Teen clothing retailer American Eagle Outfitters, Inc. (AEO) Wednesday reported lower profit and revenue for the first quarter, as a prolonged cold snap in the U.S. kept spring and summer merchandise on store shelves.
The first quarter results beat modest Wall Street estimates, but the company issued outlook for the second quarter and full year below Street view.
Robert Hanson, CEO, said, "Our first quarter results reflected a tough macro-environment as well as cooler weather causing soft demand for seasonal merchandise, all against warmer-than-normal weather and a strong performance last year...we sustained a high level of profitability supported by strong inventory principles, fleet repositioning efforts and the growth of our online business.''
Net income for the quarter declined to $27.98 million from $39.7 million. Earnings per share dropped to $0.14 from $0.20.
The Pittsburgh, Pennsylvania-based shopping mall fixture said the latest results include asset write-offs and corporate charges of $0.04 per share.
Adjusted earnings from continuing operations was $0.18 per share while it stood at $0.22 per share last year. On average, 25 analysts polled by Thomson Reuters expected earnings of $0.17 per share for the quarter. Analysts' estimates typically exclude special items.
The retailer had said in March that it 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.
Total net revenue declined to $679.48 million from $708.7 million in the prior year. Analysts expected revenues of $678.41 million.
Consolidated comparable sales, including AEO Direct, decreased 5 percent, compared to a 17 percent increase last year. Quarterly comparable sales are compared to the 13 weeks ended May 5, 2012.
Total merchandise inventory at the end of the quarter declined 7 percent to $341 million. At cost per foot, inventory decreased 6 percent. Second-quarter ending inventory cost per foot is expected to decline in the low single-digits.
Total square footage decreased 2 percent in the quarter. The company opened 7 new stores, of which 5 were factory stores, and closed 14 locations, including 10 aerie stores.
Looking ahead, the company expects second-quarter earnings per share in the range $0.19 to $0.21, based on flat comparable sales. Analysts expect earnings of $0.24 per share for the quarter.
For the year, earnings per share guidance is $1.42 to $1.45, based on second half comparable sales growth in the low-single digits. Wall Street expects earnings of $1.49 per share for the year.
The stock settled at $20.31 on Tuesday and is down 1 percent in pre-market trading.
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