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American Eagle Outfitters (NYSE:AEO) soared in early trading after the mall retailer beat consensus estimates with its earnings report that covered the holiday period.
The company reported Q4 sales were up 12.8% year-over-year during the quarter to $1.68B, with store revenue 10% higher and digital revenue up 19%.
The Aerie brand saw a 13% jump in comparable sales during the quarter, while comparable sales were 6% higher for the American Eagle brand. Gross margin rate was up 340 basis points from a year ago to 37.3% of sales. Margin expansion was driven by strong demand, lower product and transportation costs and continued benefits from our profit improvement work including lower markdowns and leverage on rent, distribution and warehousing and delivery.
AEO ended the quarter with inventory down 9% year-over-year to $641M, which management said healthy and well positioned to fuel growth initiatives.
Looking ahead, AEO operating income to be in the range of $445M to $465M on revenue growth of 2% to 4%. Due to easier comparisons in the first half of the year, the significance of the shifted retail calendar and one less selling week in the fourth quarter, AEO expects revenue and profit growth to be skewed to the first half of the year.
CEO outlook: "We are entering 2024 with momentum and from a position of strength with an exciting line-up of innovation and customer engagement initiatives. Our balance sheet is healthy and we are seeing early proof points of our new long-term strategy to deliver industry-leading earnings growth and shareholder returns, which we look forward to sharing today."
American Eagle Outfitters (AEO) also unveiled its new Powering Profitable Growth plan on Thursday. The plan is structured to deliver mid-to-high teens annual operating income expansion on 3% to 5% annual revenue growth over the next three years, and an approximate 10% operating margin. Some of the strategies laid out were growing American Eagle, powering market leadership in denim, and expansion into right-to-win adjacencies. AEO will also look to fuel Aerie’s expansion and accelerate the activewear opportunity.
Shares of American Eagle Outfitters (AEO) were up 12.30% during the premarket session on Thursday and are now up more than 20% in 2024.