AEO's 4th-Quarter Profit Rises 85%

Los Angelas, CA -- (SBWIRE) -- 03/06/2013 -- American Eagle Outfitters Inc.'s (NYSE:AEO) fiscal fourth-quarter earnings jumped 85% as the teen retailer reported higher revenue, though a weak start to the year sent shares tumbling.

Shares fell 9.3% to $20.45 in recent pre-market trading as the company guided for per-share first-quarter earnings below analysts estimates and said it expects same-store sales for the quarter in the negative mid-single digit range. The stock is up 54% in the last 12 months.

Citing macroeconomic headwinds and unfavorable weather affecting consumer spending in February, American Eagle forecast per-share earnings of 16 cents to 19 cents for the current quarter. Analysts polled by Thomson Reuters were recently looking for 25 cents a share.

The company also said its board authorized a new share repurchase program of 20 million shares and raised the quarterly cash dividend to 12.5 cents a share, a 14% increase. The company recently had about 198 million shares outstanding, according to FactSet.

Teen retailers like American Eagle have been operating in an intensely competitive environment marked by bargain-hunting consumers, deep promotions, and the rise of fast-fashion peers like Swedish retailer Hennes & Mauritz AB (HM-B.SK), known as H&M, and Forever 21 Inc.

American Eagle, for its part, has emerged as a key destination for fashion-conscious teens and standout in the teen sector. But it could be harder for American Eagle to maintain its fashion edge over other teen retailers, like high-end peer Abercrombie & Fitch Co. (ANF) and bargain player Aeropostale Inc. (ARO), going forward. Abercrombie, for one, is working to regain its footing as it slowly brings in more fashion, such as colored bottoms and woven tops, to its offerings and reins in inventory. In February, Abercrombie reported fiscal fourth-quarter earnings surged, though it guided for a weak start to the fiscal year.

For the quarter ended Feb. 2, American Eagle reported a profit of $94.8 million, or 47 cents a share, up from $51.3 million, or 26 cents a share a year earlier. Excluding a four-cent per-share tax benefit and restructuring and store impairment charges of 12 cents a share, earnings were 55 cents a share compared with 39 cents. The company in January had reiterated its forecast for earnings of 54 cents to 56 cents a share.

Net sales rose 8.6% to $1.12 billion, while same-store sales rose 4%, including sales from its online stores, compared with an 11% increase for the year-ago period. The company in January had forecast same-store sales growth in the mid single-digits, while analysts forecast net sales of $1.12 billion.

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