American Eagle Outfitters(AEO) - 2026 Q1 - Quarterly Report

Financial Performance - Total net revenue decreased 5% to $1.090 billion from $1.144 billion, with American Eagle revenue decreasing 4% and Aerie revenue decreasing 3% year-over-year [144]. - Gross profit decreased 31% to $322 million year-over-year, resulting in a gross margin of 29.6% compared to 40.6% last year [149]. - Operating loss of $85 million compared to operating income of $77 million last year, with an adjusted operating loss of $68 million this year [144]. - Comparable sales for American Eagle decreased 2% year-over-year, while Aerie's comparable sales decreased 4% year-over-year [144]. - Total comparable sales decreased by 3%, compared to a 7% increase last year [146]. - Net loss income was $64.9 million, or 6.0% of net revenue, compared to a net income of $67.8 million, or 5.9% of net revenue, representing a 196% decrease [163]. - Total operating loss was $85.2 million, a decrease of $163.0 million compared to an operating income of $77.8 million in the same period last year, reflecting a 209% decline [156]. Inventory and Charges - The company incurred a $75 million inventory charge related to a write-down of spring and summer merchandise [142]. - Impairment and restructuring charges amounted to $17.1 million, representing 1.6% of net revenue, a significant increase from 0.0% in the prior year [154]. Revenue Sources - Digital revenue decreased 2%, and store revenue decreased 6% during the reported period [146]. Store Operations - The number of stores at the end of the period increased to 1,176 from 1,173, with 6 stores opened and 2 closed [143]. - International licensed retail stores increased to 363 from 315 year-over-year [143]. - The company operated 363 licensed retail stores and concessions internationally as of May 3, 2025, across approximately 30 countries [168]. - The company remodeled 13 stores and opened 6 new stores during the 13 weeks ended May 3, 2025 [181]. Cash Flow and Liquidity - Cash flow and liquidity are expected to be sufficient to fund anticipated capital expenditures and working capital requirements for the next twelve months and beyond [137]. - Cash and cash equivalents decreased by $221.1 million for the 13 weeks ended May 3, 2025, compared to a decrease of $53.6 million in the same period last year [172]. - Total cash used in operating activities was $(54.7) million for the 13 weeks ended May 3, 2025, compared to $(38.1) million in the prior year, reflecting an increase in cash outflow of $16.6 million [172]. Capital Expenditures and Financing - For the 13 weeks ended May 3, 2025, capital expenditures totaled $61.6 million, a 70% increase from $36.2 million in the same period last year [180]. - The company expects capital expenditures for Fiscal 2025 to be approximately $275 million to support expansion efforts and technology upgrades [180]. - Cash used for financing activities for the 13 weeks ended May 3, 2025, included $201.5 million for stock repurchases under the ASR Agreement [175]. - The company repurchased approximately 0.7 million shares for $7.9 million during the 13 weeks ended May 3, 2025 [185]. - The company entered into an accelerated share repurchase agreement to repurchase $200 million of its common stock, with an initial delivery of approximately 14.5 million shares [184]. Shareholder Returns - The Board declared a quarterly cash dividend of $0.125 per share, paid on April 25, 2025 [186]. - The company has 54.0 million shares remaining authorized for repurchase through February 3, 2029 [183]. Other Financial Metrics - Interest income decreased by $3.2 million, or 94%, to $(0.2) million for the 13 weeks ended May 3, 2025, compared to $(3.4) million in the prior year [160]. - The effective tax rate increased to 23.3% for the 13 weeks ended May 3, 2025, compared to 18.0% for the same period in 2024 [162]. - An unrealized gain of $14 million was included in accumulated other comprehensive income for the 13 weeks ended May 3, 2025, due to foreign exchange rate risk [189]. - As of May 3, 2025, the company had $110.0 million in borrowings and $12.0 million in stand-by letters of credit under its Credit Facility [179].