American Eagle Outfitters(AEO) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Forward Looking Statements This section outlines forward-looking statements based on management's beliefs and cautions that results may differ due to risks - Fiscal 2024 plans include opening approximately 5-15 American Eagle stores and 25-40 Aerie/OFFLINE stores, remodeling 80-90 stores, and potentially closing 10-20 American Eagle stores[9] - Key risks that could impact future results include macroeconomic conditions, fashion trends, competition, and supply chain issues[9][10] Financial Statements Presents consolidated financial statements showing a 6% revenue increase and a significant rise in net income to $67.8 million Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | May 4, 2024 | February 3, 2024 | April 29, 2023 | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $300,518 | $354,094 | $117,841 | | Merchandise inventory | $681,062 | $640,662 | $624,851 | | Total current assets | $1,311,317 | $1,433,350 | $1,129,501 | | Total assets | $3,557,217 | $3,557,909 | $3,373,894 | | Liabilities & Equity | | | | | Total current liabilities | $773,329 | $891,172 | $716,437 | | Total liabilities | $1,804,861 | $1,821,150 | $1,754,878 | | Total stockholders' equity | $1,752,356 | $1,736,759 | $1,619,016 | Consolidated Statements of Operations Consolidated Statements of Operations (in thousands, except per share data) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :--- | :--- | :--- | | Total net revenue | $1,143,867 | $1,080,926 | | Gross profit | $464,239 | $413,179 | | Impairment, restructuring and other charges | $0 | $21,275 | | Operating income | $77,836 | $22,831 | | Net income | $67,752 | $18,453 | | Diluted net income per common share | $0.34 | $0.09 | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :--- | :--- | :--- | | Net cash (used for) operating activities | $(38,111) | $(8,216) | | Net cash provided by (used for) investing activities | $59,221 | $(46,020) | | Net cash (used for) provided by financing activities | $(74,214) | $1,908 | | Net change in cash and cash equivalents | $(53,576) | $(52,368) | Notes to Consolidated Financial Statements - The company operates two reportable segments: American Eagle and Aerie, with other operations grouped under 'Other'[27][78][114] - No impairment charges were recorded in the current quarter, unlike the $21.3 million charge in the prior-year quarter[119][120][149] - The effective income tax rate decreased to 18.0% from 27.5% in the prior year, due to tax benefits on share-based payments[111][157] - As of May 4, 2024, the company had no outstanding long-term debt[93][98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q1 performance to its growth plan, resulting in a 6% revenue increase and 241% operating income surge Results of Operations Brand Revenue Performance (13 Weeks Ended May 4, 2024 vs. Prior Year) | Brand | Revenue (in thousands) | % Change YoY | | :--- | :--- | :--- | | American Eagle | $724,744 | +8% | | Aerie | $372,652 | +4% | - Total net revenue increased 6% to $1.144 billion, with comparable sales up 7%[140] - Gross profit rose 12% to $464.2 million, and the gross margin rate expanded by 240 basis points to 40.6%[137][145] - Selling, general and administrative (SG&A) expenses increased by 7% to $333.5 million[148] - Operating income increased 241% to $77.8 million from $22.8 million in the prior year[151] Liquidity and Capital Resources - The company ended the quarter with $300.5 million in cash and no outstanding borrowings under its credit facility[167][168] - Capital expenditures were $36.2 million for the quarter, with a full-year projection of $200 million to $250 million[176] - The company returned $24.6 million in dividends and $34.9 million in share repurchases to shareholders[171] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk exposure from foreign exchange fluctuations has not materially changed since Fiscal 2023 - The primary market risk is foreign exchange rate risk from Canadian and Mexican operations, with no material change in the risk profile[183] Controls and Procedures Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[185] - There were no material changes in internal control over financial reporting during the quarter[186] PART II - OTHER INFORMATION Legal Proceedings The company does not expect current legal proceedings to have a material adverse effect on its financial condition - The company does not expect the resolution of currently pending legal matters to have a material adverse effect[187] Risk Factors This section confirms no material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the company's risk factors as disclosed in the Fiscal 2023 Form 10-K[189] Unregistered Sales of Equity Securities and Use of Proceeds The company details its repurchase of 1.5 million shares under a new 30 million share repurchase authorization Issuer Purchases of Equity Securities (13 Weeks Ended May 4, 2024) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Public Program | | :--- | :--- | :--- | :--- | | Month 1 | 101,013 | $22.48 | 0 | | Month 2 | 1,208,269 | $23.11 | 846,451 | | Month 3 | 721,572 | $23.55 | 653,549 | | Total | 2,030,854 | $23.30 | 1,500,000 | - A new share repurchase program for 30 million shares was authorized, with 28.5 million shares remaining available[178][190] Exhibits This section lists all exhibits filed with the report, including stock award agreements and CEO/CFO certifications - Filed exhibits include forms of stock award agreements, CEO/CFO certifications, and XBRL data files[196]