American Eagle Outfitters Has Another Blowout Quarter With Sales Surpassing $1 Billion

American Eagle Outfitters continues to be in demand. For the first time the teen retailer has surpassed $1 billion in sales during a quarter.

The company reported improvement on both top and bottom lines year-over-year during Tuesday’s third-quarter earnings release.

Revenue during the quarter was up 5 percent to more than $1 billion, compared with $960 million the same time last year. And shoppers were flocking to both brick-and-mortar stores as well as the web site. Same-store sales during the three months rose 8 percent, on top of 3 percent last year, marking the company’s 15th straight consecutive quarter of positive comps.

That translates to an increased income of 8.5 percent to $85.5 million, compared with $63.7 million last year.

“American Eagle and Aerie had extremely well-executed back-to-school and fall seasons, fueling strong sales across stores and double-digit growth in digital, on lower promotional activity across channels,” American Eagle’s chief executive officer Jay Schottenstein, said in a statement, and pointed out that both brands within American Eagle are off to a strong start at the beginning of this year’s holiday shopping season.

“We’re proud, when you walk in the malls and you look at the shape and condition of the stores, and you look at how the merchandise [in American Eagle stores] is displayed, I think we’re the number-one-looking stores in the mall today,” Schottenstein said on Tuesday afternoon’s conference call.

Still, the stock closed down 2.51 percent to $19.03 a share and continued in the red during after-hours trading, based on weaker-than-expected fourth-quarter expectations. The company attributes the revisions to a shorter calendar year with one less week.

But analysts have a different outlook with the stock up about 14 percent year-over-year.

“AEO is routinely one of the most heavily trafficked teen/young adult stores, which we believe demonstrates that the on-trend product offering is resonating with consumers,” Susan Anderson, an analyst at B. Riley FBR, wrote in a note. The investment firm rated American Eagle a buy.

Meanwhile, Aerie, the company’s bra and underwear brand, continues to be a cash cow. The sister business was up 32 percent in same-store sales during the quarter. That’s on top of a 19 percent increase during the same period last year.

“That business is on fire,” Robert Madore, executive vice president and chief financial officer, said on the conference call.

Jennifer Foyle, global brand president for Aerie, said the company has recently added extended sizes, both smaller and larger, as it continues to take market share from other intimates players like Victoria’s Secret.

Foyle added that about 80 percent of in-store shoppers become online shoppers with sale associates collecting e-mail addresses during each transaction.

American Eagle, which currently has more than a thousand stores in the United States, Canada, Mexico and China, and about 200 locations internationally, plans to open an additional 60 to 70 new Aerie stores in 2019, a mix of stand-alone stores and side-by-side stores. The company will also open between 15 and 20 new American Eagle stores, including a flagship in Las Vegas next week.

With continued investments in new stores, products, technology, updates to the web site and the team, such as more staff, executives said the company will be able to leverage those investments in the coming year.

“It’s our goal to be the biggest denim brand in the United States,” Schottenstein said. “We have to be the leader [in that category], not a follower.”

But he also pointed out that the company is not just selling a pair of jeans or a top; it’s selling “the whole experience.”

“At the end of the day, the customer, they expect everything,”Schottenstein said on the conference call. “They expect the great online experience, as well as an in-store experience, too. It doesn’t happen by itself.”

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