American Eagle Q3 FY17 comparable sales up 3%

However, there was a decline in the gross profit to $375 million compared to $378 million last year with a gross margin rate of 39.0 per cent to revenue compared to 40.2 per cent last year. The reduction in margin rate was due to higher promotions and increased shipping costs associated with a strong digital business.

Selling, general and administrative expense declined $3 million, or 1 per cent to $217 million compared to $220 million last year. Positive sales combined with lower expenses drove to a rate of 22.6 per cent to revenue. Lower incentives and expense discipline were partially offset by higher wages.

For the reported period, operating income of $111 million includes $4 million of restructuring charges related to severance and a lease buy-out. The adjusted operating income of $115 million compared to $118 million last year with a rate of 11.9 per cent to revenue compared to 12.6 per cent last year.

"The third quarter produced record sales, sequential margin improvement and marked eleven straight quarters of comp sales growth. Digital sales continued to grow at a rapid pace, while we also saw store sales strengthen. These results validate our investments in product leadership, innovation, quality and brand equity. I’m very pleased to see strong momentum continue into the fourth quarter, positioning us well for the next few critical weeks of the holiday season," said Jay Schottenstein, chief executive officer.

In the third quarter, capital expenditures totaled $48 million. "We continue to expect fiscal year 2017 capital expenditures in the range of $160 to $170 million, with roughly half of the spend related to store remodeling projects and new openings, and the balance to support the e-commerce business, omni-channel tools and general corporate projects," a company press release said.

Fibre2Fashion News Desk – India