US retailer AEO's revenue climbs to $1.2 bn in Q2 FY23

A detailed breakdown of the brand performance illustrates that Aerie brand generated revenue amounting to $380 million, marking a 2 per cent increase relative to Q2 FY22, although the comp sales remained stagnant. On the other hand, American Eagle brand’s revenue was $767 million, experiencing a 1 per cent decline compared to Q2 FY22, accompanied by a 2 per cent decrease in comp sales, AEO said in a press release.

Looking at the profitability metrics, the company posted a considerable 22 per cent spike in gross profit in Q2 FY23, registering $453 million, a significant rise from $370 million recorded in the corresponding period last year. This surge in gross profit corresponded to a margin rate of 37.7 per cent compared to 30.9 per cent in Q2 FY22.

In spite of the higher gross profit, the selling, general, and administrative expenses grew by 8 per cent to reach $332 million.

AEO recorded an operating income of $65 million, representing a margin of 5.4 per cent. The diluted earnings per share (EPS) stood at $0.25, with the total of average diluted shares outstanding being 196 million.

The company managed to decrease its total ending inventory by 7 per cent to $637 million, compared to $687 million in the previous year, with an 11 per cent reduction in units.

“I am pleased to report second quarter revenue and operating profit that exceeded our expectations. Demand picked up in June and July reflecting brand strength and on trend collections that are resonating well with customers, supported by exciting new marketing campaigns. It’s encouraging to see positive momentum continue into the third quarter, across brands and channels,” said Jay Schottenstein, AEO’s executive chairman of the board and chief executive officer.

Fibre2Fashion News Desk (DP)