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American Eagle Outfitters Inc. has a market cap of $2.52 billion; its shares were traded at around $12.07 with a P/E ratio of 14.2 and P/S ratio of 0.8. The dividend yield of American Eagle Outfitters Inc. stocks is 3.3%. American Eagle Outfitters Inc. had an annual average earning growth of 15.5% over the past 10 years.AEO is in the portfolios of Richard Snow of Snow Capital Management, L.P., John Hussman of Hussman Economtrics Advisors, Inc., John Buckingham of Al Frank Asset Management, Inc., Westport Asset Management, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:Operating income for the 13 weeks ended May 1, 2010 was $13.1 million compared to $27.3 million last year. Operating income as a rate to sales was 2.0% for the 13 weeks ended May 1, 2010 compared to 4.5% for the 13 weeks ended May 2, 2009. Net income for the 13 weeks ended May 1, 2010 was $10.9 million compared to $22.0 million for the 13 weeks ended May 2, 2009. Net income per diluted share decreased 55% to $0.05 compared to $0.11 last year.
Gross profit for the 13 weeks ended May 1, 2010 increased 12% to $248.4 million, or 37.7% as a rate to net sales, compared to $220.9 million, or 36.1% as a rate to net sales last year. Included in gross profit for the 13 weeks ended May 1, 2010 was a loss for M+O of $9.3 million, which includes $2.4 million of inventory related charges, compared to a loss for M+O of $2.7 million last year.
Selling, general and administrative expenses for the 13 weeks ended May 1, 2010, increased approximately 14% to $181.2 million from $158.7 million and increased 160 basis points, as a percent to sales, to 27.5% from 25.9% last year. Included within selling, general and administrative expenses for the 13 weeks ended May 1, 2010 was $12.6 million of expenses related to the M+O wind down, which includes $5.4 million of severance and employee related expenses. This compares to selling, general and administrative expenses for M+O of $6.9 million last year.
The pre-tax loss from operations for M+O for 13 weeks ended May 1, 2010 increased $29.0 million to $40.5 million, compared to $11.5 million for the 13 weeks ended May 2, 2009. The increase is primarily due to pre-tax charges associated with the decision to close the M+O brand and the loss from operations for the 13 weeks ended May 1, 2010. The pre-tax charges consisted of $18.0 million of loss on impairment of assets related to the impairment of M+O stores, $5.4 million of severance and employee related charges recorded within selling, general and administrative expenses and $2.4 million of inventory charges recorded in cost of sales. The loss for M+O for the 13 weeks ended May 1, 2010 was $24.9 million, net of tax, or $0.12 per diluted share, compared to $7.1 million, net of tax, or $0.03 per diluted share, for the 13 weeks ended May 2, 2009.
We continue to expect the Fiscal 2010 cash outflow, net of associated tax benefits, to be approximately $10 million to $40 million. This is comprised of estimated pre-tax charges of approximately $32 million to $77 million, which includes lease-related items of approximately $18 million to $63 million, severance of approximately $10 million and other charges of approximately $4 million. Additionally, we estimate approximately $29 million of non-cash, pre-tax impairment charges and inventory write downs. The above estimates are preliminary and based on a number of significant assumptions and could change materially.
As a result of the discounted cash flow analysis, for the 13 weeks ended May 1, 2010, we recognized a net recovery of $1.1 million ($0.7 million, net of tax), which reduced the total cumulative impairment recognized in OCI as of May 1, 2010 to $9.2 million ($5.7 million, net of tax) from $10.3 million ($6.4 million, net of tax) at the end of Fiscal 2009. The reversal of temporary impairment was primarily driven by favorable changes in the discount rate. These amounts were recorded in OCI and resulted in an increase in the investments’ estimated fair values. No additional net impairment loss was recorded in earnings during the 13 weeks ended May 1, 2010.
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