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American Eagle Outfitters reports 5% revenue increase in Q3 FY23

22 Nov '23
2 min read
Pic: JHVEPhoto - stock.adobe.com
Pic: JHVEPhoto - stock.adobe.com

Insights

  • AEO saw a 5 per cent rise in total net revenue to $1.3 billion in Q3 FY23.
  • Store revenue grew by 3 per cent, digital revenue by 10 per cent, and Aerie's revenue by 12 per cent.
  • Gross profit improved by 13 per cent to $544 million, with a 41.8 per cent gross margin rate.
  • Operating expenses increased by 16 per cent, but operating income reached $125 million.
For the third quarter (Q3) of fiscal 2023 (FY23), ended October 28, American Eagle Outfitters, Inc (AEO) has reported a total net revenue increase of 5 per cent to $1.3 billion. Store revenue saw a 3 per cent rise, while digital revenue grew by 10 per cent. Notably, Aerie's revenue climbed 12 per cent to $393 million, with comparable sales also up by 12 per cent. American Eagle's revenue increased by 2 per cent to $857 million with a similar rise in comparable sales.

Gross profit reached $544 million, a 13 per cent improvement, benefitting from strong demand, reduced product and freight costs, and efficiency gains from profit improvement measures. These factors contributed to a gross margin rate of 41.8 per cent, up 310 basis points.

Operating expenses rose 16 per cent to $362 million, aligned with the company's guidance and strong performance. A significant portion of this increase was attributed to incentive compensations and higher store payroll due to increased wages. Operating income stood at $125 million, reflecting a 9.6 per cent margin, and diluted earnings per share increased by 17 per cent to $0.49, the company said in a press release.

In terms of inventory, the company reported a 4 per cent decline to $769 million, maintaining a disciplined approach. Capital expenditures for the third quarter were $43 million, contributing to a year-to-date total of $135 million.

Looking ahead, AEO remains committed to cost structure optimisation, expecting these initiatives to boost gross margins and operational efficiency in 2024. For Fiscal 2023, the company anticipates revenue growth in the mid-single digits, with operating income expected to reach the higher end of the $340 to $350 million range. The fourth quarter outlook is positive, with anticipated revenue growth in the high-single digits and operating income between $105 to $115 million, the release added.

“I am pleased with our third quarter results which demonstrated the strength of our brands and reflected continued progress on our growth and profit improvement initiatives. Our strategic priorities, underpinned by our customer-first focus and commitment to operational excellence, are propelling us forward,” commented Jay Schottenstein, AEO’s executive chairman of the board of directors and chief executive officer.

Fibre2Fashion News Desk (KD)

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