American Eagle lingerie line soars above expectations
American Eagle Outfitters posted another unexpected rise in comparable sales for a second consecutive quarter thanks to a strong demand for its Aerie line of lingerie.
The clothing apparel sector had seen a significant downturn over the first half of the year as changing patterns in consumer spending had seen more customers move towards online retailers and in favour of fast fashion, forcing the likes of Aeropostale and Wet Seal into bankruptcy.
"We are particularly encouraged by the progress made in categories like jeans where more emphasis on features like style and fit have helped to boost sales...early data suggest that American Eagle did well in denim over the key back-to-school period," Anthony Riva, an analyst at GlobalData Retail said.
Comparable sales of the American Eagle's Aerie brand of lingerie saw a 26% rise in the three months leading up to 29 July, significantly more than 16.4% increase analysts had forecast.
Net revenue grew 2.7% to $844.6m, also above market expectations of $824m.
However, earnings per share were down 62% to $0.12 from the $0.23 seen in the second quarter of 2016, before saying it expects to see a $0.36 to $0.38 EPS in the third quarter.
Jay Schottenstein, chief executive officer said, "In the second quarter, we achieved sales and earnings above our expectations in a challenging retail environment. Sales trends improved and I’m proud of the continued growth in jeans, bottoms, women’s apparel and Aerie, with encouraging signs in men's tops beginning to emerge. Our brands are strong and we have significant opportunity for further growth. I’m optimistic as we enter the second half of the year, and we remain focused on delivering product innovation, strengthening customer engagement and improving profit flow-through."
As of 1605 BST, shares had gone up 6.96% to $11.99.