Strong back-to-school sales as well as offering trend-right fashion propelled top- and bottom-line growth in the third quarter for teen apparel retailers American Eagle Outfitters and Abercrombie & Fitch.
American Eagle Outfitters posted a 37.6 percent surge in third-quarter earnings and announced a 3-for-2 stock split. For the three months ended Oct. 28, net income rose to $100.9 million, or 66 cents a diluted share, from $73.3 million, or 47 cents. Total sales jumped 20 percent to $696.3 million from $580.5 million in the year-ago period, while same-store sales increased 13 percent.
Results surpassed American Eagle’s guidance of 64 to 65 cents and Wall Street’s estimate of 65 cents a share. “On-trend assortments and well-managed inventories led to our best third-quarter operating margin and the 11th consecutive quarter of record sales and earnings,” said Jim O’Donnell, chief executive officer of American Eagle, in a statement.
For the nine-month period, earnings increased 27 percent to $237.2 million, or $1.56 a diluted share, from $186.6 million, or $1.19 last year. Sales advanced 17.4 percent to $1.82 billion from $1.55 billion.
During the third quarter the company launched their intimate subbrand aerie and their new retail concept Martin + Osa, which targets 25- to 40-year-olds. The company also opened 19 new American Eagle stores and remodeled nine. The company said they plan on opening 46 new American Eagle stores and renovating 65 by the end of the year.
The specialty retailer expects fourth-quarter earnings in the range of 94 to 96 cents per share.
The company said the stock split would entitle all shareholders of record as of Nov. 24, to receive three shares of common stock for every two shares held. The additional shares will be distributed on Dec. 18.
For Abercrombie & Fitch, strong same-store sales at its Ruehl and abercrombie brands bolstered earnings. For the third quarter ended Oct. 28, earnings soared 42.5 percent to $102 million, or $1.11 a diluted share, from $71.6 million, or 79 cents, in the prior year. Total sales increased 22 percent to $863.4 million from $704.9 million, while same-store sales jumped 5 percent.
By division, comparable store sales at Abercrombie & Fitch rose 1 percent, were up 8 percent at abercrombie and Hollister and jumped 20 percent at Ruehl.
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For the nine-month period, net income advanced 32.2 percent to $224 million, or $2.44 a diluted share, from $169.4 million, or $1.87, in the year-ago period. Sales were up 19.8 percent to $2.18 billion from $1.82 billion.
The teen retailer expects to open about 70 new Hollister stores, 19 new abercrombie stores, eight new Abercrombie & Fitch stores and seven new Ruehl stores by the end of the year. They also plan to open their first European location in London in the first quarter of 2007.
The company is projecting earnings for fiscal 2006 in the range of $4.59 to $4.64.
Shares of Abercrombie & Fitch rose 3 percent to close at $76.61, while shares of American Eagle closed up 2.4 percent to $48.19. Both companies, however, were trading down in aftermarket activity.