American Eagle Outfitters, Inc. (NYSE:AEO) Q3 2019 Earnings Conference Call - Final Transcript

Dec 11, 2019 • 09:00 am ET

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American Eagle Outfitters, Inc. (NYSE:AEO) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Chad Kessler

by a successful back-to-school season. Comparable sales increased 2% building on a 5% increase last year. We posted comp growth in both stores and online, strong traffic and increased transactions were key drivers of our sales performance. American Eagle jeans led the business posting the 25th straight quarter of record sales. Jeans were positive across genders with new styles leading the way. Our new women's Curvy collection is driving incremental growth.

As we continue to fuel our leading jeans business, we have additional newness and innovation on the horizon and see a significant growth runway ahead. For example, this week, we launched a new women's Dream Jean and new AirFlex styles in men's. Other positive apparel call outs include men's and women's fleece and women's skirts and dresses.

Last quarter, I discussed, strong performance for our accessories business and that momentum continued in the third quarter. Although still small, accessories was the fastest growing women's -- AE women's classification and an above average performance in men's as well. I was also pleased with our initial launch of MOOD, AE's new Wellness And Personal care line. While still early days, we are happy with the customer response and see ample opportunities to expand this product line in the future.

Along with many wins there were a few areas that fell short of our expectations. And missed the plan for certain men's and women's tops categories led to increased markdowns and higher promotional activity. Product challenges in tops have continued and will pressure the fourth quarter. We have been working hard to strengthen areas of underperformance with a focus on ensuring product innovation, quality, style and value. We are also planning a better balance between sales and inventory growth as we move forward.

So I'm clearly not satisfied with product mixes. I remain pleased with many of our core businesses and the strength of our brand. Our brand in health metrics are favorable with a growing active customer base and rising retention rate. I can assure you that we are focused on strengthening our business. We have a track record of quickly course correcting and that is our top priority. There is still a substantial portion of the quarter ahead and we are focused on delivering the best to our customers, while ensuring that we clear through excess inventory and enter the spring season well positioned.

Now, I'll turn it over to Jen.

Executive
Jennifer Foyle

Thanks, Chad. And good morning everyone. I'm thrilled to report that Aerie delivered another outstanding quarter. Total third quarter revenue increased 26%, fueled by a comparable sales increase of 20% and the contribution from new stores. Comp sales growth built on a 32% increase last year, resulting in a two-year stack of 52%. The quarter also marked the 20th consecutive quarter of double-digit sales growth. We continue to gain meaningful market share in a healthy manner. Our customer base expanded as we attracted new customers to our brand and we also saw an increase in the average spend.

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