American Eagle Outfitters sees spring slowdown coming
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As still more snow blanketed parts of the country Wednesday, American Eagle Outfitters executives told analysts that they hope spring comes soon because shorts are scheduled to arrive in stores this weekend.
The South Side teen clothing retailer's stock price slid 10 percent Wednesday, as investors reacted to the company's warning that rough February weather, along with federal tax shifts and high fuel prices, had started the spring quarter off slowly. The stock closed at $20.27, down $2.28.
The holiday quarter went better, with American Eagle reporting net income of $94.8 million, or 47 cents per share, in the three months ended Feb. 2, up from $51.3 million, or 26 cents per share, during the same period last year. Excluding one-time adjustments, earnings were 55 cents per share. Analysts polled by Thomson Financial had been looking for 56 cents.
Total sales in the fourth quarter grew to $1.2 billion from $1.03 billion during the same period a year earlier.
For the full fiscal year, American Eagle reported a profit of $232 million, or $1.16 per share, compared to $151.7 million, or 77 cents per share. Excluding one-time items, earnings per share were $1.39, a penny below analysts' predictions.
Sales for the year rose to $3.48 billion compared to $3.12 billion the previous year.
CEO Robert Hanson, who joined the company a little over a year ago, seemed encouraged by progress made in controlling inventories and improving profit margins. He was also pleased with groundwork being laid for expanding the American Eagle brand globally.
He said he'd recently returned from a trip to China, where American Eagle is taking over operation of several stores run by a licensed partner. He sees the potential to add more stores in China, including factory outlet stores, and to create an online operation that ships from inside the country rather than from North America.
Just last week, a franchise partner opened the first American Eagle store in the Philippines, and more locations are planned there.
Mr. Hanson said the brand could enter seven to 10 new countries a year going forward, with a mix of ventures done with partners and those handled directly by the company. "We want to make sure we do this well," he said.
Other initiatives planned in 2013 include culling the company's North American real estate locations, closing underperforming mall stores and expanding the number of stores in factory outlet centers. Mr. Hanson said American Eagle also needs to improve its ability to merchandise individual stores based on the customers that shop those locations.
On the fashion side, Roger Markfield, executive creative director, said American Eagle is devoting more attention to building a strong sweater offering. In addition, he said a new team is expected to bring personal care products out later this year.
For the first quarter, American Eagle is projecting earnings in the range of 16 cents to 19 cents per share. Analysts had been looking for 25 cents per share.
American Eagle's board approved an increase in its quarterly cash dividend to 12.5 cents per share, up from 11 cents. The higher dividend will begin in the second quarter.
First Published March 7, 2013 12:00 am