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

Dec 11, 2019 • 09:00 am ET


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


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Q & A

Thank you. [Operator Instructions] Our first question comes from the line of Oliver Chen with Cowen & Company. Please proceed with your question.

Oliver Chen

Hi, thank you. Regarding men's and women's tops, what's the rationale for reasons for both -- both underperforming in both men's and women's, and what are your thoughts on the timing of digesting that and the nature of the problem in terms of the fall product versus spring? I would love your thoughts there. And a quick follow-up regarding Aerie and American Eagle, if you could articulate some of the key synergies between the two businesses that would be helpful as well? Thank you.

Chad Kessler

Sure. I think when you look at the men's and women's tops clearly, I'm not happy with the results that we saw in Q3 and as we said that continuing. I think it's a little bit different between the two genders. So in women, for Q3 -- in the total knits categories were actually -- when you look at fleece and knit tees and everything, we're pretty close to flat. We really have been suffering from a downtrend in woven shirts across both quarters, those trends are continuing. For Q1, I really feel like we've made good change to the assortment, but that said, we have planned in the quarter conservatively. We have a very responsive supply chain that we've talked to in the past. I feel like we have some great trends that go with our jeans going into Q1 and we will chase where we need to do to try to drive that business. And as we also said the accessories business continues to be really strong there in women's.

In men's, we've had inconsistency in the men's business for some time. We are working to evolve the men's assortment. I think some of those changes we made in tops have paid off. We've seen some really excitement in some of our knit and fleece categories. But I think some of the changes we made have been too fast for the customer. So for 2020, we are looking to find more balance in the assortment, similar to women's, we are taking a more conservative stance in Q1 in tops in men as we look to rebalance the assortment, and we will chase where it shows itself.

I think when you look at the two brands together, I think there is amazing -- there's great synergies. We share a lot of customers -- I think Aerie brings a lot of excitement to the total Company. I think the a loyalty we see with the AE customer in the retention rates and the love of our jeans also keeps customers coming back. But if you look at Aerie's expanded apparel, I would not say -- that's not the -- hasn't really negatively impacted AE. Like, if you look at fleece in general, right, that's a great category for both Aerie and American Eagle and both brands had record fleece businesses in Q3 in men