Aerie: All Time High Q1 Sales

Poor perfomance in swim dragged down Aerie's comps in the quarter.

Aerie revenue rose 3.8% in the quarter ended May 4, totaling $372.652 million, compared to $359.082 million in the same period last year. Store comp sales rose 6%. This was the “all-time high first quarter revenue” for the brand according to parent company American Eagle Outfitters (AEO). 

Interestingly, weak swimwear sales dragged down Aerie’s comps. “Excluding swim, where trends have been challenging in the spring season, Aerie comps were up 11%, consistent with trends exiting last year,” revealed Jennifer Foyle, the president and executive creative director of AE & Aerie, during the conference call. “The operating margin increased 70 basis points to 16.5%.”

Foyle continued: “we saw incredible strength across our corset dressing and activewear businesses. In intimates, we continue to see traction with new fabrications and styles, including our fan favorite Smoothez collection. And looking ahead, there remains significant untapped opportunity for Aerie and Offline as we are confident in their growth trajectory.”

“New Aerie and Offline stores continue to come out of the gate positive to expectation. We are also testing a new Aerie store design in Tyson’s Corner that showcases our assortment in an exciting and unique way. We opened this location a few weeks ago, and early indications have been encouraging.”

Responding to questions late in the call, CFO Mike Mathias explained that because Aerie focuses on swim only during the first few months of the year, its negative influence will have little impact later in the year. Thus he expects Aerie comps later in 2024 “to be in the higher end. Again, the comp in Q1 was plus 11 when you back out the impact of swim. We’re seeing that continue into the second quarter. Swim becomes less of a contribution to the brand as we pass through the second quarter. Like last year, we saw some pressure on Aerie comp through the first half because of swim. It went right back to double digit comps in the back half.”

AEO as a whole, which sells a variety of other apparel, reported net income of $67.75 million on sales of $1.144 billion, compared to net income of 18.45 million on sales of $1.081 billion in the quarter ended April 29, 2023. 

Aerie opened one and closed four stores during the quarter, ending with a total of 307. In its totals for Aerie, the company “includes Aerie stand alone locations, Offline stand alone locations, and Aerie/Offline side-by-side locations.” — NM

The full AEO conference call transcript can be found here: https://seekingalpha.com/article/4696327-american-eagle-outfitters-inc-aeo-q1-2024-earnings-call-transcript?utm_campaign=%7Clogin_now_link&utm_medium=email&utm_source=seeking_alpha