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EXHIBIT 99.1

AMERICAN EAGLE OUTFITTERS

REPORTS FOURTH QUARTER 2011 RESULTS

Pittsburgh, March 7, 2012—American Eagle Outfitters, Inc. (NYSE:AEO) today announced earnings for the fourth quarter ended January 28, 2012 of $0.26 per diluted share. Adjusted earnings for the fourth quarter ended January 28, 2012 were $0.35 per diluted share, which excludes store impairment charges and executive transition costs of $0.07 and $0.02 per diluted share, respectively. This compares to earnings of $0.44 per diluted share last year.

The company also announced earnings for the fiscal year ended January 28, 2012 of $0.77 per diluted share. Adjusted earnings for the fiscal year ended January 28, 2012 were $0.86 per diluted share, which excludes store impairment charges and executive transition costs of $0.07 and $0.02 per diluted share, respectively. Adjusted income from continuing operations for the fiscal year ended January 29, 2011 was $1.02 per diluted share, which excluded a realized loss from the sale of investment securities of $0.12 per diluted share. Please see the following tables for a complete reconciliation of GAAP to non-GAAP earnings per diluted share from continuing operations for all periods.

Fourth Quarter Results

Total sales for the quarter increased 14% to $1.04 billion, compared to $916 million last year. Fourth quarter comparable store sales increased 10%, compared to a 7% decrease last year. Including AEO Direct sales, comparable store sales increased 11%. For additional comparable store sales information for the period, see the accompanying table.

Gross profit was $356 million, or 34.1% as a rate to sales, compared to $361 million, or 39.4% as a rate to sales, last year. The gross margin decline was due to a lower merchandise margin. Average unit cost increases, driven by higher product costs, resulted in approximately half of the 610 basis point decline in merchandise margin. Increased markdowns, required to drive sales during peak Holiday shopping periods, contributed the balance of the decline. Buying, occupancy and warehousing costs improved 80 basis points as a rate to sales, primarily due to top line growth driven by the 10% comparable store sales increase.

Selling, general and administrative expense was $220 million, compared to $194 million last year, and includes $6 million of executive transition costs. As a rate to sales, SG&A improved 10 basis points to 21.1%, compared to 21.2% last year. The increase in SG&A expense is due to variable expense related to the sales increase and a planned investment in advertising.

During the quarter, the company recorded asset impairment charges of $21 million primarily related to aerie stores.

Operating income for the quarter was $80 million, compared to $134 million last year.


Fiscal 2011 Results—Continuing Operations

Total sales for the year increased 6% to $3.16 billion, compared to $2.97 billion last year. Fiscal 2011 comparable store sales increased 3%, compared to a 1% decrease last year, and were driven by our key item promotional strategy that began in the second half of the year. Including AEO Direct sales, comparable store sales increased 4%. For additional comparable store sales information for the period, see the accompanying table.

Gross profit was $1.13 billion, or 35.7% as a rate to sales, compared to $1.17 billion, or 39.5% as a rate to sales, last year. The merchandise margin rate declined 360 basis points. For the year, higher product costs were the primary driver in the merchandise margin decrease with increased markdowns from promotions contributing to the balance of the decline. Buying, occupancy and warehousing costs increased 20 basis points, primarily due to an increase in rent.

Selling, general and administrative expense increased 3% to $736 million, compared to $713 million last year. As a rate to sales, SG&A improved 70 basis points to 23.3%, compared to 24.0% last year. Expense reduction efforts, offset by new store growth, variable expense related to the sales increase and a planned advertising investment contributed to the improvement in SG&A rate.

Operating income for the quarter was $231 million, compared to $317 million last year.

AEO Direct

In the fourth quarter, online sales increased 18%, compared to a 4% increase last year. For the year, sales increased 15% to $385 million, compared to $334 million last year. The company’s online business includes ae.com, aerie.com and 77kids.com.

Inventory

Total merchandise inventories at the end of the fourth quarter were $378 million, an increase of 24% on a cost per foot basis, due in part to a high single-digit increase in the average unit cost. First quarter ending inventory cost is expected to moderate as compared to the back half of 2011 and cost per foot is planned to increase in the mid teens.

Capital Expenditures

For the fourth quarter, capital expenditures were $3 million, compared to $19 million last year. Fiscal 2011 capital expenditures totaled $100 million, compared to $84 million last year. For Fiscal 2012, the company expects capital expenditures to be approximately $100 million.

Real Estate

For the year, total square footage increased 1% and is expected to decrease slightly in 2012, reflecting 15 store openings, offset by 20 to 30 store closures. For additional fourth quarter 2011 actual and 2012 real estate information, see the accompanying table.


Cash and Investments

The company ended the fourth quarter with total cash and investments of $746 million. During the year, the company repurchased 1.4 million shares for $15 million. Additionally, the company paid cash dividends of $86 million.

Future Outlook

For the year, the company is planning a modest sales increase, and margin improvement. Increased product costs will continue to pressure margins in the first half of the year, and lower products costs should benefit margins in the second half. The company is also targeting lower markdowns driven by improved inventory productivity. The company expects to provide annual EPS guidance along with the first quarter earnings announcement in May.

February provided a solid start to the first quarter of 2012, with positive comps driven by well-balanced selling of spring product and clearance. However, the company’s outlook remains cautious with spring breaks and Easter still ahead. First quarter EPS guidance of $0.08 to $0.10 per diluted share assumes continued margin pressure from product costs, higher markdowns and the potential for increased promotions.

Conference Call Information

At 9:00 a.m. Eastern Time on March 7, 2012, 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. Anyone unable to listen to the call can access a replay beginning March 7, 2012 at 12:00 p.m. Eastern Time through March 28, 2012. To listen to the replay, dial 1-877-870-5176, or internationally dial 1-858-384-5517, and reference confirmation code 372065. 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 diluted share (“non-GAAP” or “adjusted”). This measure is not based on any standardized methodology prescribed by U.S. 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 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® brand targets 15 to 25 year old girls and guys, with 911 stores in the U.S. and Canada and online at www.ae.com. aerie® by american eagle offers Dormwear® and intimates collections for the AE® girl, with 158 standalone stores in the U.S. and Canada and online at www.aerie.com. The latest brand, 77kids® by american eagle®, is available online at www.77kids.com, as well as at 21 stores across the nation. The 77kids brand offers “kid cool,” durable clothing and accessories for kids ages zero to 14. AE.COM®, the online home of the brands of AEO, Inc. ships to 77 countries worldwide.


“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, specifically regarding first quarter 2012 results. 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 and Form 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.

 

CONTACT:       American Eagle Outfitters Inc.

            Judy Meehan, 412-432-3300


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     January 28,     January 29,  
     2012     2011  
     (unaudited)        

ASSETS

    

Cash and cash equivalents

   $ 719,545      $ 667,593   

Short-term investments

     25,499        67,102   

Merchandise inventory

     378,426        301,208   

Accounts receivable

     40,310        36,721   

Prepaid expenses and other

     74,947        53,727   

Deferred income taxes

     48,761        48,059   
  

 

 

   

 

 

 

Total current assets

     1,287,488        1,174,410   
  

 

 

   

 

 

 

Property and equipment, net

     582,162        643,120   

Intangible assets, net

     39,832        7,485   

Goodwill

     11,469        11,472   

Non-current deferred income taxes

     13,467        19,616   

Other assets

     16,384        23,895   
  

 

 

   

 

 

 

Total Assets

   $ 1,950,802      $ 1,879,998   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Accounts payable

   $ 183,783      $ 167,723   

Accrued compensation and payroll taxes

     42,625        34,954   

Accrued rent

     76,921        70,390   

Accrued income and other taxes

     20,135        32,468   

Unredeemed gift cards and gift certificates

     44,970        41,001   

Current portion of deferred lease credits

     15,066        16,203   

Other current liabilities and accrued expenses

     21,901        25,098   
  

 

 

   

 

 

 

Total current liabilities

     405,401        387,837   
  

 

 

   

 

 

 

Deferred lease credits

     71,880        78,606   

Non-current accrued income taxes

     35,471        38,671   

Other non-current liabilities

     21,199        23,813   
  

 

 

   

 

 

 

Total non-current liabilities

     128,550        141,090   
  

 

 

   

 

 

 

Commitments and contingencies

     —          —     

Preferred stock

     —          —     

Common stock

     2,496        2,496   

Contributed capital

     552,797        546,597   

Accumulated other comprehensive income

     28,659        28,072   

Retained earnings

     1,771,464        1,711,929   

Treasury stock

     (938,565     (938,023
  

 

 

   

 

 

 

Total stockholders’ equity

     1,416,851        1,351,071   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,950,802      $ 1,879,998   
  

 

 

   

 

 

 

Current Ratio

     3.18        3.03   


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share amounts)

(unaudited)

 

$00,00,000 $00,00,000 $00,00,000 $00,00,000
     13 Weeks Ended  
     January 28,      % of     January 29,      % of  
     2012      Sales     2011      Sales  

Net sales

   $ 1,042,727         100.0   $ 916,088         100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     687,175         65.9     554,842         60.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     355,552         34.1     361,246         39.4

Selling, general and administrative expenses

     219,655         21.1     194,009         21.2

Loss on impairment of assets

     20,730         2.0     —           0.0

Depreciation and amortization

     34,893         3.3     33,123         3.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     80,274         7.7     134,114         14.6

Other income, net

     338         0.0     1,027         0.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     80,612         7.7     135,141         14.7

Provision for income taxes

     29,328         2.8     48,103         5.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 51,284         4.9   $ 87,038         9.5
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income per basic share

   $ 0.26         $ 0.45      

Net income per diluted share

   $ 0.26         $ 0.44      

Weighted average common shares outstanding—basic

     193,798           194,878      

Weighted average common shares outstanding—diluted

     195,913           196,789      

 

$00,00,000 $00,00,000 $00,00,000 $00,00,000
     52 Weeks Ended  
     January 28,      % of     January 29,     % of  
     2012      Sales     2011     Sales  

Net sales

   $ 3,159,818         100.0   $ 2,967,559        100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     2,031,477         64.3     1,796,600        60.5
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     1,128,341         35.7     1,170,959        39.5

Selling, general and administrative expenses

     735,828         23.3     713,197        24.0

Loss on impairment of assets

     20,730         0.7     —          0.0

Depreciation and amortization

     140,647         4.4     140,501        4.8
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     231,136         7.3     317,261        10.7

Realized loss on sale of investment securities

     —           0.0     (24,426     -0.8

Other income, net

     5,874         0.2     2,249        0.0
  

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     237,010         7.5     295,084        9.9

Provision for income taxes

     85,305         2.7     113,150        3.8
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from continuing operations

     151,705         4.8     181,934        6.1

Loss from discontinued operations, net of tax

     —           0.0     (41,287     -1.4
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 151,705         4.8   $ 140,647        4.7
  

 

 

    

 

 

   

 

 

   

 

 

 

Basic income per common share:

         

Income from continuing operations

   $ 0.78         $ 0.91     

Loss from discontinued operations

     —             (0.21  
  

 

 

      

 

 

   

Net income per basic share

   $ 0.78         $ 0.70     
  

 

 

      

 

 

   

Diluted income per common share:

         

Income from continuing operations

   $ 0.77         $ 0.90     

Loss from discontinued operations

     —             (0.20  
  

 

 

      

 

 

   

Net income per diluted share

   $ 0.77         $ 0.70     
  

 

 

      

 

 

   

Weighted average common shares outstanding—basic

     194,445           199,979     

Weighted average common shares outstanding—diluted

     196,314           201,818     

AMERICAN EAGLE OUTFITTERS, INC.

GAAP TO NON-GAAP EPS RECONCILIATION

(unaudited)

 

     13 Weeks Ended      52 Weeks Ended  
     January 28, 2012      January 28, 2012  

GAAP diluted EPS

   $ 0.26       $ 0.77   

Add back: Executive transition costs

     0.02         0.02   

Add back: Store impairment charges

     0.07         0.07   
  

 

 

    

 

 

 

Non-GAAP diluted EPS

   $ 0.35       $ 0.86   
  

 

 

    

 

 

 
     13 Weeks Ended      52 Weeks Ended  
     January 29, 2011      January 29, 2011  
  

 

 

    

 

 

 

GAAP diluted EPS from continuing operations

   $ 0.44       $ 0.90   

Add back: Realized loss on sale of investment securities

     —           0.12   
  

 

 

    

 

 

 

Non-GAAP diluted EPS from continuing operations

   $ 0.44       $ 1.02   
  

 

 

    

 

 

 


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

     52 Weeks Ended  
     January 28,     January 29,     January 30,  
     2012     2011     2010  

Operating activities:

      

Net income

   $ 151,705      $ 140,647      $ 169,022   

Loss from discontinued operations

     —          41,287        44,376   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations

     151,705        181,934        213,398   

Adjustments to reconcile income from continuing operations to net cash from operating activities:

      

Depreciation and amortization

     143,156        145,548        139,832   

Share-based compensation

     12,341        25,457        34,615   

Provision for deferred income taxes

     4,207        11,885        (36,027

Tax benefit from share-based payments

     356        15,648        7,995   

Excess tax benefit from share-based payments

     (373     (12,499     (2,812

Foreign currency transaction (gain) loss

     (325     117        6,477   

Loss on impairment of assets

     20,730        —          —     

Realized investment losses

     —          25,674        3,689   

Changes in assets and liabilities:

      

Merchandise inventory

     (77,311     18,713        (33,699

Accounts receivable

     (3,589     (3,790     6,656   

Prepaid expenses and other

     (21,261     (9,045     12,916   

Other assets

     2,444        (1,380     1,146   

Accounts payable

     17,934        5,232        8,358   

Unredeemed gift cards and gift certificates

     3,979        1,713        (3,591

Deferred lease credits

     (7,837     (7,451     4,667   

Accrued compensation and payroll taxes

     7,677        (19,618     25,841   

Accrued income and other taxes

     (15,515     11,999        12,858   

Accrued liabilities

     938        12,457        (1,993
  

 

 

   

 

 

   

 

 

 

Total adjustments

     87,551        220,660        186,928   
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

   $ 239,256      $ 402,594      $ 400,326   

Investing activities:

      

Capital expenditures for property and equipment

     (100,135     (84,259     (127,080

Acquisition of intangible assets

     (34,187     (2,801     (2,003

Purchase of available-for-sale securities

     (193,851     (62,797     0   

Sale of available-for-sale securities

     240,797        177,472        80,353   
  

 

 

   

 

 

   

 

 

 

Net cash (used for) provided by investing activities from continuing operations

   $ (87,376   $ 27,615      $ (48,730

Financing activities:

      

Payments on capital leases

     (3,256     (2,590     (2,015

Repayment of note payable

     —          (30,000     (45,000

Repurchase of common stock as part of publicly announced programs

     (15,160     (216,070     —     

Repurchase of common stock from employees

     (2,189     (18,041     (247

Net proceeds from stock options exercised

     5,098        7,272        9,044   

Excess tax benefit from share-based payments

     373        12,499        2,812   

Cash used to net settle equity awards

     —          (6,434     (1,414

Cash dividends paid

     (85,592     (183,166     (82,985
  

 

 

   

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

   $ (100,726   $ (436,530   $ (119,805
  

 

 

   

 

 

   

 

 

 

Effect of exchange rates on cash

     798        1,394        3,030   
  

 

 

   

 

 

   

 

 

 

Cash flows of discontinued operations

      

Net cash used for operating activities

     —          (21,434     (13,864

Net cash used for investing activities

     —          (6     (339

Net cash used for financing activities

     —          —          —     

Effect of exchange rate on cash

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Net cash used for discontinued operations

   $ —        $ (21,440     (14,203
  

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

   $ 51,952      $ (26,367   $ 220,618   

Cash and cash equivalents—beginning of period

     667,593        693,960        473,342   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents—end of period

   $ 719,545      $ 667,593      $ 693,960   
  

 

 

   

 

 

   

 

 

 


AMERICAN EAGLE OUTFITTERS, INC.

COMPARABLE STORE SALES RESULTS BY BRAND

(unaudited)

 

     Fourth Quarter
Comparable Store Sales
 
     2011     2010  

American Eagle Outfitters, Inc.

     10     -7

AE Brand

     10     -7

aerie

     6     -6

AEO Direct (1)

     18     4
     Fiscal Year
Comparable Store Sales
 
     2011     2010  

American Eagle Outfitters, Inc.

     3     -1

AE Brand

     3     -1

aerie

     2     4

AEO Direct (1)

     15     0

 

(1) AEO Direct is comprised of ae.com, aerie.com and 77kids.com. AEO Direct is not included in consolidated comparable store sales.


AMERICAN EAGLE OUTFITTERS, INC.

REAL ESTATE INFORMATION

(unaudited)

 

     Fourth Quarter   Year-to-date   Fiscal 2012
     Fiscal 2011   Fiscal 2011   Guidance

Consolidated stores at beginning of period

   1,116   1,086   1,090

Consolidated stores opened during the period

      

AE Brand

     11   14

aerie

     10  

77kids

     12   1

Consolidated stores closed during the period

      

AE Brand

   (26)   (29)   (20) - (30)
  

 

 

 

 

 

Total consolidated stores at end of period

   1,090   1,090   1,075 - 1,085

Stores remodeled and refurbished during the period

   1   106   100

Total gross square footage at end of period

   6,398,034   6,398,034   Not Provided