American Eagle Outfitters Reports Record EPS of $0.66 for Fourth Quarter 2006, a 40% Increase, and Record Annual EPS of $1.70, a 35% Increase



    WARRENDALE, PA., March 7 /CNW/ - American Eagle Outfitters, Inc.
(NASDAQ:  AEOS) today announced that earnings for the 14 weeks ended February 3,
2007 increased 40% to $0.66 per diluted share from $0.47 per diluted share for
the 13 week period ended January 28, 2006. For the 53 week period ended
February 3, 2007, earnings per share increased 35% to $1.70 from $1.26 per
diluted share for the 52 weeks ended January 28, 2006.

    "Fiscal 2006 was a remarkable year, as it was our third consecutive year
of positive comparable store sales growth and record operating margins,"
stated CEO Jim O'Donnell. "Our financial performance reflects the strength of
the AE brand, the depth of talent within our teams, and company-wide
commitment to disciplined operational execution. I am particularly proud of
our success this year in sustaining strong profitability, while enhancing our
core AE brand and launching key growth vehicles, aerie and MARTIN + OSA. For
2007, we remain focused on delivering profitable growth, while expanding our
lifestyle brands and investing in systems to drive further advances in
productivity."

    Fourth Quarter Results

    Total sales for the 14 weeks ended February 3, 2007 increased 27% to
$973.4 million compared to $769.1 million for the 13 week period ended January
28, 2006. Due to the 53rd week in fiscal 2006, fourth quarter comparable store
sales are compared to the 14 week period ended February 4, 2006. On this
basis, the company delivered a comparable store sales increase of 14%.

    Gross profit for the fourth quarter increased to $466.5 million, or 47.9%
as a percent to sales, from $356.5 million, or 46.3% as a percent to sales
last year. Gross profit as a percent to sales improved by 160 basis points,
reflecting a higher merchandise margin and the leveraging of rent.

    Selling, general & administrative expenses reflect the company's
investments in talent, brand building and the development of new concepts.
Fourth quarter SG&A expenses of $217.7 million were 22.4% as a percent to
sales. This compared to $164.2 million, or 21.3% as a percent to sales last
year. Incentive compensation, including stock option expense of approximately
90 basis points, contributed to the increase in SG&A as a percent to sales.
Additionally, the company continued to absorb incremental expenses related to
MARTIN + OSA, representing approximately 20 basis points of SG&A
de-leveraging.

    Operating income for the quarter increased 31% to $226.8 million from
$173.3 million last year. As a percent to sales, operating income increased to
23.2%, a 70 basis points improvement compared to 22.5% last year.

    Other income for the fourth quarter was $16.1 million compared to $5.3
million last year. The increase reflected a larger investment balance, as well
as a higher yield compared to last year.

    2006 Annual Results

    Total sales for the 53 weeks ended February 3, 2007 increased 20% to
$2.794 billion from $2.322 billion for the 52 week period ended January 28,
2006. Due to the 53rd week in fiscal 2006, annual comparable store sales are
compared to the 53 week period ended February 4, 2006. On this basis,
comparable store sales increased 12% for the year.

    Gross profit for the year increased to $1.340 billion, or 48.0% as a
percent to sales, from $1.078 billion, or 46.4% as a percent to sales last
year. Gross profit as a percent to sales improved 160 basis points, reflecting
a higher merchandise margin and the leveraging of rent.

    Selling, general & administrative expenses reflect the company's
investments in talent, brand building and the development of new concepts. For
the year, SG&A expenses of $665.6 million were 23.8% as a percent to sales.
This compared to $540.3 million, or 23.2% as a percent to sales last year.
Incentive compensation, including stock option expense of approximately 40
basis points, contributed to the increase in SG&A as a percent to sales.
Additionally, the company continued to absorb incremental expenses related to
MARTIN + OSA, representing approximately 40 basis points of SG&A
de-leveraging.

    Operating income for the year increased 28% to $586.8 million from $458.7
million last year. As a percent to sales, operating income increased to 21.0%,
a 120 basis point improvement compared to 19.8% last year.

    Other income for the year was $42.3 million compared to $18.3 million
last year. The increase reflected a larger investment balance, as well as a
higher yield compared to last year.

    Growth Strategies Advance

    In January, the company announced that it will accelerate the expansion
of aerie by American Eagle with the opening of at least 15 stand-alone
locations in 2007. Launched in September, the new intimates sub-brand,
featuring a full line of undies, bras and dorm-wear, is designed to be
sweetly-sexy. The brand has been met with strong customer acceptance. The
company's expansion plans are based on the positive results of three aerie
stand-alone test stores. If new stores continue to perform as well as the test
stores, aerie could be a 350+ store chain by 2012.

    In the fourth quarter, American Eagle opened eight new AE stores and
remodeled 20 locations. In 2006, 42 new AE stores opened and 65 remodels were
completed. Together with five new MARTIN + OSA stores, and three new aerie
stand-alone test stores, total gross square footage increased 8% for the year.

    In 2007, the company plans to open 45 to 50 AE stores, at least 15 aerie
stand-alone stores and approximately 12 new MARTIN + OSA stores. Additionally,
approximately 45 AE store remodels are planned, which combined with new store
openings will generate total 2007 square footage growth of approximately 10%.

    Capital Expenditures

    For fiscal 2006, capital expenditures totaled $226 million, which
included investments in new and remodeled stores, new Pittsburgh headquarters,
a new data center and the expansion of the company's Kansas distribution
center. For fiscal year 2007, management expects capital expenditures to be
approximately $240 million, related to continued real estate expansion and
upgrades, new headquarters, investments in information technology, including a
new point of sale system, as well as the completion of its Kansas distribution
facility.

    Stock Repurchase

    During the quarter, the company completed the repurchase of 2.3 million
shares of common stock for approximately $70.2 million. For the year, the
company repurchased 5.3 million shares of common stock for approximately
$146.5 million.

    On March 6th, 2007, the company's Board of Directors authorized an
additional 7 million shares for its repurchase program.

    First Quarter Guidance

    At this time, management is establishing first quarter earnings guidance
of $0.31 to $0.33 cents per share, compared to $0.28 per share last year.

    February Sales

    In a separate release this morning, the company announced a February
comparable store sales increase of 6%. To listen to the recorded sales
commentary, please call 800-642-1687, conference code 3282124#.

    Conference Call Information

    At 9:00 a.m. Eastern Time, on March 7, 2007, the company's management
team will host a conference call to review the financial results. To listen to
the call, dial 1-877-601-0864 five to seven minutes prior to the scheduled
start time. The conference call will also be simultaneously broadcast over the
Internet at www.ae.com or www.streetevents.com. Anyone unable to listen to the
call can access a replay beginning March 7, 2007 at 12:00 p.m. Eastern Time
through March 21, 2007. To listen to the replay, dial 1-800-642-1687 and
reference confirmation code 4821967#. An audio replay of the conference call
will also be available at www.ae.com.

    About American Eagle Outfitters:

    American Eagle Outfitters, Inc. (Nasdaq:  AEOS) is a leading retailer that
operates under the American Eagle Outfitters and MARTIN + OSA brands.

    American Eagle Outfitters designs, markets and sells its own brand of
laidback, current clothing targeting 15 to 25 year-olds, providing
high-quality merchandise at affordable prices. AE's original collection
includes standards like jeans and graphic Ts as well as essentials like
accessories, outerwear, footwear, basics and swimwear. American Eagle
currently operates 834 stores in 50 states, the District of Columbia and
Puerto Rico, and 72 AE stores in Canada. American Eagle also operates ae.com,
which offers additional sizes and styles of favorite AE merchandise and ships
around the world. The American Eagle brand also includes a new collection of
dormwear and intimates, "aerie by American Eagle." aerie is available in
American Eagle stores across the country and at aerie.com. It includes bras,
undies, camis, hoodies, robes, boxers, sweats and leggings for the AE girl.
Designed to be sweetly sexy, comfortable and cozy, aerie offers AE customers a
new way to express their personal style everyday, from the dormroom to the
coffee shop to the classroom.

    The company introduced MARTIN + OSA, a new sportswear concept targeting
25 to 40 year-old women and men. MARTIN + OSA carries apparel, accessories and
footwear, using denim and sport inspiration to design fun and sport back into
sportswear. MARTIN + OSA currently operates six stores. For additional
information and updates, visit martinandosa.com.

    "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements, which represent
our expectations or beliefs concerning future events, specifically regarding
first quarter sales and earnings, real estate, aerie, and MARTIN + OSA. All
forward-looking statements made by the Company involve material risks and
uncertainties and are subject to change based on factors beyond the Company's
control. Such factors include, but are not limited to the risk that first
quarter sales, markdowns and/or earnings expectations may not be achieved,
real estate, aerie and MARTIN + OSA growth may not occur as planned and those
other risks described in the Risk Factor Section of the Company's Form 10-K
and Form 10-Q filed with the Securities and Exchange Commission. Accordingly,
the Company's future performance and financial results may differ materially
from those expressed or implied in any such forward-looking statements. The
Company does not undertake to publicly update or revise its forward-looking
statements even if future changes make it clear that projected results
expressed or implied will not be realized.

    
                       AMERICAN EAGLE OUTFITTERS, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)



                                                   February 3, January 28,
                                                      2007        2006
                                                   ----------- -----------
                                                   (Unaudited)

    ASSETS
     Cash, cash equivalents and short-term
      investments                                 $   827,113 $   751,518
     Merchandise inventory                            263,644     210,739
     Other current assets                             107,497     102,341
     Assets held for sale                                   -      12,183
                                                   ----------- -----------
       Total current assets                         1,198,254   1,076,781
                                                   ----------- -----------
     Property and equipment, net                      481,645     345,518
     Goodwill, net                                      9,950       9,950
     Long-term investments                            251,644     145,774
     Other assets, net                                 45,991      27,626
                                                   ----------- -----------
       Total Assets                               $ 1,987,484 $ 1,605,649
                                                   ----------- -----------

    LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable                             $   171,150 $   139,197
     Accrued compensation and payroll taxes            58,371      48,050
     Accrued rent                                      57,543      52,506
     Accrued income and other taxes                    87,780      43,273
     Unredeemed stored value cards and gift
      certificates                                     54,554      43,045
     Current portion of deferred lease credits         12,803      10,406
     Other current liabilities                         18,263      15,010
                                                   ----------- -----------
       Total current liabilities                      460,464     351,487
                                                   ----------- -----------
     Deferred lease credits                            65,114      60,087
     Other non-current liabilities                     44,594      38,523
                                                   ----------- -----------
       Total non-current liabilities                  109,708      98,610
                                                   ----------- -----------
       Total stockholders' equity                   1,417,312   1,155,552
                                                   ----------- -----------
       Total Liabilities and Stockholders' Equity $ 1,987,484 $ 1,605,649
                                                   ----------- -----------

     Current Ratio                                       2.60        3.06
    

    
                       AMERICAN EAGLE OUTFITTERS, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
         (Dollars and shares in thousands, except per share amounts)

                                              Three Months Ended
                                    --------------------------------------
                                    February 3,  % of   January 28,  % of
                                       2007     Sales      2006     Sales
                                    ------------------  ------------------
                                    (Unaudited)         (Unaudited)

    Net sales                      $   973,365  100.0% $   769,070  100.0%
    Cost of sales, including
     certain buying, occupancy and
     warehousing expenses              506,890   52.1%     412,616   53.7%
                                    ------------------  ------------------
    Gross profit                       466,475   47.9%     356,454   46.3%
    Selling, general and
     administrative expenses           217,735   22.4%     164,202   21.3%
    Depreciation and amortization       21,970    2.3%      18,996    2.5%
                                    ------------------  ------------------
    Operating income                   226,770   23.2%     173,256   22.5%
    Other income, net                   16,133    1.7%       5,348    0.7%
                                    ------------------  ------------------
    Income before income taxes         242,903   24.9%     178,604   23.2%
    Provision for income taxes          92,744    9.5%      71,468    9.3%
                                    ------------------  ------------------
    Income from continuing
     operations, net of tax            150,159   15.4%     107,136   13.9%
    Income from discontinued
     operations, net of tax                  -    0.0%         405    0.1%
                                    ------------------  ------------------
    Net income                     $   150,159   15.4% $   107,541   14.0%
                                    ------------------  ------------------

    Basic per common share amounts:
    Income from continuing
     operations                    $      0.68         $      0.48
    Income from discontinued
     operations                              -                   -
                                    -----------         -----------
    Net income per basic common
     share                         $      0.68         $      0.48
                                    -----------         -----------

    Diluted per common share
     amounts:
    Income from continuing
     operations                    $      0.66         $      0.47
    Income from discontinued
     operations                              -                   -
                                    -----------         -----------
    Net income per diluted common
     share                         $      0.66         $      0.47
                                    -----------         -----------

    Weighted average common shares
     outstanding - basic               221,470             222,168
    Weighted average common shares
     outstanding - diluted             227,955             227,192


                                             Twelve Months Ended
                                    --------------------------------------
                                    February 3,  % of   January 28,  % of
                                       2007     Sales      2006     Sales
                                    ------------------  ------------------
                                    (Unaudited)

    Net sales                      $ 2,794,409  100.0% $ 2,321,962  100.0%
    Cost of sales, including
     certain buying, occupancy and
     warehousing expenses            1,453,980   52.0%   1,244,213   53.6%
                                    ------------------  ------------------
    Gross profit                     1,340,429   48.0%   1,077,749   46.4%
    Selling, general and
     administrative expenses           665,606   23.8%     540,332   23.2%
    Depreciation and amortization       88,033    3.2%      78,728    3.4%
                                    ------------------  ------------------
    Operating income                   586,790   21.0%     458,689   19.8%
    Other income, net                   42,277    1.5%      18,278    0.8%
                                    ------------------  ------------------
    Income before income taxes         629,067   22.5%     476,967   20.6%
    Provision for income taxes         241,708    8.6%     183,256    7.9%
                                    ------------------  ------------------
    Income from continuing
     operations, net of tax            387,359   13.9%     293,711   12.7%
    Income from discontinued
     operations, net of tax                  -    0.0%         442    0.0%
                                    ------------------  ------------------
    Net income                     $   387,359   13.9% $   294,153   12.7%
                                    ------------------  ------------------

    Basic per common share amounts:
    Income from continuing
     operations                    $      1.74         $      1.29
    Income from discontinued
     operations                              -                   -
                                    -----------         -----------
    Net income per basic common
     share                         $      1.74         $      1.29
                                    -----------         -----------

    Diluted per common share
     amounts:
    Income from continuing
     operations                    $      1.70         $      1.26
    Income from discontinued
     operations                              -                   -
                                    -----------         -----------
    Net income per diluted common
     share                         $      1.70         $      1.26
                                    -----------         -----------

    Weighted average common shares
     outstanding - basic               222,662             227,406
    Weighted average common shares
     outstanding - diluted             228,384             233,031


    ----------------------------------------------------------------------

    Total gross square footage at
     end of period:                  5,173,065           4,772,487

    Store count at end of period:          911                 869
    ----------------------------------------------------------------------
    




For further information:

For further information: American Eagle Outfitters Inc. Judy Meehan,
724-776-4857 OR Financial Media Contact Berns Communications Group Stacy Berns
or Melissa Jaffin, 212-994-4660

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