American Eagle Outfitters (NYSE:AEO) reported a strong finish to its fiscal year with fourth-quarter earnings and revenue that topped Wall Street expectations, sending its shares up 13% in response to the upbeat results and the unveiling of an ambitious three-year growth strategy.
The retailer announced adjusted earnings per share (EPS) of $0.61 for the quarter, surpassing the analyst consensus of $0.50. Revenue reached $1.7 billion, exceeding the $1.66 billion estimate and representing a 12% increase compared to the same quarter last year. The company attributed the performance to robust sales across its brands, with Aerie achieving an all-time high in quarterly revenue, up 13%, and American Eagle posting a 6% increase in comparable sales.
CEO Jay Schottenstein credited the company's strategic focus and profit improvement initiatives for the positive results, highlighting strong merchandise collections that resonated with customers. "We are entering 2024 with momentum and from a position of strength," Schottenstein remarked, pointing to a healthy balance sheet and early signs of success from the company's new strategy aimed at delivering industry-leading earnings growth and shareholder returns.
Looking ahead, American Eagle provided fiscal 2024 operating income guidance of $445 to $465 million, based on 2 to 4% revenue growth, which takes into account a one-point headwind from the retail calendar shift. For the first quarter of 2024, the company forecasts operating income between $65 to $70 million, with revenue expected to rise in the mid-single digits, including a one-point benefit from the calendar shift.
The Powering Profitable Growth plan, announced alongside the earnings, is designed to achieve mid-to-high teens annual operating income expansion on 3-5% annual revenue growth over the next three years, targeting an approximate 10% operating margin. The strategy focuses on amplifying the American Eagle and Aerie brands, executing with financial discipline, and optimizing operations.
Schottenstein expressed excitement about the growth strategy, emphasizing the potential in casual apparel and activewear with the Aerie and OFFLINE brands, and a commitment to profit expansion supported by leading operating capabilities and new technologies.