American Eagle Outfitters Inc. (AEO, Financial) reported strong second-quarter earnings before the opening bell on Wednesday, but disappointing third-quarter guidance sent shares lower.
The Pittsburgh-based specialty apparel retailer posted earnings of 34 cents per share, a significant increase from 12 cents a year ago. Revenue grew 14% to $965 million, receiving a $40 million boost as a result of a shifted retail calendar.
American Eagle’s same-store sales grew 9% due to an increase in demand from consumers gearing up to start a new school year. While overall same-store sales growth beat analyst estimates, comparable sales of its Aerie brand fell short of expectations for the first time in at least two years. The intimates and lingerie brand saw same-store sales growth of 27%, which was just shy of the 30% increase analysts were anticipating.
In a statement, CEO Jay Schottenstein commented on the company’s performance, saying it exceeded expectations by “delivering record sales and 79% growth in adjusted earnings.”
“This marked our 14th consecutive quarter of comparable sales growth, with the American Eagle and Aerie brands posting positive results across both stores and e-commerce,” he said. “Driven by exceptional product, teamwork and execution, it’s gratifying to see strength throughout our business, as we capitalize on the broad appeal of our brands and leading merchandise assortments.”
For the third quarter, the company forecast earnings of 45 cents to 47 cents per share. Thomson Reuters was projecting earnings of 49 cents per share.
With a $4.19 billion market cap, shares of American Eagle tumbled nearly 12% on Wednesday morning to around $24.03. According to GuruFocus, the stock has climbed approximately 25% year to date.
Disclosure: No positions.
