Home / Knowledge / News / Apparel/Garments / American Eagle Outfitters' gross profit soars 10% in Q1
American Eagle Outfitters' gross profit soars 10% in Q1
Jun '18
Courtesy: American Eagle Outfitters
Courtesy: American Eagle Outfitters
The gross profit of American Eagle Outfitters in the first quarter of fiscal 2018 has increased 10 per cent to $304 million from $278 million. The gross margin rate increased to 37.0 per cent of revenue, compared to 36.5 per cent last year, reflecting rent leverage and a favourable markdown rate, partially offset by increased digital delivery expense.

For the reported period, the company's total net revenue went up 8 per cent to $823 million compared to $762 million last year. The consolidated comparable sales increased 9 per cent over the comparable period ending May 6, 2017.

Selling, general and administrative expense of $210 million leveraged to 25.5 per cent as a rate to revenue due to strong comparable sales. Higher store compensation and incentive expense drove the majority of the increase from $195 million last year.

In the first quarter, capital expenditures totaled $47 million, with more than half related to store re-modeling projects and new openings, and the balance to support the digital business, omni-channel tools and general corporate maintenance. Depreciation expense increased 4 per cent to $42 million from $40 million last year, leveraging to 5.1 per cent as a rate to revenue.

Operating income for the first quarter was $51 million, which included $1.6 million of restructuring charges, compared to $37 million last year. Adjusted operating income increased 23 per cent to $52 million from $42 million last year, leveraging to 6.4 per cent as a rate to revenue.

During the quarter, the company opened 4 American Eagle stores and closed 2, ending with 935 American Eagle stores, including 118 Aerie side-by-side locations. Additionally, the company opened 1 Aerie stand-alone store and closed 1, ending with 109 Aerie stand-alone stores. Internationally, the company ended the quarter with 217 licensed stores.

"I'm very pleased to see our momentum continue. The first quarter marked our 13th consecutive quarter of positive comparable sales, leading to an increased operating margin and earnings growth, which exceeded our expectations. American Eagle leveraged strong brand equity and its dominant jeans business to deliver comparable sales gains across brick and mortar stores and e-commerce. After starting a body positivity movement, Aerie is posting record growth rates and striking a real emotional connection with its expanding customer base. We are highly focused on our strategic plan, centered on expanding American Eagle, accelerating Aerie’s growth, elevating the customer experience and delivering strong financial returns," Jay Schottenstein, chief executive officer, said. (RR)

Fibre2Fashion News Desk – India

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