- AEO reports earnings November 24th. Revenue could fall in the low single-digit percentage range.
- The Aerie brand grew revenue over 30% last year. Aerie is a real catalyst for AEO.
- The digital channel performed well amid the pandemic. AEO could be a brand play and distribution play.
- AEO could amplify growth when the economy reopens. Buy AEO into earnings.
American Eagle Outfitters (AEO) reports earnings November 24th. Analysts expect revenue of $1.03 billion and EPS of $0.33. The revenue estimate implies a 4% decline Y/Y. Investors should focus on the following key items.
Revenue Could Stabilize
Millions of Americans have been stuck at home amid the pandemic. Sales through physical stores have suffered due to shelter-in-place policies. American Eagle temporary closed stores when the pandemic materialized in March. In August, all of the company’s stores had been reopened. Last quarter, total revenue of $884 million fell 15% Y/Y.On a brand basis, it was a tale of two cities. Revenue for the American Eagle brand fell 26% Y/Y, while revenue for Aerie rose 32%. Aerie posted record sales, of which, about 70% occurred online. Aerie represented about 28% of American Eagle’s total revenue versus just under 20% in the year earlier period. The larger Aerie becomes, the more its out-sized growth can potentially influence the entire company.
