American Eagle Q2 Results Top Estimates, Guides Q3 In Line

(RTTNews) - Teen clothing retailer American Eagle Outfitters, Inc. (AEO) reported Wednesday a profit for the second quarter that soared from last year, reflecting improved operating margins and a double-digit revenue growth.

Both adjusted earnings per share and quarterly revenues also topped analysts' expectations. The company also provided earnings forecast for the third quarter, in line with Street view.

"I'm pleased to report another strong quarter, and to see positive momentum continue. 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," Interim CEO Jay Schottenstein said in a statement.

The Pittsburgh, Pennsylvania-based shopping mall fixture reported net income of $33.27 million or $0.17 per share for the second quarter, sharply higher than $5.81 million or $0.03 per share in the prior-year quarter.

On average, 28 analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude special items.

Total net revenue for the quarter grew 12 percent to a record $797.43 million from $710.60 million in the same quarter last year, and topped twenty-five Wall Street analysts' consensus estimate of $769.56 million.

Comparable store sales increased 11 percent for the quarter, over a 7 percent drop last year.

The company's AE total brand reported a 10 percent increase in comparable store sales. Comparable store sales at aerie total brand also grew 18 percent.

Operating margin for the quarter improved 500 basis points to 6.7 percent, as gross margin increased 220 basis points and selling, general and administrative expenses, as a percentage of total revenues, leveraged 220 basis points.

"We have two of the best-positioned brands in the marketplace today, and we are well poised to capitalize on our strengths. We have vast opportunity for ongoing improvements and will strive to deliver continued growth and returns to our shareholders," Schottenstein added.

Looking ahead to the third quarter, the company expects adjusted earnings in a range of $0.28 to $0.31 per share, on projected mid single-digit increase in comparable store sales. Street is currently looking for third-quarter earnings of $0.28 per share on a revenue growth of 4.9 percent to $895.76 million.

AEO closed Tuesday's regular trading session at $18.27, down $0.14 on a volume of 8.30 million shares.