American Eagle Outfitters is the latest retailer bracing itself for an increasingly promotional holiday shopping season.
, loungewear and swimwear brand grew 11 percent, compared with last year’s results. Comp sales at Aerie fell 3 percent during the quarter, compared with a year ago, but were up 59 percent, compared with 2019. “Intimates is not an oversight,” Jennifer Foyle, president and executive creative director of the AE, Aerie and Unsubscribed brands, told analysts on Tuesday’s conference call.
American Eagle Outfitters logged $81.2 million in total income for the quarter, down 46.5 percent compared with last year’s third-quarter profits of more than $152 million. holiday shopping season as inflation persists and many consumers trade discretionary items for experiences. Excess inventory and reduced margins have forced some retailers to increase markdowns ahead of the holidays.
“In this business you have to be an optimist, or you can’t be in the retail business,” Schottenstein said on the call. “We see our costs coming down. We see the cost of freight going down, back to 2019 levels. So there is a reason for optimism. We see we have the ability to work closer to need and be able to trace merchandise. So everything is pretty positive. And we can only control what we can control. But I’m optimistic. I see a lot of good signs. Investors seemed to agree.
“AEO’s inventory increased just 8 percent to $798 million, with the expectation of Q4 inventory to be down [year-over-year],” Warring wrote in a note. “Q3 operating margin of 9.5 percent was down 700 [basis points, year-over-year] but remains above many peers and in line with pre-pandemic margins. We like the momentum in the company’s Aerie brand and AEO’s current valuation compared to peers; thus, our recommendation on AEO is buy.
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