Aug. 20--American Eagle Outfitters managed to beat analysts' expectations for second-quarter earnings, but the South Side teen clothing chain's interim CEO said the company still isn't performing up to its potential.
The retailer this morning reported a profit of $5.8 million, or 3 cents per share, far off the $19.6 million, or 10 cents per share, seen during the same period a year ago.
But analysts had been looking, on average, for earnings per share to be flat to last year, according to Thomson Financial, so the company's shares rose in pre-market trading.
Total revenue dropped 2 percent to $711 million from $727 million last year, and sales in stores that have been open at least a year fell 7 percent during the three months ended Aug. 2. That follows a similar 7 percent drop in the second quarter of last year.
"Although the second quarter results were slightly ahead of our expectations, they do not reflect our potential," said Jay Schottenstein, the company's longtime chairman who has been serving as interim CEO since earlier this year when American Eagle parted ways with its chief executive of two years.
"We did, however, make significant progress on our priorities to build a sustainable path to higher profitability," Mr. Schottenstein said. "We successfully cleared through spring and summer merchandise, and entered the second half of the year in a good inventory position."
In a report Tuesday on several specialty retailers, Jefferies analyst Randal J. Konik wrote that American Eagle may start to benefit from improving trends in teen clothing retail. "We anticipate more meaningful recovery in [the second half of the year] with a new CEO likely announced, easing sales and margin compares, favorable supply rebalancing, merchandising improvement and moderating promos through more balanced inventory."
During the second quarter, American Eagle opened five of its namesake stores in North America and 10 factory stores, in addition to three stores in Mexico and two in China. The company closed five stores, including two of its aerie intimates clothing stores. Seven international licensed stores were added.
For the year, American Eagle plans to close about 50 of its namesake stores and 25 aerie stores in North America.
The company has said that it needs to adjust its store fleet to accommodate shifts in shopping patterns, at a time when more sales are coming online.
Teresa F. Lindeman: firstname.lastname@example.org or at 412-263-2018.
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