American Eagle Outfitters Reports Third Quarter 2008 Results.PITTSBURGH -- American Eagle Outfitters, Inc. (NYSE NYSE See: New York Stock Exchange :AEO) today announced that non-GAAP earnings for the third quarter ended November 1, 2008 were $0.30 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, excluding a $0.09 per share other-than-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. charge related to auction rate securities. Third 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. compared to $0.45 per diluted share for the quarter ended November 3, 2007. "We continue to face challenges, which affected our third quarter financial results. Although we are not satisfied with our quarterly performance, American Eagle Outfitters remains highly profitable, with strong cash flow," said Jim O'Donnell, Chief Executive Officer. He continued, "As we look ahead, our top priorities are to strengthen our businesses and protect our market share. Importantly, we are vigilantly controlling expenses, managing tight inventories and we have significantly reduced 2009 capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. plans to address the economic climate. I am confident that we will manage through the current challenges, continue to strengthen our leading lifestyle brands and emerge well-positioned for future success." Third Quarter Results Total sales for the quarter ended November 1, 2008 increased 1% to $754.0 million compared to $744.4 million for the quarter ended November 3, 2007. Third quarter comparable store sales decreased 7%, compared to a 2% increase last year. Gross profit for the third quarter was $309.4 million, or 41.0% as a rate to sales, compared to $352.9 million, or 47.4% as a rate to sales last year. Merchandise margin declined by 470 basis points, primarily due to higher markdowns, and an increase in the cost of merchandise. Buying, occupancy and warehousing costs increased by 170 basis points, due to de-leveraging of rent related to new store openings and the third quarter comparable store sales decline. Selling, general and administrative expenses of $181.7 million increased to 24.1% as a rate to sales from $174.2 million, or 23.4% as a rate last year. The higher rate this quarter was primarily due to the comparable store sales decline. 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 $94.9 million, compared to $150.9 million last year. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 12.6%, compared to 20.3% last year. Other income (expense), net decreased $22.3 million from $6.9 million to $(15.4) million. This was primarily due to an other-than-temporary impairment charge of $19.9 million in connection with the valuation of investments in dividend received auction rate preferred securities. (See paragraph titled Auction Rate Securities.) The company generated net income during the third quarter of $42.6 million, compared to $99.4 million last year. Inventory Total merchandise inventories at the end of the third quarter were $422 million, an increase of $29 million compared to last year. Looking ahead, the company expects fourth quarter average weekly inventory to be down in the low double-digits at cost per foot. AEO Direct The company's direct business, which includes ae.com, aerie.com, 77kids.com and martinandosa.com, is an important area of growth. For the quarter, sales increased approximately 35% over last year, driven primarily by increases in both traffic and conversion. Capital Expenditures For the third quarter, capital expenditures were approximately $69.2 million. For fiscal 2008, management continues to expect 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. The company has lowered 2009 planned capital expenditures to an approximate range Noun 1. approximate range - near to the scope or range of something; "his answer wasn't even in the right ballpark" ballpark ambit, range, scope, reach, compass, orbit - an area in which something acts or operates or has power or control: "the range of a of $110 to $135 million, which relate to new and remodeled stores, the completion of the current distribution center and headquarters projects, as well as IT initiatives. Real Estate In the third quarter, the company opened eight AE stores, 30 aerie stores and five 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 a total of 35 AE stores, 77 aerie stores and 10 MARTIN + OSA stores. Together with approximately 31 AE store remodels, the company expects to grow square footage by approximately 12%. In 2009, the company is planning approximately 12 new and 25 to 35 remodeled AE stores and 17 new aerie stores, for total square footage growth of approximately 2%. Cash and Cash Equivalents, Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. Investments and Long-term Investments The company ended the third quarter with total cash and cash equivalents, short-term investments and long-term investments of $616 million. This includes $283 million of investments in auction rate securities. Auction Rate Securities During the third quarter, the company incurred an other-than-temporary impairment charge of $19.9 million recognized in earnings, and a net temporary impairment charge of $21.8 million recognized through other comprehensive income, in connection with the valuation of its auction rate securities portfolio. Year-to-date, the company incurred an other-than-temporary impairment charge of $19.9 million recognized in earnings, and a net temporary impairment charge of $30.0 million recognized through other comprehensive income. For additional information, please refer to the company's Form 8K filed with the SEC, on November 19, 2008. Business Outlook Sales trends in November have remained challenging. Through the first two weeks of the month, comparable stores sales declined 17%. With one-third of November sales still ahead, and the importance of the Thanksgiving Thanksgiving annual U.S. holiday celebrating harvest and yearly blessings; originated with Pilgrims (1621). [Am. Culture: EB, IX: 922] See : America Thanksgiving national holiday with luxurious dinner as chief ritual. [Am. Pop. weekend needed to gauge holiday selling, the company will provide fourth quarter earnings guidance next week along with its November sales announcement. Conference Call Information At 9:00 a.m. Eastern Time on November 25, 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 November 25, 2008 at 12:00 p.m. Eastern Time through December 9, 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 293725. An audio replay of the conference call will also be available at www.ae.com. Non-GAAP Measures This press release includes information on non-GAAP earnings per share. This measure is not based on any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. methodology prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") and is not necessarily comparable to similar measures presented by other companies. The Company believes that this non-GAAP information is useful as an additional means for investors to evaluate the Company's operating performance, when reviewed in conjunction with the Company's GAAP financial statements. This amount is not determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP and therefore, should not be used exclusively in evaluating the Company's business and operations. American Eagle Outfitters, Inc., through its subsidiaries, ("AEO, Inc.")offers high-quality, on-trend clothing, accessories and personal care products at affordable prices. The American Eagle Outfitters([R]) brand targets 15 to 25 year old girls and guys, with 959 stores in the U.S. and Canada and online at www.ae.com. aerie([R]) by american eagle offers Dormwear([R]) and intimates collections for the AE([R]) girl, with 114 standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. stores in the U.S. and Canada and online at www.aerie.com. MARTIN + OSA([R]) provides Refined Casual[TM] fashions for 28 to 40 year old men and women at its 28 stores and online at www.martinandosa.com. The latest brand, 77kids[TM] by american eagle[TM], is available online only at www.77kids.com. 77kids offers "kid cool," durable clothing and accessories for kids ages two to 10. AE.COM([R]), the online home of the brands of AEO, Inc. ships to more than 60 countries worldwide. "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 fourth quarter earnings. 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 the Company's operating, financial and capital plans may not be achieved and the risks described in the Risk Factor 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 Form 10-Q See 10-Q. 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] [TABLE OMITTED] [TABLE OMITTED] |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion