American Eagle Outfitters reports 5% revenue increase in Q3 FY23

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)