(Filed Under Financial and General Interest News). Aerie second quarter comparable store and online sales jumped 27%, that on top of a 26% rise in the same quarter a year ago.
“Aerie’s performance is nothing short of spectacular, marking nearly four years of consecutive double-digit growth,” declared Jay Schottenstein, CEO of parent company American Eagle Outfitters (AEO), during the conference call with analysts to discuss the results.
Jennifer Foyle, Aerie’s global brand president, added, “All areas of the business experienced growth, with strength across apparel, core bras, undies and swim.”
“We continue to expand our customer base and gain market share,” she continued. “As we build on our leadership position within the body positivity movements, I’m excited to highlight our recent introduction of our revolutionary new bra collection and the 360 degree shopping experience. Our redesign real bra line delivers even more innovation and comfort. Additionally, we’re offering an expanded range of sizes, the first of its kind of in-store and online experience built on our most successful core bra collections.”
Noting that “Aerie’s online business is simply spectacular, producing a 30% sales gain in the quarter,” Foyle also emphasized the importance of adding physical locations. “Stores remain an important tool in building the Aerie brand and we see tremendous runway for growth. Our store opening plans for next year will ramp up to 50 to 80 locations, including a number of new markets.”
Foyle stated Aerie currently has stores in only 15 states in the U.S., as well as some locations in Canada and Mexico. AEO counts two types of Aerie stores, “stand alone” and “side by side,” the latter being part of AE or factory stores. Between February 3 and August 4 of this year, Aerie closed two and opened two U.S. stand alone Aerie stores, ending with a total of 91. During the same period the number of those locations in Canada has remained stable at 18.
In the same six months, AEO added 13 side by side Aerie locations in the U.S., raising the total to 103. And it added one side by side Aerie each in Canada and Mexico, raising the total to 14 each in both countries.
Robert Madore, AEO’s CFO attempted, but without complete success, to further explain the pace of Aerie’s store expansion plans. During the conference call he stated, “we’re planning to open approximately 40 Aerie stores this year,” which, presumably, would include the net increase of 15 stores it has already reported in the first half.
Later, when asked by an analyst why there was so much uncertainty about the number of possible Aerie openings for next year, he replied, ‘We gave – given a range of 50 to 80. And to be honest with you, that range really reflects what our aspirations are for the next three-year period. It’s really going to come down to the availability of, look, attractive locations for Aerie expansion. That’s why we’ve got such a large range. We’re not going to go in malls just to increase store count. We’re very disciplined around the criteria” that goes into selecting a location, he continued. “Which is why we gave the 50 to 80 range. Really looking to ramp up to 80 store openings, probably out looking out to the next two to three years just in light of supply, and then really just being able to execute.”
Elsewhere in the call, Foyle noted Aerie continues to be successful with its non-underwear apparel categories. “We’re still seeing really nice comps in that business, and we will continue to build out the lifestyle for the Aerie girl. We love our Chill. Play. Move assortment, and there’s still a lot to be had there.” She boasted, “In that part of the business, our leggings continue to just be amazing, as well as our new chill bra tops.”
AEO as a whole, which operates a total of 1,054 stores internationally, offering a range of apparel choices, earned $60.3 million on sales of $964.9 million in the quarter ended August 4, compared to a profit of $21.2 million on sales of $844.6 million in the three months ended July 29, 2017. — NM
The complete conference call transcript can be found here: https://seekingalpha.com/article/4202890-american-eagle-outfitters-inc-aeo-ceo-jay-schottenstein-q2-2018-results-earnings-call
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