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AEO's $200M Accelerated Repurchase Plan to Boost Shareholders' Value
AEOAmerican Eagle Outfitters(AEO) ZACKS·2025-03-18 16:37

Core Viewpoint - American Eagle Outfitters, Inc. (AEO) is implementing its Powering Profitable Growth Plan effectively, focusing on shareholder value through share repurchases and dividends [1][4]. Share Repurchase and Dividend Actions - AEO has entered into an accelerated share repurchase agreement (ASR) with Bank of America to buy back 200millionofitscommonstock,approximately18.1millionshares,representingabout9.5200 million of its common stock, approximately 18.1 million shares, representing about 9.5% of its fully diluted outstanding stock [1]. - The company plans to complete the ASR under its existing share repurchase authorization of 68.5 million shares [2]. - AEO announced a quarterly cash dividend of 12.50 cents per share, payable on April 25, 2025, to stockholders of record as of April 11, 2025 [2]. Financial Performance and Capital Allocation - In the most recent quarter, AEO returned 24 million to shareholders through dividends, with year-to-date cash dividends totaling 96million[3].−Thecompanyrepurchased3.5millionsharesfor96 million [3]. - The company repurchased 3.5 million shares for 60 million in the fourth quarter, totaling 9.5 million shares repurchased for 191millioninfiscal2024[3].−AEO′sboardhasauthorizedanadditional50millionsharesforrepurchase,withatotalof68.5millionsharesavailableforrepurchaseuntilFebruary3,2029[3].−Asoftheendofthefiscalfourthquarter,AEOhadcashandcashequivalentsof191 million in fiscal 2024 [3]. - AEO's board has authorized an additional 50 million shares for repurchase, with a total of 68.5 million shares available for repurchase until February 3, 2029 [3]. - As of the end of the fiscal fourth quarter, AEO had cash and cash equivalents of 309 million and no outstanding debt, with total liquidity exceeding 920million[4].MarketPerformanceandChallenges−Despiteshareholder−friendlyactions,AEO′sshareshavedeclinedby26.5920 million [4]. Market Performance and Challenges - Despite shareholder-friendly actions, AEO's shares have declined by 26.5% over the past three months, compared to a 20.1% decline in the industry [5]. - The company faces challenges from retail calendar shifts, higher markdowns, and a difficult operating environment, impacting consumer spending [6]. - For the first quarter of fiscal 2025, AEO expects mid-single-digit revenue declines and a drop in gross margin year over year, with operating income projected between 20-25million[7].FutureOutlook−Forfiscal2025,AEOanticipateslow−single−digitrevenuedeclinesandadecreaseingrossmargin,factoringina25 million [7]. Future Outlook - For fiscal 2025, AEO anticipates low-single-digit revenue declines and a decrease in gross margin, factoring in a 20 million adverse impact from the strengthening U.S. dollar and 5−5-10 million from U.S. tariffs on China [8]. - Management expects a mid-single-digit revenue decrease in the first half of fiscal 2025, along with declining profits [8].