American Eagle to close 150 stores
Pittsburgh – On the heels of disappointing results for the first quarter of fiscal 2014, American Eagle Outfitters Inc. has decided to close 150 stores in America, including 100 namesake stores. For 2014, the company is planning to close approximately 50 American Eagle and 20 aerie stores in North America.
Beginning in 2015, the company anticipates annualized after-tax savings of approximately $10 million-$15 million related to these store closures.
American Eagle’s net income plummeted 86% to $3.87 million from $27.98 million. Total net revenue fell 5% to $646.13 million from $679.48 million.
Same-store sales fell 10%. A significant decline in pretax income drove American Eagle’s net income drop.
“Results were consistent with our expectations,” said Jay Schottenstein, interim CEO. “The quarter reflected weak sales and increased markdowns. We are committed to improved profitability and are working hard to implement our plan to strengthen our brands, channels and operations. Specific actions underway include continuing to build strong omnichannel capabilities, rationalizing our store fleet, reducing expenses, growing international licensed stores, and most importantly, delivering great merchandise and customer experience across our brands. Our focus is on leveraging our strong brands and talented team in order to deliver long-term profitable growth and enhanced value for our shareholders.”
Target’s Q1 Results: Give me back my Tar-zhay!
By Sandy Skrovan, U.S. Research Director, Planet Retail
On Target’s first quarter results, Sandy Skrovan, U.S. Research Director at Planet Retail, comments:
"Don’t expect a lot from Target this quarter. The data breach and subsequent fallout – including leadership turnover and ongoing shopper trust issues – weigh like an albatross around the retailer’s neck. Besides dealing with internal issues, some broader retail metrics don’t bode well for Target either, suggesting another disappointing quarter is on the cards."
"Target also has its work cut out to refocus attention on some basic retail fundamentals – e.g. inventory management, merchandise excitement, and good old friendly customer service. Out-of-stocks are becoming increasingly problematic. Some aisles beyond grocery even appear in bad shape.
"It’s taken its eye off the ball – namely,i.e. core US operations – by taking on too many new ventures all at once: Canada, urban CityTarget, online. Two years ago, Planet Retail surmised that while this combination of future growth possibilities could be quite powerful, we were concerned Target was biting off more than it could chew. I wish Target had proved us wrong, but sadly it’s not the case."
Sandy Skrovan can be reached at [email protected]
Michaels solid in first quarter
While many retailers were still reeling from a prolonged winter that hurt their first quarter results, Michaels saw solid results in its first quarter, posting increases in both net and comparable-store sales.
Net sales increased 5.9% to $1.05 billion from $993 million during last year’s first quarter. Comparable store sales increased 3.8% driven by a 2.4% increase in the company’s average ticket, a 1.3% increase in transactions and a 10 basis point positive impact from deferred custom framing revenue. The Canadian foreign exchange rate negatively impacted comparable-store sales by 80 basis points.
Gross profit for the quarter increased 4.9% to $429 million from $409 million during last year’s first quarter. Gross profit as a percent of net sales decreased approximately 40 basis points to 40.8%. This decrease was driven by increased freight and distribution costs, higher remodel costs and lower merchandise margin.
Net income for the quarter increased 21.7% to $56 million and increased approximately 70 basis points as a percent of net sales to 5.3%.
During the quarter, the company opened eight and relocated five Michaels stores and closed three Aaron Brothers stores. The company operated 27 net new Michaels and Aaron Brothers stores in the past 12 months. The company now operates a total of 1,262 stores including 1,144 Michaels stores and 118 Aaron Brothers stores.