American Eagle Outfitters beats revenue outlook, reinstates dividend

American Eagle Outfitters, Inc. (AEO) reported net revenue of 1.5 billion dollars, down 1 percent in the fourth quarter of 2022. According to Reuters analysts on average had expected revenue of 1.48 billion dollars. Brand revenue declined 2 percent, exceeding company expectations for a mid-single digit decline. The company also reinstated its quarterly cash dividend.

Full year net revenue of 5 billion dollars was flat to fiscal year 2021, while brand revenue declined approximately 3 percent.

Fourth quarter Aerie revenue of 464 million dollars, the company said in a release, rose 8 percent versus fourth quarter 2021, while comp sales declined 2 percent. American Eagle revenue of 962 million dollars declined 8 percent and comp sales declined 9 percent versus fourth quarter 2021.

Full year Aerie revenue of 1.5 billion dollars rose 9 percent on top of 39 percent growth last year. American Eagle revenue of 3.3 billion dollars declined 8 percent following a 30 percent increase last year. Compared to the pre-pandemic fiscal year 2019 base, Aerie revenue increased 88 percent and AE revenue declined 6 percent.

“I am proud of how our teams navigated through unanticipated macro challenges this year, which pressured top line demand as we lapped record strength in 2021. In response, we took aggressive actions early in the year on inventory and spending to strengthen margins and increase free cash flow. We ended 2022 in a healthy financial position and I’m pleased to reinstate our quarterly cash dividend,” said Jay Schottenstein, AEO’s executive chairman and CEO.

Review of AEO’s fourth quarter and FY22 results

Consolidated fourth quarter store revenue was flat, while digital revenue declined 9 percent. Compared to pre-pandemic fourth quarter 2019, store revenue increased 5 percent and digital revenue increased 19 percent.

Fourth quarter gross profit of 507 million dollars increased approximately 4 percent and reflected a gross margin rate of 33.9 percent compared to 32.4 percent last year. GAAP operating income was 74 million dollars, while non-GAAP operating income of 96 million dollars, reflected a 6.4 percent margin. GAAP diluted EPS was 28 cents, while non-GAAP diluted EPS was 37 cents.

Consolidated full year store revenue declined 2 percent and digital revenue declined 7 percent. Compared to the pre-pandemic fiscal year 2019 base, revenue was up across channels.

Full year gross profit of 1.7 billion dollars decreased 12 percent and reflected a gross margin rate of 35 percent compared to 39.7 percent last year. GAAP Operating income was 247 million dollars and non-GAAP operating income was 269 million dollars and reflected a 5.4 percent operating margin. GAAP EPS was 64 cents and non-GAAP EPS was 97 cents.

For the first quarter, management’s outlook reflects revenue in the range of flat to up low-single digits with operating income approximately flat to last year. For the full-year, management’s outlook reflects revenue in the range of flat to up low-single digits with operating income in the range of 270 dollars to 310 million dollars, compared to adjusted operating income of 269 million dollars in 2022.