A shopper wearing a protective mask walks past a sale sign inside an American Eagle Outfitters Inc. clothing store in Westfield San Francisco Center in San Francisco, California, United States on Thursday, June 18, 2020.
Michael Short | Bloomberg | Getty Images
American Eagle Outfitters reported first quarter earnings and sales on Wednesday that exceeded analyst estimates as shoppers spent their money on new jeans, summer swimwear, and comfortable bras and underwear from Aerie.
However, stocks fell roughly 1% in extended trading on the news as the company failed to provide a financial outlook for the full year. The stock had closed the day by more than 5%.
The results follow strong results from Urban Outfitters and Abercrombie & Fitch earlier in the week. Executives at the three retailers point to pent-up demand – especially among younger consumers – eager to leave and reconnect. And they want new outfits to be put on in front of family and friends.
American Eagle had already announced in April that sales would rise to over $ 1 billion in the first quarter.
The momentum accelerated further in the second quarter, it said on Wednesday.
This is how American Eagle performed for the period ending May 1, compared to analyst expectations based on refinitive estimates:
- Earnings per share: adjusted 48 cents compared to 46 cents expected
- Revenue: $ 1.03 billion versus $ 1.02 billion expected
American Eagle’s net income for the period ended May 1 rose to $ 95.5 million, or 46 cents per share, compared to a loss of $ 257.2 million, or $ 1.54 per share in the Previous year. Without one-off adjustments, the company earned 48 cents per share, 2 cents more than analysts expected.
Revenue increased from $ 551.7 million a year ago to $ 1.03 billion. That beat estimates for $ 1.02 billion.
Sales of the company’s American Eagle brand of the same name rose slightly to $ 728 million from 2019. While Aerie sales rose 89% to $ 297 million in two years.
Jen Foyle, chief creative officer at American Eagle and global president of Aerie, said in an interview with CNBC that the company was pulling out its promotions to increase profits. The company is also reacting faster to fashion trends like the popularity of high-rise and wide-leg pants, she said. And it’s getting smarter and smarter to suggest other pieces on mannequins in stores and online to complete the whole look.
“We just continue to focus on really getting the outfits [right] and complete the look, “said Foyle.” Focuses on tops, dresses and fashion. … We really started attacking this quickly. “
American Eagle shares are up roughly 76% since the start of the year.
Shoppers with their Urban Outfitters shopping bags in Soho in New York
Richard Levine | Corbis | Getty Images
Activewear gives a boost
On Tuesday, Urban Outfitters reported first quarter earnings of 54 cents per share on sales of $ 927.4 million. According to a Refinitiv poll, analysts had targeted a profit of 17 cents per share on sales of 900.1 million US dollars.
The retailer, which also owns Anthropologie and Free People, said sales were up 7.3% from pre-pandemic levels in 2019. Like-for-like sales on a two-year basis grew 44% for Free People, 9% for Urban Outfitters and 1% for Anthropologie.
The demand from women for workout clothes did not slow down in the quarter, the company said. There has been an ongoing appetite for sportswear, including sports bras and leggings that can be worn from the gym to the grocery store. The Free People Movement brand within Free People grew by more than 300% from 2019.
Richard Hayne, chief executive of Urban Outfitters, said the company benefits from shoppers who are “cashless” because they haven’t spent on restaurant meals, movies and concerts, or travel. These social activities are gradually returning, he said, but Urban Outfitters predicts that demand for clothing and accessories will increase in at least the second quarter thanks to pent-up purchases.
Clothes that are left at home are still strong
Abercrombie & Fitch on Wednesday reported adjusted earnings per share for the first quarter of 67 cents on sales of $ 781.4 million. That was better than the 38 cents per share loss and $ 687 million in revenue that analysts were looking for.
On a two-year basis, the retailer’s total sales increased 6%. Revenue for the Abercrombie brand of the same name rose 59.6% year over year and increased 11% over 2019. Hollister sales grew 62% year over year and increased 3.3% on a two-year basis.
Fran Horowitz, CEO of Abercrombie, declined to provide an annual outlook but said net sales in the second quarter should be at or above pre-pandemic levels.
The company saw continued strength in its denim business and nightlife tops, but also in cozy clothes that stay at home. According to Abercrombie, spending on the latter category hasn’t slowed, despite the fact that many Americans are leaving the house more often and have already spent as much money on sweatpants and pajama sets as early as 2020.
Investment firm Jefferies said it sees Abercrombie, American Eagle and Urban Outfitters as the biggest short-term beneficiaries of a new fashion cycle, alongside the off-price sector.
“We see indications of a burgeoning fashion cycle that should bring benefits for several quarters, if not longer,” said Jefferies analyst Janine Stichter in a statement to customers.
In particular, Stichter pointed to a shift towards consumers who, due to the Covid pandemic, prefer wide-legged trousers to narrow denim and other tight-fitting trousers. As this shift takes place, consumers will need to purchase new tops and different shoes to match these types of pant silhouettes. Jefferies predicts that the companies that offer all of these things will see sales grow.
Urban Outfitters stocks closed more than 10% on Wednesday after rising more than 55% since the start of the year. Abercrombie stocks ended the day nearly 8% after hitting a 52-week high of $ 43.90 in intraday trading, and rose more than 86% for the year.