AEO Inc. Reports Strong Fourth Quarter and Fiscal Year 2024 Results; Provides Fiscal Year 2025 Outlook

Fourth quarter comparable sales growth of 3%, operating income of $142 million

• Record Aerie revenue with comp growth of 6%; American Eagle comp growth of 1%

Fiscal year comparable sales growth of 4%; record revenue with significant profit expansion

• Record Aerie revenue with comp growth of 5%. American Eagle comp growth of 3%
• GAAP operating income of $427 million. Adjusted operating income up 19% to $445 million

Over $190 million returned to shareholders through shares repurchases in 2024; Board of Directors authorizes additional 50 million shares for repurchase

American Eagle Outfitters, Inc. (NYSE:AEO) today announced financial results for the fourth quarter and fiscal year 2024 ended February 1, 2025.

"2024 demonstrated significant progress on our Powering Profitable Growth Plan. The team delivered strong operating profit growth with positive momentum across our brands and channels as well as disciplined expense management and operating efficiencies," commented Jay Schottenstein, AEO's Executive Chairman of the Board and Chief Executive Officer.

"Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather. While we anticipate improvement as the Spring season gets underway, we are also taking proactive steps to strengthen the top-line, manage inventory and reduce expenses. As we navigate through an uncertain consumer and operating landscape, we will also remain focused on our long-term strategic priorities," he added.

Fourth Quarter 2024 Results:

• Fourth quarter 2024 results are presented for the 13 weeks ended February 1, 2025 compared to the 14 weeks ended February 3, 2024. Comparable sales metrics are presented for the 13 weeks ended February 1, 2025 compared to the 13 weeks ended February 3, 2024.
• Total comparable sales increased 3%, following 8% reported comp growth last year.
• Total net revenue of $1.6 billion declined 4%. This included approximately $85 million of adverse impact from one less selling week and the retail calendar shift.
• Aerie comparable sales increased 6% on a 13% increase last year. American Eagle comparable sales grew 1% following 6% growth last year.
• Gross profit of $599 million. Gross margin of 37.3% reflected higher freight and product costs, offset by lower markdowns. BOW costs were roughly neutral.
• Selling, general and administrative expense of $402 million decreased 6% and leveraged 40 basis points. The improved rate was due to lower compensation, including incentive costs, partially offset by increased advertising.
• Operating income rose slightly to $142 million, reflecting an operating margin of 8.9%. This included an approximately $20 million adverse impact from one less selling week and the retail calendar shift.
• Diluted earnings per share was $0.54. Average diluted shares outstanding were 193 million.

Fiscal Year 2024 Results:

• Fiscal Year 2024 results are presented for the 52 weeks ended February 1, 2025 compared to the 53 weeks ending February 3, 2024. Comparable sales metrics are presented for the 52 weeks ended February 1, 2025 compared to the 52 weeks ended February 3, 2024.
• Total comparable sales increased 4%, following 3% reported comp growth last year.
• Total net revenue of $5.3 billion increased 1%. This included an approximately $60 million adverse impact from one less selling week.
• Aerie comparable sales increased 5% on 8% growth last year. American Eagle comparable sales increased 3% following 1% growth last year.
• Gross profit of $2.1 billion increased 3%. Gross margin of 39.2% expanded driven by lower rent, utilities and delivery expenses, with a partial offset from higher markdowns.
• Selling, general and administrative expense of $1.4 billion was roughly in-line to last year and leveraged 30 basis points. The improved rate was due to lower compensation, including incentive costs, partially offset by increased advertising.
• GAAP Operating income of $427 million. Adjusted operating income of $445 million reflected an operating margin of 8.3%. This included an approximately $5 million adverse impact from one less selling week.
• GAAP diluted earnings per share was $1.68. Adjusted diluted earnings per share was $1.74. Average diluted shares outstanding were 196 million.

Inventory

Total ending inventory decreased 1% to $637 million. Inventory is healthy and well positioned for the Spring season.

Shareholder Returns

In the fourth quarter the company repurchased 3.5 million shares for $60 million, bringing full-year repurchases to 9.5 million shares for $191 million. The company also returned approximately $24 million in cash to shareholders through its quarterly cash dividend of $0.125 per share, bringing year-to-date cash dividends to $96 million.

New Share Repurchase Authorization

On March 11, 2025, the company's Board of Directors authorized an additional 50 million shares for repurchase under its existing authorization, increasing the total shares available for repurchase to 68.5 million through February 3, 2029.

Share repurchases may be made from time to time in open market or private transactions in such manner as may be deemed advisable from time to time (including, without limitation, pursuant to one or more 10b5-1 trading plans, accelerated share repurchase programs, and any other method that the company may deem advisable) and may be discontinued at any time.

Capital Expenditures

Capital expenditures totaled $65 million in the fourth quarter and $223 million for fiscal year 2024. The company expects 2025 capital expenditures to be approximately $300 million. This includes a one-time $40 million cost of relocating to a new Manhattan office, which provides more favorable lease terms.

Outlook

The company's outlook reflects near-term headwinds in the consumer and macroeconomic operating environment, balanced with proactive steps the company is taking to strengthen the top-line and reduce expenses.

^{*Does not include repurchase activity beyond offsetting internal grants}

Webcast and Supplemental Financial Information

Management will host a conference call and real time webcast today at 4:30pm Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to www.aeo-inc.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company's website.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE:AEO) is a leading global specialty retailer with a portfolio of beloved apparel brands including American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed. Rooted in optimism, inclusivity and authenticity, AEO's brands empower every customer to celebrate their unique personal style by offering casual, comfortable, timeless outfitting and high-quality products that are made to last.

AEO Inc. operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce business across its brands. For more information, visit aeo-inc.com.

Non-GAAP Measures

This press release includes operating income and diluted earnings per share presented on an adjusted or non-GAAP basis, which are non-GAAP financial measures. These financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance when reviewed in conjunction with our GAAP Consolidated Financial Statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. The tables included in this release reconcile the GAAP financial measures to the non-GAAP financial measures discussed above for the 52 weeks ended February 1, 2025 and the 13 and 53 weeks ended February 3, 2024.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent management's expectations or beliefs concerning future events, including, without limitation, the outlook for first fiscal quarter and annual fiscal 2025. Words such as "outlook," "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," "may," "potential," and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company's control. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 and in any other filings that we may make with the Securities and Exchange Commission, in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the risk that the company's operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; the possibility that product costs are adversely affected by foreign trade issues (including import tariffs and other trade restrictions imposed by the U.S., China or other countries), currency exchange rate fluctuations, increasing prices for raw materials, supply chain issues, political instability or other reasons; challenges with information technology systems, including safeguarding against security breaches; and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

The use of the "company," "AEO," "we," "us," and "our" in this release refers to American Eagle Outfitters, Inc.

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