Wow, 3 posts since my last one. Bought more today to add to my position. Can't pass up such a good report. Someone seems to like selling at low prices. I'll take them (to the bank hopefully)
American Eagle Soaring Into
Busy Holiday Season
By Richard McCaffery (TMF Gibson)
What a run the leading casual clothing retailers have had
in the last three years.
Apparel, footwear, and accessories maker American
Eagle Outfitters (Nasdaq: AEOS) is riding a swift
updraft. The company, whose stock is up 68% this year,
reported third quarter net income of $24.3 million, or
$0.50 per diluted share. This is a 75% increase from net
income of $13.9 million, or $0.29 per diluted share, a year ago.
Results blew away analyst estimates of $0.43 per share,
according to First Call/Thomson. Same-store sales jumped
an amazing 26.4%. Retail investors pay close attention to this measure because it separates growth at existing stores from growth at new stores, which can skew the actual strength of a company's business because new stores are typically fast out of the gate.
What makes the company's Q3 results even more
impressive is the strength of last year's third quarter. A 75% growth in net income wouldn't be such a big deal if the company reported negative growth last year. But that's not what happened. Net income jumped 121% last year,and same-store sales increased 29.4%.
The company sells its own line of jeans, khakis, and
T-shirts, as well as shoes and accessories like sunglasses, hats, and coats. It targets the fashion-conscious consumers ages 16 to 34, a strategy that's served competitors the Gap (NYSE: GPS) and Abercrombie & Fitch (NYSE: ANF)well over the years.
American Eagle should have an easier time than the Gap
growing earnings and sales at a double-digit pace over the long term, however, simply because it's a much smaller company. American Eagle operates 460 stores in 43 states, compared to more than 1,800 Gap stores in the
U.S., Canada, and overseas.
After more than doubling this year, shares of American
Eagle slid after talk that it boosted same-store sales by counting merchandise it sold to discount retailers, as well as scuttlebutt about the company not building up enough inventory for its busy fourth quarter. Rubbish, said analysts at Robertson Stephens in a recent report, which recommended buying on the weakness.
What can the Fool add to this? Investors with questions
about how a company stocks inventory, counts same-store
sales, handles accounts receivable, etc. -- all good
questions -- should pick up the phone and call the
company's investor relations department. Go right to the
source. It doesn't take long and that's what investor
relations people are there for. More often than not you'll get your answer in two shakes. |
