American Eagle Outfitters Reports First Quarter Adjusted EPS of $0.18

American Eagle Outfitters Reports First Quarter Adjusted EPS of $0.18

PITTSBURGH--(BUSINESS WIRE)-- American Eagle Outfitters, Inc. (NYS: AEO) today reported adjusted earnings from continuing operations of $0.18 per diluted share for the first quarter ended May 4, 2013, compared to $0.22 per diluted share for the comparable quarter last year. GAAP earnings of $0.14 per share include asset write-offs and corporate charges of ($0.04) per share. The EPS figures refer to diluted earnings per share.

Robert Hanson, chief executive officer stated, "Our first quarter results reflected a tough macro-environment as well as cooler weather causing soft demand for seasonal merchandise, all against warmer-than-normal weather and a strong performance last year. Although disappointed with the decline to last year, we sustained a high level of profitability supported by strong inventory principles, fleet repositioning efforts and the growth of our online business. We remain confident in our strategic direction and made good progress on our initiatives to fortify our business, grow North America and lay the foundation for transformational global longer-term growth. Our focus is aimed at driving profitable revenue growth and delivering top tier returns to our shareholders."


First Quarter 2013 Non-GAAP Results

The following discussion is based on Non-GAAP results, as presented in the accompanying GAAP to Non-GAAP reconciliations.

  • Total net revenue decreased 4% to $679 million, compared to $709 million last year.

  • Consolidated comparable sales, including AEO Direct, decreased 5%, compared to a 17% increase last year. First quarter 2013 comp sales are compared to the 13 weeks ended May 5, 2012.

  • Gross profit decreased 3% to $266 million and increased 30 basis points to 39.1% as a rate to revenue, driven by favorable product costs, sourcing and supply chain efficiencies. Improvements were partially offset by higher markdowns and negative comps.

  • Selling, general and administrative expense of $181 million increased 1% from last year and deleveraged 140 basis points.

  • Operating income decreased 11% to $57 million, resulting in rate of 8.4% compared to 9.1% last year.

  • Adjusted EPS of $0.18 compared to $0.22 last year, an 18% decrease.

Inventory

Total merchandise inventory at the end of the first quarter declined 7% to $341 million compared to $368 million last year. At cost per foot, inventory decreased 6%. Second quarter 2013 ending inventory cost per foot is expected to decline in the low single-digits.

Capital Expenditures

In first quarter 2013, capital expenditures totaled $46 million, with approximately half related to store investments and the balance to information technology and investments in e-commerce. For fiscal 2013, the company continues to expect capital expenditures of $250 million to $280 million. In addition to investments in store growth and maintenance projects, the company's capital spending plan includes building a new distribution center to support omni-channel growth, upgraded technology which includes the implementation of a fully integrated global enterprise system which incorporates a new fleet-wide point-of-sale system and new planning tools.

Real Estate

In the first quarter, total square footage decreased 2% from last year. The company opened 7 new stores, of which 5 were factory stores, and closed 14 locations, including 10 aerie stores. Additionally the company had 57 international franchise locations in 14 countries. For additional first quarter 2013 actual and fiscal 2013 projected real estate information, see the accompanying table.

Future Outlook

Management is issuing second quarter EPS guidance of $0.19 to $0.21 per diluted share, based on flat comparable sales. For the year, EPS guidance is $1.42 to $1.45, based on second half comparable sales growth in the low-single digits.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:00 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.ae.com to access the webcast and audio replay. Also, 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 earnings per share information and the consolidated results of operations 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. The company believes that this non-GAAP information is useful as an additional means for investors to evaluate the company's operating performance, when reviewed in conjunction with the company's GAAP financial statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company's business and operations.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYS: 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 Outfitters® and aerie® brands. The company operates more than 1,000 stores in North America, and ships to 81 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at 57 international franchise stores in 14 countries. For more information, please visit www.ae.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, specifically regarding second quarter and fiscal 2013 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors beyond the company's control. Such factors include, but are not limited to the risk that the company's operating, financial and capital plans may not be achieved and the risks described in the Risk Factor Section of the company's Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized.

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

May 4,

February 2,

April 28,

2013

2013

2012

(unaudited)

(unaudited)

ASSETS

Cash and cash equivalents

$

383,175

$

509,119

$

713,443

Short-term investments

113,041

121,873

8,587

Merchandise inventory

340,508

332,452

367,695

Assets held for sale

4,528

9,499

19,039

Accounts receivable

55,193

46,321

37,472

Prepaid expenses and other

97,512

73,805

75,433

Deferred income taxes

42,649

58,230

48,358

Total current assets

1,036,606

1,151,299

1,270,027

Property and equipment, net

522,269

500,134

562,058

Intangible assets, net

37,931

38,136

39,556

Goodwill

11,434

11,484

11,544

Non-current deferred income taxes

23,325

31,282

16,579

Other assets

35,479

23,718

16,688

Total Assets

$

1,667,044

$

1,756,053

$

1,916,452

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$

161,778

$

176,874

$

133,861

Accrued compensation and payroll taxes

27,993

65,533

21,970

Accrued rent

74,034

77,873

76,550

Accrued income and other taxes

7,948

29,155

14,333

Unredeemed gift cards and gift certificates

33,435

46,458

30,783

Current portion of deferred lease credits

14,219

13,381

14,945

Other current liabilities and accrued expenses

27,728

26,628

25,779

Total current liabilities

347,135

435,902

318,221

Deferred lease credits

69,399

59,571

73,350

Non-current accrued income taxes

19,321

19,011

31,806

Other non-current liabilities

24,064

20,382

22,544

Total non-current liabilities

112,784

98,964

127,700

Commitments and contingencies

-

-

-

Preferred stock

-

-

-

Common stock

2,496

2,496

2,496

Contributed capital

583,795

627,065

567,700

Accumulated other comprehensive income

28,795

29,297

30,532

Retained earnings

1,592,706

1,553,058

1,774,205

Treasury stock

(1,000,667)

(990,729)

(904,402)

Total stockholders' equity

1,207,125

1,221,187

1,470,531

Total Liabilities and Stockholders' Equity

$

1,667,044

$

1,756,053

$

1,916,452

Current Ratio

2.99

2.64

3.99

AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)

GAAP Basis

13 Weeks Ended

May 4,

% of

April 28,

% of

2013

Revenue

2012

Revenue

Total net revenue

$

679,477

100.0%

$

708,695

100.0%

Cost of sales, including certain buying,

occupancy and warehousing expenses

415,868

61.2%

433,782

61.2%

Gross profit

263,609

38.8%

274,913

38.8%

Selling, general and administrative expenses

182,253

26.8%

178,539

25.2%

Depreciation and amortization

35,539

5.3%

32,066

4.5%

Operating income

45,817

6.7%

64,308

9.1%

Other (expense) income, net

(682)

-0.1%

3,507

0.5%

Income before income taxes

45,135

6.6%

67,815

9.6%

Provision for income taxes

17,159

2.5%

23,780

3.4%

Income from continuing operations

27,976

4.1%

44,035

6.2%

Loss from discontinued operations, net of tax

-

0.0%

(4,338)

-0.6%

Net income

$

27,976

4.1%

$

39,697

5.6%

Basic income per common share:

Income from continuing operations

$

0.14

$

0.22

Loss from discontinued operations

0.00

(0.02)

Net income per basic share

$

0.14

$

0.20

Diluted income per common share:

Income from continuing operations

$

0.14

$

0.22

Loss from discontinued operations

0.00

(0.02)

Net income per diluted share

$

0.14

$

0.20

Weighted average common shares

outstanding - basic

192,710

194,890

Weighted average common shares

outstanding - diluted

196,718

197,252

AMERICAN EAGLE OUTFITTERS, INC.

GAAP TO NON-GAAP RECONCILIATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)

13 Weeks Ended

May 4, 2013

American Eagle Outfitters,
Inc.
(GAAP Basis)

Asset Write-offs
and
Corporate Charges
(1)

American Eagle Outfitters,
Inc.
(Non-GAAP Basis)

% of

% of

Revenue

Revenue

Total net revenue

$

679,477

100.0%

$

-

$

679,477

100.0%

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

415,868

61.2%

2,425

413,443

60.9%

Gross profit

263,609

38.8%

(2,425)

266,034

39.1%

Selling, general and administrative expenses

182,253

26.8%

1,512

180,741

26.6%

Depreciation and amortization

35,539

5.3%

7,606

27,933

4.1%

Operating income (loss)

45,817

6.7%

(11,543)

57,360

8.4%

Other expense, net

(682)

-0.1%

-

(682)

-0.1%

Income (loss) before income taxes

45,135

6.6%

(11,543)

56,678

8.3%

Provision (benefit) for income taxes

17,159

2.5%

(4,375)

21,534

3.2%

Income (loss) from continuing operations

27,976

4.1%

(7,168)

35,144

5.1%

Loss from discontinued operations, net of tax

-

0.0%

-

-

0.0%

Net income (loss)

$

27,976

4.1%

$

(7,168)

$

35,144

5.1%