American Eagle Outfitters Reports EPS of $0.21 for First Quarter 2008.Provides Second Quarter EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Guidance PITTSBURGH -- American Eagle Outfitters, Inc. (NYSE NYSE See: New York Stock Exchange :AEO) today announced that earnings for the 13 weeks ended May 3, 2008 decreased 40% to $0.21 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to the 13 week period ended May 5, 2007. "Our first quarter results reflect a number of challenges during the quarter, both internal and external," said Jim O'Donnell, Chief Executive Officer. "We are taking quick action to strengthen the business, and I am pleased with the progress we were able to make during the quarter. In response to the economic environment, we are reducing inventory and expenses. At the same time, we continue to build the company for long-term growth in a prudent and measured manner. I am confident in the strength of our brands and our ability to drive profitable growth." First Quarter Results Total sales for the 13 weeks ended May 3, 2008 increased 5% to $640.3 million compared to $612.4 million for the 13 week period ended May 5, 2007. First quarter comparable store sales decreased 6%, compared to a 6% increase last year. Gross profit for the first quarter was $263.7 million, or 41.2% as a rate to sales, compared to $298.5 million, or 48.7% as a rate to sales last year. The primary cause of the reduced margin was increased markdowns as a result of lower than expected sales. Rent increased as a rate to sales due to new store openings and the first quarter comp comp See comparison. decline. Additionally, the company experienced higher delivery costs related to fuel surcharges. Selling, general and administrative expenses of $169.6 million increased to 26.5% as a rate to sales from $157.0 million, or 25.6% as a rate last year. The higher rate this quarter is primarily due to the comp decline. The company de-leveraged direct compensation and benefits, services purchased, travel and communications. Incentive compensation, advertising and supplies improved as a rate to sales. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter was $64.5 million, compared to $116.0 million last year. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 10.1%, compared to 18.9% last year. The company generated net income during the first quarter of $43.9 million, compared to $78.8 million last year. As a percent to sales, net income was 6.9%, compared to 12.9% last year. Inventory Total merchandise inventories at the end of the first quarter were $262.2 million, a decrease of $12.6 million compared to last year. Inventory (excluding e-commerce) decreased 17% on a per square foot basis from a year ago. Looking ahead, the company expects second quarter ending inventory to be down in the low double-digits at cost per foot. Real Estate In the first quarter, the company opened 15 AE stores, 16 aerie stores and 3 MARTIN + OSA Martin + Osa (Martin & Osa) is a new clothing brand developed by American Eagle Outfitters. The store's name and inspiration comes from Martin and Osa Johnson, a globetrotting husband and wife team from Kansas who explored Africa and the South Pacific Islands, chronicling their stores. In fiscal 2008, the company plans to open approximately 40 AE stores, 80 aerie stores and 11 MARTIN + OSA stores. Together with approximately 40 to 50 AE store remodels, the company expects to grow square footage by approximately 12%. AEO Direct The company's direct business, which includes ae.com, aerie.com and martinandosa.com, is also an important area of growth. For the quarter, sales grew approximately 29% over last year, driven primarily by an increase in both traffic and conversion. Capital Expenditures For the first quarter, capital expenditures were approximately $74 million. For fiscal 2008, management expects capital expenditures to be in the range of $250 to $275 million. Of this amount, approximately one half relates to new and remodeled stores. The balance of the 2008 capital spend relates to investments in the company's home office, distribution centers and IT initiatives to support AEO Direct and brand growth. Cash and Cash Equivalents, Short-term Investments and Long-term Investments The company ended the first quarter with total cash and cash equivalents, short-term investments and long-term investments of $705 million. This included approximately $368 million of investments in auction rate securities ("ARS"). During the quarter, the company recorded a temporary impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of $5.1 million in the stockholder's equity Stockholder's equity The residual claims that stockholders have against a firm's assets, calculated by subtracting all current liabilities and debt liabilities from total assets. section of the balance sheet, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its ARS portfolio. Subsequent to quarter-end, $14 million of ARS were called at par, leaving the company with $354 million in ARS investments as of May 16, 2008. In light of the company's strong cash flow, management believes that the current lack of liquidity relating to its ARS investments will have no impact on its ability to fund its ongoing operations and growth initiatives. Second Quarter Guidance At this time, management is establishing second quarter earnings guidance of $0.28 to $0.30 per share, compared to $0.37 per share last year. Conference Call Information At 9:00 a.m. Eastern Time on May 28, 2008, the company's management team will host a conference call to review the financial results. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 five to seven minutes prior to the scheduled start time. The conference call will also be simultaneously broadcast over the Internet at www.ae.com or www.streetevents.com. Anyone unable to listen to the call can access a replay beginning May 28, 2008 at 12:00 p.m. Eastern Time through June 11, 2008. To listen to the replay, dial 1-877-660-6853, or internationally dial 1-201-612-7415, and reference account 3055 and confirmation code 279173. An audio replay of the conference call will also be available at www.ae.com. American Eagle Outfitters designs, markets and sells its own brand of laidback, current clothing targeting 15 to 25 year-olds, providing high-quality merchandise at affordable prices. The original collection includes standards like jeans and graphic Ts as well as essentials like accessories, outerwear, footwear, basics and swimwear. American Eagle currently operates 867 stores in 50 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , and 76 AE stores in Canada. American Eagle also operates ae.com[R], which offers additional sizes and styles of favorite AE[R] merchandise and ships to more than forty countries around the world. The American Eagle[R] brand also includes a Dormwear[R] collection, aerie[TM], which is available in 62 standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. stores, American Eagle stores and at aerie.com. The collection includes bras, undies, camis, hoodies, robes robe n. 1. A long loose flowing outer garment, especially: a. An official garment worn on formal occasions to show office or rank, as by a judge or high church official. b. An academic gown. c. , boxers, sweats and leggings leg·ging n. 1. A leg covering usually extending from the ankle to the knee and often made of material such as leather or canvas, worn especially by soldiers and workers. 2. leggings a. for the AE girl. Designed to be sweetly sexy, comfortable and cozy See COSE. , the aerie brand offers AE customers a new way to express their personal style everyday, from the dormroom to the coffee shop to the classroom. 77E, a new multi-channel entertainment platform, features original and user-generated content The production of content by the general public rather than by paid professionals and experts in the field. Mostly available on the Web via blogs and wikis, user-generated content refers to material such as the daily news, encyclopedias and other references, movie and product reviews as on ae.com, in AE stores, on television, and on Web sites such as Youtube, MySpace and Facebook. For more information, visit www.ae.com. MARTIN + OSA[TM], a concept targeting 28 to 40 year-old women and men, offers refined casual clothing and accessories, designed to be valuable, irresistible, inspiring, authentic and adventurous. MARTIN + OSA currently operates 22 stores. For additional information and updates, visit www.martinandosa.com. The company plans to launch a children's apparel brand, 77kids by american eagle[TM], offering on-trend, high-quality clothing and accessories for kids age two to 10. 77kids will debut online at www.77kids.com during Fiscal 2008, with brick-and-mortar stores in the U.S. planned for 2010. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which represent our expectations or beliefs concerning future events, specifically regarding second quarter sales and earnings, inventory, real estate, aerie, MARTIN + OSA and 77kids by american eagle. All forward-looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors beyond the Company's control. Such factors include, but are not limited to the risk that second quarter earnings expectations may not be achieved; real estate, aerie and MARTIN + OSA growth may not occur as planned; and those other risks described in the Risk Factors Section of the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q's filed with the Securities and Exchange Commission. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The Company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized. [TABLE OMITTED] [TABLE OMITTED] |
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