The company, parent to the American Eagle, Aerie, Todd Synder and Unsubscribed brands, posted quarterly results Wednesday before the bell, falling short on both top and bottom lines, but still beating analyst expectations for the three-month period ending Aug. 1.
Total company revenues fell 15 percent to $884 million, down from more than $1 billion the year before. The retailer said the declines were largely a result of store closures during the quarters. Revenues in the year-ago period also included $40 million from Japanese license royalties.
By brand, American Eagle revenues declined 26 percent during the quarter, while Aerie’s sales surged 32 percent. Meanwhile, revenues in the company’s e-commerce business grew 74 percent, or 47 percent at American Eagle and 142 percent at Aerie.
Still, the company lost $13.7 million during the quarter, compared with profits of nearly $65 million the same time last year. That’s on top of the company’s $257 million loss the quarter before that.
“In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business — a true testament to the agility, talent and commitment of our team,” Jay Schottenstein, executive chairman of the board and chief executive officer of American Eagle Outfitters, said in a statement. “Aerie was simply outstanding, fueled by strong demand, with revenue rising 32 percent and record margins, demonstrating the power of the brand and signaling the vast opportunity ahead. Across brands, digital sales accelerated and we successfully reopened stores during the quarter.”
The retailer closed all of its stores mid-March to prevent the spread of the coronavirus. Stores did not begin reopening until May.
But since then American Eagle Outfitters has been in expansion mode.
In late June, American Eagle Outfitters launched its fourth brand, a single-store retail concept located in East Hampton, N.Y., called Unsubscribed. The store is focused on slow retail. Then in July, the company launched Offline by Aerie, the intimates apparel brand’s take on activewear and an attempt to tap into the growing performance wear and ath-leisure markets.
Schottenstein said during the quarter, “We operated with strong disciplines, reduced expenses, cut inventories and carefully managed liquidity. We controlled what we could and generated positive free cash flow, strengthening our balance sheet. Inventories are in good shape and I believe we are very well-positioned for the second half of the year. We will remain focused on managing through the near term and preparing for a new future as we accelerate strategies to transform our business and emerge with strength.”
Total inventory costs fell 21 percent to $421 million during the most recent quarter. American Eagle Outfitters ended the quarter with $899 million in cash and equivalents and nearly $517 million in long-term debt.
Shares of American Eagle Outfitters, which closed up 2.64 percent to $13.20 on Tuesday, are down nearly 22 percent year-over-year.