Key Takeaways
- American Eagle Outfitters Inc. stock rose Thursday after it reported record-high fourth-quarter sales and adjusted earnings per share that beat estimates.
- The company’s bottom line was hurt by about $120 million in impairment and restructuring charges, largely related to its internal logistics business Quiet Platforms.
- American Eagle also released a plan that it projects can add 3% to 5% annual revenue growth by 2027.
American Eagle Outfitters Inc. (AEO) shares rose Thursday after it reported a record-high $1.68 billion in revenue for the fourth quarter of 2023, 12% above the $1.5 billion posted in the final quarter of 2022, along with unveiling a plan the company says will produce 3% to 5% annual growth in revenue over the next three years.
The company posted better-than-expected adjusted earnings per share (EPS) of 61 cents, above estimates compiled by Visible Alpha of 50 cents. American Eagle reported $5.26 billion in total revenue for the full fiscal year, and projects that its new “Powering Profitable Growth” plan could drive the company to $5.7 billion to $6 billion in annual revenue by the end of the 2026 fiscal year.
The additional revenue will come from “amplifying” its namesake brand, along with growing other brands like Aerie and an activewear brand, Offline, the company said. American Eagle also said it will look to practice additional “financial discipline” so it can operate at a higher profit margin.
Net income, however, was only $6.32 million because the apparel company posted about $120 million in impairment and restructuring charges, $98 million of which was related to its Quiet Platforms logistics business.
American Eagle bought a number of companies over the last several years to create an internal supply-chain business it called Quiet Platforms to improve its own business, and also make American Eagle a resource that other companies would look to for assistance with their logistics.
In April 2023, multiple executives at Quiet Platforms were reported to have left the company amid “changes within the Quiet Platforms Organization,” and American Eagle acknowledged in the fourth-quarter earnings call for the 2022 fiscal year that the business had grown, but not at the margins it had anticipated.
Most of the $98 million charge was attributed to intangible asset and goodwill impairment, as well as long-term asset impairment due to technology that is no longer part of Quiet Platforms’ long-term strategy.
American Eagle was up about 2.4% at $24.02 at 1:31 p.m. ET Thursday, after rising as much as 5% earlier in the day. The stock is up 13% in 2024, and more than 75% over the last full year. Shares of American Eagle and Abercrombie & Fitch Co. (ANF) jumped earlier this year after both companies raised their guidance on strong holiday sales.