27.8% expanded 780 bps from 2020.

Average diluted shares outstanding were 205 million compared to 184 million in the third quarter of 2020. The increase primarily reflected 34 million shares of unrealized dilution associated with the company's convertible notes.

EPS of $0.74. Adjusted EPS of $0.76 this quarter excludes $0.02 of non-cash interest expense on the company's convertible notes.

Inventory

Total consolidated ending inventory at cost increased 32% to $740 million compared to a 13% decline last year. The increase was partially driven by higher air freight due to global supply chain disruptions.

Capital Expenditures

In the third quarter of 2021, capital expenditures totaled $58 million, and year to date totaled $144 million. For fiscal 2021, the company now expects capital expenditures to be at the low end of our prior guidance range of $250 to $275 million.

Cash Flow and Balance Sheet

The company ended the period with total cash of $741 million. This compares to $692 million in third quarter 2020.

Shareholder Returns

The company's third quarter cash dividend of $30 million was paid during the quarter.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:30 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to www.aeo-inc.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company's website.

Non-GAAP Measures

This press release includes information on non-GAAP financial measures ("non-GAAP" or "adjusted"), including consolidated adjusted operating income and earnings per share, excluding non-GAAP items. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles ("GAAP") and are not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Management believes that this non-GAAP information is useful for an alternate presentation of the company's performance, when reviewed in conjunction with the company's GAAP consolidated financial statements, as it helps identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude in such non-GAAP measures. Accordingly, we believe that adjusted operating income provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to the key financial metrics used by our management in our financial and operational decision-making.

These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company's business and operations. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.

* * * *

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. Our purpose is to show the world that there's REAL power in the optimism of youth. The company operates stores in the United States, Canada, Mexico, and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 33 countries. For more information, please visit www.aeo-inc.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including fourth quarter and annual fiscal 2021 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company's control. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," "potential," and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 and in any other filings that we may make with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results for fiscal 2021 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the negative impacts of the COVID-19 pandemic and related operational disruptions; the risk that the company's operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

CONTACT:

Olivia Messina

412-432-3300

LineMedia@ae.com

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

October 30,

January 30,

October 31,

2021

2021

2020

ASSETS

Cash and cash equivalents

$

740,668

$

850,477

$

692,356

Merchandise inventory

739,808

405,445

559,961

Accounts receivable

228,461

146,102

124,560

Prepaid expenses and other

66,593

120,619

130,909

Total current assets

1,775,530

1,522,643

1,507,786

Property and equipment, net

665,408

623,808

650,397

Operating lease right-of-use assets

1,148,108

1,155,965

1,243,311

Intangible assets, including goodwill

69,332

70,332

50,864

Non-current deferred income taxes

57,753

33,045

12,774

Other assets

33,884

29,013

33,083

Total Assets

$

3,750,015

$

3,434,806

$

3,498,215

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$

314,561

$

255,912

$

304,552

Current portion of operating lease liabilities

299,693

328,624

346,321

Accrued compensation and payroll taxes

123,588

142,272

117,736

Other current liabilities and accrued expenses

56,090

55,343

47,587

Unredeemed gift cards and gift certificates

42,070

62,181

39,794

Accrued income taxes and other

33,570

14,150

15,503

Dividends payable

-

-

22,843

Total current liabilities

869,572

858,482

894,336

Non-current operating lease liabilities

1,123,681

1,148,742

1,196,755

Long-term debt, net

336,249

325,290

321,081

Other non-current liabilities

23,816

15,627

17,846

Total non-current liabilities

1,483,746

1,489,659

1,535,682

Commitments and contingencies

-

-

-

Preferred stock

-

-

-

Common stock

2,496

2,496

2,496

Contributed capital

627,264

663,718

655,891

Accumulated other comprehensive loss

(39,049

)

(40,748

)

(44,673

)

Retained earnings

2,185,393

1,868,613

1,865,370

Treasury stock

(1,379,407

)

(1,407,414

)

(1,410,887

)

Total stockholders' equity

1,396,697

1,086,665

1,068,197

Total Liabilities and Stockholders' Equity

$

3,750,015

$

3,434,806

$

3,498,215

Current Ratio

2.04

1.77

1.69

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share amounts)

(unaudited)

GAAP Basis

13 Weeks Ended

October 30,

% of

October 31,

% of

2021

Revenue

2020

Revenue

Total net revenue

$

1,274,078

100.0

%

$

1,031,617

100.0

%

Cost of sales, including certain buying, occupancy and warehousing expenses

709,554

55.7

%

616,840

59.8

%

Gross profit

564,524

44.3

%

414,777

40.2

%

Selling, general and administrative expenses

313,890

24.6

%

273,297

26.5

%

Restructuring and COVID-19 related charges

-

0.0

%

6,955

0.6

%

Depreciation and amortization expense

40,947

3.2

%

38,974

3.8

%

Operating income (loss)

209,687

16.5

%

95,551

9.3

%

Interest expense (income), net

8,612

0.7

%

7,924

0.8

%

Other (income) expense, net

(3,130

)

-0.2

%

(2,223

)

-0.2

%

Income (loss) before income taxes

204,205

16.0

%

89,850

8.7

%

Provision (benefit) from income taxes

51,981

4.1

%

31,742

3.1

%

Net income (loss)

$

152,224

11.9

%

$

58,108

5.6

%

Net income (loss) per basic share

$

0.91

$

0.35

Net income (loss) per diluted share

$

0.74

$

0.32

Weighted average common shares outstanding - basic

167,637

166,185

Weighted average common shares outstanding - diluted

205,013

184,397

GAAP Basis

39 Weeks Ended

October 30,

% of

October 31,

% of

2021

Revenue

2020

Revenue

Total net revenue

$

3,502,848

100.0

%

$

2,466,819

100.0

%

Cost of sales, including certain buying, occupancy and warehousing expenses

1,999,743

57.1

%

1,758,537

71.3

%

Gross profit

1,503,105

42.9

%

708,282

28.7

%

Selling, general and administrative expenses

872,320

24.9

%

685,206

27.8

%

Impairment, restructuring and COVID-19 related charges

-

0.0

%

177,186

7.1

%

Depreciation and amortization expense

119,674

3.4

%

120,818

4.9

%

Operating income (loss)

511,111

14.6

%

(274,928

)

-11.1

%

Interest expense (income), net

26,038

0.7

%

16,617

0.7

%

Other (income) expense, net

(6,354

)

-0.2

%

(793

)

0.0

%

Income (loss) before income taxes

491,427

14.1

%

(290,752

)

-11.8

%

Provision (benefit) from income taxes

122,226

3.6

%

(77,943

)

-3.2

%

Net income (loss)

$

369,201

10.5

%

$

(212,809

)

-8.6

%

Net income (loss) per basic share

$

2.20

$

(1.28

)

Net income (loss) per diluted share

$

1.78

$

(1.28

)

Weighted average common shares outstanding - basic

168,062

166,385

Weighted average common shares outstanding - diluted

207,032

166,385

AMERICAN EAGLE OUTFITTERS, INC.

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share amounts)

(unaudited)

13 Weeks Ended

October 30, 2021

Interest Expense, net

Net Income

Diluted Earnings per Common Share

GAAP Basis

$

8,612

152,224

$

0.74

% of Revenue

0.7

%

11.9

%

Less: Convertible debt(1):

4,569

3,330

0.02

Non-GAAP Basis

$

4,043

155,554

$

0.76

% of Revenue

0.3

%

12.2

%

(1) Amortization of the non-cash discount on the Company's convertible notes

AMERICAN EAGLE OUTFITTERS, INC.

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share amounts)

(unaudited)

13 Weeks Ended

October 31, 2020

Operating Income

Interest Expense, net

Net Income

Diluted Earnings per Common Share

GAAP Basis

$

95,551

$

7,924

$

58,108

$

0.32

% of Revenue

9.3

%

0.8

%

5.6

%

Add: Incremental COVID-19 related expenses and restructuring (1):

6,955

-

4,500

0.02

Less: Convertible debt (2):

-

4,113

2,657

0.01

Non-GAAP Basis

$

102,506

$

3,811

$

65,265

$

0.35

% of Revenue

9.9

%

0.4

%

6.2

%

(1) $7.0 million incremental COVID-19 related expenses and restructuring charges:

-

$6.0 million of incremental COVID-19 related expenses consisting of personal protective equipment and supplies for our associates and customers

-

$1.0 million of corporate severance charges

(2) Amortization of the non-cash discount on the Company's convertible notes

AMERICAN EAGLE OUTFITTERS, INC.

RESULTS BY SEGMENT

(Dollars in thousands)

(unaudited)

American Eagle

Aerie

Corporate(1)

Total(2)

13 weeks ended October 30, 2021

Total net revenue

$

940,992

$

315,049

$

18,037

$

1,274,078

Operating income (loss)

$

261,225

$

52,021

$

(103,559

)

$

209,687

Capital Expenditures

$

13,298

$

24,867

$

20,036

$

58,201

13 weeks ended October 31, 2020

Total net revenue

$

775,961

$

246,748

$

8,908

$

1,031,617

Operating income (loss)

$

155,259

$

35,738

$

(95,446

)

$

95,551

Restructuring and COVID-19 related charges

$

-

$

-

$

6,955

$

6,955

Adjusted operating income (loss)

$

155,259

$

35,738

$

(88,491

)

$

102,506

Capital Expenditures

$

10,488

$

6,399

$

14,302

$

31,189

American Eagle

Aerie

Corporate(1)

Total(2)

39 weeks ended October 30, 2021

Total net revenue

$

2,513,700

$

947,851

$

41,297

$

3,502,848

Operating income (loss)

$

611,650

$

191,341

$

(291,880

)

$

511,111

Capital Expenditures

$

36,093

$

48,164

$

60,148

$

144,405

39 weeks ended October 31, 2020

Total net revenue

$

1,791,042

$

653,240

$

22,537

$

2,466,819

Operating income (loss)

$

1,113

$

47,011

$

(323,052

)

$

(274,928

)

Impairment, restructuring, and COVID-19 related charges

$

90,926

$

18,215

$

68,045

$

177,186

Adjusted operating income (loss)

$

92,039

$

65,226

$

(255,007

)

$

(97,742

)

Capital Expenditures

$

25,361

$

23,807

$

43,423

$

92,591

(1)Corporate includes revenue and operating results of the Todd Snyder and Unsubscribed brands, and AirTerra, which are not material to disclose as separate reportable segments. Corporate operating costs represents certain costs that are not directly attributable to another reportable segment.

(2) The difference between Total Operating Income (loss) and Income (loss) before Taxes includes the following items, which are not allocated to our reportable segments:

-

For the 13 weeks ended October 30, 2021, interest expense, net or $8.6 million and other (income), net of ($3.1) million. For the 39 weeks ended October 30, 2021, interest expense, net of $26.0 million and other (income), net of ($6.4) million.

-

For the 13 weeks ended October 31, 2020, interest expense, net of $7.9 million and other (income), net of ($2.2) million. For the 39 weeks ended October 31, 2020, interest expense, net of $16.6 million and other (income), net of ($0.8) million.

AMERICAN EAGLE OUTFITTERS, INC.

STORE INFORMATION

(unaudited)

Third Quarter

YTD Third Quarter

2021

2021

Consolidated stores at beginning of period

1,090

1,078

Consolidated stores opened during the period

AE Brand

3

14

Aerie stand-alone (incl. OFFLINE) (3)

25

43

Todd Snyder

0

1

Unsubscribed

2

3

AE77

1

1

Consolidated stores closed during the period

AE Brand

0

(18

)

Aerie stand-alone (incl. OFFLINE)

0

(1

)

Total consolidated stores at end of period

1,121

1,121

AE Brand

897

Aerie stand-alone (incl. OFFLINE) (3)

216

Aerie side-by-side (incl. OFFLINE) (2)(4)

187

Todd Snyder

3

Unsubscribed

4

AE77

1

Stores remodeled and refurbished during the period

2

13

Total gross square footage at end of period (in '000)

6,924

6,924

International license locations at end of period (1)

256

256

Aerie Openings

Aerie stand-alone (incl. OFFLINE) (3)

25

43

Aerie side-by-side (incl. OFFLINE) (2)(4)

4

9

Total Aerie Openings

29

52

(1) International license locations are not included in the consolidated store data or the total gross square footage calculation.

(2) Aerie side-by-side and OFFLINE side-by-side stores are included in the AE Brand store count as they are considered part of the AE Brand store to which they are attached. OFFLINE side-by-side stores, when attached to an Aerie Brand store, are included in the Aerie Brand store count.

(3) Aerie stand-alone stores include 3 OFFLINE openings during the period and 4 OFFLINE openings YTD, with 8 OFFLINE stores in the consolidated totals.

(4) Aerie side-by-side stores include 4 OFFLINE openings during the period and YTD, with 5 OFFLINE stores in the consolidated totals.

Disclaimer

American Eagle Outfitters Inc. published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 17:09:06 UTC.


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Financials (USD)
Sales 2022 5 020 M - -
Net income 2022 442 M - -
Net cash 2022 450 M - -
P/E ratio 2022 10,9x
Yield 2022 2,54%
Capitalization 4 005 M 4 005 M -
EV / Sales 2022 0,71x
EV / Sales 2023 0,65x
Nbr of Employees 35 000
Free-Float -
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American Eagle Outfitters, Inc. Technical Analysis Chart | AEO | US02553E1064 | MarketScreener
Technical analysis trends AMERICAN EAGLE OUTFITTERS, INC.
Short TermMid-TermLong Term
TrendsNeutralBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 12
Last Close Price 23,75 $
Average target price 36,67 $
Spread / Average Target 54,4%
EPS Revisions
Managers and Directors
Jay L. Schottenstein Executive Chairman & Chief Executive Officer
Michael A. Mathias Chief Financial Officer & Executive Vice President
Michael R. Rempell Chief Operations Officer & Executive VP
Janice E. Page Independent Director
Cary D. McMillan Independent Director
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