stock was rising Tuesday after the clothing company posted a third-quarter earnings beat and said it reduced inventory levels.
(ticker: AEO) reported adjusted profit of 42 cents a share in the period, while analysts had penciled in 22 cents. The company posted operating income of $118 million, which it said exceeded pre-pandemic 2019 levels.
Net revenue dipped 3% year over year to $1.24 billion, but slightly beat analysts’ expectations. For its fourth quarter, the company “is guiding brand revenue down in the mid single digits” and forecast gross margin in the range of 32% to 33%, at the higher end of previous guidance.
American Eagle said its Aerie division, known for leggings and lingerie, posted “all-time high third-quarter revenue” of $350 million, an increase of 11% year over year.
“Bold actions to rationalize inventory and reduce expenses are paying off. Our inventory is in good shape, up 8% to last year, with progress continuing into the fourth quarter,” said CEO Jay Schottenstein. That compared with an inventory increase of 36% in the last quarter.
“Inventory is current for the holiday season,” the company said, adding it “continues to expect fourth-quarter-ending inventory to be down to last year.”
American Eagle Outfitters was selected as a Barron’s stock pick earlier this year.
The stock rose 8% on Tuesday. It has fallen about 49% this year.
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