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EXHIBIT 99.1

AMERICAN EAGLE OUTFITTERS

REPORTS 37% INCREASE IN THIRD QUARTER EPS

SALES INCREASED 11% TO $910 MILLION ON COMPARABLE STORE SALES GROWTH OF 10%

PITTSBURGH–November 28, 2012 - American Eagle Outfitters, Inc. (NYSE:AEO) today announced that income from continuing operations increased 37% to $0.41 per diluted share for the third quarter ended October 27, 2012, compared to $0.30 per diluted share for the comparable quarter last year. Due to the exit of the 77kids business, its results are presented as discontinued operations for all periods and are further discussed below. Net income for the third quarter, which includes a loss from discontinued operations, was $0.39 per diluted share, compared to $0.27 per diluted share last year.

Robert Hanson, chief executive officer stated, “Our third quarter reflected on-going business momentum, profitable sales growth, and a leading brand and product driven customer experience. We’re also pleased to see business strength carry into the fourth quarter and record results over Thanksgiving weekend. As we look forward, we are sharply focused on executing our strategy plan to drive future profitable growth and top tier shareholder returns.”

Third Quarter Results – Continuing Operations (Excluding 77kids)

 

   

Net sales increased 11% to a record $910 million, compared to $819 million last year.

 

   

Comparable store sales, including AE Direct, increased 10%, compared to a 7% increase last year.

 

   

Gross profit increased 21% to $379 million and increased 350 basis points to 41.6% as a rate to sales. Within gross margin, the merchandise margin improved 290 basis points primarily as a result of improved product costs and lower markdowns. Buying, occupancy and warehousing costs leveraged 60 basis points due to strong sales.

 

   

Selling, general and administrative expense of $219 million increased 140 basis points to 24.1% as a rate to sales. The increase related to incremental incentive compensation and variable selling expenses due to strong business results and a planned incremental investment in advertising.

 

   

Depreciation and amortization expense of $31 million decreased 80 basis points to 3.4% as a rate to sales.

 

   

Operating income increased 39% to $129 million. The operating margin expanded 290 basis points to 14.1%, the company’s best margin rate since 2008.

 

   

Other income of $3 million primarily relates to a settlement recovery from auction rate securities that were previously held.

 

   

EPS from continuing operations of $0.41 compares to $0.30 last year, a 37% increase.

77kids Update

On August 3, 2012, the company completed the sale of its children’s business, 77kids, which included store assets, the online business, inventory and a temporary license to use the 77kids name through January 15, 2013.

In conjunction with the sale, the company incurred total year-to-date after-tax losses of approximately $32 million, which includes both operational and exit costs, of which $4 million, or $0.02 per share, was incurred in the third quarter. 77kids results are presented as discontinued operations for all periods. All prior period inventory balances for 77kids have been recorded as an asset held for sale on the company’s consolidated balance sheets.


AEO Direct

In the third quarter, online sales increased 27%, compared to a 21% increase last year. The company’s online business includes ae.com and aerie.com.

Inventory

Total merchandise inventories at the end of the third quarter were $481 million compared to $555 million last year. At cost per foot, inventory decreased 11% compared to last year. Fourth quarter ending inventory cost per foot is expected to be down in the high single-digits.

Capital Expenditures

For the third quarter, capital expenditures were $23 million, compared to $30 million last year, bringing the year-to-date total to $71 million. For fiscal 2012, the company continues to expect capital expenditures to be approximately $100 million.

Real Estate

In the third quarter, total square footage increased slightly. The company opened four stores, closed four stores, and completed 8 remodels. For additional third quarter 2012 actual and fiscal 2012 projected real estate information, see the accompanying table.

Cash and Investments

The company ended the quarter with total cash and short-term investments of $545 million, compared to $481 million last year, after dividend payments totaling $317 million.

Future Outlook

For the fourth quarter, management now expects EPS to be in the range of $0.54 to $0.56 per diluted share, compared to an adjusted EPS from continuing operations of $0.39 last year, representing growth of 38% to 44%. For the year, management expects EPS from continuing operations of $1.38 to $1.40, compared to an adjusted EPS of $0.97 last year. For the fourth quarter, EPS guidance is based on comparable store sales growth in the mid-single digits and excludes the potential impact of store impairment charges.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to www.ae.com to access the webcast and audio replay. Also, a financial results presentation is posted on the company’s website.

* * * *

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle Outfitters® and Aerie® brands. The company operates more than 1,000 stores in North America, and ships to 77 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at approximately 48 international franchise stores in 13 countries. For more information, please visit www.ae.com.


“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, specifically regarding fourth quarter and fiscal 2012 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors beyond the company’s control. Such factors include, but are not limited to the risk that the company’s operating, financial and capital plans may not be achieved and the risks described in the Risk Factor Section of the company’s Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, the company’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized.

 

CONTACT:    American Eagle Outfitters Inc.
   Judy Meehan, 412-432-3300


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     October 27,
2012
    January 28,
2012
    October 29,
2011
 
     (unaudited)           (unaudited)  

ASSETS

      

Cash and cash equivalents

   $ 544,683      $ 719,545      $ 380,284   

Short-term investments

     —          25,499        101,036   

Merchandise inventory

     481,208        367,514        554,900   

Assets held for sale

     —          10,912        16,851   

Accounts receivable

     47,432        40,310        41,138   

Prepaid expenses and other

     65,326        74,947        64,378   

Deferred income taxes

     59,203        48,761        47,254   
  

 

 

   

 

 

   

 

 

 

Total current assets

     1,197,852        1,287,488        1,205,841   
  

 

 

   

 

 

   

 

 

 

Property and equipment, net

     537,058        582,162        629,486   

Intangible assets, net

     38,459        39,832        40,088   

Goodwill

     11,492        11,469        11,511   

Non-current deferred income taxes

     23,199        13,467        8,833   

Other assets

     25,073        16,384        14,692   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,833,133      $ 1,950,802      $ 1,910,451   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Accounts payable

   $ 213,197      $ 183,783      $ 222,894   

Accrued compensation and payroll taxes

     51,992        42,625        18,677   

Accrued rent

     76,769        76,921        74,888   

Accrued income and other taxes

     38,133        20,135        19,552   

Unredeemed gift cards and gift certificates

     23,089        44,970        22,456   

Current portion of deferred lease credits

     13,886        15,066        15,512   

Other current liabilities and accrued expenses

     26,432        21,901        22,570   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     443,498        405,401        396,549   
  

 

 

   

 

 

   

 

 

 

Deferred lease credits

     63,220        71,880        74,981   

Non-current accrued income taxes

     27,110        35,471        38,527   

Other non-current liabilities

     15,734        21,199        17,853   
  

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     106,064        128,550        131,361   
  

 

 

   

 

 

   

 

 

 

Commitments and contingencies

     —          —          —     

Preferred stock

     —          —          —     

Common stock

     2,496        2,496        2,496   

Contributed capital

     599,343        552,797        550,167   

Accumulated other comprehensive income

     29,179        28,659        29,116   

Retained earnings

     1,522,805        1,771,464        1,744,280   

Treasury stock

     (870,252     (938,565     (943,518
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     1,283,571        1,416,851        1,382,541   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,833,133      $ 1,950,802      $ 1,910,451   
  

 

 

   

 

 

   

 

 

 

Current Ratio

     2.70        3.18        3.04   


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share amounts)

(unaudited)

 

     13 Weeks Ended  
     October 27,
2012
    % of
Sales
    October 29,
2011
    % of
Sales
 

Net sales

   $ 910,374        100.0   $ 819,419        100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     531,284        58.4     507,164        61.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     379,090        41.6     312,255        38.1

Selling, general and administrative expenses

     219,128        24.1     185,687        22.7

Depreciation and amortization

     31,421        3.4     34,415        4.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     128,541        14.1     92,153        11.2

Other income (expense), net

     2,822        0.3     (407     0.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     131,363        14.4     91,746        11.2

Provision for income taxes

     48,922        5.4     33,795        4.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     82,441        9.0     57,951        7.1

Loss from discontinued operations, net of tax

     (3,833     –0.4     (5,524     –0.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 78,608        8.6   $ 52,427        6.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per common share:

        

Income from continuing operations

   $ 0.42        $ 0.30     

Loss from discontinued operations

     (0.02       (0.03  
  

 

 

     

 

 

   

Net income per basic share

   $ 0.40        $ 0.27     
  

 

 

     

 

 

   

Diluted income per common share:

        

Income from continuing operations

   $ 0.41        $ 0.30     

Loss from discontinued operations

     (0.02       (0.03  
  

 

 

     

 

 

   

Net income per diluted share

   $ 0.39        $ 0.27     
  

 

 

     

 

 

   

Weighted average common shares outstanding - basic

     197,173          194,378     

Weighted average common shares outstanding - diluted

     201,967          195,985     
     39 Weeks Ended  
     October 27,
2012
    % of
Sales
    October 29,
2011
    % of
Sales
 

Net sales

   $ 2,358,749        100.0   $ 2,091,623        100.0

Cost of sales, including certain buying, occupancy and warehousing expenses

     1,428,182        60.5     1,309,371        62.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     930,567        39.5     782,252        37.4

Selling, general and administrative expenses

     579,792        24.6     504,052        24.1

Depreciation and amortization

     96,130        4.1     103,848        5.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     254,645        10.8     174,352        8.3

Other income, net

     5,986        0.3     5,536        0.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     260,631        11.1     179,888        8.6

Provision for income taxes

     91,309        3.9     64,974        3.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     169,322        7.2     114,914        5.5

Loss from discontinued operations, net of tax

     (31,990     –1.4     (14,493     –0.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 137,332        5.8   $ 100,421        4.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per common share:

        

Income from continuing operations

   $ 0.86        $ 0.59     

Loss from discontinued operations

     (0.16       (0.07  
  

 

 

     

 

 

   

Net income per basic share

   $ 0.70        $ 0.52     
  

 

 

     

 

 

   

Diluted income per common share:

        

Income from continuing operations

   $ 0.85        $ 0.58     

Loss from discontinued operations

     (0.16       (0.07  
  

 

 

     

 

 

   

Net income per diluted share

   $ 0.69        $ 0.51     
  

 

 

     

 

 

   

Weighted average common shares outstanding - basic

     196,177          194,659     

Weighted average common shares outstanding - diluted

     200,041          196,430     


AMERICAN EAGLE OUTFITTERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

     39 Weeks Ended  
     October 27,
2012
    October 29,
2011
 

Operating activities:

    

Net income

   $ 137,332      $ 100,421   

Loss from discontinued operations

     31,990        14,493   
  

 

 

   

 

 

 

Income from continuing operations

     169,322        114,914   

Adjustments to reconcile income from continuing operations to net cash from operating activities of continuing operations:

    

Depreciation and amortization

     97,720        105,787   

Share-based compensation

     45,458        8,591   

Provision for deferred income taxes

     (21,233     11,252   

Tax benefit from share-based payments

     5,072        293   

Excess tax benefit from share-based payments

     (4,365     (152

Foreign currency transaction loss (gain)

     24        (277

Loss on impairment of assets

     449        —     

Changes in assets and liabilities:

    

Merchandise inventory

     (113,509     (261,138

Accounts receivable

     (7,735     (3,209

Prepaid expenses and other

     8,896        (10,398

Other assets

     (9,574     3,936   

Accounts payable

     36,713        56,569   

Unredeemed gift cards and gift certificates

     (21,908     (18,607

Deferred lease credits

     (6,896     (5,714

Accrued compensation and payroll taxes

     9,461        (16,329

Accrued income and other taxes

     9,642        (12,105

Accrued liabilities

     13,280        7,560   
  

 

 

   

 

 

 

Total adjustments

     41,495        (133,941
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities from continuing operations

   $ 210,817      $ (19,027

Investing activities:

    

Capital expenditures for property and equipment

     (71,223     (86,228

Acquisition of intangible assets

     (958     (33,886

Purchase of available-for-sale securities

     (10,069     (186,328

Sale of available-for-sale securities

     36,415        157,994   
  

 

 

   

 

 

 

Net cash used for investing activities from continuing operations

   $ (45,835   $ (148,448

Financing activities:

    

Payments on capital leases

     (2,515     (2,343

Repurchase of common stock as part of publicly announced programs

     —          (15,160

Repurchase of common stock from employees

     (4,125     (2,189

Net proceeds from stock options exercised

     43,914        2,680   

Excess tax benefit from share-based payments

     4,365        152   

Cash dividends paid

     (360,498     (64,273
  

 

 

   

 

 

 

Net cash used for financing activities from continuing operations

   $ (318,859   $ (81,133
  

 

 

   

 

 

 

Effect of exchange rates on cash

     264        872   
  

 

 

   

 

 

 

Cash flows of discontinued operations

    

Net cash used for operating activities

     (20,481     (29,056

Net cash used for investing activities

     (768     (10,517

Net cash used for financing activities

     —          —     

Effect of exchange rate on cash

     —          —     
  

 

 

   

 

 

 

Net cash used for discontinued operations

   $ (21,249   $ (39,573
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

   $ (174,862   $ (287,309

Cash and cash equivalents - beginning of period

     719,545        667,593   
  

 

 

   

 

 

 

Cash and cash equivalents - end of period

   $ 544,683      $ 380,284   
  

 

 

   

 

 

 


AMERICAN EAGLE OUTFITTERS, INC.

COMPARABLE STORE SALES RESULTS BY BRAND

(unaudited)

 

     Third Quarter
Comparable  Store Sales (1)
 
     2012     2011  

American Eagle Outfitters, Inc. (2)

     10     7

AE Brand

     8     5

aerie

     5     8

AEO Direct (2)

     27     21
     YTD Third  Quarter
Comparable Store Sales (1)
 
     2012     2011  

American Eagle Outfitters, Inc. (2)

     12     1

AE Brand

     10     –1

aerie

     12     Flat   

AEO Direct (2)

     26     13

 

(1) Comparable store sales are from continuing operations and exclude 77kids.
(2) AEO Direct is comprised of ae.com and aerie.com. AEO Direct is included in consolidated comparable store sales.


AMERICAN EAGLE OUTFITTERS, INC.

REAL ESTATE INFORMATION

(unaudited)

 

     Third Quarter
Fiscal 2012
    YTD
Third Quarter
Fiscal 2012
    Fiscal 2012
Guidance

Consolidated stores at beginning of period (1)

     1,063        1,069      1,069

Consolidated stores opened during the period

      

AE Brand

     4        13      16

Consolidated stores closed during the period

      

AE Brand

     (3     (15   (25) - (30)

aerie

     (1     (4   (5) - (10)
  

 

 

   

 

 

   

 

Total consolidated stores at end of period

     1,063        1,063      1045 - 1055

Stores remodeled and refurbished during the period

     8        46      48 - 50

Total gross square footage at end of period

     6,300,662        6,300,662      Not Provided

International franchise stores at end of period (2)

     44        44      49

(1)- Consolidated store data and total gross square footage exclude all 77kids store locations.

(2)- International franchise stores are not included in the consolidated store data or the total gross square footage calculation.