EX-99.1 2 d586836dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

AMERICAN EAGLE OUTFITTERS

REPORTS SECOND QUARTER 2013 RESULTS

PITTSBURGH–August 21, 2013 - American Eagle Outfitters, Inc. (NYSE:AEO) today reported earnings of $0.10 per diluted share for the second quarter ended August 3, 2013, compared to earnings from continuing operations of $0.21 per diluted share in the comparable quarter last year.

Robert Hanson, Chief Executive Officer stated, “Our second quarter results reflected disappointing product execution in women’s. Additionally, we faced a highly promotional and competitive retail landscape and a decline in traffic, which have continued into the third quarter. We are working hard to strengthen our assortments, marketing efforts and overall execution, while maintaining tight inventories and disciplined expense management. Although extremely disappointed with our results, I’m confident in the strength of our brands, our strategic initiatives including, factory stores, aerie, omni-channel and international, as well as the team’s resolve to regain momentum and improve our bottom line performance.”

Second Quarter 2013 Non-GAAP Results

The following discussion is based on Non-GAAP results for the comparable quarter last year, as presented in the accompanying GAAP to Non-GAAP reconciliations.

 

   

Total net revenue decreased 2% to $727 million, compared to $740 million last year.

 

   

Consolidated comparable sales, including AEO Direct, decreased 7%, compared to an 8% increase last year. Second quarter 2013 comparable sales are compared to the 13 weeks ended August 4, 2012.

 

   

Gross profit decreased 11% to $245 million and, as a rate to revenue, decreased 360 basis points to 33.8%. The decline is primarily the result of higher markdowns and the deleverage of rent on negative comps.

 

   

Selling, general and administrative expense of $186 million increased 5% from last year and deleveraged 160 basis points to 25.6% as a rate to revenue.

 

   

Operating income decreased 56% to $29 million, resulting in a rate of 4.1% compared to 9.1% last year.

 

   

EPS of $0.10 compared to adjusted EPS from continuing operations of $0.21 last year, a 52% decrease.

Inventory

Total merchandise inventory at the end of the second quarter declined slightly to $461 million compared to $462 million last year. At cost per foot, inventory decreased 1%.


Capital Expenditures

In the second quarter, capital expenditures totaled $78 million. Due to the retiming of projects, the company now expects capital expenditures of $230 to $250 million for fiscal 2013. This compares to previous expectations of $250 to $280 million. The capital spending plan includes new store growth, remodels, a new distribution center to support omni-channel growth and the implementation of new and upgraded technology.

Real Estate

In the second quarter, total square footage increased 1% from last year. The company opened 26 new stores, including 18 factory stores, and closed 7 locations, including 6 aerie stores. As a result of the terminated licensed agreement previously announced, the company assumed operation of 6 existing stores in Hong Kong and China. Additionally, the company had 57 international franchise locations in 12 countries. For additional second 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 short-term investments of $405 million compared to $702 million last year. The reduction in cash reflects share repurchases of $33 million in the first quarter of 2013and $174 million in the fourth quarter of 2012. In addition to regular quarterly dividends, the company paid a special cash dividend of $1.50 per share in the third quarter of 2012 for $296 million.

Third Quarter Outlook

Management is issuing third quarter EPS guidance of $0.14 to $0.16 per diluted share, based on a mid- to high-single digit decline in comparable sales. This compares to EPS from continuing operations of $0.41 last year.

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 to www.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 non-GAAP 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.

* * * *

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 North America, and ships to 81 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at 59 international franchise stores in 12 countries. For more information, please visit www.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 third 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)

 

     August 3,     February 2,     July 28,  
     2013     2013     2012  
     (unaudited)           (unaudited)  

ASSETS

      

Cash and cash equivalents

   $ 345,188      $ 509,119      $ 696,077   

Short-term investments

     59,678        121,873        5,995   

Merchandise inventory

     461,080        332,452        462,013   

Assets held for sale

     4,669        9,499        19,850   

Accounts receivable

     45,965        46,321        40,202   

Prepaid expenses and other

     115,595        73,805        76,584   

Deferred income taxes

     41,807        58,230        55,607   
  

 

 

   

 

 

   

 

 

 

Total current assets

     1,073,982        1,151,299        1,356,328   
  

 

 

   

 

 

   

 

 

 

Property and equipment, net

     593,879        500,134        534,886   

Intangible assets, net

     44,658        38,136        38,682   

Goodwill

     13,814        11,484        11,445   

Non-current deferred income taxes

     25,441        31,282        22,477   

Other assets

     28,311        23,718        15,064   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,780,085      $ 1,756,053      $ 1,978,882   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Accounts payable

   $ 292,120      $ 176,874      $ 171,655   

Accrued compensation and payroll taxes

     20,496        65,533        54,168   

Accrued rent

     74,052        77,873        78,514   

Accrued income and other taxes

     9,614        29,155        15,822   

Unredeemed gift cards and gift certificates

     26,389        46,458        24,342   

Current portion of deferred lease credits

     14,104        13,381        14,679   

Other current liabilities and accrued expenses

     28,024        26,628        26,694   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     464,799        435,902        385,874   
  

 

 

   

 

 

   

 

 

 

Deferred lease credits

     67,461        59,571        69,598   

Non-current accrued income taxes

     19,722        19,011        26,285   

Other non-current liabilities

     24,430        20,382        18,711   
  

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     111,613        98,964        114,594   
  

 

 

   

 

 

   

 

 

 

Commitments and contingencies

     —          —          —     

Preferred stock

     —          —          —     

Common stock

     2,496        2,496        2,496   

Contributed capital

     587,905        627,065        574,671   

Accumulated other comprehensive income

     24,397        29,297        28,073   

Retained earnings

     1,588,094        1,553,058        1,770,546   

Treasury stock

     (999,219     (990,729     (897,372
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     1,203,673        1,221,187        1,478,414   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,780,085      $ 1,756,053      $ 1,978,882   
  

 

 

   

 

 

   

 

 

 

Current Ratio

     2.31        2.64        3.51   


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share amounts)

(unaudited)

 

     GAAP Basis
13 Weeks Ended
 
     August 3,
2013
     % of
Revenue
    July 28,
2012
    % of
Revenue
 

Total net revenue

   $ 727,313         100.0   $ 739,680        100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     481,818         66.2     463,116        62.6
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     245,495         33.8     276,564        37.4

Selling, general and administrative expenses

     186,336         25.6     182,125        24.6

Depreciation and amortization

     29,734         4.1     32,643        4.4
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     29,425         4.1     61,796        8.4

Other (expense) income, net

     1,149         0.1     (343     -0.1
  

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     30,574         4.2     61,453        8.3

Provision for income taxes

     10,980         1.5     18,607        2.5
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from continuing operations

     19,594         2.7     42,846        5.8

Loss from discontinued operations, net of tax

     —           0.0     (23,819     -3.2
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 19,594         2.7   $ 19,027        2.6
  

 

 

    

 

 

   

 

 

   

 

 

 

Basic income per common share:

         

Income from continuing operations

   $ 0.10         $ 0.22     

Loss from discontinued operations

     0.00           (0.12  
  

 

 

      

 

 

   

Net income per basic share

   $ 0.10         $ 0.10     
  

 

 

      

 

 

   

Diluted income per common share:

         

Income from continuing operations

   $ 0.10         $ 0.21     

Loss from discontinued operations

     0.00           (0.12  
  

 

 

      

 

 

   

Net income per diluted share

   $ 0.10         $ 0.09     
  

 

 

      

 

 

   

Weighted average common shares outstanding - basic

     192,731           196,160     

Weighted average common shares outstanding - diluted

     195,951           199,807     
     26 Weeks Ended  
     August 3,
2013
     % of
Revenue
    July 28,
2012
    % of
Revenue
 

Total net revenue

   $ 1,406,790         100.0   $ 1,448,375        100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     897,686         63.8     896,898        61.9
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     509,104         36.2     551,477        38.1

Selling, general and administrative expenses

     368,589         26.2     360,664        24.9

Depreciation and amortization

     65,273         4.6     64,709        4.5
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     75,242         5.4     126,104        8.7

Other income, net

     467         0.0     3,164        0.2
  

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     75,709         5.4     129,268        8.9

Provision for income taxes

     28,139         2.0     42,387        2.9
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from continuing operations

     47,570         3.4     86,881        6.0

Loss from discontinued operations, net of tax

     —           0.0     (28,157     -1.9
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 47,570         3.4   $ 58,724        4.1
  

 

 

    

 

 

   

 

 

   

 

 

 

Basic income per common share:

         

Income from continuing operations

   $ 0.25         $ 0.44     

Loss from discontinued operations

     —             (0.14  
  

 

 

      

 

 

   

Net income per basic share

   $ 0.25         $ 0.30     
  

 

 

      

 

 

   

Diluted income per common share:

         

Income from continuing operations

   $ 0.24         $ 0.44     

Loss from discontinued operations

     —             (0.14  
  

 

 

      

 

 

   

Net income per diluted share

   $ 0.24         $ 0.30     
  

 

 

      

 

 

   

Weighted average common shares outstanding - basic

     192,720           195,525     

Weighted average common shares outstanding - diluted

     196,451           198,329     


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  
     July 28, 2012  
     American Eagle  Outfitters,
Inc.

(GAAP Basis)
    Tax Benefits  (1)     Restructuring
Costs (1)
    American Eagle  Outfitters,
Inc.
(Non-GAAP Basis)
 
           % of
Sales
                      % of
Sales
 

Net sales

   $ 739,680        100.0   $ —        $ —        $ 739,680        100.0

Cost of sales, including certain buying,occupancy and warehousing expenses

     463,116        62.6     —          —          463,116        62.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     276,564        37.4     —          —          276,564        37.4

Selling, general and administrative expenses

     182,125        24.6     —          4,367        177,758        24.0

Depreciation and amortization

     32,643        4.4     —          710        31,933        4.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     61,796        8.4     —          (5,077     66,873        9.1

Other (expense), net

     (343     -0.1     —          —          (343     -0.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     61,453        8.3     —          (5,077     66,530        9.0

Provision (benefit) for income taxes

     18,607        2.5     (4,411     (1,882     24,900        3.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     42,846        5.8     4,411        (3,195     41,630        5.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from discontinued operations, net of tax

     (23,819     -3.2     —          —          (23,819     -3.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 19,027        2.6   $ 4,411      $ (3,195   $ 17,811        2.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per common share

            

Income from continuing operations

   $ 0.22        $ 0.03      $ (0.02   $ 0.21     

Loss from discontinued operations

   $ (0.12     $ 0.00      $ 0.00      $ (0.12  
  

 

 

     

 

 

   

 

 

   

 

 

   

Basic income per common share

   $ 0.10        $ 0.03      $ (0.02   $ 0.09     

Diluted income per common share

            

Income from continuing operations

   $ 0.21        $ 0.02      $ (0.02   $ 0.21     

Loss from discontinued operations

   $ (0.12     $ 0.00      $ 0.00      $ (0.12  
  

 

 

     

 

 

   

 

 

   

 

 

   

Diluted income per common share

   $ 0.09        $ 0.02      $ (0.02   $ 0.09     

Weighted average common shares outstanding - basic

     196,160          196,160        196,160        196,160     

Weighted average common shares outstanding - diluted

     199,807          199,807        199,807        199,807     

 

(1)- Non-GAAP Items consist of $4.4 million of tax benefits from audit settlements, offset by $3.9 million of pre-tax severance and related costs and $1.2 million of pre-tax asset impairments and asset write offs.


AMERICAN EAGLE OUTFITTERS, INC.

COMPARABLE SALES RESULTS BY BRAND

(unaudited)

 

     Second Quarter
Comparable  Sales
 
     2013(1)     2012  

American Eagle Outfitters, Inc. (3)

     -7     8

AE Total Brand (3)

     -8     8

aerie Total Brand (3)

     -2     17

AEO Direct

     11     27
     YTD Second  Quarter
Comparable Store Sales
 
     2013(2)     2012  

American Eagle Outfitters, Inc. (3)

     -6     13

AE Total Brand (3)

     -7     12

aerie Total Brand (3)

     1     19

AEO Direct (2)

     17     24

 

(1) Second quarter 2013 comp sales are compared to the sales for the 13 weeks ended August 4, 2012.
(2) YTD second quarter 2013 comp sales are compared to the sales for the 26 weeks ended August 4, 2012.
(3) AEO Direct is included in consolidated and total brand comparable sales.


 

AMERICAN EAGLE OUTFITTERS, INC.

REAL ESTATE INFORMATION

(unaudited)

     Second Quarter
2013
  YTD
Second Quarter
2013
  Fiscal 2013
Guidance

Consolidated stores at beginning of period

   1,037   1,044   1,044

Consolidated stores opened during the period

      

AE Brand (2)

   26   33   55 - 60

Consolidated stores closed during the period

      

AE Brand

   (1)   (5)   (20) - (30)

aerie

   (6)   (16)   (15) - (20)
  

 

 

 

 

 

Total consolidated stores at end of period

   1,056   1,056   1054 - 1064

Stores remodeled and refurbished during the period

   20   42   50 - 65

Total gross square footage at end of period

   6,373,055   6,373,055   Not Provided

International franchise stores at end of period (1)

   57   57   66

 

(1)- International franchise stores are not included in the consolidated store data or the total gross square footage calculation.
(2)- Includes six franchise stores in Hong Kong and China that were acquired by the company in the second quarter of 2013.