Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 04, 2024 | May 28, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 04, 2024 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | AEO | |
Entity Registrant Name | American Eagle Outfitters, Inc. | |
Entity Central Index Key | 0000919012 | |
Current Fiscal Year End Date | --02-01 | |
Document Quarterly Report | true | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 196,430,395 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Security Exchange Name | NYSE | |
Entity File Number | 1-33338 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-2721761 | |
Entity Address, Address Line One | 77 Hot Metal Street | |
Entity Address, City or Town | Pittsburgh | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15203-2329 | |
City Area Code | 412 | |
Local Phone Number | 432-3300 | |
Document Transition Report | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 |
Current assets: | |||
Cash and cash equivalents | $ 300,518 | $ 354,094 | $ 117,841 |
Short-term investments | 100,000 | ||
Merchandise inventory | 681,062 | 640,662 | 624,851 |
Accounts receivable, net | 230,934 | 247,934 | 259,074 |
Prepaid expenses and other | 98,803 | 90,660 | 127,735 |
Total current assets | 1,311,317 | 1,433,350 | 1,129,501 |
Operating lease right-of-use assets | 1,123,649 | 1,005,293 | 1,053,938 |
Property and equipment, at cost, net of accumulated depreciation | 703,551 | 713,336 | 762,433 |
Goodwill, net | 225,253 | 225,303 | 264,896 |
Non-current deferred income taxes | 89,332 | 82,064 | 13,034 |
Intangible assets,net | 45,178 | 46,109 | 92,399 |
Other assets | 58,937 | 52,454 | 57,693 |
Total assets | 3,557,217 | 3,557,909 | 3,373,894 |
Current liabilities: | |||
Accounts payable | 225,480 | 268,308 | 212,318 |
Current portion of operating lease liabilities | 303,603 | 284,508 | 321,430 |
Accrued compensation and payroll taxes | 64,502 | 152,353 | 43,550 |
Unredeemed gift cards and gift certificates | 57,373 | 66,285 | 57,014 |
Accrued income and other taxes | 50,716 | 46,114 | 13,812 |
Other current liabilities and accrued expenses | 71,655 | 73,604 | 68,313 |
Total current liabilities | 773,329 | 891,172 | 716,437 |
Non-current liabilities: | |||
Non-current operating lease liabilities | 1,002,529 | 901,122 | 987,048 |
Long-term debt, net | 30,225 | ||
Other non-current liabilities | 29,003 | 28,856 | 21,168 |
Total non-current liabilities | 1,031,532 | 929,978 | 1,038,441 |
Commitments and contingencies | |||
Stockholders’ equity: | |||
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding | |||
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 196,430, 196,936, and 197,450 shares outstanding, respectively | 2,496 | 2,496 | 2,496 |
Contributed capital | 345,922 | 360,378 | 324,396 |
Accumulated other comprehensive loss | (15,722) | (16,410) | (26,777) |
Retained earnings | 2,267,785 | 2,214,159 | 2,130,108 |
Treasury stock, at cost, 53,136, 52,630, and 52,116 shares, respectively | (848,125) | (823,864) | (811,207) |
Total stockholders' equity | 1,752,356 | 1,736,759 | 1,619,016 |
Total liabilities and stockholders’ equity | $ 3,557,217 | $ 3,557,909 | $ 3,373,894 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 | 0 |
Preferred stock, outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 |
Common stock, shares issued | 249,566,000 | 249,566,000 | 249,566,000 |
Common stock, shares outstanding | 196,430,000 | 196,936,000 | 197,450,000 |
Treasury stock, shares | 53,136,000 | 52,630,000 | 52,116,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Income Statement [Abstract] | ||
Total net revenue | $ 1,143,867,000 | $ 1,080,926,000 |
Cost of sales, including certain buying, occupancy and warehousing expenses | 679,628,000 | 667,747,000 |
Gross profit | 464,239,000 | 413,179,000 |
Selling, general and administrative expenses | 333,493,000 | 312,345,000 |
Impairment, restructuring and other charges | 0 | 21,275,000 |
Depreciation and amortization expense | 52,910,000 | 56,728,000 |
Operating income | 77,836,000 | 22,831,000 |
Interest (income) expense, net | (3,439,000) | 690,000 |
Other (income), net | (1,396,000) | (3,311,000) |
Income before income taxes | 82,671,000 | 25,452,000 |
Provision for income taxes | 14,919,000 | 6,999,000 |
Net income | $ 67,752,000 | $ 18,453,000 |
Basic net income per common share | $ 0.34 | $ 0.09 |
Diluted net income per common share | $ 0.34 | $ 0.09 |
Weighted average common shares outstanding - basic | 196,429 | 194,487 |
Weighted average common shares outstanding - diluted | 201,310 | 197,160 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 67,752 | $ 18,453 |
Other comprehensive income: | ||
Foreign currency translation adjustments | 688 | 5,853 |
Other comprehensive income: | 688 | 5,853 |
Comprehensive income | $ 68,440 | $ 24,306 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Contributed Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss |
Beginning Balance at Jan. 28, 2023 | $ 1,599,163 | $ 2,496 | $ 341,775 | $ 2,137,126 | $ (849,604) | $ (32,630) |
Beginning Balance (in shares) at Jan. 28, 2023 | 195,064 | |||||
Stock awards | 14,650 | 14,650 | ||||
Repurchase of common stock from employees | (10,314) | (10,314) | ||||
Repurchase of common stock from employees (in shares) | (740) | |||||
Reissuance of treasury stock | 1,226 | (27,194) | (3,183) | 31,603 | ||
Reissuance of treasury stock (in shares) | 2,027 | |||||
Redemption/Exchange of Convertible Senior Notes | 8,690 | (6,281) | (2,137) | 17,108 | ||
Redemption/Exchange of Convertible Senior Notes (in shares) | 1,099 | |||||
Net income | 18,453 | 18,453 | ||||
Other comprehensive income | 5,853 | 5,853 | ||||
Cash dividends declared and dividend equivalents | (19,625) | 526 | (20,151) | |||
Contributions from non-controlling interests | 920 | 920 | ||||
Ending Balance at Apr. 29, 2023 | $ 1,619,016 | $ 2,496 | 324,396 | 2,130,108 | (811,207) | (26,777) |
Ending Balance (in shares) at Apr. 29, 2023 | 197,450 | 197,450 | ||||
Beginning Balance at Feb. 03, 2024 | $ 1,736,759 | $ 2,496 | 360,378 | 2,214,159 | (823,864) | (16,410) |
Beginning Balance (in shares) at Feb. 03, 2024 | 196,936 | 196,936 | ||||
Stock awards | $ 20,436 | 20,436 | ||||
Repurchase of common stock as part of publicly announced programs (in shares) | (1,500) | |||||
Repurchase of common stock as part of publicly announced programs | (34,949) | (34,949) | ||||
Repurchase of common stock from employees | (13,242) | (13,242) | ||||
Repurchase of common stock from employees (in shares) | (531) | |||||
Reissuance of treasury stock | (3) | (35,005) | 11,072 | 23,930 | ||
Reissuance of treasury stock (in shares) | 1,525 | |||||
Net income | 67,752 | 67,752 | ||||
Other comprehensive income | 688 | 688 | ||||
Cash dividends declared and dividend equivalents | (24,593) | 605 | (25,198) | |||
Contributions from non-controlling interests | (492) | (492) | ||||
Ending Balance at May. 04, 2024 | $ 1,752,356 | $ 2,496 | $ 345,922 | $ 2,267,785 | $ (848,125) | $ (15,722) |
Ending Balance (in shares) at May. 04, 2024 | 196,430 | 196,430 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends declared and dividend equivalents, Per share | $ 0.125 | $ 0.10 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Operating activities: | ||
Net income | $ 67,752,000 | $ 18,453,000 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 55,097,000 | 57,932,000 |
Share-based compensation | 20,586,000 | 14,780,000 |
Deferred income taxes | (7,109,000) | 23,448,000 |
Loss on impairment of assets | 0 | 10,759,000 |
Changes in assets and liabilities: | ||
Accounts receivable | 16,729,000 | (16,331,000) |
Merchandise inventory | (40,078,000) | (43,070,000) |
Operating lease assets | (91,029,000) | 72,310,000 |
Operating lease liabilities | 93,385,000 | (88,777,000) |
Other assets | (16,344,000) | (19,863,000) |
Accounts payable | (42,788,000) | (22,106,000) |
Accrued compensation and payroll taxes | (87,931,000) | (8,404,000) |
Accrued and other liabilities | (6,381,000) | (7,347,000) |
Net cash (used for) operating activities | (38,111,000) | (8,216,000) |
Investing activities: | ||
Capital expenditures for property and equipment | (36,209,000) | (45,857,000) |
Sale of available-for-sale investments | 100,000,000 | |
Other investing activities | (4,570,000) | (163,000) |
Net cash provided by (used for) investing activities | 59,221,000 | (46,020,000) |
Financing activities: | ||
Repurchase of common stock as part of publicly announced programs | (34,948,000) | |
Repurchase of common stock from employees | (13,242,000) | (10,314,000) |
Proceeds from revolving line of credit | 30,000,000 | |
Net proceeds from stock options exercised | 1,853,000 | 1,095,000 |
Cash dividends paid | (24,593,000) | (19,625,000) |
Other financing activities | (3,284,000) | 752,000 |
Net cash (used for) provided by financing activities | (74,214,000) | 1,908,000 |
Effect of exchange rates changes on cash | (472,000) | (40,000) |
Net change in cash and cash equivalents | (53,576,000) | (52,368,000) |
Cash and cash equivalents - beginning of period | 354,094,000 | 170,209,000 |
Cash and cash equivalents - end of period | $ 300,518,000 | $ 117,841,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 67,752 | $ 18,453 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
May 04, 2024 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Rule 10b5 - 1 Trading Plans During the fiscal quarter ended May 4, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted, modified or terminated a "Rule 10b5 - 1 trading arrangement" or "non-Rule 105b-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K), except as described in the table below: Name and Position Action Date Rule 10b5-1* Non - Rule 10b5-1** Total Shares of Common Expiration Date Stock to be Sold Jennifer Foyle , President, Executive Creative Director, AE and Aerie Adoption April 16, 2024 X Up to 518,878 March 31, 2025 * Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. ** “Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K under the Exchange Act. |
Name | Jennifer Foyle |
Title | President, Executive Creative Director, AE and Aerie |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | April 16, 2024 |
Aggregate Available | 518,878 |
Expiration Date | March 31, 2025 |
Interim Financial Statements
Interim Financial Statements | 3 Months Ended |
May 04, 2024 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | 1. Interim Financial Statements The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company," “we,” and “our,”) a Delaware corporation, at May 4, 2024 and April 29, 2023 and for the 13 week periods ended May 4, 2024 and April 29, 2023 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report. Therefore, these Consolidated Financial Statements should be read in conjunction with our Fiscal 2023 Form 10-K. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the notes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly Report. The Company operates under the American Eagle ® ("AE") and Aerie ® brands. We also operate Todd Snyder New York ("Todd Snyder"), a premium menswear brand, and Unsubscribed, which focuses on consciously made slow fashion. Founded in 1977, the Company is a leading multi-brand specialty retailer that operates more than 1,500 retail stores in the U.S. and internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.com and through more than 300 international store locations managed by third-party operators. Through its portfolio of brands, the Company offers high quality, on-trend clothing, accessories, and personal care products at affordable prices. We sell directly to consumers through our retail channel, which includes our stores and concession-based shop-within-shops. We operate stores in the U.S., Canada, Mexico, and Hong Kong. We also have license agreements with third parties to operate American Eagle and Aerie stores throughout Asia, Europe, India, Latin America, and the Middle East. The Company's online business, AEO Direct, ships to approximately 80 countries worldwide. As e-commerce penetration and growth has normalized coming out of the COVID-19 pandemic, the supply chain landscape has continued to evolve. In Fiscal 2023, as part of its profit improvement initiative, the Company began to streamline and shift the operations of Quiet Platforms to better align with AEO's long term strategy. As a result of these changes, Quiet Platforms has refined its focus on its core capabilities as a regionalized fulfillment center network. The network and related growth plans have been updated to reflect this refined focus. Historically, our operations have been seasonal, with a large portion of total net revenue and operating income occurring in the third and fourth fiscal quarters, reflecting increased demand during the back-to-school and year-end holiday selling seasons, respectively. Our quarterly results of operations also may fluctuate based upon such factors as the timing of certain holiday seasons, the number and timing of new store openings, the acceptability of seasonal merchandise offerings, the timing and level of markdowns, store closings and remodels, competitive factors, weather and general economic and political conditions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
May 04, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and consolidated entities where the Company's ownership percentage is less than 100 %. Non-controlling interest is included as a component of contributed capital within the Consolidated Balance Sheets and Consolidated Statements of Stockholders' Equity and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At May 4, 2024 , the Company operated in two reportable segments, American Eagle and Aerie. Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, "Fiscal 2024" refers to the 52-week period that will end on February 1, 2025. “Fiscal 2023” refers to the 53-week period ended on February 3, 2024. Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Recent Accounting Pronouncements In November 2023, the Financial Standards Board issued ASU 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires that segment expenses deemed significant to the Chief Operating Decision Maker (CODM) typically incorporated in measuring profit or loss of the segment should be disclosed. The guidance also requires that the difference between segment revenues and these significant segment expenses is disclosed. Any annually disclosed segment information is now required to be reported in interim periods as well. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Public entities are required to apply the amendment retrospectively to prior periods presented in the financial statements. The Company plans to adopt ASU 2023-07 effective for its Fiscal Year 2024 and for the interim periods beginning in Fiscal 2025. Refer to Note 12 to the Consolidated Financial Statements for additional information regarding Segment Reporting. In December 2023, the Financial Standards Board issued ASU 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires increased transparency in tax disclosures, specifically by expanding requirements for rate reconciliation and income taxes paid information. Additionally, the amendment requires disclosures of income/(loss) from continuing operations before taxes disaggregated between domestic and foreign, and income tax expense/(benefit), disaggregated by federal, state, and foreign. Disclosure requirements about the nature and estimated range of the reasonably possible change in unrecognized tax benefits over the next year have been removed as part of this amendment. The guidance is effective for fiscal years beginning after December 15, 2024. The Company plans to adopt ASU 2023-09 effective for Fiscal 2025. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding Income Taxes. Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters , the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income . We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended May 4, 2024 , an unrealized gain of $ 0.7 million was included in other comprehensive income, which were primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates. Cash, Cash Equivalents and Short-term Investments The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with an original maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash, cash equivalents, and short-term investments. Accounts Receivable The Company's receivables are primarily generated from product sales and royalties from our licensees. The primary indicators of the credit quality of our receivables are aging, payment history, economic sector information and outside credit monitoring, and are assessed on a quarterly basis. Our credit loss exposure is mainly concentrated in our accounts receivable portfolio. Our allowance for credit losses is calculated using a loss-rate method based on historical experience, current market conditions and reasonable forecasts. Historically, the Company’s reserves have approximated actual experience. Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology Five year s Three to five year s As of May 4, 2024 , the weighted average remaining useful life of our assets was approximately six years . In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ("ROU") assets associated with retail stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income within the Consolidated Statements of Operations. Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. There were no long-lived asset impairment charges recorded during the 13 weeks ended May 4, 2024. During the 13 weeks ended April 29, 2023, the Company recorded impairment of property and equipment of $ 10.8 million. Refer to Note 6 to the Consolidat ed Financial Statements for additional information regarding property and equipment and refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets. Goodwill and Intangible Assets The Company’s goodwill is primarily related to the acquisition of its regionalized fulfillment center network, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. The Company last performed an annual goodwill impairment test as of February 3, 2024. As a result of the annual impairment test, the Company concluded that the goodwill assigned to the Quiet Platforms reporting unit was impaired, resulting in a charge of $ 39.6 million recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations for Fiscal 2023, due to insufficient prospective cash flows to support the carrying value of the business. Significant, subjective assumptions used in the Company’s fair value estimate included forecasted cost of sales, forecasted operating expense and the discount rate. No indicators of impairment were present during the 13 weeks ended May 4, 2024 or April 29, 2023. Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. During Fiscal 2023, the Company recorded a $ 40.5 million impairment charge within impairment, restructuring and other charges on the Consolidated Statements of Operations related to the definite-lived intangible assets of Quiet Platforms, due to insufficient prospective cash flows to support the carrying value of the assets. No definite-lived intangible asset impairment charges were recorded during the 13 weeks ended May 4, 2024 or April 29, 2023. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets. Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop-loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. Leases The Company leases all store premises, its Canadian distribution center in Mississauga, Ontario, its regional distribution facilities, some of its office space and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. Co-Branded and Private Label Credit Cards The Company offers a co-branded credit card and a private-label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. Customer Loyalty Program The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie (the “Program”). The Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at AE and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The portion of the sales revenue attributed to the reward points is deferred and recognized when the reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Credit Agreement In June 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $ 700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027 . Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements. Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the Company’s effective income tax rate. The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance, requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss). Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. Revenue Recognition The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to Customer Loyalty Program above for additional information. Revenue associated with Quiet Platforms is recognized as the services are performed. Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”), Quiet Platforms' costs to service its customers and buying, occupancy and warehousing costs and services. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Total net revenue, net of merchandise costs, represents merchandise margin. Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. Interest (Income) Expense, Net Interest (income) expense, net primarily consists of interest income from cash and cash equivalent s. Other (Income), Net Other (income), net consists primarily of foreign currency fluctuations and changes in other non-operating items. Non-controlling interest was not material for any period presented and is included within other (income), net. Segment Information The Company has identified two operating segments (American Eagle and Aerie brand) that also represent our reportable segments and reflect the Chief Operating Decision Maker's (defined as our CEO) internal view of analyzing results and allocating resources. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption. For additional information regarding the Company’s segment and geographic information, refer to Note 12 to the Consolidated Financial Statements. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
May 04, 2024 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | 3. Cash and Cash Equivalents and Short-term Investments The following table summarizes the fair market values for the Company’s cash, cash equivalents, and short-term investments which are recorded in the Consolidated Balance Sheets: (In thousands) May 4, 2024 February 3, 2024 April 29, 2023 Cash and cash equivalents: Cash $ 110,792 $ 162,279 $ 117,457 Interest bearing deposits $ 189,726 $ 191,815 384 Total cash and cash equivalents $ 300,518 $ 354,094 $ 117,841 Short-term investments: Certificates of deposits $ - $ 100,000 $ — Total short-term investments $ - $ 100,000 — Total cash and short-term investments $ 300,518 $ 454,094 $ 117,841 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
May 04, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments. Fair Value Measurements at May 4, 2024 (In thousands) Carrying Amount Quoted Market Prices Significant Other Significant Cash and cash equivalents: Cash $ 110,792 $ 110,792 $ - $ - Interest bearing deposits 189,726 189,726 - - Total cash and cash equivalents $ 300,518 $ 300,518 $ - $ - Long-Term Debt As of May 4, 2024 , there were no outstanding borrowing under the Company's Credit Facility. As of April 29, 2023 , the fair value of the Company's $ 30 million in outstanding borrowings under its Credit Facility approximated the carrying value. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements. Non-Financial Assets The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value. The fair value is determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. There were no long-lived asset impairment charges recorded during the 13 weeks ended May 4, 2024. During the 13 weeks ended April 29, 2023 , the Company recorded impairment of property and equipment of $ 10.8 million . Refer to Note 13 to the Consolidated Financial Statements for additional information on impairment, restructuring and other charges. The fair value of the Company's ROU assets was based upon market rent assumptions. The Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. The Company last performed an annual goodwill impairment test using Level 3 inputs as defined in ASC 820 as of February 3, 2024. No indicators of goodwill impairment were present during the 13 weeks ended May 4, 2024 and April 29, 2023 . |
Earnings per Share
Earnings per Share | 3 Months Ended |
May 04, 2024 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 5. Earnings per Share The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended (In thousands) May 4, 2024 April 29, 2023 Numerator: Net income and numerator for basic EPS $ 67,752 $ 18,453 Add: Interest expense, net of tax, related to the 2025 Notes (1) — 58 Numerator for diluted EPS $ 67,752 $ 18,511 Denominator: Denominator for basic EPS - weighted average shares 196,429 194,487 Add: Dilutive effect of the 2025 Notes (1) - 834 Add: Dilutive effect of stock options and non-vested restricted stock 4,881 1,839 Denominator for diluted EPS - adjusted weighted average shares 201,310 197,160 Anti-dilutive shares (2) 239 2,072 (1) The Company utilizes the "if-converted" method of calculating diluted EPS, in accordance with ASU 2020-06, Debt with Conversion and Other Options. (2) For all periods presented, anti-dilutive shares relate to stock options and unvested restricted stock. Refer to Notes 8 and 9 to the Consolidated Financial Statements for additional information regarding the 2025 Notes and share-based compensation, respectively. |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
May 04, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | 6. Property and Equipment, net Property and equipment, net consists of the following: May 4, February 3, April 29, (In thousands) 2024 2024 2023 Property and equipment, at cost $ 2,437,863 $ 2,427,114 $ 2,723,188 Less: Accumulated depreciation and impairment ( 1,734,312 ) ( 1,713,778 ) ( 1,960,755 ) Property and equipment, net $ 703,551 $ 713,336 $ 762,433 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 3 Months Ended |
May 04, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | 7. Goodwill and Intangible Assets, net Goodwill and definite-lived intangible assets, net consist of the following: May 4, February 3, April 29, (In thousands) 2024 2024 2023 Goodwill, gross (1) $ 269,047 $ 269,097 $ 269,092 Accumulated impairment (2) ( 43,794 ) ( 43,794 ) ( 4,196 ) Goodwill, net $ 225,253 $ 225,303 $ 264,896 (1) The change in Goodwill, gross from period to period includes the effect of foreign currency rate fluctuations. (2) Accumulated impairment includes $ 39.6 million recorded in Fiscal 2023, $ 1.7 million recorded in Fiscal 2019 and $ 2.5 million recorded in Fiscal 2016. May 4, February 3, April 29, (In thousands) 2024 2024 2023 Intangible assets, gross $ 147,234 $ 147,054 $ 146,379 Accumulated amortization ( 61,523 ) ( 60,412 ) ( 53,980 ) Accumulated impairment ( 40,533 ) ( 40,533 ) - Intangible assets, net $ 45,178 $ 46,109 $ 92,399 |
Long-Term Debt, Net
Long-Term Debt, Net | 3 Months Ended |
May 04, 2024 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | 8. Long-Term Debt, Net The Company has no long-term debt outstanding as of May 4, 2024 or February 3, 2024. As of April 29, 2023, there were $ 30 million of outstanding Credit Facility borrowings. 2025 Notes In April 2020, the Company issued $ 415 million aggregate principal amount of 2025 Notes in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The 2025 Notes had a stated interest rate of 3.75 %, payable semi-annually . The Company used the net proceeds from the issuance for general corporate purposes. The Company redeemed all of the remaining 2025 Notes during the 13 weeks ended April 29, 2023. See "Note Exchanges" below. The Company did not have the right to redeem the 2025 Notes prior to April 17, 2023 . On or after April 17, 2023 and prior to the fortieth scheduled trading day immediately preceding the maturity date, the Company could redeem all or any portion of the 2025 Notes, at its option, for cash, if the last reported sale price of our common stock had been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period. Note Exchanges During Fiscal 2022, the Company entered into separate privately negotiated exchange agreements with certain holders of the 2025 Notes, to exchange $ 403.2 million in aggregate principal amount of the 2025 Notes for a combination of cash and shares of the Company's common stock, plus payment of accrued and unpaid interest (together, the "Note Exchanges"). Early Redemption On February 10, 2023, the Company issued a notice of optional redemption for all of its remaining outstanding 2025 Notes, notifying holders that, among other things, it has elected to exercise its right to redeem any and all of the outstanding 2025 Notes on April 17, 2023 (the "Early Redemption"). Subsequent to this notice, and prior to April 17, 2023, the 2025 Note holders redeemed a total of $ 8.8 million aggregate principal amount for a combined 1.1 million shares of the Company's common stock. Following the Note Exchanges and Early Redemption, the aggregate principal amount of the 2025 Notes had been fully redeemed at April 29, 2023. Interest expense for the 2025 Notes was $ 0.1 million for the 13 weeks ended April 29, 2023. Revolving Credit Facility In June 2022, the Company entered into an amended and restated Credit Agreement. The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $ 700 million, subject to customary borrowing base limitations. The Credit Facility expires on June 24, 2027 . Before amendment and restatement, the Company's previous credit agreement provided senior secured asset-based revolving credit for loans and letters of credit up to $ 400 million and was scheduled to expire on January 30, 2024 . All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries. As of May 4, 2024 , there were no outstanding borrowings, and the Company was in compliance with the terms of the Credit Agreement with $ 12 million outstanding in stand-by letters of credit. As of April 29, 2023 , the Company had $ 30 million in outstanding borrowings under the Credit Agreement and $ 7.7 million outstanding in stand-by letters of credit. Borrowings under the Credit Facility accrue interest at the election of the Company at an adjusted secured overnight financing rate ("SOFR") rate of SOFR plus 0.10 % plus an applicable margin (ranging from 1.125 % to 1.375 %) or an alternate base rate plus an applicable margin (ranging from 0.125 % to 0.375 %), with each such applicable margin being based on average borrowing availability under the Credit Facility. Interest is payable quarterly and at the end of each applicable interest period. There were no Credit Facility borrowings for the 13 weeks ended May 4, 2024. The total interest expense related to the Credit Facility borrowings for the 13 weeks ended April 29, 2023 was $ 0.6 million. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
May 04, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | 9. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation , which requires the Company to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 weeks ended May 4, 2024 was $ 20.6 million ( $ 17.0 mil lion, net of tax), and for the 13 weeks ended April 29, 2023 was $ 14.8 million ($ 10.7 million, net of tax). Stock Option Grants The Company grants time-based stock option awards, which vest over the requisite service period of the award or at an employee's eligible retirement date, if earlier. A summary of the Company’s stock option activity for the 13 weeks ended May 4, 2024 follows: Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 3, 2024 4,213 $ 16.83 Granted 525 $ 24.37 Exercised ( 293 ) $ 13.96 Cancelled - $ - Outstanding - May 4, 2024 4,445 $ 17.91 4.3 32,185 Vested and expected to vest - May 4, 2024 4,323 $ 17.79 4.1 9,819 Exercisable - May 4, 2024 (1) 2,530 $ 15.49 3.3 22,298 (1) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on May 4, 2024 . As of May 4, 2024 , there was $ 1.0 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2. 5 year s. The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 13 Weeks Ended May 4, April 29, Black-Scholes Option Valuation Assumptions 2024 2023 Risk-free interest rate (1) 4.4 % 3.4 % Dividend yield 1.9 % 2.8 % Volatility factor (2) 55.4 % 55.7 % Weighted-average expected term (3) 4.5 years 4.5 years (1) Based on the United States Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3) Represents the period of time options are expected to be outstanding. The weighted-average expected option terms were determined based on historical experience. Restricted Stock Grants Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years . Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. Performance-based restricted stock ("PSU") awards include performance-based restricted stock units. Annual PSU grants cliff vest, if at all, at the end of a three-year performance period upon achievement of pre-established goals. Outstanding PSU awards receive dividend equivalents in the form of additional PSUs, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of time-based restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant. A Monte-Carlo simulation was utilized for performance-based restricted stock awards. A summary of the Company’s restricted stock activity is presented in the following table: Time-Based Restricted Performance-Based Restricted May 4, 2024 May 4, 2024 (Shares in thousands) Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Non-vested - February 3, 2024 2,830 $ 15.83 2,023 $ 18.45 Granted 1,048 $ 24.21 455 $ 27.71 Vested ( 1,153 ) $ 17.51 ( 248 ) $ 39.81 Cancelled ( 123 ) $ 11.74 ( 32 ) $ 18.05 Non-vested - May 4, 2024 2,602 $ 18.65 2,198 $ 17.96 As of May 4, 2024 , there was $ 44.9 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.4 years. There is $ 7.5 million of unrecognized compensation expense related to performance-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.3 years. As of May 4, 2024, the Company ha d 11 million shares available for all equity grants. |
Income Taxes
Income Taxes | 3 Months Ended |
May 04, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended May 4, 2024 was 18.0 % compared to 27.5 % for the 13 weeks ended April 29, 2023. The change in the effective tax rate, as compared to the prior period, is primarily due to excess tax benefits on share-based payments and tax audit adjustments. The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense , which were $ 6.7 million for the 13 weeks ending May 4, 2024, and insignificant for the 13 weeks ended April 29, 2023 . The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits increased by approximately $ 14.2 million during the 13 weeks ended May 4, 2024 due to tax audit adjustments, and decreased by approximately $ 0.8 million during the 13 weeks ended April 29, 2023 due to income tax settlements . Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $ 15.3 million due to settlements, expiration of statute of limitations, or other changes in unrecognized tax benefits, which is expected to have an immaterial impact on the annual effective tax rate. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
May 04, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | 11. Legal Proceedings The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or consolidated cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims. |
Segment Reporting
Segment Reporting | 3 Months Ended |
May 04, 2024 | |
Segment Reporting [Abstract] | |
Segment Reporting | 12. Segment Reporting In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified two operating segments (American Eagle brand and Aerie brand) that also represent our reportable segments and reflect the Chief Operating Decision Maker’s (defined as our CEO) internal view of analyzing results and allocating resources. Additionally, our Todd Snyder brand, Unsubscribed brand, and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption, as permitted by ASC 280. General corporate expenses consist of general and administrative costs that management does not attribute to any of our operating segments. These costs primarily relate to corporate administration, information and technology resources, finance and human resources functional and organizational costs, depreciation and amortization of corporate assets, and other general and administrative expenses resulting from corporate-level activities and projects. Our CEO analyzes segment results and allocates resources between segments based on the adjusted operating income, or the operating income in periods where there are no adjustments, of each segment. Adjusted operating income is a non-GAAP financial measure ("non-GAAP" or "adjusted") that is defined by the Company as operating income excluding impairment, restructuring and other charges. Adjusted operating income is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance, when reviewed in conjunction with our GAAP consolidated financial statements and provides a higher degree of transparency. Reportable segment information is presented in the following table: 13 weeks ended May 4, 2024 April 29, 2023 Net Revenue: American Eagle $ 724,744 $ 671,092 Aerie $ 372,652 $ 359,082 Total Segment Net Revenue $ 1,097,396 $ 1,030,174 Other $ 54,984 $ 109,357 Intersegment Elimination $ ( 8,513 ) $ ( 58,605 ) Total Net Revenue $ 1,143,867 $ 1,080,926 Operating Income: American Eagle $ 138,585 $ 107,167 Aerie $ 61,327 $ 56,604 Total Segment Operating Income $ 199,912 $ 163,771 Other $ ( 14,848 ) $ ( 16,307 ) Intersegment Elimination $ - $ - General corporate expenses $ ( 107,228 ) $ ( 103,358 ) Impairment, restructuring and other charges (1) $ - $ ( 21,275 ) Total Operating Income $ 77,836 $ 22,831 Interest (income) expense, net $ ( 3,439 ) $ 690 Other (income) expense, net $ ( 1,396 ) $ ( 3,311 ) Income before income taxes $ 82,671 $ 25,452 Capital Expenditures American Eagle $ 12,634 $ 14,943 Aerie $ 11,741 $ 11,188 Other $ 2,864 $ 5,577 General corporate expenditures $ 8,970 $ 14,149 Total Capital Expenditures $ 36,209 $ 45,857 (1) Refer to Note 13 to the Consolidated Financial Statements for additional information. We do not allocate assets to the reportable segment level and therefore our CEO does not use segment asset information to make decisions. Total net revenue for the American Eagle and Aerie reportable segments in the table above represents revenue attributable to each brand's merchandise, which comprises approximately 96% of total net revenue. The following table presents summarized geographical information: 13 Weeks Ended (In thousands) May 4, 2024 April 29, 2023 Total net revenue: United States $ 952,685 $ 914,391 Foreign (1) 191,182 166,535 Total net revenue $ 1,143,867 $ 1,080,926 (1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Impairment, Restructuring and O
Impairment, Restructuring and Other Charges | 3 Months Ended |
May 04, 2024 | |
Restructuring and Related Activities [Abstract] | |
Impairment, Restructuring and Other Charges | 13. Impairment, Restructuring and Other Charges The following table represents impairment, restructuring and other charges related to Quiet Platforms. All amounts were recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations during the 13 weeks ended April 29, 2023 . There were no impairment, restructuring and other charges recorded for the 13 weeks ended May 4, 2024. 13 Weeks Ended April 29, (In thousands) 2023 Long-lived asset impairment charges $ 10,759 Employee related costs 5,592 Other commercial related charges 4,924 Total impairment, restructuring and other charges $ 21,275 The following footnotes relate to impairment, restructuring, and other charges recorded in the 13 weeks ended in April 29, 2023: (1) $ 21.3 million of charges related to the Quiet Platforms restructuring. Of this amount, we recorded $ 10.8 million of long-term asset impairment primarily related to technology which is no longer a part of the long-term strategy. All impairments were recorded due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms. We recorded $ 5.6 million of severance based on this revised strategy. We also recorded $ 4.9 million of contract related charges. A rollforward of the restructuring liabilities recognized in the Consolidated Balance Sheet is as follows: 13 Weeks Ended May 4, (In thousands) 2024 Accrued liability as of February 3, 2024 $ 11,414 Less: Cash payments and adjustments ( 7,210 ) Accrued liability as of May 4, 2024 $ 4,204 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
May 04, 2024 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and consolidated entities where the Company's ownership percentage is less than 100 %. Non-controlling interest is included as a component of contributed capital within the Consolidated Balance Sheets and Consolidated Statements of Stockholders' Equity and was not material for any period presented. All intercompany transactions and balances have been eliminated in consolidation. At May 4, 2024 , the Company operated in two reportable segments, American Eagle and Aerie. |
Fiscal Year | Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, "Fiscal 2024" refers to the 52-week period that will end on February 1, 2025. “Fiscal 2023” refers to the 53-week period ended on February 3, 2024. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the Financial Standards Board issued ASU 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires that segment expenses deemed significant to the Chief Operating Decision Maker (CODM) typically incorporated in measuring profit or loss of the segment should be disclosed. The guidance also requires that the difference between segment revenues and these significant segment expenses is disclosed. Any annually disclosed segment information is now required to be reported in interim periods as well. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Public entities are required to apply the amendment retrospectively to prior periods presented in the financial statements. The Company plans to adopt ASU 2023-07 effective for its Fiscal Year 2024 and for the interim periods beginning in Fiscal 2025. Refer to Note 12 to the Consolidated Financial Statements for additional information regarding Segment Reporting. In December 2023, the Financial Standards Board issued ASU 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires increased transparency in tax disclosures, specifically by expanding requirements for rate reconciliation and income taxes paid information. Additionally, the amendment requires disclosures of income/(loss) from continuing operations before taxes disaggregated between domestic and foreign, and income tax expense/(benefit), disaggregated by federal, state, and foreign. Disclosure requirements about the nature and estimated range of the reasonably possible change in unrecognized tax benefits over the next year have been removed as part of this amendment. The guidance is effective for fiscal years beginning after December 15, 2024. The Company plans to adopt ASU 2023-09 effective for Fiscal 2025. Refer to Note 10 to the Consolidated Financial Statements for additional information regarding Income Taxes. |
Foreign Currency Translation | Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters , the Company translates assets and liabilities denominated in foreign currencies into U.S. dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income . We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended May 4, 2024 , an unrealized gain of $ 0.7 million was included in other comprehensive income, which were primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates. |
Cash, Cash Equivalents, and Short-term Investments | Cash, Cash Equivalents and Short-term Investments The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with an original maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash, cash equivalents, and short-term investments. |
Accounts Receivable | Accounts Receivable The Company's receivables are primarily generated from product sales and royalties from our licensees. The primary indicators of the credit quality of our receivables are aging, payment history, economic sector information and outside credit monitoring, and are assessed on a quarterly basis. Our credit loss exposure is mainly concentrated in our accounts receivable portfolio. Our allowance for credit losses is calculated using a loss-rate method based on historical experience, current market conditions and reasonable forecasts. Historically, the Company’s reserves have approximated actual experience. |
Merchandise Inventory | Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. |
Property and Equipment | Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology Five year s Three to five year s As of May 4, 2024 , the weighted average remaining useful life of our assets was approximately six years . In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ("ROU") assets associated with retail stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income within the Consolidated Statements of Operations. Our impairment loss calculations require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. The significant assumption used in our fair value analysis is forecasted revenue. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our consolidated operating results could be adversely affected. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. There were no long-lived asset impairment charges recorded during the 13 weeks ended May 4, 2024. During the 13 weeks ended April 29, 2023, the Company recorded impairment of property and equipment of $ 10.8 million. Refer to Note 6 to the Consolidat ed Financial Statements for additional information regarding property and equipment and refer to Note 13 to the Consolidated Financial Statements for additional information regarding the impairment of these assets. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s goodwill is primarily related to the acquisition of its regionalized fulfillment center network, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. The Company last performed an annual goodwill impairment test as of February 3, 2024. As a result of the annual impairment test, the Company concluded that the goodwill assigned to the Quiet Platforms reporting unit was impaired, resulting in a charge of $ 39.6 million recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations for Fiscal 2023, due to insufficient prospective cash flows to support the carrying value of the business. Significant, subjective assumptions used in the Company’s fair value estimate included forecasted cost of sales, forecasted operating expense and the discount rate. No indicators of impairment were present during the 13 weeks ended May 4, 2024 or April 29, 2023. Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. During Fiscal 2023, the Company recorded a $ 40.5 million impairment charge within impairment, restructuring and other charges on the Consolidated Statements of Operations related to the definite-lived intangible assets of Quiet Platforms, due to insufficient prospective cash flows to support the carrying value of the assets. No definite-lived intangible asset impairment charges were recorded during the 13 weeks ended May 4, 2024 or April 29, 2023. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets. |
Construction Allowances | Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. |
Self-Insurance Liability | Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop-loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. |
Leases | Leases The Company leases all store premises, its Canadian distribution center in Mississauga, Ontario, its regional distribution facilities, some of its office space and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. |
Co-Branded and Private Label Credit Cards | Co-Branded and Private Label Credit Cards The Company offers a co-branded credit card and a private-label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. |
Customer Loyalty Program | Customer Loyalty Program The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie (the “Program”). The Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at AE and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The portion of the sales revenue attributed to the reward points is deferred and recognized when the reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. |
Credit Agreement | Credit Agreement In June 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides senior secured asset-based revolving credit for loans and letters of credit up to $ 700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027 . Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements. |
Income Taxes | Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the Company’s effective income tax rate. The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance, requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss). Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to Customer Loyalty Program above for additional information. Revenue associated with Quiet Platforms is recognized as the services are performed. |
Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses | Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”), Quiet Platforms' costs to service its customers and buying, occupancy and warehousing costs and services. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Total net revenue, net of merchandise costs, represents merchandise margin. Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, selling, general and administrative expenses do not include rent and utilities, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. |
Interest (Income) Expense, Net | Interest (Income) Expense, Net Interest (income) expense, net primarily consists of interest income from cash and cash equivalent s. |
Other (Income), Net | Other (Income), Net Other (income), net consists primarily of foreign currency fluctuations and changes in other non-operating items. Non-controlling interest was not material for any period presented and is included within other (income), net. |
Segment Information | Segment Information The Company has identified two operating segments (American Eagle and Aerie brand) that also represent our reportable segments and reflect the Chief Operating Decision Maker's (defined as our CEO) internal view of analyzing results and allocating resources. Additionally, our Todd Snyder and Unsubscribed brands and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they are presented under the Other caption. For additional information regarding the Company’s segment and geographic information, refer to Note 12 to the Consolidated Financial Statements. |
Fair Value Measurements | ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Legal Proceedings and Claims | The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or consolidated cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
May 04, 2024 | |
Accounting Policies [Abstract] | |
Useful Lives of Major Classes of Assets | The useful lives of our major classes of assets are as follows: Buildings 25 years Leasehold improvements Lesser of 10 years or the term of the lease Fixtures and equipment Information technology Five year s Three to five year s |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 3 Months Ended |
May 04, 2024 | |
Cash and Cash Equivalents [Abstract] | |
Fair Market Value of Cash and Cash Equivalents | The following table summarizes the fair market values for the Company’s cash, cash equivalents, and short-term investments which are recorded in the Consolidated Balance Sheets: (In thousands) May 4, 2024 February 3, 2024 April 29, 2023 Cash and cash equivalents: Cash $ 110,792 $ 162,279 $ 117,457 Interest bearing deposits $ 189,726 $ 191,815 384 Total cash and cash equivalents $ 300,518 $ 354,094 $ 117,841 Short-term investments: Certificates of deposits $ - $ 100,000 $ — Total short-term investments $ - $ 100,000 — Total cash and short-term investments $ 300,518 $ 454,094 $ 117,841 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
May 04, 2024 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets Measured at Fair Value on a Recurring Basis | The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments. Fair Value Measurements at May 4, 2024 (In thousands) Carrying Amount Quoted Market Prices Significant Other Significant Cash and cash equivalents: Cash $ 110,792 $ 110,792 $ - $ - Interest bearing deposits 189,726 189,726 - - Total cash and cash equivalents $ 300,518 $ 300,518 $ - $ - |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
May 04, 2024 | |
Earnings Per Share [Abstract] | |
Reconciliation Between Basic and Diluted Earnings per Share | The following is a reconciliation between basic and diluted weighted average shares outstanding: 13 Weeks Ended (In thousands) May 4, 2024 April 29, 2023 Numerator: Net income and numerator for basic EPS $ 67,752 $ 18,453 Add: Interest expense, net of tax, related to the 2025 Notes (1) — 58 Numerator for diluted EPS $ 67,752 $ 18,511 Denominator: Denominator for basic EPS - weighted average shares 196,429 194,487 Add: Dilutive effect of the 2025 Notes (1) - 834 Add: Dilutive effect of stock options and non-vested restricted stock 4,881 1,839 Denominator for diluted EPS - adjusted weighted average shares 201,310 197,160 Anti-dilutive shares (2) 239 2,072 (1) The Company utilizes the "if-converted" method of calculating diluted EPS, in accordance with ASU 2020-06, Debt with Conversion and Other Options. (2) For all periods presented, anti-dilutive shares relate to stock options and unvested restricted stock. |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
May 04, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and equipment, net consists of the following: May 4, February 3, April 29, (In thousands) 2024 2024 2023 Property and equipment, at cost $ 2,437,863 $ 2,427,114 $ 2,723,188 Less: Accumulated depreciation and impairment ( 1,734,312 ) ( 1,713,778 ) ( 1,960,755 ) Property and equipment, net $ 703,551 $ 713,336 $ 762,433 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 3 Months Ended |
May 04, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Definite-lived intangible assets, net | Goodwill and definite-lived intangible assets, net consist of the following: May 4, February 3, April 29, (In thousands) 2024 2024 2023 Goodwill, gross (1) $ 269,047 $ 269,097 $ 269,092 Accumulated impairment (2) ( 43,794 ) ( 43,794 ) ( 4,196 ) Goodwill, net $ 225,253 $ 225,303 $ 264,896 (1) The change in Goodwill, gross from period to period includes the effect of foreign currency rate fluctuations. (2) Accumulated impairment includes $ 39.6 million recorded in Fiscal 2023, $ 1.7 million recorded in Fiscal 2019 and $ 2.5 million recorded in Fiscal 2016. May 4, February 3, April 29, (In thousands) 2024 2024 2023 Intangible assets, gross $ 147,234 $ 147,054 $ 146,379 Accumulated amortization ( 61,523 ) ( 60,412 ) ( 53,980 ) Accumulated impairment ( 40,533 ) ( 40,533 ) - Intangible assets, net $ 45,178 $ 46,109 $ 92,399 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
May 04, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | A summary of the Company’s stock option activity for the 13 weeks ended May 4, 2024 follows: Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In years) (In thousands) Outstanding - February 3, 2024 4,213 $ 16.83 Granted 525 $ 24.37 Exercised ( 293 ) $ 13.96 Cancelled - $ - Outstanding - May 4, 2024 4,445 $ 17.91 4.3 32,185 Vested and expected to vest - May 4, 2024 4,323 $ 17.79 4.1 9,819 Exercisable - May 4, 2024 (1) 2,530 $ 15.49 3.3 22,298 (1) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on May 4, 2024 . |
Black-Scholes Option Valuation Assumptions | The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: 13 Weeks Ended May 4, April 29, Black-Scholes Option Valuation Assumptions 2024 2023 Risk-free interest rate (1) 4.4 % 3.4 % Dividend yield 1.9 % 2.8 % Volatility factor (2) 55.4 % 55.7 % Weighted-average expected term (3) 4.5 years 4.5 years (1) Based on the United States Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3) Represents the period of time options are expected to be outstanding. The weighted-average expected option terms were determined based on historical experience. |
Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity is presented in the following table: Time-Based Restricted Performance-Based Restricted May 4, 2024 May 4, 2024 (Shares in thousands) Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Non-vested - February 3, 2024 2,830 $ 15.83 2,023 $ 18.45 Granted 1,048 $ 24.21 455 $ 27.71 Vested ( 1,153 ) $ 17.51 ( 248 ) $ 39.81 Cancelled ( 123 ) $ 11.74 ( 32 ) $ 18.05 Non-vested - May 4, 2024 2,602 $ 18.65 2,198 $ 17.96 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
May 04, 2024 | |
Segment Reporting [Abstract] | |
Summary of Reportable Segment Information | Reportable segment information is presented in the following table: 13 weeks ended May 4, 2024 April 29, 2023 Net Revenue: American Eagle $ 724,744 $ 671,092 Aerie $ 372,652 $ 359,082 Total Segment Net Revenue $ 1,097,396 $ 1,030,174 Other $ 54,984 $ 109,357 Intersegment Elimination $ ( 8,513 ) $ ( 58,605 ) Total Net Revenue $ 1,143,867 $ 1,080,926 Operating Income: American Eagle $ 138,585 $ 107,167 Aerie $ 61,327 $ 56,604 Total Segment Operating Income $ 199,912 $ 163,771 Other $ ( 14,848 ) $ ( 16,307 ) Intersegment Elimination $ - $ - General corporate expenses $ ( 107,228 ) $ ( 103,358 ) Impairment, restructuring and other charges (1) $ - $ ( 21,275 ) Total Operating Income $ 77,836 $ 22,831 Interest (income) expense, net $ ( 3,439 ) $ 690 Other (income) expense, net $ ( 1,396 ) $ ( 3,311 ) Income before income taxes $ 82,671 $ 25,452 Capital Expenditures American Eagle $ 12,634 $ 14,943 Aerie $ 11,741 $ 11,188 Other $ 2,864 $ 5,577 General corporate expenditures $ 8,970 $ 14,149 Total Capital Expenditures $ 36,209 $ 45,857 (1) Refer to Note 13 to the Consolidated Financial Statements for additional information. |
Summary of Geographical Information | The following table presents summarized geographical information: 13 Weeks Ended (In thousands) May 4, 2024 April 29, 2023 Total net revenue: United States $ 952,685 $ 914,391 Foreign (1) 191,182 166,535 Total net revenue $ 1,143,867 $ 1,080,926 (1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Impairment, Restructuring and_2
Impairment, Restructuring and Other Charges (Tables) | 3 Months Ended |
May 04, 2024 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Impairment, Restructuring and Other Charges | The following table represents impairment, restructuring and other charges related to Quiet Platforms. All amounts were recorded within impairment, restructuring and other charges on the Consolidated Statements of Operations during the 13 weeks ended April 29, 2023 . There were no impairment, restructuring and other charges recorded for the 13 weeks ended May 4, 2024. 13 Weeks Ended April 29, (In thousands) 2023 Long-lived asset impairment charges $ 10,759 Employee related costs 5,592 Other commercial related charges 4,924 Total impairment, restructuring and other charges $ 21,275 The following footnotes relate to impairment, restructuring, and other charges recorded in the 13 weeks ended in April 29, 2023: (1) $ 21.3 million of charges related to the Quiet Platforms restructuring. Of this amount, we recorded $ 10.8 million of long-term asset impairment primarily related to technology which is no longer a part of the long-term strategy. All impairments were recorded due to insufficient prospective cash flows to support the asset value, resulting from the restructuring of Quiet Platforms. We recorded $ 5.6 million of severance based on this revised strategy. We also recorded $ 4.9 million of contract related charges. |
Rollforward of Restructuring Liabilities Recognized in Consolidated Balance Sheet | A rollforward of the restructuring liabilities recognized in the Consolidated Balance Sheet is as follows: 13 Weeks Ended May 4, (In thousands) 2024 Accrued liability as of February 3, 2024 $ 11,414 Less: Cash payments and adjustments ( 7,210 ) Accrued liability as of May 4, 2024 $ 4,204 |
Interim Financial Statements -
Interim Financial Statements - Additional Information (Details) | May 04, 2024 Store Country |
Accounting Policies [Abstract] | |
Number of retail stores | 1,500 |
Number of international store locations | 300 |
Number of countries company operates in | Country | 80 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 USD ($) | Apr. 30, 2020 USD ($) | Jan. 31, 2019 USD ($) | May 04, 2024 USD ($) Segment | Apr. 29, 2023 USD ($) | Feb. 03, 2024 USD ($) | |
Significant Accounting Policies [Line Items] | ||||||
Maximum ownership percentage in consolidated entities and subsidiaries | 100% | |||||
Number of reportable segments | Segment | 2 | |||||
Unrealized loss included in other comprehensive loss | $ 688,000 | $ 5,853,000 | ||||
Weighted average remaining useful life, assets | 6 years | |||||
Asset impairment charges | $ 0 | 0 | ||||
Goodwill impairment charge | 0 | 0 | ||||
Definite-lived impairment charges | $ 0 | 0 | ||||
Credit Card Reward Program Description | The Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. | |||||
Foreign currency translation adjustments | $ 688,000 | 5,853,000 | ||||
Impairment and restructuring charges | 21,275,000 | |||||
Quiet Platforms | ||||||
Significant Accounting Policies [Line Items] | ||||||
Asset impairment charges | 10,800,000 | |||||
Goodwill impairment charge | $ 39,600,000 | |||||
Definite-lived impairment charges | $ 40,500,000 | |||||
Credit Agreement | Credit Facilities | ||||||
Significant Accounting Policies [Line Items] | ||||||
Loans and letters of credit maximum borrowing capacity | $ 700,000,000 | $ 400,000,000 | ||||
Line of credit facility, expiration date | Jun. 24, 2027 | Jan. 30, 2024 | ||||
Property and Equipment | ||||||
Significant Accounting Policies [Line Items] | ||||||
Asset impairment charges | $ 0 | $ 10,800,000 | ||||
2025 Notes | ||||||
Significant Accounting Policies [Line Items] | ||||||
Aggregate principal amount of debt issued | $ 415,000,000 | |||||
Debt instrument, maturity year | 2025 | |||||
Minimum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Definite-lived intangibles, useful life | 10 years | |||||
Maximum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Definite-lived intangibles, useful life | 15 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Useful Lives of Major Classes of Assets (Detail) | May 04, 2024 |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | Leasehold Improvements |
Buildings | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 25 years |
Leasehold Improvements | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Fixtures and Equipment | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Information Technology | Minimum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 3 years |
Information Technology | Maximum | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Useful Lives of Major Classes of Assets (Parenthetical) (Detail) | May 04, 2024 |
Maximum | Leasehold Improvements | |
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
Useful lives in asset class | 10 years |
Cash and Cash Equivalents and S
Cash and Cash Equivalents and Short-Term Investments - Fair Market Values for Cash and Short-term Investments (Detail) - USD ($) $ in Thousands | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 |
Cash and cash equivalents: | |||
Cash and cash equivalents | $ 300,518 | $ 354,094 | $ 117,841 |
Short-term investments: | |||
Short-term investments | 100,000 | ||
Total cash and short-term investments | 300,518 | 454,094 | 117,841 |
Cash | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | 110,792 | 162,279 | 117,457 |
Interest Bearing Deposits | |||
Cash and cash equivalents: | |||
Cash and cash equivalents | $ 189,726 | 191,815 | $ 384 |
Certificates of Deposit | |||
Short-term investments: | |||
Short-term investments | $ 100,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 300,518 | $ 354,094 | $ 117,841 |
Fair Value Measurements, Recurring | Carrying Amount | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 300,518 | ||
Fair Value Measurements, Recurring | Cash | Carrying Amount | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 110,792 | ||
Fair Value Measurements, Recurring | Interest Bearing Deposits | Carrying Amount | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 189,726 | ||
Fair Value Measurements, Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 300,518 | ||
Fair Value Measurements, Recurring | Level 1 | Cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 110,792 | ||
Fair Value Measurements, Recurring | Level 1 | Interest Bearing Deposits | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 189,726 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | Feb. 03, 2024 | |
Fair Value Measurements Disclosure [Line Items] | |||
Outstanding borrowings | $ 30,000,000 | ||
Impairment charges | $ 0 | 10,759,000 | |
Goodwill impairment | 0 | 0 | |
Quiet Platforms | |||
Fair Value Measurements Disclosure [Line Items] | |||
Goodwill impairment | $ 39,600,000 | ||
Revolving Credit Facility | |||
Fair Value Measurements Disclosure [Line Items] | |||
Outstanding borrowings | $ 0 | $ 30,000,000 |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation Between Basic and Diluted Earnings per Share (Detail) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
May 04, 2024 | Apr. 29, 2023 | ||
Numerator: | |||
Net income | $ 67,752 | $ 18,453 | |
Add: Interest expense, net of tax, related to the 2025 Notes | [1] | 58 | |
Numerator for diluted EPS | $ 67,752 | $ 18,511 | |
Denominator: | |||
Denominator for basic EPS - weighted average shares | 196,429 | 194,487 | |
Add: Dilutive effect of the 2025 Notes | [1] | 834 | |
Add: Dilutive effect of stock options and non-vested restricted stock | 4,881 | 1,839 | |
Denominator for diluted EPS - adjusted weighted average shares | 201,310 | 197,160 | |
Anti-dilutive shares | [2] | 239 | 2,072 |
[1] The Company utilizes the "if-converted" method of calculating diluted EPS, in accordance with ASU 2020-06, Debt with Conversion and Other Options. For all periods presented, anti-dilutive shares relate to stock options and unvested restricted stock. |
Earnings per Share (Additional
Earnings per Share (Additional Information) (Detail) $ in Thousands | 3 Months Ended |
May 04, 2024 USD ($) | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Repurchase of common stock as publicly announced programs | $ 34,948 |
Property and Equipment, net - P
Property and Equipment, net - Property and Equipment, net (Detail) - USD ($) $ in Thousands | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 |
Property, Plant and Equipment [Abstract] | |||
Property and equipment, at cost | $ 2,437,863 | $ 2,427,114 | $ 2,723,188 |
Less: Accumulated depreciation and impairment | (1,734,312) | (1,713,778) | (1,960,755) |
Property and equipment, net | $ 703,551 | $ 713,336 | $ 762,433 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net (Detail) - USD ($) $ in Thousands | May 04, 2024 | Feb. 03, 2024 | Apr. 29, 2023 | |
Goodwill [Line Items] | ||||
Goodwill, gross | [1] | $ 269,047 | $ 269,097 | $ 269,092 |
Accumulated impairment | [2] | (43,794) | (43,794) | (4,196) |
Goodwill, net | 225,253 | 225,303 | 264,896 | |
Intangible assets, gross | 147,234 | 147,054 | 146,379 | |
Accumulated amortization | (61,523) | (60,412) | (53,980) | |
Accumulated impairment | (40,533) | (40,533) | ||
Intangible assets, net | $ 45,178 | $ 46,109 | $ 92,399 | |
[1] The change in Goodwill, gross from period to period includes the effect of foreign currency rate fluctuations. Accumulated impairment includes $ 39.6 million recorded in Fiscal 2023, $ 1.7 million recorded in Fiscal 2019 and $ 2.5 million recorded in Fiscal 2016. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net, (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2024 | Feb. 01, 2020 | Jan. 28, 2017 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |||
Accumulated impairment | $ 39.6 | $ 1.7 | $ 2.5 |
Long-Term Debt, Net - Additiona
Long-Term Debt, Net - Additional Information (Detail) shares in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Feb. 10, 2023 USD ($) shares | Jun. 30, 2022 USD ($) | Apr. 30, 2020 USD ($) TradingDay | Jan. 31, 2019 USD ($) | May 04, 2024 USD ($) | Apr. 29, 2023 USD ($) shares | Jan. 28, 2023 USD ($) | Feb. 03, 2024 USD ($) | |
Line Of Credit Facility [Line Items] | ||||||||
Long-term debt outstanding | $ 0 | $ 0 | ||||||
Outstanding borrowings | $ 30,000,000 | |||||||
Credit Facilities | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Credit facility interest rate | 0.10 | |||||||
Interest expense | $ 0 | 600,000 | ||||||
Credit Facilities | SOFR | Minimum | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Accrued interest margin rate | 1.125% | |||||||
Credit Facilities | SOFR | Maximum | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Accrued interest margin rate | 1.375% | |||||||
Credit Facilities | Alternate Base Rate | Minimum | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Accrued interest margin rate | 0.125% | |||||||
Credit Facilities | Alternate Base Rate | Maximum | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Accrued interest margin rate | 0.375% | |||||||
Credit Agreement | Credit Facilities | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Loans and letters of credit maximum borrowing capacity | $ 700,000,000 | $ 400,000,000 | ||||||
Line of credit facility, expiration date | Jun. 24, 2027 | Jan. 30, 2024 | ||||||
Credit Agreement | Stand-by Letters of Credit | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Letters of credit outstanding amount | $ 12,000,000 | 7,700,000 | ||||||
Credit Agreement | Credit Agreement Loans | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Outstanding borrowings | $ 0 | $ 30,000,000 | ||||||
Common Stock | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Exchange of Convertible Senior Notes (in shares) | shares | 1,099 | |||||||
Redemption/Exchange of Convertible Senior Notes (in shares) | shares | 1,099 | |||||||
2025 Notes | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Aggregate principal amount of debt issued | $ 415,000,000 | |||||||
Debt instrument, stated interest rate | 3.75% | |||||||
Debt instrument, maturity year | 2025 | |||||||
Debt instrument, interest terms | The 2025 Notes had a stated interest rate of 3.75%, payable semi-annually. | |||||||
Debt instrument, frequency of periodic payment of interest | payable semi-annually | |||||||
Debt instrument, redemption earliest date | Apr. 17, 2023 | Apr. 17, 2023 | ||||||
Debt instrument, redemption, scheduled trading day immediately preceding maturity date | TradingDay | 40 | |||||||
Debt instrument, redemption percentage of common stock price to conversion price | 130% | |||||||
Debt instrument, redemption, effect for trading days | TradingDay | 20 | |||||||
Debt instrument, redemption, consecutive trading day period | TradingDay | 30 | |||||||
Notes exchange aggregate principal amount | $ 8,800,000 | $ 403,200,000 | ||||||
Interest expense for 2025 Notes | $ 100,000 | |||||||
2025 Notes | Common Stock | ||||||||
Line Of Credit Facility [Line Items] | ||||||||
Exchange of Convertible Senior Notes (in shares) | shares | 1,100 | |||||||
Redemption/Exchange of Convertible Senior Notes (in shares) | shares | 1,100 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 20,586 | $ 14,780 |
Share-based compensation, net of tax | 17,000 | 10,700 |
Net proceeds from stock options exercised | $ 1,853 | $ 1,095 |
Shares available for all equity grants | 11 | |
Performance-Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Unrecognized compensation expense | $ 7,500 | |
Unrecognized compensation expense, weighted average period | 2 years 3 months 18 days | |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 1,000 | |
Unrecognized compensation expense, weighted average period | 2 years 6 months | |
Time Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Unrecognized compensation expense, weighted average period | 2 years 4 months 24 days | |
Unrecognized compensation expense, restricted stock grants | $ 44,900 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 04, 2024 USD ($) $ / shares shares | ||
Options | ||
Outstanding - beginning of period | shares | 4,213 | |
Granted | shares | 525 | |
Exercised | shares | (293) | |
Outstanding - end of period | shares | 4,445 | |
Vested and expected to vest - end of period | shares | 4,323 | |
Exercisable - end of period | shares | 2,530 | [1] |
Weighted-Average Exercise Price | ||
Outstanding - beginning of period | $ / shares | $ 16.83 | |
Granted | $ / shares | 24.37 | |
Exercised | $ / shares | 13.96 | |
Outstanding - end of period | $ / shares | 17.91 | |
Vested and expected to vest - end of period | $ / shares | 17.79 | |
Exercisable - end of period | $ / shares | $ 15.49 | [1] |
Weighted-Average Remaining Contractual Term (In years) | ||
Outstanding - end of period | 4 years 3 months 18 days | |
Vested and expected to vest - end of period | 4 years 1 month 6 days | |
Exercisable - end of period | 3 years 3 months 18 days | [1] |
Aggregate Intrinsic Value | ||
Outstanding - end of period | $ | $ 32,185 | |
Vested and expected to vest - end of period | $ | 9,819 | |
Exercisable - end of period | $ | $ 22,298 | [1] |
[1] Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on May 4, 2024 . |
Share-Based Compensation - Blac
Share-Based Compensation - Black-Scholes Option Valuation Assumptions (Detail) | 3 Months Ended | ||
May 04, 2024 | Apr. 29, 2023 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | [1] | 4.40% | 3.40% |
Dividend yield | 1.90% | 2.80% | |
Volatility factor | [2] | 55.40% | 55.70% |
Weighted-average expected term | [3] | 4 years 6 months | 4 years 6 months |
[1] Based on the United States Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. Based on historical volatility of the Company’s common stock. Represents the period of time options are expected to be outstanding. The weighted-average expected option terms were determined based on historical experience. |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Restricted Stock Activity (Detail) shares in Thousands | 3 Months Ended |
May 04, 2024 $ / shares shares | |
Time Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,830 |
Granted | shares | 1,048 |
Vested | shares | (1,153) |
Cancelled | shares | (123) |
Nonvested - end of period | shares | 2,602 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 15.83 |
Granted | $ / shares | 24.21 |
Vested | $ / shares | 17.51 |
Cancelled | $ / shares | 11.74 |
Nonvested - end of period | $ / shares | $ 18.65 |
Performance-Based Restricted Stock Units | |
Shares | |
Nonvested - beginning of period | shares | 2,023 |
Granted | shares | 455 |
Vested | shares | (248) |
Cancelled | shares | (32) |
Nonvested - end of period | shares | 2,198 |
Weighted-Average Grant Date Fair Value | |
Nonvested - beginning of period | $ / shares | $ 18.45 |
Granted | $ / shares | 27.71 |
Vested | $ / shares | 39.81 |
Cancelled | $ / shares | 18.05 |
Nonvested - end of period | $ / shares | $ 17.96 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Income Tax Disclosure [Abstract] | ||
Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months | $ 15.3 | |
Effective income tax benefit rate | 18% | 27.50% |
Accrued interest and penalties related to unrecognized tax benefits | $ 6.7 | |
Increase (decrease) in unrecognized tax benefits | $ 14.2 | $ (0.8) |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 3 Months Ended |
May 04, 2024 Segment | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segment Reporting - Summary of
Segment Reporting - Summary of Reportable Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
May 04, 2024 | Apr. 29, 2023 | ||
Segment Reporting Information [Line Items] | |||
Total net revenue | $ 1,143,867 | $ 1,080,926 | |
Impairment, restructuring and other charges | [1] | (21,275) | |
Operating income | 77,836 | 22,831 | |
Interest (income) expense, net | (3,439) | 690 | |
Other (income) expense, net | (1,396) | (3,311) | |
Income before income taxes | 82,671 | 25,452 | |
Capital expenditures | 36,209 | 45,857 | |
General Corporate Expenses | |||
Segment Reporting Information [Line Items] | |||
Operating income | (107,228) | (103,358) | |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 1,097,396 | 1,030,174 | |
Operating income | 199,912 | 163,771 | |
Operating Segments | American Eagle | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 724,744 | 671,092 | |
Operating income | 138,585 | 107,167 | |
Capital expenditures | 12,634 | 14,943 | |
Operating Segments | Aerie | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 372,652 | 359,082 | |
Operating income | 61,327 | 56,604 | |
Capital expenditures | 11,741 | 11,188 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 54,984 | 109,357 | |
Operating income | (14,848) | (16,307) | |
Capital expenditures | 2,864 | 5,577 | |
Intersegment Elimination | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | (8,513) | (58,605) | |
Capital expenditures | $ 8,970 | $ 14,149 | |
[1] Refer to Note 13 to the Consolidated Financial Statements for additional information. |
Segment Reporting - Summary o_2
Segment Reporting - Summary of Geographical Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
May 04, 2024 | Apr. 29, 2023 | ||
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Total net revenue | $ 1,143,867 | $ 1,080,926 | |
United States | |||
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Total net revenue | 952,685 | 914,391 | |
Foreign | |||
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Total net revenue | [1] | $ 191,182 | $ 166,535 |
[1] Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries and international franchise royalty revenue. |
Impairment, Restructuring and_3
Impairment, Restructuring and Other Charges - Schedule of Impairment and Restructuring Charges (Detail) - USD ($) | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Restructuring and Related Activities [Abstract] | ||
Long-lived asset impairment charges | $ 0 | $ 10,759,000 |
Employee related costs | 5,592,000 | |
Other commercial related charges | 4,924,000 | |
Total impairment, restructuring and other charges | $ 21,275,000 |
Impairment, Restructuring and_4
Impairment, Restructuring and Other Charges - Schedule of Impairment and Restructuring Charges (Parenthetical) (Details) - USD ($) | 3 Months Ended | |
May 04, 2024 | Apr. 29, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Impairment, restructuring and other charges | $ 0 | $ 21,275,000 |
Long-term asset impairment | 0 | $ 0 |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment, restructuring and other charges | |
Contract related charges | $ 4,924,000 | |
Impairment charges | $ 0 | 10,759,000 |
Quiet Platforms | ||
Restructuring Cost and Reserve [Line Items] | ||
Impairment, restructuring and other charges | 21,300,000 | |
Long-term asset impairment | 10,800,000 | |
Severance Costs | 5,600,000 | |
Contract related charges | $ 4,900,000 |
Impairment, Restructuring and_5
Impairment, Restructuring and Other Charges - Rollforward of Restructuring Liabilities Recognized in Consolidated Balance Sheets (Details) $ in Thousands | 3 Months Ended |
May 04, 2024 USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Accrued liability as of February 3, 2024 | $ 11,414 |
Less: Cash payments and adjustments | (7,210) |
Accrued liability as of May 4, 2024 | $ 4,204 |