American Eagle (AEO) shares up as retailer plans more store closures

American Eagle shares rose Thursday afternoon, as the teenager attire retailer outlined plans to shut tons of of shops within the coming years, whereas it seems to be to develop it lingerie and active-wear model Aerie to a $2 billion enterprise.

The inventory was final up more than 3%.

Chief Financial Officer Mike Mathias stated throughout a digital assembly with traders that the corporate, which has about 880 shops, is seeking to shut between 200 and 250 principally mall-based places within the subsequent two to 3 years. Meantime, it plans to develop the variety of Aerie shops by 50, to about 400 on the finish of 2021, and is focusing on having 500 to 600 Aerie places in 2023.

"It's a tale of two brands," the CFO defined.

American Eagle had stated Thursday morning it expects fourth-quarter income to lower within the low-single digits, pushed by a drop in brick-and-mortar gross sales as a consequence of weak mall visitors in the course of the Covid pandemic. That got here in decrease than analysts' estimates, which anticipated a 0.14% dip, in keeping with Refinitiv.

The attire retailer stated it expects momentum to proceed on-line, with digital gross sales in any respect of its manufacturers rising double digits. It stated Aerie is forecast to develop fourth-quarter income within the high-20% vary, whereas its namesake American Eagle model is forecast to see gross sales drop within the low double digits.

Mall-based retailers together with Nordstrom and Urban Outfitters have reported weak 2020 vacation gross sales, as many Americans stayed house, buying from the couch, and shopping for much less attire and footwear. Retailers like American Eagle that depend on attire gross sales have tried to inventory their cabinets with more comfy clothes, such as leggings and pajama units, that customers have most popular to put on in the course of the pandemic.

Management stated the retailer's tailor-made collection of merchandise in the course of the holidays helped it to promote more gadgets at full value.

"Compelling holiday product and marketing, combined with a disciplined approach to promotional activity drove very strong margin results," Chief Executive Jay Schottenstein stated in an announcement. "I believe we are well-positioned as we head into 2021."

The retailer is anticipated to report its fourth-quarter and monetary 2020 outcomes on March 3.

In a separate press launch Thursday, American Eagle laid out longer-term monetary targets, aiming to develop its Aerie enterprise to $2 billion, whereas it really works on enhancing income at its namesake banner.

"Aerie has been posting among the best growth in retail, and therefore $2 billion seems a reasonable target to present," BMO Capital Markets senior analyst Simeon Siegel stated. "But it also seems fair investors may have been looking for more."

The speedy development of the Aerie model, which sells every thing from bras and underwear to swimsuits and sweatpants, is making it a a lot stronger competitor to L Brands' Victoria's Secret enterprise, he added.

Overall, American Eagle stated it’s focusing on income of $5.5 billion, and working earnings of $550 million, in fiscal 2023. In its newest reported fiscal yr, it introduced in income of $4.31 billion.

American Eagle shares are up about 63% over the previous 12 months.

Read the press releases from American Eagle right here.

Retail goes to proceed to wrestle nationally: Don PeeblesThe Exchange

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