Innovate, innovate, innovate.
That laser focus on innovation was a key element in helping American Eagle Outfitters Inc. achieve 11 consecutive quarters of comparable-store sales gains, according to Bob Madore, chief financial officer of the teen retailer.
In a telephone interview Wednesday following the company’s third-quarter earnings report, Madore said, “When I walk the malls and spend time looking at us and our competitors, one of the big things for us is continuous product innovation and high-quality merchandise at a value.” He also said the American Eagle brand has the leading jeans position in the teen space in the malls, noting that key differentiators in the business are the brand’s different style options and fits in the jeans category.
Jay L. Schottenstein, chairman and chief executive officer, said in the morning conference call to Wall Street analysts that the company “achieved record third-quarter sales and posted the best comparable sales so far this year.…We continue to see consistency in our top-line growth, which reflects the multiyear investments we’ve made in product leadership, innovation [and] quality in our brands.”
Results for the quarter ended Oct. 28 just missed Wall Street’s consensus estimates. Net income fell 15.9 percent to $63.7 million, or 36 cents a diluted share, on a revenue gain of 2.1 percent to $960.4 million and comps gain of 3 percent on top of a 2 percent increase last year. Adjusted for restructuring charges, adjusted EPS was 37 cents. Wall Street was expecting adjusted EPS of 38 cents on revenues of $960.8 million.
The company continues to remain strong in its AE jeans and bottoms business, and the goal for Aerie continues to be the $1 billion mark in annual volume over the next few years. Further, the company has been working on creating stronger customer engagement and experience at every touch point. It recently built its new AE Studio at Union Square, a concept designed to raise the bar on customer engagement.
Chad Kessler, global brand president for American Eagle Outfitters, told WWD that the company is “very optimistic” going into the fourth quarter and has issued guidance for a positive midsingle-digit earnings growth over last year. He said the business “exceeded our expectation over the critical Thanksgiving time period.” The brand comped up 1 percent in the quarter.
Kessler also said the company has been able to better manage the interplay — and consumer experience — between direct-to-consumer and brick-and-mortar, as well as digital, and have the experience be somewhat different between the different platforms. That differentiation is more involved than what’s found at competitors, particularly in the digital space that includes exclusive product, compared with many competitors who are focused primarily on extensive sizing options, Kessler said.
The American Eagle brand president also said the investment in marketing campaigns, focused on product and value proposition, has also helped “us drive more than our share of traffic in the mall [into our stores].”
Over at the company’s intimates concept brand Aerie, the business posted its 14th consecutive quarter of positive comps, which included a 19 percent comps growth in the third quarter. Jennifer Foyle, Aerie’s global brand president, said, while intimates remains strong, the addition of fleece tops and ath-leisure apparel provides a lifestyle collection that allows the customer to “dress in a casual sensibility from yoga to the coffee shop. That is how girls are dressing today.” She also reiterated the brand’s body-positive platform and how that’s resonating with a new generation of consumers.
Shares of American Eagle rose 2.4 percent to close at $16.42 in New York Stock Exchange trading.