Robert Hanson’s vision for American Eagle Outfitters Inc. includes a foray South of the Border.
This story first appeared in the August 23, 2012 issue of WWD. Subscribe Today.
Hanson, who took the reins as chief executive officer in January, said the company would open at least four stores in Mexico next year, beginning in the spring.
“Based on extensive research and our leading border stores, we have strong brand acceptance and believe Mexico presents growth and high return on invested capital potential,” Hanson told analysts on a conference call detailing second-quarter results, which were strong enough for the company to boost its annual outlook.
“We recently launched our online business in Mexico so we can bring a complete multichannel experience to our customers,” Hanson said. “We view Mexico as an important pilot which will inform our longer-term approach to global expansion.”
Hanson plans to lay out more of his vision for the company to Wall Street in October, but said American Eagle will fortify its brands in North America, setting the stage for “transformational growth, which includes multichannel global expansion and a true 360-degree customer engagement model.”
The company’s second-quarter profits slipped to $19 million from $19.7 million a year earlier and earnings per share were flat at 10 cents. Excluding the 77kids business, which was sold off, earnings rose to 21 cents a share, in line with the retailer’s guidance earlier this month. Sales advanced 10.5 percent to $739.7 million from $669.1 million.
American Eagle boosted its annual EPS guidance for continuing operations to a range of $1.33 to $1.36, up from the $1.16 to $1.22 projected in May. That was enough to push the stock up 6.2 percent to $22.13.
Also reporting Wednesday were Chico’s FAS Inc. and Express Inc. Chico’s also impressed investors, although Express’ outlook disappointed. Here’s a rundown of results for the quarter ended July 28.
• Chico’s net income rose 23 percent to $53.4 million, or 32 cents a share, from $43.4 million, or 25 cents, a year earlier. Earnings came in 2 cents better than the 30 cents analysts expected. Total sales increased 16.4 percent to $641.7 million from $552.4 million.
Shares of the company rose 6.6 percent to $18.21.
The company has 1,327 stores and outlets under the Chico’s, White House|Black Market and Soma Intimates banners.
David Dyer, president and ceo, said the company opened 31 stores so far this year. “These new stores are exceeding our sales expectations and were our first priority as we allocated total inventory since first-year sales are a major indicator of the long-term success for a given location. So in all likelihood, we left more than a few comparable sales dollars on the table.”
• Express’ earnings rose 26.1 percent to $15.9 million, or 18 cents a share, from $12.6 million, or 14 cents, a year earlier. Profits per share were 1 cent ahead of the 17 cents analysts expected. Sales inched up 2 percent to $454.9 million from $446 million.
Michael Weiss, chairman, president and ceo, said the company continued to open stores and maintain double-digit growth in e-commerce, but sought to tamp down expectations for the rest of the year.
“As we begin the second half of the year, we believe it is prudent to set our guidance more conservatively and in line with the trend we experienced in the second quarter,” Weiss said. “We remain confident in our strategies and expect the disciplined execution against our growth pillars to result in another year of growth for Express.”
The chain cut its annual EPS outlook to a range of $1.69 to $1.79, down from the $1.79 to $1.89 projected in May. Investors reacted strongly, pushing the stock down 11.1 percent to $15.03.
• After the market closed, Pacific Sunwear of California Inc. said second-quarter net losses narrowed to $17.5 million, or 26 cents a share, from $19.3 million, or 29 cents, a year earlier. Sales rose 4.7 percent to $210.3 million from $200.9 million.