American Eagle tops quarterly estimates on steady apparel demand
7:22 pm Wednesday, March 01st, 2023
By Granth Vanaik
(Reuters) -American Eagle Outfitters on Wednesday beat fourth-quarter market estimates, as consumers heading back to work and social events snapped up apparel and accessories despite persistently high inflation.
Shares of American Eagle jumped about 7% in extended trading as the company also reinstated a $0.10 per share quarterly cash dividend after pausing it in September.
Even as the United States faces once-in-a-generation levels of inflation, demand for sportswear, dresses and cargo pants have remained steady, benefiting apparel makers like American Eagle that have offered higher discounts to shoppers in order to get rid of excess stock.
In January, the American Eagle said that its fourth-quarter sales and profit margins were tracking at high end of its forecasts, benefiting from its decision to right-size inventories and a better-than-expected performance at its American Eagle label.
The company said on Wednesday it expects 2023 revenue to be in the range of flat to up low-single digit, taking a “cautious view” given the current macroeconomic environment. Analysts on average expect 3.2% growth, according to Refinitiv IBES data.
Finance chief Michael Mathias said that while the company has seen good trends in February with a favorable response to new merchandise, “the environment remains choppy”.
American Eagle’s comment echoed rival Abercrombie & Fitch, which earlier on Wednesday said it was “cautiously optimistic” about consumer demand, after it forecast upbeat full-year sales.
“Guidance for the year is better than many of its peers,” said Zachary Warring, senior equity analyst at CFRA Research.
The company’s net revenue fell 1% to $1.5 billion in the fourth quarter ended Jan. 28, while analysts had expected revenue of $1.48 billion.
“Revenue declined only modestly which is something of a win for the company,” said Neil Saunders, managing director of GlobalData.
Excluding items, American Eagle earned 37 cents per share, above estimates of 30 cents.
(Reporting by Granth Vanaik in Bengaluru; Editing by Maju Samuel)
