American Eagle posts 13th straight quarter of sales gains
American Eagle Outfitters on Thursday said that first quarter total net revenue rose 8% to $823 million compared to $762 million last year as comparable sales rose 9% over the comparable period last year.
By brand in the quarter, American Eagle's comparable sales rose 4% and Aerie's comparable sales rose 38%, according to a company press release.
Gross profit rose 10% to $304 million from $278 million in the year-ago quarter. The gross margin rate expanded by 50 basis points to 37% of revenue up slightly from 36.5% last year. Operating income rose to $51 million from $37 million last year, and adjusted operating income rose 23% to $52 million from $42 million last year, the company said.
The first quarter marked American Eagle's 13th straight quarter of positive comparable sales, which boosted its operating margin and earnings growth and exceeded the company's expectations.
The company is now applying the messaging that has fueled its Aerie brand to its flagship, and with good reason. The Aerie line continues to resonate with customers, and executives said last quarter that they are gaining sales from younger shoppers as well as their moms. Executives said the brand offers the flagship American Eagle arm an opportunity to gain new customers as well, especially now that Aerie stores are increasingly located next to flagship stores, with a doorway between them.
"After starting a body positivity movement, Aerie is posting record growth rates and striking a real emotional connection with its expanding customer base," CEO Jay Schottenstein said in a statement on Thursday.
GlobalData Retail Managing Director Neil Saunders also noted Aerie's success, saying the company is "firmly on the right flight path," but pointed out that the flagship brand is also resonating based on strong social and ethical stances, and a similar inclusive aesthetic.
To promote the authenticity shoppers are perceiving at Aerie, the flagship banner has launched an effort to capture customer photos. "Stop by your local AE store to take a fitting room selfie and share your look with #AEXME & @americaneagle for a chance to be in our Spring '19 campaign," reads its website landing page, which already features a slew of images. The effort is accompanied by a video that emphasizes individuality, which the retailer insists is possible even though, presumably, it would like everyone to shop at the same place: namely, at its stores.
The campaign follows its #WeAllCan effort in 2016 featuring untouched images of models, including body positivity influencers, and its introduction last year of a denim hijab.