Markdowns affected American Eagle Outfitters Inc. earnings per share (EPS) in the third quarter of fiscal 2019 even as sales hit a record.
The specialty apparel retailer reported total net revenue increased $63 million, or 6%, to a record $1.07 billion compared to $1.00 billion in the same quarter the prior year. Same-store sales increased 5%, and were positive across both store and digital channels. By brand, American Eagle’s same-store sales increased 2%, while Aerie’s same-store sales increased 20%,
However, EPS stayed flat at $0.48, meeting American Eagle’s previously released guidance. Jay Schottenstein, chairman and CEO of American Eagle Outfitters, cited soft sales in some categories as clipping the retailer’s earnings.
“Strong top-line performance across brands and channels led to our 19th consecutive quarter of comparable sales growth and record third-quarter revenue,” said Schottenstein. “In a tough environment, we reported EPS in line with our guidance. We continued to deliver on our strategic pillars, with Aerie and American Eagle Jeans demonstrating strong sales and profit growth. Softer demand in certain AE apparel categories led to higher markdowns and has persisted into the fourth quarter. The team has been working hard to quickly course correct, and our focus is squarely on continuing to capitalize on the strength of our brands, accelerating the growth of Aerie, and creating shareholder value.”
During the quarter, the company opened six American Eagle stores, ending with 945 American Eagle stores, including 170 Aerie side-by-side locations. Additionally, the company opened 12 Aerie stand-alone stores and closed one, ending with 142 Aerie stand-alone stores. Internationally, the company ended the quarter with 241 licensed stores compared to 223 last year.
American Eagle expects fourth-quarter 2019 EPS to be in the range of $0.34 to $0.36, with same-sales approximately flat. This guidance excludes potential asset impairment and restructuring charges. In 2018, the company reported EPS of $0.43 for the fourth quarter.