EXHIBIT 99.1
AMERICAN EAGLE OUTFITTERS
REPORTS THIRD QUARTER 2013 RESULTS
PITTSBURGH–December 6, 2013 - American Eagle Outfitters, Inc. (NYSE:AEO) today reported adjusted earnings of $0.19 per diluted share for the third quarter ended November 2, 2013, compared to earnings from continuing operations of $0.41 per diluted share for the third quarter ended October 27, 2012. GAAP earnings of $0.13 per diluted share include non-cash charges of ($0.06) per diluted share associated with the company’s previously disclosed plans to close its Warrendale, PA distribution center upon the opening of its new facility in Hazleton, PA.
Robert Hanson, CEO stated, “Our financial performance is clearly unsatisfactory and not consistent with our objectives. As we continue to navigate through an intensely promotional North American retail landscape, we are making improvements in merchandising and marketing, while aggressively pursuing efficiency gains, expense reductions and ensuring disciplined inventory management. We are continuing to invest in important areas of growth including omni-channel, global expansion and factory stores — all high-return segments, which diversify our business and will be key drivers of our future growth and success.”
Third Quarter 2013 Non-GAAP Results
The following discussion is based on Non-GAAP results, as presented in the accompanying GAAP to Non-GAAP reconciliation.
• | Total net revenue of $857 million decreased 6% compared to $910 million last year. On comparable weeks, total revenue would have decreased in the low single-digits. |
• | Consolidated comparable sales, including AEO Direct, decreased 5%, compared to a 10% increase last year. Third quarter 2013 comparable sales are compared to the 13 weeks ended November 3, 2012. |
• | Gross profit decreased 21% to $299 million and 670 basis points to 34.9% of revenue, primarily as the result of higher promotional activity and the deleverage of rent on negative comparable sales. |
• | Selling, general and administrative expense of $206 million decreased 6% from last year and leveraged 10 basis points to 24.0% as a rate to revenue. Lower incentive compensation and travel costs contributed to the improvement. |
• | Operating income decreased 52% to $61 million, resulting in a rate of 7.1% compared to 14.1% last year. |
• | Adjusted EPS of $0.19 compared to EPS from continuing operations of $0.41 last year, a 54% decline. |
Inventory
Total merchandise inventory at the end of the third quarter increased to $519 million compared to $481 million last year. At cost per foot, inventory increased 6% against an 11% decline last year, which reflects the impact of timing shifts of merchandise receipts due to the 53rd week last year. On comparable weeks, inventory at cost per foot would have increased in the low single-digits.
Capital Expenditures
In third quarter 2013, capital expenditures totaled $93 million. The company expects capital expenditures of $250 million for fiscal 2013. The capital spending plan includes new store growth, store remodels, a new distribution center to support omni-channel growth and the implementation of new and upgraded technology.
Real Estate
In the third quarter, total square footage increased 2% from last year. The company opened 13 new stores, including 6 factory stores, and closed 5 locations, including 3 aerie stores. Additionally, the company had 61 international franchise locations in 12 countries. For additional third quarter 2013 actual and fiscal 2013 projected real estate information, see the accompanying table.
Cash and Investments
The company ended the quarter with total cash and investments of $367 million compared to $545 million last year.
Fourth Quarter Outlook
Management is issuing fourth quarter earnings guidance of $0.26 to $0.30 per diluted share, based on a mid single-digit decline in comparable sales. Guidance excludes potential asset impairment and restructuring charges. This compares to adjusted EPS of $0.55 last year, which excludes a tax benefit of $0.04 per share and restructuring and store impairment charges of ($0.12) per share.
Conference Call and Supplemental Financial Information
Today, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go towww.ae.com to access the webcast and audio replay. Also, a financial results presentation is posted on the company’s website.
Non-GAAP Measures
This press release includes information on non-GAAP financial measures (“non-GAAP” or “adjusted”), including earnings per share information and the consolidated results of operations excluding certain
items. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies. The company believes that this non-GAAP information is useful as an additional means for investors to evaluate the company’s operating performance, when reviewed in conjunction with the company’s GAAP financial statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations.
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About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle Outfitters® and Aerie® brands. The company operates more than 1,000 stores in the United States, Canada, Mexico, China, and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at 62 licensed international franchise stores in 12 countries. For more information, please visitwww.ae.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, specifically regarding fourth quarter 2013 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors beyond the company’s control. Such factors include, but are not limited to the risk that the company’s operating, financial and capital plans may not be achieved and the risks described in the Risk Factor Section of the company’s Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, the company’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized.
CONTACT: | American Eagle Outfitters Inc. | |
Judy Meehan 412-432-3300 |
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 2, 2013 | February 2, 2013 | October 27, 2012 | ||||||||||
(unaudited) | (unaudited) | |||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 354,284 | $ | 509,119 | $ | 544,683 | ||||||
Short-term investments | 2,930 | 121,873 | — | |||||||||
Merchandise inventory | 518,904 | 332,452 | 481,208 | |||||||||
Assets held for sale | 4,666 | 9,499 | 9,682 | |||||||||
Accounts receivable | 59,277 | 46,321 | 47,432 | |||||||||
Prepaid expenses and other | 107,292 | 73,805 | 65,326 | |||||||||
Deferred income taxes | 46,510 | 58,230 | 59,203 | |||||||||
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Total current assets | 1,093,863 | 1,151,299 | 1,207,534 | |||||||||
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Property and equipment, net | 630,206 | 500,134 | 527,376 | |||||||||
Intangible assets, net | 44,427 | 38,136 | 38,459 | |||||||||
Goodwill | 13,792 | 11,484 | 11,492 | |||||||||
Non-current deferred income taxes | 19,086 | 31,282 | 23,199 | |||||||||
Other assets | 38,712 | 23,718 | 25,073 | |||||||||
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Total Assets | $ | 1,840,086 | $ | 1,756,053 | $ | 1,833,133 | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Accounts payable | $ | 353,228 | $ | 176,874 | $ | 213,197 | ||||||
Accrued compensation and payroll taxes | 32,522 | 65,533 | 51,992 | |||||||||
Accrued rent | 75,680 | 77,873 | 76,769 | |||||||||
Accrued income and other taxes | 9,002 | 29,155 | 38,133 | |||||||||
Unredeemed gift cards and gift certificates | 24,689 | 46,458 | 23,089 | |||||||||
Current portion of deferred lease credits | 13,954 | 13,381 | 13,886 | |||||||||
Other current liabilities and accrued expenses | 29,382 | 26,628 | 26,432 | |||||||||
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Total current liabilities | 538,457 | 435,902 | 443,498 | |||||||||
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Deferred lease credits | 65,004 | 59,571 | 63,220 | |||||||||
Non-current accrued income taxes | 20,777 | 19,011 | 27,110 | |||||||||
Other non-current liabilities | 23,139 | 20,382 | 15,734 | |||||||||
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Total non-current liabilities | 108,920 | 98,964 | 106,064 | |||||||||
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Commitments and contingencies | — | — | — | |||||||||
Preferred stock | — | — | — | |||||||||
Common stock | 2,496 | 2,496 | 2,496 | |||||||||
Contributed capital | 577,108 | 627,065 | 599,343 | |||||||||
Accumulated other comprehensive income | 23,483 | 29,297 | 29,179 | |||||||||
Retained earnings | 1,587,320 | 1,553,058 | 1,522,805 | |||||||||
Treasury stock | (997,698 | ) | (990,729 | ) | (870,252 | ) | ||||||
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Total stockholders’ equity | 1,192,709 | 1,221,187 | 1,283,571 | |||||||||
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Total Liabilities and Stockholders’ Equity | $ | 1,840,086 | $ | 1,756,053 | $ | 1,833,133 | ||||||
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Current Ratio | 2.03 | 2.64 | 2.72 |
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)
GAAP Basis 13 Weeks Ended | ||||||||||||||||
November 2, 2013 | % of Revenue | October 27, 2012 | % of Revenue | |||||||||||||
Total net revenue | $ | 857,305 | 100.0 | % | $ | 910,374 | 100.0 | % | ||||||||
Cost of sales, including certain buying, occupancy and warehousing expenses | 558,430 | 65.1 | % | 531,284 | 58.4 | % | ||||||||||
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Gross profit | 298,875 | 34.9 | % | 379,090 | 41.6 | % | ||||||||||
Selling, general and administrative expenses | 205,725 | 24.0 | % | 219,128 | 24.1 | % | ||||||||||
Loss on impairment of assets | 19,316 | 2.3 | % | — | 0.0 | % | ||||||||||
Depreciation and amortization | 31,998 | 3.8 | % | 31,421 | 3.4 | % | ||||||||||
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Operating income | 41,836 | 4.8 | % | 128,541 | 14.1 | % | ||||||||||
Other income, net | 520 | 0.1 | % | 2,822 | 0.3 | % | ||||||||||
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Income before income taxes | 42,356 | 4.9 | % | 131,363 | 14.4 | % | ||||||||||
Provision for income taxes | 17,453 | 2.0 | % | 48,922 | 5.4 | % | ||||||||||
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Income from continuing operations | 24,903 | 2.9 | % | 82,441 | 9.0 | % | ||||||||||
Loss from discontinued operations, net of tax | — | 0.0 | % | (3,833 | ) | -0.4 | % | |||||||||
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Net income | $ | 24,903 | 2.9 | % | $ | 78,608 | 8.6 | % | ||||||||
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Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.13 | $ | 0.42 | ||||||||||||
Loss from discontinued operations | 0.00 | (0.02 | ) | |||||||||||||
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Net income per basic share | $ | 0.13 | $ | 0.40 | ||||||||||||
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Diluted income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.13 | $ | 0.41 | ||||||||||||
Loss from discontinued operations | 0.00 | (0.02 | ) | |||||||||||||
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Net income per diluted share | $ | 0.13 | $ | 0.39 | ||||||||||||
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Weighted average common shares outstanding - basic | 192,818 | 197,173 | ||||||||||||||
Weighted average common shares outstanding - diluted | 194,612 | 201,967 |
GAAP Basis 39 Weeks Ended | ||||||||||||||||
November 2, 2013 | % of Revenue | October 27, 2012 | % of Revenue | |||||||||||||
Total net revenue | $ | 2,264,095 | 100.0 | % | $ | 2,358,749 | 100.0 | % | ||||||||
Cost of sales, including certain buying, occupancy and warehousing expenses | 1,456,116 | 64.3 | % | 1,428,182 | 60.5 | % | ||||||||||
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Gross profit | 807,979 | 35.7 | % | 930,567 | 39.5 | % | ||||||||||
Selling, general and administrative expenses | 574,314 | 25.4 | % | 579,350 | 24.6 | % | ||||||||||
Loss on impairment of assets | 19,316 | 0.8 | % | 442 | 0.0 | % | ||||||||||
Depreciation and amortization | 97,271 | 4.3 | % | 96,130 | 4.1 | % | ||||||||||
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Operating income | 117,078 | 5.2 | % | 254,645 | 10.8 | % | ||||||||||
Other income, net | 987 | 0.0 | % | 5,986 | 0.3 | % | ||||||||||
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Income before income taxes | 118,065 | 5.2 | % | 260,631 | 11.1 | % | ||||||||||
Provision for income taxes | 45,592 | 2.0 | % | 91,309 | 3.9 | % | ||||||||||
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Income from continuing operations | 72,473 | 3.2 | % | 169,322 | 7.2 | % | ||||||||||
Loss from discontinued operations, net of tax | — | 0.0 | % | (31,990 | ) | -1.4 | % | |||||||||
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Net income | $ | 72,473 | 3.2 | % | $ | 137,332 | 5.8 | % | ||||||||
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Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.38 | $ | 0.86 | ||||||||||||
Loss from discontinued operations | — | (0.16 | ) | |||||||||||||
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Net income per basic share | $ | 0.38 | $ | 0.70 | ||||||||||||
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Diluted income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.37 | $ | 0.85 | ||||||||||||
Loss from discontinued operations | — | (0.16 | ) | |||||||||||||
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Net income per diluted share | $ | 0.37 | $ | 0.69 | ||||||||||||
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Weighted average common shares outstanding - basic | 192,753 | 196,177 | ||||||||||||||
Weighted average common shares outstanding - diluted | 195,021 | 200,041 |
AMERICAN EAGLE OUTFITTERS, INC.
GAAP TO NON-GAAP RECONCILIATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(unaudited)
13 Weeks Ended November 2, 2013 | ||||||||||||||||||||
American Eagle Outfitters, Inc. (GAAP Basis) | Distrubution Center Charges(1) | American Eagle Outfitters, Inc. (Non-GAAP Basis) | ||||||||||||||||||
% of Sales | % of Sales | |||||||||||||||||||
Net sales | $ | 857,305 | 100.0 | % | $ | — | $ | 857,305 | 100.0 | % | ||||||||||
Cost of sales, including certain buying, occupancy and warehousing expenses | 558,430 | 65.1 | % | — | 558,430 | 65.1 | % | |||||||||||||
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Gross profit | 298,875 | 34.9 | % | — | 298,875 | 34.9 | % | |||||||||||||
Selling, general and administrative expenses | 205,725 | 24.0 | % | — | 205,725 | 24.0 | % | |||||||||||||
Loss on impairment | 19,316 | 2.3 | % | 19,316 | — | 0.0 | % | |||||||||||||
Depreciation and amortization | 31,998 | 3.8 | % | — | 31,998 | 3.8 | % | |||||||||||||
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Operating income (loss) | 41,836 | 4.8 | % | (19,316 | ) | 61,152 | 7.1 | % | ||||||||||||
Other income, net | 520 | 0.1 | % | — | 520 | 0.1 | % | |||||||||||||
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Income (loss) before income taxes | 42,356 | 4.9 | % | (19,316 | ) | 61,672 | 7.2 | % | ||||||||||||
Provision (benefit) for income taxes | 17,453 | 2.0 | % | (7,398 | ) | 24,851 | 2.9 | % | ||||||||||||
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Net income (loss) | 24,903 | 2.9 | % | (11,918 | ) | 36,821 | 4.3 | % | ||||||||||||
Basic income per common share | $ | 0.13 | $ | (0.06 | ) | $ | 0.19 | |||||||||||||
Diluted income per common share | $ | 0.13 | $ | (0.06 | ) | $ | 0.19 | |||||||||||||
Weighted average common shares outstanding - basic | 192,818 | 192,818 | 192,818 | |||||||||||||||||
Weighted average common shares outstanding - diluted | 194,612 | 194,612 | 194,612 |
(1)- | Non-GAAP Items consist of $19.3 million of pre-tax asset impairments related to the Warrendale Distribution Center. |
AMERICAN EAGLE OUTFITTERS, INC.
COMPARABLE SALES RESULTS BY BRAND
(unaudited)
Third Quarter Comparable Sales | ||||||||
2013 (1) | 2012 | |||||||
American Eagle Outfitters, Inc.(3) | -5 | % | 10 | % | ||||
AE Total Brand(3) | -5 | % | 10 | % | ||||
aerie Total Brand(3) | -3 | % | 7 | % | ||||
AEO Direct | 17 | % | 26 | % | ||||
YTD Third Quarter Comparable Store Sales | ||||||||
2013 (2) | 2012 | |||||||
American Eagle Outfitters, Inc.(3) | -6 | % | 11 | % | ||||
AE Total Brand(3) | -6 | % | 11 | % | ||||
aerie Total Brand(3) | -1 | % | 15 | % | ||||
AEO Direct | 17 | % | 25 | % |
(1) | Third quarter 2013 comp sales are compared to the sales for the 13 weeks ended November 3, 2012. |
(2) | YTD second quarter 2013 comp sales are compared to the sales for the 39 weeks ended November 3, 2012. |
(3) | AEO Direct is included in consolidated and total brand comparable sales. |
AMERICAN EAGLE OUTFITTERS, INC.
REAL ESTATE INFORMATION
(unaudited)
Third Quarter 2013 | YTD Third Quarter 2013 | Fiscal 2013 Guidance | ||||||||||
Consolidated stores at beginning of period | 1,056 | 1,044 | 1,044 | |||||||||
Consolidated stores opened during the period AE Brand (2) | 13 | 46 | 60 - 65 | |||||||||
Consolidated stores closed during the period AE Brand | (2 | ) | (7 | ) | (15) - (20 | ) | ||||||
aerie | (3 | ) | (19 | ) | (25) - (30 | ) | ||||||
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Total consolidated stores at end of period | 1,064 | 1,064 | 1054 - 1069 | |||||||||
Stores remodeled and refurbished during the period | 12 | 54 | 50 - 65 | |||||||||
Total gross square footage at end of period | 6,455,497 | 6,455,497 | Not Provided | |||||||||
International franchise stores at end of period(1) | 61 | 61 | 66 |
(1) | International franchise stores are not included in the consolidated store data or the total gross square footage calculation. |
(2) | YTD and Fiscal 2013 Guidance includes six franchise stores in Hong Kong and China that were acquired by the company in the second quarter of 2013. |