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American Eagle Outfitters Reports 38% Increase In First Quarter Adjusted EPS And 18% Sales Growth

Stock quotes in this article: AEO 

In fiscal 2011, the brand generated an after-tax loss of approximately $24 million on sales of $40 million. The company anticipates charges associated with the disposition of 77kids to be taken primarily in the second and third quarters of 2012, which will be disclosed as plans are finalized.

AEO Direct

In the first quarter, online sales increased 22%, compared to a 3% increase last year. The company’s online business includes ae.com, aerie.com and 77kids.com.

Inventory

Total merchandise inventories at the end of the first quarter were $377 million vs. $332 million last year. At cost per foot, inventory is up 14% compared to last year. Second quarter ending inventory cost per foot is expected to be up in the mid single digits.

Capital Expenditures

For the first quarter, capital expenditures were $25 million, compared to $38 million last year. For fiscal 2012, the company continues to expect capital expenditures to be approximately $100 million.

Real Estate

In the first quarter, total square footage increased slightly, reflecting seven store openings, offset by seven store closures, and 21 remodels and refurbishments. For additional first 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 $722 million compared to $605 million last year.

Future Outlook

Assuming low to mid-single digit comparable store sales growth for the year, the company expects annual adjusted EPS of $1.16 to $1.22 compared to adjusted EPS of $0.97 last year. For the second quarter the company expects adjusted EPS of $0.13 to $0.15, assuming mid single digit comparable store sale growth. This compares to adjusted EPS of $0.13 last year. Guidance excludes operating results and exit charges related to 77kids in addition to other potential restructuring charges.

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