While many mall-based retailers are singing the blues, denim-king American Eagle Outfitters says sales held steady, predicting more significant gains in the months ahead.
Sales at AEO, the Pittsburgh-based retailer, which also owns Aerie, were flat at $1.2 billion in the second quarter, in line with Wall Street expectations.
Store revenue rose 4%, while digital sales fell 7%.
“Demand picked up in June and July, reflecting brand strength and on-trend collections that are resonating well with customers, supported by exciting new marketing campaigns,” says Jay Schottenstein, AEO executive chairman of the board and chief executive officer.
Net income came in at $48.6 million, compared to a loss of $42.5 million in the second quarter of 2022.
And while he noted that the company is keeping a close watch on people’s spending patterns, “we are excited about future product arrivals, leveraging the positive response to early fall goods and delivering innovative customer connections.”
As a result, AEO now predicts better numbers for the full year, with revenue expected to rise in the low single digits. Its previous forecast called for flat-to-down sales. And for the next quarter, the company is maintaining its expectation of sales growing in the low single digits.
Gabriella Carbone, an analyst who follows the retailer for Deutsche Bank, says the results landed generally within expectations.
“After noting a slowdown in May trends last call, management cited an 'inflection point' this June with strength sustaining into July, which was the best month this quarter,” she writes in her note, with sales at American Eagle turning into positive territory, and Aerie delivering double-digit increases, as initial weakness in intimates improved over the quarter.
Carbone, who has given the company a “Buy” rating, says that at the American Eagle banner, “management called out strength in women's tops and continued comparable improvement across denim and non-denim bottoms and men's bottoms.”