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American Eagle Outfitters (AEO) Gains After 3Q Results, 4Q Guidance

 November 28, 2012 08:36 AM

(By Balaseshan) American Eagle Outfitters (NYSE: AEO) reported in-line quarterly earnings on a 11% growth in sales. Further, the specialty retailer issued fourth quarter earnings forecast that came in-line with Street's view.

Earnings from continuing operations for the third quarter were $82.44 million or $0.41 per share, up from $57.95 million or $0.30 per share last year. Earnings per share (EPS) rose to $0.39 from $0.27.

Sales grew 11% to $910.37 million. Comparable sales including AEO Direct sales increased 10% for the third quarter.

Analysts, on average, polled by Thomson Reuters had expected profit of $0.39 per share on revenue of $873.26 million for the third quarter.

[Related -American Eagle Outfitters (NYSE:AEO) Q3 Earnings Preview: What To Watch?]

Gross margin increased 350 basis points to 41.6%. Higher product costs and lower markdowns led to a 290 basis point improvement in the merchandise margin. Buying, occupancy and warehousing costs leveraged 60 basis points due to strong sales.

Looking ahead into the fourth quarter, the company expects earnings of $0.54 to $0.56 per share, while Street predicts $0.55 per share. EPS guidance is based on comparable store sales growth of mid single-digits and excludes the potential impact of store impairment charges.

For the fiscal 2012, the company raised its EPS guidance from continuing operations to a range of $1.38 to $1.40 from previous forecast of $1.33 to $1.36, while Street analysts predict $1.32. The company continues to expect capital expenditures to be about $100 million.

[Related -The Gap Inc. (NYSE:GPS), L Brands Inc(NYSE:LTD): How November Comps Will Fare Post Black Friday?]

AEO closed Tuesday's regular trading at $19.39. The stock has been trading between $12.50 and $23.94 for the past 52 weeks.

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