Sales drop at American Eagle Outfitters; new distribution center planned

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A chilly spring combined with a challenging economy hurt American Eagle Outfitters' result in the first quarter, as the South Side teen clothing retailer reported lower sales and profit than a year earlier.

The company this morning posted profit of $28 million, or 14 cents per share, in the three months ended May 4, compared to $40 million, or 20 cents, in the same period a year ago.

Adjusted earnings from continuing operations produced earnings of 18 cents per share, a penny above the expectations of analysts polled by Thomson Financial.

Net revenue fell 4 percent to $679 million versus $709 million a year ago. Sales in stores open at least a year, including online sales, fell 5 percent.

CEO Robert Hanson blamed the results on a "tough macro-environment as well as cooler weather" that slowed demand for seasonal styles.

He noted that last year the same quarter saw warmer than normal temperatures, making comparisons challenging.

"Although disappointed with the decline to last year, we sustained a high level of profitability supported by strong inventory principles, fleet repositioning efforts and the growth of our online business," he said in the announcement.

"We remain confident in our strategic direction and made good progress on our initiatives to fortify our business, grow North American and lay the foundation for transformational global longer-term growth."

In a separate development, the company plans to build a new 1-million-square-foot distribution center in Luzerne County.

According to an announcement from the state, American Eagle will invest more than $160 million and create 369 jobs, with additional positions during peak seasons.

The Department of Community and Economic Development has given the project a $400,000 Pennsylvania First Program grant and $166,050 Guaranteed Free Training grant to help in training.

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Teresa F. Lindeman: tlindeman@post-gazette.com or 412-263-2018.


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