American Eagle Outfitters, Inc. (NYSE:AEO) Q2 2018 Earnings Conference Call Transcript
Aug 29, 2018 • 09:00 am ET
Greetings, and welcome to the American Eagle Outfitters Second Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host, Ms. Judy Meehan, VP of IR for American Eagle Outfitters. Thank you. You may begin.
Good morning, everyone. Joining me today for our prepared remarks are Jay Schottenstein, CEO; Chad Kessler, Global Brand President of the AE Brand; Jen Foyle, Global Brand President of Aerie; and Bob Madore, CFO.
(Forward-Looking Cautionary Statements)
Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted to the Company's website at ae.com in the Investor Relations section. Here you can also find the second quarter investor presentation.
Consistent with the retail calendar and the 53rd week last year, the second quarter's financial report and discussion today reflects the quarter ended August 4, 2018, compared to the quarter ended July 29, 2017. Comparable sales are shifted to reflect the comparable period of the quarter ended August 4, 2018 against August 5, 2017.
And now, I'd like to turn the call over to Jay.
Okay. Thank you, Judy, and good morning, everyone, and thanks for joining us today. I am extremely pleased to see strong business momentum continue. In the second quarter, comparable sales increased 9% and adjusted EPS rose 79% to $0.34 per share. These results exceeded our expectations. AE produced a 7% comp increase and Aerie grew 27%.
In addition to strong digital sales, each brand delivered positive store comps for the third quarter in a row. And demonstrating incredible consistency, this was the 14th consecutive quarter of positive comps for AEO, Inc. Great talent, strong brands and product leadership are fueling our success. Our healthy cash flow and this year's additional financial flexibility from tax reform has enabled us to continue to invest in our people, our brands and in the customer experience. I'm proud of the outstanding progress over the past 4 years. Our teams have successfully transitioned AEO during a period of real disruption in the retail sector. We have grown into a multibrand company with two of the leading brands in the industry, American Eagle and Aerie.
Our core strategies continue to drive results. Those include, leverage our leading position in AE jeans and bottoms to expand our market share, accelerate Aerie growth, strengthen our customer connection and deliver financial returns. I'd like to go into some detail on how our execution against these strategies fueled our second quarter results.
First, within the AE brand. We achieved our 20th straight quarter of record jeans sales. The team remains consistently focused on developing the highest quality and newest fabrics. We offer compelling fits and styles that strongly resonate with our core consumer and attract new customers to the brand. Our