Shares of American Eagle Outfitters Inc. saw nearly double-digit gains in morning trading Wednesday after the company reported progress in its turnaround efforts, marked by improvements in fourth-quarter sales and profits that exceeded expectations.
The firm also provided first-quarter profit guidance that surpassed Wall Street analysts’ consensus expectations. ***
Shares rose 9.9 percent to $16.29 in morning trading on the New York Stock Exchange after hitting a 52-week high of $16.34 earlier in the day.
American Eagle Outfitters Inc. made progress in its turnaround efforts in the fourth quarter, posting improvements in sales and profits that exceeded expectations.
In the three months ended Jan. 31, the Pittsburgh-based operator of the American Eagle and Aerie brands generated net income of $61.6 million, or 32 cents a diluted share, nearly six times the $10.5 million, or 5 cents, reported for the comparable period in 2013. Excluding the discontinued 77kids operation, adjusted EPS was 36 cents, ahead of both the 34-cent consensus estimate of Wall Street analysts and the updated guidance provided by the company on Jan. 8, which called for EPS of between 32 and 34 cents.
Revenues advanced 2.9 percent to $1.07 billion from $1.04 billion in the fourth quarter of 2013. Overall, comparable sales were flat, with a 13 percent increase at Aerie offsetting American Eagle’s 1 percent decline.
Gross margin jumped to 35.1 percent of sales from 29.4 percent in the year-ago period.
Jay Schottenstein, interim chief executive officer, said, “We’re encouraged to see momentum continue into the spring season. We have significant opportunity for earnings recovery. While we fully recognize the volatility within our sector, I believe we are very well positioned, with a top-notch leadership team focused on the right priorities to strengthen our business and deliver profitable growth and returns to shareholders.”
The company said it expected earnings of between 9 and 12 cents in the first quarter, versus a consensus estimate among analysts for 7 cents.
For the full year, earnings fell 3.2 percent to $80.3 million, or 42 cents a diluted share, while revenues were down 0.7 percent to $3.28 billion.
The company late Tuesday promoted Chad Kessler and Jennifer Foyle to global brand presidents of the American Eagle and Aerie businesses, respectively.