American Eagle Outfitters (NYSE: AEO) stock lost over 7.9% in the 5th March, 2020 (Source: Google finance) on poor fourth quarter of FY 19 as net income, fell to $4.8 million from $76.2 million, a year earlier. Same-store sales grew 2% in the fourth-quarter of 2019, edging past estimates of a 0.15% increase, due to a 26% increase at Aerie. By brand, American Eagle comps fell 3% compared to a 3% increase last year. Positive comps in digital were offset by fall in the number of in stores. Aerie comps rose 26% after a 23% increase in the prior year with significant strength across channels. AEO forecast first-quarter profit to be in the range of 20 cents and 22 cents per share, which is in line with market estimates of 21 cents per share. The company also projects comparable sales to rise in the low single digits, while analysts were projecting a 1.07% increase.
The company took a pre-tax charge of $76 million, related to impairment of 20 stores and costs, including severance. The company has opened 65 new stores in 2019 and closed five, bringing the total for the year to 332. The company is seeing very strong returns from the investments in new and remodeled stores as well, including exceptional growth trends in newer markets like Dallas, Houston and Denver.
Moreover, the company has expanded Aerie’s reach, increased the number of customers across both digital and stores. The company has posted ongoing growth in its signature jeans and bottoms categories where the company continues to gain meaningful market share and achieve record revenue. In tops, the company is planning inventories cautiously to strengthen pricing power and rebuild margins. In women’s, the company expects to see improvements through strong key item bear tops and Ts and to benefit from year-round fleece business. AEO in the fourth quarter of FY 19 has reported the adjusted earnings per share of 37 cents, while adjusted revenue growth of 5.6 percent to $1.31 billion in the fourth quarter of FY 19.