AEO - Earnings call 3 2024 | American Eagle Outfitters, Inc.

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Operator

Greetings, and welcome to the American Eagle Outfitters Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Judy Meehan. Thank you.

You may begin.

Judy Meehan

Good morning, everyone.

Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer; Jen Foyle, President, Executive Creative Director for AE and Aerie; and Mike Mathias, Chief Financial Officer.

call, certain to forward-looking today's we you begin make will statements. we I remind need that Before These statements are company's current based upon information or that beliefs. expectations represents the in based Results risk differ realized filings. materially actually factors may included our SEC on update by The forward-looking revise law. of information, statements, company otherwise, or result any future a or events to as except undertakes obligation new no publicly whether as required

now our our the can find third will section. And corporate Investor at you presentation on quarter call Additionally, posted the in website www.aeo-inc.com Relations Jay. over I turn investor to

Jay Schottenstein

performance. morning. pleased Good I'm with Overall, our third quarter

Although we trends. the remains macro environment highly are seeing dynamic, encouraging

that remain stronger time again us deliver brands at priorities customers time exciting our strategic to are fall this collections. are innovation propelling the exception. center Our strategy, was enables ever, forward. our no AEO's than and us of And and constant driving

excellence. and we industry-leading data-driven Additionally, an provided insights experience, reflecting in investments our operational customer

drive With the higher our program, taking profit margins improvement launch initiatives of growth are and hold. to structural

Now financial from highlights a the and few quarter. strategic

hit revenue X% growing quarter reflecting growth, terrific a momentum by $X.X billion, and comp merchandise brand collection. record fall driven of Third

double-digit and evident comps. Our true and and was for returned lifestyle this AE growth revenue to quarter. our market-leading that comp generated positive Aerie and customers, destinations are brands revenues

accelerating across also significant and performer, digital growth. AE XX% traffic strong Aerie. The digital star strength driving and across execution, stores was We improved saw to and with new merchandise channel a

data of to improvement e-commerce We stronger Head we introduced were tactics, has will have in great work use positive enhance engagement in ahead. Stores are here. Zhang, also remarkable and receive David business quarter. a drive new of innovative the Digital, seeing analytics momentum plenty our This our of leadership runway the KPIs. yielded Under customer of our

encompasses unsubscribed under AE results Arie, early one and designs, our collections of SoHo. store Gateway in with including seamlessly The XX/X pleased AE, OFFLINE, store new AEXX, our all from store our are We across roof.

OFFLINE to and of coming gate Arie are stores also out the positive New expectations.

our margin third decade. This by highest was Turning markup to over changes aligned to our the to gross ongoing with profit. optimize operating and results We driven profit inventory highlights XXXX mix AE's our modernizing in as include when income year promotional clearance well exceptional to last shift and second tight Real Margin expansion product the quarter few was categories, second industry. focus and strategy improved and as discipline, reduce changing on numerous only only higher costs -- yield this of into improvement. A stimulus to scaling fueled higher-margin across achieved delivery a Estate network maintaining footprint. Aerie in our profit, work structural

demand build the income year we range. $XXX end our momentum to and $XXX to prior our the of prior. As of million continue guidance drive million work, range raising $XXX operating to $XXX to on full million million now are We from expect to we strong in this high be

capital priorities our remain Lastly, unchanged. allocation

to to committed while continued growth We in are and investing returning brands capital shareholders. our

healthy a liquidity We and with million million liquidity cash Our $XXX position. in total resilient maintain debt. $XXX no is the sheet in we with ended balance and quarter nearly

savings our long-term intently generate remain portfolio to; our drive we ahead, advancing growth improved consistent brands; for strategic profit cost and priorities on efficiencies one, Looking focused two, across and of flow-through.

for investing and in priorities future positions which our towards advance to us success. talent, further continue We

COO, as plan, X our Michael quarter, part we leadership of the During made appointments. key succession Rempell

Ogtrop, complement Operations, responsible AE drive created to Officer, of and our Valerie through operational who across We collaboration to are we new our distribution. Chief nicely energy our our Aerie's a bench Board supply for growth across Valerie is the new Head level improvement across welcome and focus And division to Chain support experienced profit high welcome our and synergies organization teams Sarah executives with teams excited great global Brand our We've Directors. Supply a of sourcing Sarah greater chain our and of of from project. van and associates. There's excellent ensuring of excellence Clarke, strong and from role a from profit engagement leadership around leaders plan. and had

here in we has of embedded and with benefits initiatives, innovative specifics growth rethink the moving Investors provide talent. our improvement long-term focused shareholder strong expenses, incentives to our harnessing fully forward. revenue returns. XXXX. AEO financial confident are host go-forward on profit and and an We our intend term, that operations XXXX, sales strategy with leverage near and and day from have in we am how And unlocking right spirit base and on recipe enduring work our Meeting every I our from expense deliver foundation Spring new we brands, early strong operate confident of with We revenue efficiencies profit I even both on build to place strategic robust ability XXXX streams to will modest direction, to our where unveil and am targets. in and in in growth

to I'll that, Jen. With turn the call over

Jennifer Foyle

good Thanks, Jay, everyone. and morning,

strong of noted, strong that quarter on our comps comps American with It bottoms. of were to how strategies. particularly a the and across was to see X%. As delivered a sequential wrote collections All had and exciting improvement exciting received, was I an positive well and and channels. we brand teams brand am revenue experience. Women's across Jay brands incredibly assortment winning We Eagle incredible our showcased proud where and we with tops customer growth return heritage executed

up tees, fleece, for bottoms and Men's and legs. delivered cargoes newer We in growth, wider are last seeing to also sweaters, with strategic out twills, and strong in operating X% shorts. AE strength aligned laid profit saw demand plan twill bottoms as tees, XXXX. we skirts year, such strong the

offerings Estate to optimize improving made have of few rationalized the and unprofitable away in brand's sales, brand AE the eliminate last stepped Real We years. the health low-margin over progress significant our We from SKUs footprint.

highly Early to quarters, file we is relative initiatives Casual levels exciting are continues that revenue quarter. profit and as third restored down customer is XXXX with strategically providing prior proof trends in this focused to us impactful, lifestyle to level quarter third With to healthy a growth. As have on modestly returned to a discussed AE X%. wear quarter profit evolve note for point, up XX% I'm and and into. new that to pleased a growing been play drive its brand

and AE collections and XX, our XX/X on and that premium our to and fabrics also are focused dominance leveraging making industry-leading occasions the We deliver our penetrate investments are activewear time, to our we categories AE fits same better important men's denim, At newness. to in expanding like capsule. customers with are

forward. also continuing are store productivity We we and best improve our fleet to invest our put to in ensure foot

takeover also response a close to initial to our tests, and and customers. And and allocation we and are year design reposition next AE program AE's low to new the improved lastly, serve This campaigns improving continuing replenishment brand. seen innovate expanding marketing have focused around remodeled the delivering with locations, significantly we store better on additional to stores key comps. items capsule amplifying on City our are to productivity and New fall, continue excitement on back-to-school our High we and Based inventory while limited-edition stopped We to stores positive remodel these leverage include we of showcase immersive success on season, collaborated York for in the with a the fashion Ziegler in a that installation tracks. included [indiscernible] this and sisters Line in quality powerful sales, and We dominance strong Yorkers our our the campaign New stores. driving and the denim strong iconic expectations, and their online category. both assortment of showcase our The versatility heritage underscoring in event, outperformed

Now had an profits turning to quarter We comps with and revenue Aerie. XX% XX%. expanding exceptional and

recovery. grew best-ever in a third core market share nice Newness business performance brand. sequential our and quarter We our and intimates assortment changes in drove core had

for slimmer few Since in continue We in have also and rapid beloved expansion very fashion sales growing collection collections business fleece and double-digit resonating see our we apparel incredible profit. activewear. with core in great into and And last comfy where are a our XXXX, seen well. quadrupled activewear growth new over has years, fits our a growth. Aerie OFFLINE also apparel, the and quarter, intimates, achieving strength sweaters to had cozy our destination doubled particular exciting

take We on continue new in market, we athleisure. addressable every over with single-digit activewear XX particular, provides with season Yet total playful scratching we low demand an our Aerie's billion opportunity attractive file opportunity just just here fueled $XX see OFFLINE. customers a as now with customer by the build and surface. We total vibrant a to are share million. Activewear, are share assortment. develop to gaining to strong the of for unique close

base customer our in awareness innovative We grow we and are our continuing to build share investments focused brand marketing as on store fleet of wallet. strategies to leverage and

come providing into store comps positive New lift to strong, the they company. performance a remained as

are Additionally, OFFLINE exceeding openings plan.

the go-to the within with on marketing On their and side, included up with programs. the elevating apparel. and the popular fashionable encouraging brand across focused first-to-market users to Aerie's This as Bumble, dating a campaigns match fall of for partnership showed way the a intimates influencer season talent We company comfortable Aerie. and notable find high-quality, were app

Hidden event KPIs. marketing the Gems hosted York in City a fun, customer interactive Marketplace, strong that also generated We New

and women in brands is survey. Piper denim day. one strategic platforms of consistently in retail. with our It's in decade, of I positivity body most ages feel meaningful Sandler AE in X brand XX have the the have in cohort, selves X a exciting profitably portfolio We the the brand in the Stock empowering priority top fashion, best age to ranked particular. market every ahead. in to for and the over their is see all celebrating women we to across brands #X Teens leader grow opportunity brand Aerie #X the best Through brands the XX and of a Taking

strong the this over in big work their teams turn Aerie AE I hard a Mike, you delivering and a to Before call quarter. thank for to

true and to category to that, testament gaining are I a over talented channel call the is momentum, turn with this team. And brand, strategies Mike. will Our which

Mike Mathias

morning, Good everyone. Jen. Thanks,

$X.X basis increased of year, X.X% top last margin. early representing up third the revenue billion strong brand us a entered comparable of and in the points We up results combined of income with and actions Operating momentum, gross strategic X%. improvement was on profit into on marked flow-through. result. Consolidated million line our year. last reflected holiday operating fueling year-over-year. progress $XXX to continued initiatives, for margin momentum in As margins grow rose XXX million quarter of and Jay operating quarter to taken $XXX to profit continued XX.X%, million, X% our improved season, sales with our Strong Gross $XX mentioned, that income profit up also resulted a a brands improved gross priorities set

and costs noted, number Jay a discipline from As lower we initiatives. Inventory of record, lower promotions. merchandise highest we margins strong our reflecting some in improvement healthy profit resulted markdowns achieved of on as benefits maintained demand, our

end-of-season continue in the clearance last through margins. quarter, model With change to we merchandise better at our announced sell

and Consistent up guidance. year. with lower business on rent, ramp-up after last XX% We million cost per costs half warehousing also line as roughly at reflecting from metrics, was $XXX our order with year delivery, last per saw expense expense accruals driven of as shipments across key the strengthening by focus the and trends, leverage stores shipment. SG&A new with including increase Aerie efficiencies of incentive was strong and of several lower and fleet on distribution well AE X productivity in

to payroll also provided to primarily investment in The quarter, back year-over-year this last wages. increased our are Depreciation line quarter, higher As the was with in weighted incentives guidance last half discussed due up reflecting stores. year. largely and new of

of share. an efficiencies, with cost focus now to performance we business previously, leverage ongoing top improving our have our reset we're based noted next and on per base year. third on for incentives quarter the well modest line to growth positioned on EPS As incentives reflect expense $X.XX

of expanding and points X continued our reflecting stores the to improved last XX.X%. brands. Eagle third inventory increased X% third-party brand profitable comparable Aerie over and revenue XX% a an hit scale, the revenue basis from lower in markdowns and clearance to as offset XX.X% fell operating our noncomp sales early quarter, the benefits lift expanding saw clearance all-time to with shift. shift model. XX control margin markups, and greater and from points increased operating a off, to positive comps high, year the Aerie's more was Turning margin these to lower we American by

liquidity line top now numerous been XXXX. We're on we've of X%. down occasions, quarter over with growing buying the cash with discussed strengthening demand. a profit with flow-through. discipline has cost the as by to third balance year focus a million of maintain $XX of was ended totaled past attention levels X% brand. of ending to to total remain I'm expenditures As position, since to million, turning down including last expanding $XXX million. profitability and we our units years and points basis the our the compared Consolidated the expect full of controlled with CapEx we sharp quarter healthy range to made, extremely sheet margin our XXX $XXX AE continue in million case and the the be million, several profit we including on strong Inventory $XXX revolver. Capital year eye a pleased in inventory $XXX and progress We

XX by brand. flat Our to reflecting consolidated remains plan approximately closures in last for XXXX the AE approximately for offset XX year, our store Aerie roughly new openings net store count

provide to an Before to important $XX on color in with generate This I ongoing our on Last million in improvement model. line and basis. more to quarter plan remained move our savings in change to an on XXXX is $XX tracking like annualized million in profit work. I'd outlook, clearance our savings

that have also work down within being other efficiencies identified been supported and gross expansion, streams significant are As to our have on. we continue SG&A actioned lock margin

plans. an instilling expense are which our of are improvement into around management. We results internal XXXX continuous culture incorporated and The

positive As at growth. result, rate SG&A specific the trend continued we and drive margin a expansion and revenue profit leverage depreciation, in give A year, business months digits. flow-through. up deliver expect in for provide to incremental would and growth, and further revenue in earnings beyond this the more to our sustained with single-digit the expansion, momentum are healthy our future brands as details We'll gross on structuring low expectations leverage mid-single next we we XXXX drive spring. Quarter-to-date, seeing across operating

end With improvement income This We raising comps guidance. to digits to to progress mid-single initiatives. of up be million profit now to expect range in we year revenue million. to digits. make of $XXX background, good this the Additionally, full continue low executing we're our on up high operating mid-single for outlook the in with prior $XXX reflects

For revenue quarter, from up $XXX be this X-point are projected including implies the Comp with the the million to $XXX operating single of impact range the SG&A is sales in approximately X-point in fourth the tailwind a digits, XX%, a XXrd be mid-single in income to up week. up the to high million, including from XXrd digits. expected week.

skewed it discussed, previously the year. of higher includes As also incentive accruals, back are to which this half

mentioned, more on Investor financial Spring Jen look providing As priorities forward it I'll we up long-term questions. that, Meeting. With open color strategic goals at for our our to and

Operator

the question JPMorgan. [Operator Boss with comes Instructions] first from Our of line Matthew

Matthew Boss

concept of to for in Jen, positive just see return growth at you the to sustainability quarter, and key how the So Eagle brand could at the top flow-through project view Just just step do of SG&A Mike, on modest quarter year? could this Aerie elaborate third improvement moving historical areas to American compares how speak a acceleration and at comps that you to you how position maybe next And the this the you on holiday? in leverage forward? the profit line back then, model. taking And

Jennifer Foyle

still relevant same well, went nudge accomplished can decided to tell it's after I what QX. trends. future continue all fashion, in is Aerie held particular, you I day, trends. In that. do happy today's seeing bras in team I for last what what going we year-over-year, in $XX Keep for billion of I declining This I'm definitely of we to quarter And commits just to. victory That's day get business. Thanksgiving my to to is market jump and almost QX. my the team, a and And now team, We're that And To We there. days. a the know, way. okay, think their of ahead to seeing you. were Eagle Eagle in in in we we're category, Their to I and in in And I'm needed as Jay's it. Really as weeks time our basically Women's, over have early delivering we've off on. take it's like long-term for in that team, for in up just this more strategy. I'm I into We the -- haul. say to in long loved opportunity It's X.X Friday, double black. down what [indiscernible] American us team, more what many Green QX. this we the what men's the stores XX Look, in call not we grow well, team Aerie, own ahead I in on for week I'm what all we're seeing QX, up years to have say in mind, This grow and me big I'd heading they that and here. we did what categories, And to spring, quarter, to our proud saw American is X comps us. long week. think saw stores comps superseded for We back is all, share overdue. the it. like held into love small like thing. an have we Sure. our lap And now. AE, one been you by a going to let

compete to more And going to in almost Mike our I X.X go. we're XX, on to, to in we ready stores, are XX and alluded I were ready growth I plans. we brand we're as we talk season you to said, think what's can long-term when days, Like all strategy. this about happening it. incredible I here, see I going and spring But to -- and we're the see our deliver build speak terms. in

Jay Schottenstein

when the best-looking were stores were stores, the out in best we're -- would there, too. Jen, And you you stores the Yes. like that our agree

Jennifer Foyle

so. think I

way I we grow say. think deliver to business is the I what have your to thing That's It's thing one operate. another excellence. to operational

Mike Mathias

Yes. was which where all Matt, the providing expenses point we've gross been third has margin improvement, and another the improvement and generating expansion. proof that And quarter focus, had profit on work, margin on

seen it gross quarters Fourth the we'll now we've gross again. -- now, do leveraged We've So for margin expansion. expenses quarter, margin. X in

looking about, we longer is the a of vendors and multiyear piece a models, this sort journey type have we're little or either and would that line into work at reductions know we consolidate we've things sight As talked benefits labor that we look and the SG&A negotiating work, like. or services, rates vendor, of now That current what move that contracts we vendors. take have to of looked to of XXXX, as

that next that opportunity the that, expansion even margin will single-digit result. the than gross see if leverage the that year year, revenue SG&A got model. that next higher believe to better would of growth historical be we and Anything against we've top on leverage we'd now So low continue at

Operator

Our next question of comes Citi. from the Lejuez with Paul line

Kelly Crago

follow-up. from at a XQ and do on a Kelly is expect how margin was and sales? about talk gross expect impact 'XX of perspective? headwind And the This how a sales you And benefit, I to just And margin change have the both P&L how strategy quarter? we XQ? Was that it F impacted you this do much a the Paul. it how -- Could for clearance to then

Mike Mathias

Yes.

[indiscernible] over this part, and benefit the the is And I revenue based clearing a X QX, sell-off QX the points which is the we're which annualized revenue booked, unprofitable. X think around ourselves in quarter being the off most the story million for it happen will basis. just not improvement, $XX on that's we in headwind now, selling or versus was Historically, XX-month clearance what hits that doing. to

QX, and in in than benefit. markdown management, other leverage across QX. our margin gross this QX we'll some is in period, expenses see total we'll There's then And bigger clearance are XX-month that results. benefit some of So see QX. and another in inventory the But slight benefit benefit saw benefit. Again, of those benefit most management again, pieces a then the

forward. sell-off see across of a it's model versus that XX-month sort XX-month we'll now QX $XX the go period QX, model, million annualized So

Kelly Crago

the just And guidance on SG&A the fourth quarter. for

guided up into the -- coming mid-teens fourth today, SG&A think quarter. in sort I we you the of had

to greater savings I -- relative that, trying a driving quarter just in the I we finding that while I what's growth on to Or expectations? about for -- guess, sort of Is So of talking fourth now. accrual been your you've all comp? mean, understand previous cost incentive and

why would Just we be seeing offset. wondering more

Mike Mathias

Yes.

that you the XXrd I and based includes And the which back think is XX% change the plus week yet that similar sort on mid-teen of to to to growth, accrual. points half from gets incentive X was changes QX. -- of

now XXXX 'XX. the work that So path. benefits what those even be within talked work line some into and teams that other speak. We've year that we expecting but the would in come it we've the said to of always mid-teens SG&A then about The completing full the we on next work XXXX. in benefits half not would a There embedding are have are there, more other of sight would half into as of streams got be some incentive, we're knew Again, we expenses. longer SG&A, embedded

continue there's this year. components a -- coming past that couple some even So there's

that, we're -- pleased providing that point in and depreciation kick gross next is what's teams executing SG&A focus the P&L work of through coming when all in. margin that's So with not really proof half, the the the are year back leverage the the

Kelly Crago

that. follow-up a on Just

include the did guidance prior not mid-teens week? XXrd So

Mike Mathias

includes the It accrual between new did include in week in XXrd the guidance incentive movement quarters.

Operator

Telsey with Group. Telsey Dana of line the Advisory from comes question next Our

Dana Telsey

As that and downtown the looked biggest How the the Broadway holiday this when saw you X and store on on by for you the promotions brand all and in much how I would play and with remodels? the busy of and together. into of about And think good on getting? you Sunday, lift digital remodels, you're concepts store channel differences in planning it? was channel? do of quarter, you it think type was you think And each about CapEx it how are performance that What

Jennifer Foyle

I'll with you start, the it reminder, the you research. came see this it's a did The incredibly a brands and over. And Gateway, Gateway, as And and up they we're our you Mike, work facade first thus enter The And place name some take The all team then talented can calling as that of Gateway. up all what we're highlight and the to. Soho. to

So my design, I those the could we not learnings to there's And leverage going sales be in in average American about incredible more more proud exceeding, store out on come the comp there. that said, delivery say think when store the And lived there. mentioned in and brand. we're for I future. That there's think more there's to has this that as I are design. I it exceeding comps Eagle new comments, new the

American been It's we many new to And brand time long this show to design. the we we're so for So but it's way the learnings test deserve. fun. and there, scale going love a Eagle coming and up

I love seeing I'm So there. what

what and better good there about other proud play brand. and a story. our It's it windows we We've is There's get of and what We've the really feel I The and everything, wine, coming bottle gets product the rationalized we've I'm in of As stores. that's I time a but with now definitely age. that's spring to forward in I time. We've concept this American doing seeing X lot that teams. forward, like forge And so from hurdle learnings we and much deserve good here. the Eagle out team back. looked what there's closed at whole love Aerie, a just particular. had fast past to years this it's over done in

store We did that that, new have We takes that that, acknowledge the well, halo to that in with calls. effect And say opening and prior on time are. and from new halo we it we here learning the comps stores. a

well, this omni retailers at. each I drive the is then so but direct, at in best what So are talks think to. is we team love best what on what happened the everyone they channel up direct QX. And And look and

company lot at team return, XX%. it say with comps and very heard I so this modest spend ad of and the You that do and time love are is want is to see David in we many a That's I and its what what launch, But over we we're growth. to. going so so to up have team and do to. up we're that this we ideas steady tested have new that can this we

Mike Mathias

now, Just from seeing locations out that bit We're sales and -- and the locations the be a of we strategy remodels, from as in plans spring team XX help we're part store a see detailed AE that but early at lift looking number got these we significant little what We're we said, -- as on strategy. sort reading are love closer, to indications that around next but have remodeled. will get and are fuel doing are to seeing positive that well. to going into we of be out remodels add we the locations and Jen the the Jen brand what that we're as lot -- other things of also we've refine to several X year supporting around preliminary grow color talking of which of about we growth the as more that is mall-based growth remodeled brand. will coming

Operator

the from UBS. comes of Jay question next Sole Our with line

Jay Sole

Jen, you're about assortment. you product spring the excited mentioned

company trended how you're the bit believe think And the East versus U that ] the just in talk quarter? some you last impact of about guidance partners. has Bra an Can Middle through do has category, that seeing talk then business fourth a expect if or what you quarter franchise October your business how since and its for little that has about Mike, on year? swim [ Just in to I perform a maybe just,

Jennifer Foyle

the what teams business with I play we're doing disconnected. at certainly that and It's for and us, actually out we we say the the taken like we're for on growth I a we're interesting, interesting American brand. have women's future. -- Sorry, Lots And away business. have just for scale trajectory think in. definitely are and women's there more the a still in got how best sure. of profitable are margin teams would sure, My business for Aerie, And is high to a about near putting American trends there. have which category Brazil them bit and I and looking more what's back great Aerie into Eagle Eagle to test coming and Swim, think little learnings here. a

And I our And a about And OFFLINE opportunities AE. company, business, house we we're Aerie together. our in so into you what, as seeing brands see as -- was together. I play, growth both that of talked stores, both think Aerie women's OFFLINE, guess Gateway better we right? We're and as what that's The all take about then

do we what just amazing it's business way. So you if about think can that the

are that's, as we about swim I and company of as wanting or only in think think position too or and So I how think, not about I I what about all I about edge. our do the think growth a And trends, the competitive Eagle categories. women think OFFLINE, American Aerie do for

making can businesses that's swim, leverage have that, the sure to And all thinking the I business about pitch in and don't we we high-margin think testing other brands. back plan, that going we're as and the So we're we certainly, about business. there. think And way scaling again, that I over

come deliver. So hope we I And more continue Spring can great. to to looks there.

Jay Schottenstein

get of but Like question -- we a it Okay. about weeks, take coming couple last did weeks, of back pretty the the is little like like strong Middle have strong. there. international I'll business East. first a whack, There the couple the it

So in that peace far like we're down as very And -- as road that optimistic playing region. the there. we're for area in

Operator

question from BMO Simeon next Markets. Our line comes of the Siegel with Capital

Simeon Siegel

in growth speak on can lot. the forward? that general into you I to about show drivers would support brand say dollars meant just on color Times corporate And just we nice of Any congrats growth want the a margin thank about to think level gross on in store, be year quick next that your you your at add you expense Can dollars. a then going helpful. for EBIT any color to should so think to -- it Square the

Mike Mathias

front. margin that line initial of so first benefiting We buys. fill on of seeing see our that we've into gross margin. through and of expansion, our still margin gross There's lot sight got markup, expenses a the were half benefits annualization in On tailwinds we

cost still buckets. of continuing So shipment, those got some we've per first see our expense order, sight of benefits as through per into shipments half well, the the line

our that capturing expansion still we We delivery, this effect markup an the rent, on year are year at will of warehousing, we're that so point. benefits the -- in have half top of have the plans distribution, next embedded and least annualized we see at that

Jay Schottenstein

the We Yes. international the And Mike opportunity like part too. part see see an like we as business growth of also too, still a great like growing. that vehicle, international

Simeon Siegel

then corporate dollars? just expense Great. And the

Mike Mathias

corporate our There's then plans being just pieces the the Yes. It's tied really that across and happening plan. year, expanded still being embedded line we're about improvement speak to line in exists, the from all those services items, next year's into perspective. opportunity margin for all labor the we that profit the embedded, from gross benefits items, work we P&L, as next really on making straddle in just SG&A, tender of embedded expenses maintenance we being gross a and next seeing again, year, else areas to everything as both the talked margin changes speak models

Jay Schottenstein

saying is think I Mike next doesn't Yes. also SG&A see Also, he Mike, for increasing I the think that year. really -- also

Mike Mathias

Yes, yes.

Simeon Siegel

one, about sales the point? to then we And this comp Aerie right just a think should for total spread quick Great. follow-up. it's How at Yes.

Mike Mathias

few points now. a only It's

comp store as in 'XX We're that comp. we and all digitalist growth definitely less than only spread 'XX, year. that think stores anniversary XX I opening this

So we past year, XX really, as in you base. noncomp only get those have this a

spread. So point It's X. low it's maybe probably or a single-digit

Operator

next comes Nardone America. the of from Chris Our Bank line of question with

Christopher Nardone

Two questions.

think you is growth? year? we for you it you on operating could sales quarter-to-date each that growth costs is then base mentioned, point much for case level low a how brand, First, next can still of your next single-digit are more sales that do margins specifically? leverage this is that about And Or year, clarify how expand? of trending can as think comps you And

Mike Mathias

similar. color. more a point modest it's expenses make leverage specific I'll sales -- second And just it's have coming providing on that that of of that year to are expand on we together. -- first. not level then the part the It's guidance Yes, in operating quarter-to-date, we're based can revenue rate, just growth next plans how comps are

I just we're got the quarter. guidance into the to to by now really our now, QX. that of within the to comps going similar the look, year think, a the points. XX% X% leverage, Right low only type results revenue guiding XXX in think achieved weeks few I So the guidance, basis but we expand about top only at we're and to XXX this on weeks on expecting start mid-single-digit peak we're rate brands. And we're We've of providing year, we're on for operating similar operating to the

early gross to 'XX. the margin provide specifically just As XXXX of expected into in across expand operating of gross rate some line that's, We'll just the our that year. like able year, more the what the in that we've [indiscernible]. again, is provide make expand Again, some not -- to opportunity this provide point margin, color leverage P&L, results. sight March, on by next do early we guidance expenses and we we'll on have leverage level we an to of half in leveraging on for color just back initial to specifics indications, get varying early And been color see and revenue

Operator

Cowen. from Jonna the comes with of Kim TD question line next Our

Kathryn Hallberg

intimates on know about you're the you market And dig quarter? for bras, little this, the if as a I'm but through there trends missed pretty you This talk I to I then just consistent Aerie's can briefly, mentioned traffic and category wanted a is within Jonna. little performance to intimates. as the in about brand just thinking Katy how well positioning bit I I bit sorry share across was believe.

Jennifer Foyle

They holding Great say as scratching with that will customer category an our own our cornerstone category. in only in surface launch on of we it's now billion we question. trusts $XX market and brand opportunity we win, feels I business, added smoothies so when on category our a just us love as platform. right? new their in and here. QX, it I the intimates the represents to share mentioned this is way body. we're far the idea, So the that we're It totally --

there. come to more So

on This I and of it's our -- really we great And to up as off point out. We feel think women have again, on right? far about that. day it totally terms. smoothies what a sort jumping what themselves to we is bill does just a compete and the now make day fits as do, in Aerie's

come think lots on entertain underserved, store But that's So space, constantly market that's she's And of up share going ways product so our that I customer not to more as been the guess to of my have it's we're believe there's the our of terms, how really and opportunity with I compete are we're thinking to that But this I'm changed. again It's serve future it the it more one going the promise what fits I you we our demanding. for and up new brand and design show to what can to saying. and teams has as I far and we to categories secrets. much in business customers the thing really there. Look, the can't come. what I accounts. bra platform is bill to be. the used all How into merchant team

Mike Mathias

our team digital changes we're positive traffic. And we've was improvement we're we're marketing David looking both across to expense media on not to brands so and reducing benefits customer done a both kudos spending in but work especially how seeing to and digital in convert Traffic that the optimize more this our actually We ton stores in A/B saw healthy and continual how work, the side we're messaging to of throughout drive conversion, work is sort and the And Within quarter. and to profit traffic we're channels, the qualified really to at the healthier of then digital. make the benefits. and channels digital significant customers testing, but traffic doing that making seeing conversion journey team. are

continue So as next to that's into converting traffic we've that happening happening a year and driving then and of back lot half of those lot work traffic, and the a got to well. benefits seeing on healthy on work we're believe going

Operator

with Our the Jefferies. next question comes Corey from Tarlowe of line

Corey Tarlowe

little $XX as and think your growth major are maybe you growing the the about enterprise? Jen, bit over benefiting a Could excuse you contextualize you in this drivers you've it's I me, fleet, seen that's perhaps to color your talked of Great. believe file, how customer now that that customer provide more file million. the what overall

Jennifer Foyle

Sure.

just me Let [indiscernible].

brands Sorry, file customer me that reiterate let that just are both groups.

approach So a Both really file to just grew on even a comps their take just brands their and position far but Aerie dominating growth exciting not XXX to as as AE really on nicely. marketing. see are

So not only are we spending on performance.

an right? work between a New York between are our on many actually, about eyeballs and to that City. Well, our In a store, stores brands, we not overspend our that to go on customer, because when easy ensure influencers, there dominate. on don't and influencers, it's fact, we our delivers that, to store when how So right? forget see our represent game go it return that, performance we and product, easy by a we marketing, Between on means spread spend the store investment employees. performance did out So about to, have marketing, It's took Meatpacking in AE, they delivering we new in they're brands, right, when the concepts. that good our delivering better delivering had we to see the what in not approach up that so XXX but of installations over innovation, And when Aerie, we in think District way, news district all right? the we they coincidentally customers, and that our we're our

stopped. haven't We

concept team. a In reminder, in testament have up came a store find Inc. we with July, just max. and and brands innovation well, whole our in put to new came company, July, what near a of And its and behold, this The idea As design, lo it Gateway, innovative we new to a means -- I up as all to in together SoHo brand our ideas, we see with this at AEO, the

it when We to. thing we This And and but me, one Inc. out delivering #X growth top believe just next to power. big not were not is to brand. show it's there, trust AEO, of what we're mind brand sustainable in comes long-term again, to going the say, So a up brand is it's I'm

we we're that about going brands And so think one way, about our in the long-term brands think of powerful be retail. to most we strategies when growth, how the and long-term

tactic not in about marketing, about about future one going best to it's in we're the town. and be how the just thinking it's again, So

Mike Mathias

we'll since earlier again -- is next that Jen very the in the that's we be stores this other add And of acquisition, the more Jen stores specifically, the opened are locations. XX thing XXX strategy customer I'd obviously part opening too, year with 'XX, still so have year. XXX would adding growth, customer we're file maturity curve, or those

still. base to opportunity So customer adding -- up within within the everything have it's you're again, brand. talking just expand from combined the that the play still marketing have about percentage and a We that pretty addressable that file sizable a for expansion store brands market with we to perspective, small brick-and-mortar a only

Corey Tarlowe

also how color the remainder throughout and AUR could on talked how that quarter? the openings. any AUR I Got you fleet And topic about just to about how store to trends think just talk the Mike, did look year? color but think you you the up about on as then in Could ahead? to traffic about trended store that, on of it. as the then of follow AE provide then we we you And know get

Mike Mathias

course We It's we're sure. pandemic, the the brand the I AUR of expansion hit quarter. equity grow to of the that up. talked kind back built, been about able on story up we've AUR too first. gross that over of in holding margin giving part for we've AUR was the not position to

and be seeing a repositions some count, still results Your continuing XX similar net where we're year. number actually will we're AE strategic we're market the to that, net store But coming to question explore to this in point that moves. talking healthy from maybe We're about of on versus those closures closures, down.

part again, strategy, it's when significant spring more reduction as articulate in brand we color years the the the AE think of as profitability been of but reset brand. as provide fleet we've we'll where an as is last we square going the won't growth be in So footage several

Operator

Our of Morgan Stanley. next question comes from the line Straton Alex with

Alexandra Straton

has step in haven't the Perfect. feel think improvement Quiet should some I been we far? so like part next on then about a of heard impactful back, plan what the the your how the we latest taking Maybe profit in eyes leg? most And And your Logistics business then secondly, thoughts time.

So if perhaps an you great. be could provide there, would that update

Mike Mathias

about margin months. within we the the X gross the being dates talked mean this about I been talked we've I for focus about area. talking -- -- We think

margin there margin third inventory in basis points gross of this the from expenses leverage [indiscernible] the leveraged quarter. year. -- were now every the and in We've but So the those markdown in the XX gross expenses quarter margin, management expenses in

We going that forward. to expect do

around our a leverage now that results 'XX fact we're been, gives drive high -- that's that a -- that's SG&A And thing. is me to point so work the same we're and So what proof the it in the level the year's there, of to this where has doing. in driving results, we're focus depreciation landing confidence plans

Jay Schottenstein

sister to starting still more go opportunity an Quiet company, our question, to a Quiet us And provided Mike, on the gross has like margins. starting will also Todd And platform strengthen the flow and benefits to third-party see we're Yes. seeing the on this we're onto enormous brands to of it Snyder like through use our We're part in too. business Quiet our the Yes. year.

Judy Meehan

have time question. we Melissa, for one more

Operator

Associates. Our line Research final the Janet with Kloppenburg from today comes of question JJK

Janet Kloppenburg

questions. of couple A

is year, first improvement how the you'd of half I they from But when wondering on much at we said and forward how increases were forward? First, SG&A, improvement? leverage from gross mid-single to I'm Mike, should SG&A margin provide the I you could just this about came in the going know Also next look and terrific. markdown what the you look freight digit. year, of much came breakdown which

should first you if that's half we there. And book men's, So Jen, bonus I'm because expect outlook I Aerie. maybe AE quarter? your have at very the it legging little a you positive just help business not about sure what's accrual? was bit for talk there? you on the to a next And high-margin business know year could for higher And

Mike Mathias

some the margin margin. margin board, expenses of well leverage components, On lower the through then benefits product gross across gross as rate management, benefits, and really markdowns markdown we

in think all next SG&A So half first components. mid-single. On the X it was year, was growth yes, I the

spending -- maintenance in Our There's embedding plans services, about in coming have embedded some items, that compensation line we of the SG&A we're anything talked changes our plans for advertising would this year. 'XX, not XX% areas.

components bit color that plans. this weighting comp look specific we're absorbing So the how to we're incentive making more those of our to will we changes all on provide once exactly flow a but get to half quarters more in those some a now To in 'XX versus March. guidance have we -- your we point, little back quarterly may can

Jennifer Foyle

that women's mean we saw of but we of we in women's the down certainly, was business comps in on For in we women's does the QX. significant And opportunity more side than the that Eagle. definitely that results American softer definitely that men's. sure, Again, coming men's. entered the don't as men's We not reached into have versus were doubled

that little of as In half hanging back see now, we some as right into QX and get QX. fruit this head we fact, we as year QX, into

be I an working been it. as to we've a hard bit opportunity little at So men's see more productive. definitely

in middle the bit I business. Leggings, assorted women's don't know on that SKUs can productive we little more my bit down and there, business little to a name, continue we definitely going over think if go should never were I the maybe that away. have double as past, is I a we to call

lagging Me has anyone what the far incredible. I of Aerie they Me Real move they sit again, X our Real of everything try The #X you our leggings, And must to leggings think tried and leggings, outstanding company, the are we entire at if your for. are the leggings, have innovation hasn't the there. SKUs a I Real our it's brand as comfortability. for. And cornerstone just as what back stands Aerie in is because the and to stands design --

good there's happening OFFLINE. So more stuff much so in

a wow, OFFLINE rallying this fact, on And brand comps cry or its you in great in mall. should the in week keep have getting both In what mall, we some the really time. stores same in on Aerie categories the at to what OFFLINE they're own, still and had means we're crossover same see They in mind, Aerie in seeing. we like the same

brands that there's would growth the tell to So for both test more we Aerie, continue opportunity me in future. that for some as

business is this business. about love about with again, what really the So is stopping. I what I'm early to going wagons, great finalize denim women's, they're don't in some anyone I seeing know on. reads to not ever going see that particular, in And this, we're

she And we She a can saying inside, then what so class is and she our I'm out go that's in and denim both. can gym things wear up do go what to leggings in to. can we're can

Operator

question-and-answer our Schottenstein to you. Thank final any turn That the concludes for back session. I'll Mr. comments. floor

Jay Schottenstein

Jen morning. the our operator, across build a are you, is Todd it here improvement momentum our third clear are that seeing and is whether Arie, hope we're this profit strong I saying, strategies This you thank Thank this in and testament results, brands, we're and quarter be AE, our -- growth we joining was Snyder. enduring Like for call Okay. initiatives. seeing all working. to build like OFFLINE

driving you the interest and your for return investment profit updating we in to in and you look and you. company, also We are our focused coming to shareholders. year. Thank growth Thank on the consistent forward

Operator

Thank you.

conference concludes Sorry today's call. -- thank This you.

your time. at Thank disconnect participation. your for may you You this lines

American Eagle Outfitters (AEO) 21 Nov 232024 Q3 Earnings call transcript