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Aerie Brand Is Still Soaring for American Eagle Outfitters in the Fourth Quarter

By Rich Duprey - Updated Jan 21, 2021 at 11:56AM

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The lingerie and loungewear line is expected to do the lion's share of the work.

American Eagle Outfitters (AEO -0.82%) is once again able to avoid falling from dizzying heights as its lingerie and loungewear brand Aerie continues to soar.

Ahead of an investor day presentation, the apparel company provided some early insights into its fourth-quarter earnings, due to be released soon, and the Aerie brand should once again see double-digit growth.

Women wearing Aeries loungewear clothes

Image source: Aerie.

American Eagle reported that total quarterly revenue is expected to fall by the low single-digit range despite its name brand suffering double-digit declines. That's because Aerie is doing so well, with sales growth in the high 20% range.

Like most of the retail industry, American Eagle is suffering from pandemic-related store closures and weak shopping mall traffic, though that was offset quite a bit by its digital channel, with both brands seeing double-digit gains.

CEO Jay Schottenstein said, "Compelling holiday product and marketing, combined with a disciplined approach to promotional activity, drove very strong margin results."

The apparel chain said it expected fourth-quarter adjusted operating income to exceed $95 million, up from $77 million a year ago. It's being lifted by higher margins resulting from fewer promotions, more full-price sales, and a successful holiday sales period.

American Eagle separately released its new strategic vision road map through 2023 called Real Power. Real Growth. It targets annual revenue of $5.5 billion, operating margins of 10%, and operating income of $550 million, which would equate to a 15% compound annual growth rate.

To achieve those targets, Aerie will be doing the heavy lifting by doubling sales to $2 billion, while the American Eagle brand revenue will remain flat at $3.5 billion. However, it's seen as returning to profitable growth, too.

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