American Eagle Outfitters Inc., riding double-digit sales gains from merchandise improvements, reported diluted earnings per share of 17 cents for the second quarter, beating guidance of 11 cents to 14 cents and far exceeding the 3 cents a share earned in the year-ago quarter.
Total revenues at the Pittsburgh-based casual apparel retailer for teens increased 12 percent to $797 million in the quarter ended Aug. 1, from $711 million last year. Comparable sales increased 11 percent, compared to a 7 percent decrease last year.
“I’m pleased to report another strong quarter, and to see positive momentum continue,” said Jay Schottenstein, American Eagle Outfitters’ interim chief executive officer. “The team is delivering exceptional execution, and our customers have taken notice of improvements to our merchandise and overall customer experience. Both American Eagle and Aerie delivered strong sales and earnings growth across channels.”
American Eagle Outfitters, with more than 1,000 stores, expects the momentum shown this year to continue for the third quarter, the company anticipates a mid-single-digit increase in comparable sales, and earnings per share of 28 cents to 31 cents, compared with adjusted EPS of 22 cents last year. The guidance excludes potential asset impairment and restructuring charges.
In the second quarter, gross profit increased 20 percent to $285 million and the gross margin rose 230 basis points to 35.7 percent.
Operating income increased to $53 million from $12 million last year, and the operating margin expanded 500 basis points to 6.7 percent as a rate to revenue.
Total merchandise inventories increased 4 percent to $409 million compared to $393 million last year.