American Eagle Tops Q2 Expectations

reported better-than-expected earnings for the second quarter on Wednesday. The Pittsburgh, Pennsylvania-based company posted quarterly net income of $33.3 million, or $0.17 per share, compared to $5.8 million, or $0.03 per share, in the year-ago period. Its net revenue climbed 12 percent to $797.4 million. However, analysts were expecting earnings of $0.14 per share on revenue of $769.56 million. The average estimate among 13 Estimize users was for earnings of $0.16 per share and revenue of $770.43 million. Its comparable sales climbed 11 percent for the quarter. Its gross profit rose 20 percent to $285 million in the latest quarter, while gross margin rate expanded 230 basis points to 35.7 percent. At the end of the second quarter, total merchandise inventories rose 4 percent to $409 million, versus $393 million last year. American Eagle ended the quarter with $327 million in total cash and investments, versus $263 million last year. Jay Schottenstein, Interim CEO said, "I'm pleased to report another strong quarter, and to see positive momentum continue. The team is delivering exceptional execution, and our customers have taken notice of improvements to our merchandise and overall customer experience. Both American Eagle and Aerie delivered strong sales and earnings growth across channels. We have two of the best-positioned brands in the marketplace today, and we are well poised to capitalize on our strengths. We have vast opportunity for ongoing improvements and will strive to deliver continued growth and returns to our shareholders." For the third quarter, the company expects earnings of $0.28 to $0.31 per share, versus analysts' estimates of $0.28 per share. The company projects mid single-digit rise in comparable sales. American Eagle shares fell 3.72 percent to $17.59 in pre-market trading.