Gross profit at American Eagle surges 13% in Q4FY15

10 Mar '15
3 min read

Gross profit at apparel retailer American Eagle Outfitters surged 13 per cent year over year in the fourth fiscal quarter ended January 31, 2015 driven primarily by reduced markdowns.

In the fourth quarter of fiscal 2015, gross profit rose 13 per cent over the same period of the previous fiscal to $376 million and grew 320 basis points to 35.1 per cent as a percentage of revenue.

According to American Eagle, the margin improvement was driven primarily by reduced markdowns and was partially offset by 90 basis points of rent deleverage.

“This was also combined with higher delivery costs related to an increase in direct orders, including orders fulfilled through our buy online ship from store program,” it said in a press release.

Total net revenue for the reporting quarter ascended slower at 3 per cent to $1.07 billion from $1.04 billion in the prior fiscal quarter, while consolidated comparable sales were flat.

SG&A expense of $227 million increased 5 per cent from last year and deleveraged 50 basis points to 21.2 per cent as a percentage of revenue.

“Planned investments in marketing and incentive compensation led to the increase and were partially offset by reductions in overhead and miscellaneous expenses,” the apparel marketer added.

Fourth quarter of fiscal 2015 operating income zoomed 31 per cent from the year earlier quarter to $112 million and operating margin expanded 230 basis points to 10.5 per cent.

EPS from continuing operations stood at $0.36 as against adjusted EPS of $0.27 last year, a hike of 33 per cent.

Total merchandise inventories at the end of the fourth quarter declined 4 per cent to $279 million compared to $292 million last year. At cost per foot, inventory decreased 5 per cent year over year.

In 2014, capex totaled $245 million, above expectations, due in part to incremental strategic omni-channel investments, including retail fulfillment as well as the pilot of the Oracle point of sale system.

The retailer expects capex to be approximately $150 million in 2015, which includes roll-out of point of sale system, completion of its new fulfillment centre, as well as investments in new and remodeled stores.

In the quarter under review, the apparel retailer company opened 6 new stores, including 3 stores in the United Kingdom, 2 stores in Mexico, and 1 store in Asia.

The company closed 42 locations, including 39 AE and 3 aerie stores. Five international licensed stores opened during the quarter, including the first stores in Indonesia and Thailand.

It ended the quarter with total cash and investments of $411 million compared to $429 million last year.

Fibre2fashion News Desk - India

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