For the second quarter, American Eagle Outfitters reported EPS of 0.12 dollars compared to 0.23 dollar last year. Adjusted EPS was 0.19 dollar compared to 0.23 dollar last year. The company’s total net revenue increased 3percent to 845 million dollars and consolidated comparable sales were up 2percent, following a 3percent increase last year.
“In the second quarter, we achieved sales and earnings above our expectations in a challenging retail environment. Our brands are strong and we have significant opportunity for further growth. I’m optimistic as we enter the second half of the year, and we remain focused on delivering product innovation, strengthening customer engagement and improving profit flow-through,” said Jay Schottenstein, the company’s Chief Executive in a statement.
The company’s gross profit was 294 million dollars compared to 307 million dollars last year with a gross margin rate of 34.9percent to revenue compared to 37.3percent last year, a 240 basis point decline. The company said, margin declined primarily due to increased promotional activity.
Operating income of 39 million dollars included 11 million dollars of restructuring charges, compared to 69 million dollars last year. Adjusted operating income was 50 million dollars compared to 69 million dollars last year with a rate of 6 percent to revenue compared to 8.3 percent last year.
American Eagle added that consistent with its strategy, during the quarter it opened nine new Aerie locations, of which seven were in new markets. Additionally, six new AE stores were opened, with two in Mexico and four in the US. The company also opened nine international licensed stores and closed three.
For the remainder of the year, the company plans to open another five AE stores and five Aerie stores in the US, Canada and Mexico, as well as 32 international licensed stores to support the company’s global growth strategy. The company is also on track to close a total of 25 to 40 stores this year.
Based on anticipated comparable store sales in the range of flat to up low single digit, the company’s management expects third quarter 2017 EPS to be approximately 0.36 dollar to 0.38 dollar. The company said, this guidance excludes potential asset impairment and restructuring charges, and compares to EPS of 0.41 dollar last year.