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Aerie powers American Eagle to best first-quarter sales in three years

American Eagle Outfitters says it expects current-quarter revenue and operating income to surpass last two years’ numbers, betting on high-growth brand Aerie that sells work-from-home favourites, lingerie and loungewear.

Shares of the Pittsburgh-based apparel retailer rose more than 5 per cent in after market trade on Wednesday, US time, as the company also beat Wall Street expectations for fourth-quarter revenue and profit.

“We’re seeing really good signs in terms of where we’re headed for the quarter,” CEO Jay Schottenstein told analysts.

The apparel retailer has been doubling down on investments in its Aerie brand, which includes comfortable leggings and bralettes, opening new stores and boosting its digital business.

American Eagle is also closing some of its underperforming stores and moving away from malls, where traffic has been thinning, and will open new stand-alone stores. The company plans to open 50 Aerie stores this year.

For the fourth quarter ended January 30, Aerie recorded a 25-per-cent rise in revenue from a year earlier, while digital revenue for the retailer surged 35 per cent.

“Aerie had an exceptional 2020….and (we) see significant future runway,” Schottenstein said.

The company forecast higher spending for fiscal 2021, as it plans investments in supply chain to ensure fast delivery and online features for the convenience of shoppers.

It expects annual capital expenditure to be in the range of US$250 million to $275 million, up from $128 million in 2020.

For the fourth quarter, total net revenue fell about 2 per cent to $1.29 billion, beating analysts’ average expectation of $1.28 billion, according to Refinitiv estimates.

Excluding one-time items, the company earned a profit of 39 cents per share, beating estimates of 36 cents.

Holiday-quarter earnings, however, fell about 25 per cent, weighed by underperforming stores and a charge of $103 million due to pandemic-related expenses.

  • Reporting by Aditi Sebastian and Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli, of Reuters.

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