Teen clothing retailer American Eagle Outfitters, Inc. (AEO) reported Wednesday a profit for the fourth quarter that surged 85 percent from last year, reflecting significantly improved margins and revenue growth. Adjusted earnings per share from continuing operations missed analysts' expectations by a penny, while quarterly revenues matched their estimates.
The company also provided earnings forecast for the first quarter, below Street view, but raised quarterly dividend by 14 percent.
The Pittsburgh, Pennsylvania-based shopping mall fixture reported net income of $94.78 million or $0.47 per share for the fourth quarter, higher than $51.28 million or $0.26 per share in the prior-year quarter.
Income from continuing operations for the quarter increased to $94.78 million or $0.47 per share from $60.37 million or $0.31 per share in the comparable quarter a year ago.
Excluding special items, adjusted income from continuing operations for the quarter was $0.55 per share, compared to last year's $0.39 per share.
On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total net revenue for the quarter increased 9 percent to a record $1.12 billion from $1.03 billion in the same quarter last year, and matched twenty Wall Street analysts' consensus estimate of $1.12 billion. Comparable store sales grew 4 percent for the quarter, over a 11 percent increase last year.
The company's AEO direct business, including ae.com, and aerie.com, reported a 24 percent increased in comparable store sales. Comparable store sales at American Eagle brand stores grew 1 percent, while it declined 3 percent at Aerie stores.
Operating margin expanded 430 basis points to the company's best operating income rate since 2007 of 15.9 percent, as gross margin improved 600 basis points to 41.2 percent amid lower product costs, markdown improvements and rent leverage, partially offset by a 230 basis points increased in selling, general and administrative expense as a percentage of total revenues.
Additionally, the company's board of directors authorized 20 million shares under a new share repurchase program and raised the quarterly cash dividend by 14 percent to $0.125 per share, with the increased dividend distribution to begin in the second quarter.
For fiscal 2012, American Eagle reported net income of $232.11 million or $1.16 per share, higher than $151.71 million or $0.77 per share in the prior year.
Income from continuing operations for the year increased to $264.10 million or $1.32 per share from $175.28 million or $0.89 per share in the year ago.
Excluding special items, adjusted earnings from continuing operations was $1.39 per share, compared to last year's $0.97 per share. Analysts expected the company to report earnings of $1.40 per share for fiscal 2012.
Total net revenues for the full year grew 11 percent to $3.48 billion from $3.12 billion in the previous year. Street was looking for full-year 2012 revenues of $3.48 billion. Comparable store sales grew 9 percent for the year, over a 4 percent increase last year.
Looking ahead to the first quarter, the company expects earnings in a range of $0.16 to $0.19 per share, on projected comparable store sales in the negative mid-single digit range. Analysts currently expect the company to report first-quarter earnings of $0.25 per share.
Meanwhile, American Eagle remains committed to its strategic plan annual revenue growth targets of 7 to 9 percent.
AEO closed Tuesday's regular trading session at $22.55, up $0.71 on a volume of 6.82 million shares. In the past 52-week period, the stock has been trading in a broad range of $15.20 to $23.94.
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