American Eagle Outfitters Reports First Quarter Adjusted EPS of $0.18

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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,
201320132012
(unaudited)(unaudited)
 
ASSETS
Cash and cash equivalents$383,175$509,119$713,443
Short-term investments113,041121,8738,587
Merchandise inventory340,508332,452367,695
Assets held for sale4,5289,49919,039
Accounts receivable55,19346,32137,472
Prepaid expenses and other97,51273,80575,433
Deferred income taxes42,64958,23048,358
Total current assets1,036,6061,151,2991,270,027
Property and equipment, net522,269500,134562,058
Intangible assets, net37,93138,13639,556
Goodwill11,43411,48411,544
Non-current deferred income taxes23,32531,28216,579
Other assets35,47923,71816,688
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 taxes27,99365,53321,970
Accrued rent74,03477,87376,550
Accrued income and other taxes7,94829,15514,333
Unredeemed gift cards and gift certificates33,43546,45830,783
Current portion of deferred lease credits14,21913,38114,945
Other current liabilities and accrued expenses27,72826,62825,779
Total current liabilities347,135435,902318,221
Deferred lease credits69,39959,57173,350
Non-current accrued income taxes19,32119,01131,806
Other non-current liabilities24,06420,38222,544
Total non-current liabilities112,78498,964127,700
Commitments and contingencies---
Preferred stock---
Common stock2,4962,4962,496
Contributed capital583,795627,065567,700
Accumulated other comprehensive income28,79529,29730,532
Retained earnings1,592,7061,553,0581,774,205
Treasury stock(1,000,667)(990,729)(904,402)
Total stockholders' equity1,207,1251,221,1871,470,531
Total Liabilities and Stockholders' Equity$1,667,044$1,756,053$1,916,452
 
Current Ratio2.992.643.99
 
    
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,% ofApril 28,% of
2013 Revenue  2012 Revenue
 
Total net revenue$679,477100.0%$708,695100.0%
Cost of sales, including certain buying,
occupancy and warehousing expenses415,868 61.2%433,782 61.2%
Gross profit263,60938.8%274,91338.8%
Selling, general and administrative expenses182,25326.8%178,53925.2%
Depreciation and amortization35,539 5.3%32,066 4.5%
Operating income45,8176.7%64,3089.1%
Other (expense) income, net(682) -0.1%3,507 0.5%
Income before income taxes45,1356.6%67,8159.6%
Provision for income taxes17,159 2.5%23,780 3.4%
Income from continuing operations27,9764.1%44,0356.2%
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 operations0.00 (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 operations0.00 (0.02)
Net income per diluted share$0.14$0.20
 
Weighted average common shares
outstanding - basic192,710194,890
Weighted average common shares
outstanding - diluted196,718197,252
 
     
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$679,477100.0%$-$679,477100.0%
Cost of sales, including certain buying, occupancy and warehousing expenses 415,868 61.2% 2,425 413,443 60.9%
Gross profit263,60938.8%(2,425)266,03439.1%
Selling, general and administrative expenses182,25326.8%1,512180,74126.6%
Depreciation and amortization 35,539 5.3% 7,606 27,933 4.1%
Operating income (loss)45,8176.7%(11,543)57,3608.4%
Other expense, net (682) -0.1% - (682) -0.1%
Income (loss) before income taxes45,1356.6%(11,543)56,6788.3%
Provision (benefit) for income taxes 17,159 2.5% (4,375) 21,534 3.2%
Income (loss) from continuing operations27,9764.1%(7,168)35,1445.1%
Loss from discontinued operations, net of tax - 0.0% - - 0.0%
Net income (loss)$27,976 4.1%$(7,168)$35,144 5.1%
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