NEW YORK — Weak mall traffic and promotional pressures pushed American Eagle Outfitters’ third-quarter profits down 11.7 percent.
The Warrendale, Pa.-based specialty retailer said for the three months ended Nov. 2, net income was knocked down to $27.1 million, or 37 cents a diluted share, from $30.7 million, or 42 cents, in the same quarter last year. Earnings exceeded AE’s and Wall Street’s already lowered guidance.
Total consolidated sales for the third quarter rose 3 percent to $374.5 million, from $363.7 million in last year’s quarter, and comparable-store sales, including Canadian units, dropped 7 percent.
The company said the negative comps were attributable to a decline in its average unit retail price, which dropped just over 10 percent in the quarter. Deflation was offset by increases in transactions per average store and units sold per average store and per transaction.
"Our third-quarter results were below our expectations," Roger Markfield, AE’s president and chief merchandising officer, acknowledged on a morning conference call. "It was a challenging environment with heavy promotions in certain categories and very spotty mall traffic in a highly competitive marketplace."
There was one notable exception: "Our women’s fashion was right on, enabling us to achieve a positive low-single-digit comp," Markfield said, citing strength in denim, skirts, graphic T-shirts, accessories and underwear. He also said he is seeing solid results in sweaters, which are producing double-digit comp gains.
On the other hand, he said the men’s business, plagued by a lack of a clear and compelling fashion trends, comped down in the low double-digits. Men’s denim, however, had double-digit comp gains. Markfield said the division is improving and said he believes the momentum will increase with the start of holiday shopping. He declined to say if the trend meant the men’s division was now comping positively.
"We have become a denim destination store and we will continue to have a meaningful denim assortment all year long," Markfield declared.
He said he believes "this Christmas we will get more than our fair share of the holiday spending in our segment of the market." He said he is comfortable AE will be fully in stock in all key holiday items before the Thanksgiving weekend."The merchandise is fashion right and we are perceived more and more as the gift-giving brand," he said, adding that early feedback on the holiday line has been positive.
Laura Weil, chief financial officer, said the later Thanksgiving this year — causing six fewer shopping days — will likely impact that month’s comps 3 to 4 percentage points, but said looking at November and December combined, the effect will be minimal. Comps for November are expected to be flat to down in the single digits, with December faring better.
For the first nine months , income fell 19 percent to $49.9 million, or 68 cents a diluted share, versus income of $61.6 million, or 83 cents. Total sales increased 7.1 percent to 971.6 million from $907.6 million. Comps for the AE stores receded 5 percent and were down 6.2 percent on a consolidated basis.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye