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.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)