Shares of American Eagle Outfitters Inc. fell 9.5 percent Friday after the company reported declines in third-quarter results and updated fourth-quarter guidance below analysts’ consensus estimates.
For the three months ended Nov. 2, net income was down 68.3 percent to $24.9 million, or 13 cents a diluted share, from $78.6 million, or 39 cents, a year ago. EPS on a GAAP basis includes a non-cash charge of 6 cents a diluted share in connection with the plans to close its Warrendale, Pa., distribution center after the chain opens its new facility in Hazelton, Pa. Total net revenues also fell by 5.8 percent to $857.3 million from $910.4 million.
Consolidated comparable-store sales, including its direct channel, fell 5 percent versus a 10 percent gain last year.
Robert Hanson, chief executive officer, said during a conference call to Wall Street analysts, “We continue to operate in the most challenging sector of retail where there has been intense promotional competition and tepid consumer spending. This has led to weak store traffic and the high level of promotional activity.…In the third quarter, good expense management was offset by top-line pressure and weak merchandise margins.”
He added that business conditions remain tough in the firm’s North American mainline stores. “We need to deliver stronger assortments and ensure we have compelling innovative key items at outstanding value. In order to win, we need to be differentiated and deliver excellence in trending quality combined with a great customer experience,” he said.
While Hanson said the company has been working on initiatives to improve performance in 2014, he expects “conditions to remain challenging and we’re planning accordingly.”
The company said fourth-quarter diluted earnings per share are expected in the range of 26 cents to 30 cents, based on a “midsingle-digit decline” in comps. Analysts were expecting 39 cents as the consensus estimate. That’s compared with fourth-quarter EPS of 55 cents a year ago.
American Eagle is the latest retailer in the teen space that has reported declines in third-quarter results.
According to Jeff Edelman, a former retail analyst and now director of retail and consumer products advisory services at McGladrey, the problem faced by all the teen retailers is one regarding merchandising.
Separately, the retailer said that Chad Kessler will be joining the company as chief merchandising and designer officer for the core American Eagle brand in early February. He succeeds Fred Grover, who is retiring after 35 years.
Supermodel @helenachristensen teamed up with longtime friend and designer @camillastaerk on a joint @paredeyewear collaboration. The lineup features three styles and 11 offerings, all of which embody a vintage feel. Get all the details on how they celebrated the collab on WWD.com. #wwdaccessories #wwdeye (📷: @slovekinpics)
“It’s a hard industry to keep motivated, as well, so finding different subjects and people is what makes it worth it – when you’re like, oh, I’ve met great people, I feel like I’ve done something good, and I feel proud of having done this,” said French actress Stacy Martin on being grateful for the variety of roles she’s take on. Read @ktauer’s full interview with Martin on her her latest film “Godard Mon Amour.” #wwdeye (📷: @danieldorsa)
After showing in front of the Eiffel Tower for his last two women’s ready-to-wear collection, it looks like @anthonyvaccarello may be heading to the Big Apple. Sources say the designer will stage his next @ysl show in NYC on June 6. Get all the details on WWD.com. #wwdnews #wwdfashion (📷: @aitorrosasphoto)
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion