American Eagle Outfitters released
earnings for 2Q12 on August 20th, 2012. They reported net sales of $740mil
compared to $669mil in 2Q11, which represents an 11% increase year-over-year,
and beats street expectations of $738mil.
Sales were driven by a 9% increase in comparable store sales, and an
increase in the average selling price. The company's AE Brand, aerie and AEO
Direct segments reported a growth of 7%, 13% and 28%, respectively, in
comparable store sales. An adjusted EPS
of 21 cents marks a 62% increase in EPS year-over-year. Gross margin
improved 210 basis points to 37.4%. Increase in margin was driven by strong
top-line growth, lower product costs, and a decrease in occupancy/warehousing
expenses. AEO opened 9 new stores (8 of
which are outlet stores), in 2Q12, and also closed 8 locations during the same
period.
EPS estimate for the third
quarter is between 37 – 38 cents, which is higher than EPS from 2Q11 of 30
cents. For the year, adjusted EPS is expected to be $1.33 to $1.36 which
assumes comp store sales growth in the mid single-digit range. Guidance is
adjusted for the 10 cent per share 77kids operating loss due to the closing of
that business. The sale of the 77kids business was closed late in the quarter,
and is expected to cause an after-tax loss of $35mil, of which $9mil is
expected to be incurred in 3Q12.
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