NEW YORK — Urban hip, suburban prep or fashion-forward contemporary woman — regardless of style, specialty retailers Urban Outfitters Inc., American Eagle Outfitters Inc. and Bebe Stores Inc. struck on hot product assortments for spring...
NEW YORK — Urban hip, suburban prep or fashion-forward contemporary woman — regardless of style, specialty retailers Urban Outfitters Inc., American Eagle Outfitters Inc. and Bebe Stores Inc. struck on hot product assortments for spring and early summer, sending sales and earnings soaring.
Pennsylvania-based teen retailers American Eagle and Urban Outfitters had similar results for the second quarter, with both companies posting double-digit sales gains for the quarter and six-month periods, translating into triple-digit increases in earnings for both.
For American Eagle, rising sales and dramatically reduced costs ignited earnings. For the three months ended July 31, earnings rocketed 265.5 percent to $29.6 million, or 40 cents a diluted share, besting Wall Street’s consensus estimate of 38 cents a share. Comparatively, the company reported earnings of $8.1 million, or 11 cents a share, in the same period a year ago.
Sales rose 22.8 percent to $413.8 million from $337.1 million, with a 12.7 percent gain in comparable-store sales for the quarter.
“Our merchandise assortments are fashion-ripe and are perfectly geared to our 15- to 25-year-old target customer,” said James O’Donnell, chief executive officer of AE, during the company conference call. “We continue to have focus assortments with brand-defining key items that have been driving the significant improvement of our business.”
In contrast to Abercrombie & Fitch, whose executives said the retailer is missing out on potential sales during the quarter due to a lack of denim offerings, AE’s denim lines have been hot across the board.
“The cornerstone of the line is denim, which is and has been quite strong for us in both men’s and women’s,” said Roger Markfield, president of AE, during the call. “It has been a strategic goal of the company to be the very best in denim with the best styles, fit, quality and value for our target customer.”
Further fueling profits was a drastic reduction in costs. Cost of sales plunged 670 basis points to $249.5 million, or 60.3 percent of sales, compared with costs of $225.9 million, or 67 percent of sales, in the year-ago period.
Results were even greater for the first six months, with earnings exploding 277.3 percent to $54.7 million, or 74 cents a diluted share, compared with earnings of $14.5 million, or 20 cents, in the same period a year ago.
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