Shares of American Eagle Outfitters (AEO +15.10%) popped on Wednesday after the clothing purveyor's profits topped investors' expectations.
By the close of trading, AEO's stock price was up more than 15%.
Image source: American Eagle Outfitters.
American Eagle's sales are strengthening
AEO's revenue rose 6% year over year to $1.4 billion in its fiscal third quarter ended Nov. 1, driven by new store openings and higher sales at existing locations. The company's total comparable sales grew 4%, a marked improvement from the 1% decline in the second quarter and 3% shortfall in the first quarter.
AEO's Aerie brand delivered particularly impressive same-store sales growth of 11%, while the company's namesake American Eagle brand also returned to growth, with comp sales rising 1%.
"I'm extremely pleased with the significant trend change across our business reflecting decisive steps taken from merchandising to marketing to operations -- all having a positive impact," CEO Jay Schottenstein said in a press release.
NYSE: AEO
Key Data Points
The retailer's popular marketing campaigns with actress Sydney Sweeney and football icon Travis Kelce are helping to boost its brand awareness among shoppers. The two partnerships together generated a whopping 44 billion ad impressions.
All told, AEO's adjusted earnings per share jumped 10% to $0.53. That bested Wall Street's estimates, which had called for per-share profits of $0.44.
American Eagle sees a strong holiday selling season ahead
These results, along with encouraging ongoing sales trends, prompted AEO to boost its financial outlook. Management now expects fourth-quarter operating income of $155 million to $160 million -- up from a prior forecast of $125 to $130 million -- fueled by comp sales growth of 8% to 9%.
The company, in turn, lifted its full-year operating profit target to $303 million to $308 million, up from $255 million to $265 million.
"Strong momentum has continued into the fourth quarter, including an excellent start to the holiday season," Schottenstein said. "We delivered a record-breaking Thanksgiving weekend, led by an acceleration in demand across brands and channels."
