For the quarter ended Nov. 2, the teen retailer posted a net income of $24.9 million, or 13 cents a share, compared with $78.61 million, or 39 cents a share, a year ago. Excluding one-time items, adjusted earnings were 19 cents a share in line with analysts’ average estimate.
Net sales declined 6% to $857 million compared to $910 million last year. Total comparable store sales declined 5% compared with a 10% increase in the year-ago quarter.
‘Intensively Promotional Retail Landscape’
CEO Robert Hanson said, “Our financial performance is clearly unsatisfactory and not consistent with our objectives. As we continue to navigate through an intensely promotional North American retail landscape, we are making improvements in merchandising and marketing, while aggressively pursuing efficiency gains, expense reductions and ensuring disciplined inventory management.”
Looking ahead, AEO forecast fourth quarter earnings between 26 and 30 cents, which is below analysts’ consensus for 39 cents a share. Comp store sales are expected to decline in the mid single-digits.
“We are continuing to invest in important areas of growth including omnichannel, global expansion and factory stores — all high-return segments, which diversify our business and will be key drivers of our future growth and success,” Hanson added.
AEO also announced the appointment of Chad Kessler as executive vice president, chief merchandising and design officer. Kessler, who will assume his new on Feb. 3 next year, succeeds Fred Grover, who will stay with the company to “ensure a smooth transition through mid-year” until he retires.