• Record Revenue: $5.3 billion, fueled by 4% comparable sales growth.
• Adjusted Operating Profit: $445 million, marking one of the strongest years in history.
• Fourth Quarter Operating Income: $142 million, the highest in over a decade.
• Full Year Cash Flow from Operations: Over $470 million.
• Shareholder Returns: Over $280 million returned through buybacks and dividends.
• Aerie Revenue: Crossed $1.7 billion in 2024.
• Fourth Quarter Revenue: $1.6 billion, down 4% year-over-year.
• Fourth Quarter Comparable Sales: Increased 3%.
• Fourth Quarter Gross Profit: $599 million with a rate of 37.3%.
• Fourth Quarter SG&A: Decreased 6%, leveraging 40 basis points.
• Fourth Quarter Earnings Per Share: $0.54.
• Ending Inventory Cost: Down 1% year-over-year.
• Full Year CapEx: $223 million.
• Share Repurchases: 9.5 million shares repurchased in 2024.
• Cash and Investments: Approximately $359 million at year-end.
• First Quarter Revenue Outlook: Expected decline in mid-single digits.
• Full Year Revenue Outlook: Expected to be down in the low single digits.
• Full Year Operating Income Outlook: $360 million to $375 million.
• 2025 Capital Expenditures: Expected to be approximately $300 million.

• Warning! GuruFocus has detected 6 Warning Signs with CMTL.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Eagle Outfitters Inc (NYSE:AEO) achieved record revenue of $5.3 billion in 2024, driven by a 4% comparable sales growth.
• The company reported an adjusted operating profit of $445 million, marking one of its strongest years in history.
• Aerie's revenue crossed $1.7 billion, with strong performance in soft apparel and activewear collections.
• American Eagle maintained its number 1 ranking in denim with its core customer base, achieving its sixth consecutive quarter of positive comp growth.
• The company returned over $280 million to shareholders through buybacks and dividends in 2024.

Negative Points

• 2025 has started off softer than anticipated due to a less robust consumer environment and cold weather.
• The company expects full-year revenue and operating income to be down relative to last year.
• Ongoing consumer uncertainty and changes in the operating landscape, including tariffs and a strong US dollar, pose challenges.
• First quarter revenue is expected to decline in the mid-single digits, with operating income projected to be between $20 million to $25 million.
• The company faces headwinds from higher markdown activity, tariffs, and BOW cost deleverage on the comp decline.

Q & A Highlights

Q: Can you provide insights on how stores in warmer areas performed compared to those affected by cold weather? A: Jennifer Foyle, President, Executive Creative Officer - AE, Aerie, noted that stores in warmer climates showed better performance, but the difference wasn't significant enough to impact the quarter's overall results. The company is only a third into the quarter, and there's still potential for improvement.

Q: How is American Eagle Outfitters managing SG&A expenses, and what are the plans for future cost control? A: Mike Mathias, Executive Vice President & Chief Financial Officer, explained that the company has developed strong expense control measures, leveraging SG&A effectively. They plan to continue managing expenses for leverage, aiming for a target SG&A rate of 25% to 26%, contingent on revenue growth.

Q: What are the early spring selling trends for American Eagle and Aerie, and how do they reflect in the Q1 revenue outlook? A: Jennifer Foyle mentioned that early spring trends showed some headwinds, with softer-than-expected February results. However, the company is positioned to chase inventory in high-demand categories like denim and fleece, allowing them to adapt quickly to market demands.

Q: Can you elaborate on the gross margin outlook, particularly regarding markdowns and product costs? A: Mike Mathias highlighted that the first quarter faces currency headwinds and tariff impacts, affecting gross margins. However, improvements in IMU (initial markup) are expected in the second half, with controlled markdowns and expense mitigations contributing to a stable gross margin.

Q: What is the current status and future outlook for the OFFLINE by Aerie brand? A: Mike Mathias stated that OFFLINE is a significant growth opportunity, currently representing about a third of Aerie's business. The brand has low customer awareness but is the fastest-growing segment within the company, with plans for product and geographic expansion.

Q: How is American Eagle Outfitters addressing the potential impact of tariffs on their supply chain? A: Jay Schottenstein, Executive Chairman and CEO, emphasized the importance of flexibility in the supply chain. The company is reducing its reliance on China, planning to decrease sourcing from high teens to single digits, while maintaining redundancy across 15 countries to adapt as needed.

Q: What are the expectations for digital and store performance in the first quarter, and how are store remodels progressing? A: Mike Mathias reported that digital sales are currently stronger than in-store sales, with digital traffic healthier than mall traffic. The company plans to continue with store remodels, aiming to reduce the average age of the American Eagle fleet and open new Aerie and OFFLINE locations.

Q: How is American Eagle Outfitters planning to enhance basket size and manage promotions? A: Jennifer Foyle noted that basket size is holding steady, with a focus on fulfilling customer needs to drive sales. The company is working on balancing assortments with opening price points to compete effectively while managing inventory and promotional strategies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.