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Aug 20, 2015
By WGSN Insider
Maintaining a successful run seems to be a tough call in the US teen apparel sector, as does getting the thumbs-up from investors. Despite American Eagle Outfitters’ impressive figures for Q2, weaker (but certainly not weak) expectations for Q3 saw its shares tumble 8% Wednesday. Much the same had happened to Urban Outfitters on Tuesday.
It was all going so well for AEO, too. After refreshing its clothing offer, same-store sales jumped 11% in Q2, the strongest growth in 13 quarters, with both profits and revenues topping analysts’ expectations. However, Q3 is “only” expected to yield comp rises in the mid-single digits.
Total revenue jumped 12.2% to $797.4m, way ahead of the $762.4m analysts had projected.
Q2 net income jumped to $33.3m/17 cents per share, well above the $5.8m/3 cents posted a year ago.
“Our customers have taken notice of improvements to our merchandise and overall customer experience,” said interim CEO Jay Schottenstein. “Both American Eagle and Aerie delivered strong sales and earnings growth across channels.
“What was most exciting for me in Q2 were the positive comps across the board in both men’s and women’s tops as well as men’s and women’s bottoms,” global brand president Chad Kessler told WWD. “The strong 70s Bohemian trend fits right into our brand handwriting.”
Kessler added: “Fabric innovations have also helped, with Kessler citing soft, sexy, ‘bouncy’ jersey in much of the knit line, and last fall’s introduction of ‘denim X’,” which Kessler described as a “supersoft denim fabric that won’t bag out”. It runs through such categories as jeans, pants and shorts.
For the current quarter ending in November, American Eagle also said it expects its per-share earnings to range 28-31 cents while analysts expected earnings of 28 cents per share. It did not give predictions for Q4.
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