American Eagle Outfitters(AEO) - 2025 Q4 - Annual Report

Financial Performance - Total net revenue increased by $67 million to$5.329 billion in Fiscal 2024 compared to $5.262 billion in Fiscal 2023[207] - Total comparable sales rose by 4$2.089 billion, with a gross margin of 39.2%, up 70 basis points from the previous year[211] - Operating income surged by 92% to $427.3 million, representing 8.0$329.4 million, with diluted earnings per share increasing to $1.68 from$0.86[207] - Operating income for American Eagle was $606.5 million, a 1$315.8 million[219] - Non-GAAP net income for Fiscal 2024 was $342.4 million, or$1.74 per diluted share, after adjusting for impairment and restructuring charges[230] - Total operating income increased by 92% to $427.3 million, driven by higher gross profit and lower impairment charges[219] Digital and Operational Improvements - Digital revenue grew by 5$1 million year-over-year, improving by 30 basis points as a percentage of revenue[214] - Total impairment, restructuring, and other charges for Fiscal 2024 amounted to $141.7 million, representing 2.7$10.7 million in employee severance related to corporate restructuring and $6.8 million in impairment costs from the sale of Hong Kong retail operations[215] - The company incurred$10.9 million in charges related to exiting the Japan market, including the closure of four stores and impairments in Hong Kong operations[233] - The company recorded $119.6 million in charges related to the Quiet Platforms restructuring, including impairments of$40.5 million in intangible assets and $39.6 million in goodwill[236] Cash Flow and Shareholder Returns - Cash flow and liquidity are expected to be sufficient to fund anticipated capital expenditures and working capital requirements for the next 12 months[199] - Total cash provided by operating activities decreased by$103.9 million from $580.7 million in Fiscal 2023 to$476.8 million in Fiscal 2024[238] - Capital expenditures for Fiscal 2024 totaled $222.5 million, with a projected increase to approximately$300 million for Fiscal 2025 to support expansion and technology upgrades[245] - The company repurchased 9.5 million shares during Fiscal 2024 under a new share repurchase program authorized for 30 million shares[250] - Cash returned to shareholders through dividends and share repurchases was $287.4 million in Fiscal 2024, compared to$104.1 million in Fiscal 2023[243] Tax and Depreciation - The effective tax rate for Fiscal 2024 was 25.5%, down from 29.1% in Fiscal 2023, primarily due to changes in non-deductible executive compensation[225] - Depreciation and amortization expense decreased by 6% to $212.3 million, primarily driven by prior year impairments of definite-lived tangible and intangible assets[218] - The effective tax rate for non-GAAP income was 23.6$22.8 million related to restructuring charges[234] Liquidity and Financial Position - The current ratio as of February 1, 2025, was 1.53, indicating a strong liquidity position[238] - The company expects to fund future cash requirements through current cash holdings and available liquidity[237] Foreign Exchange and Other Comprehensive Loss - A hypothetical 10% adverse change in foreign exchange rates could result in a $25 million to$30 million fluctuation in foreign currency translation[274] - An unrealized loss of $40 million is included in accumulated other comprehensive loss, primarily due to fluctuations in the U.S. dollar against the Mexican peso and Canadian dollar[274] Goodwill and Share-Based Payments - The company evaluates goodwill for impairment at least annually, with potential charges recorded if carrying value exceeds fair value[264] - Share-based payments are valued using the Black-Scholes model and Monte-Carlo simulation, with assumptions impacting fair value estimates[265]