A shopper walks past an American Eagle store in the mall.
Tim Boyle | Getty Images News | Getty images
American Eagle Outfitters announced on Wednesday that the company is ahead of expectations for its fiscal first quarter as stimulus controls and pent-up demand fuel sales of jeans, smart tops and leggings.
Sales are on track and will exceed $ 1 billion, he said. Analysts asked American Eagle for 23 cents a share on revenue of $ 904.1 million, according to a Refinitiv poll. The company has not provided a new earnings estimate.
Its shares were up more than 8% in out-of-hours trading.
The tween and teen apparel retailer said demand for goods from both its namesake American Eagle and Aerie – which sells comfortable lingerie and loungewear for young women – is stronger than expected. That’s partly due to external factors, including economic stimulus, renewed consumer optimism and pent-up customer demand, he said.
American Eagle’s denim business is particularly strong, and shoppers have also started buying more tops, CEO Jay Schottenstein said during a phone interview with CNBC.
“There is a lot of money there,” he said. “We think the environment is going to be a really good environment in the coming years … People will want to spend [and] people will want to go out and they will want to go back to what was normal before. “
The trends are another sign that people are ready to change clothes after spending months in the house during the Covid pandemic in sweatpants or pajamas. Other retailers, such as Levi’s, have recently made similar comments about the popularity of denim, especially among Gen Z customers.
Within Aerie, which has grown much faster than American Eagle, momentum for leggings has not slowed, said Jennifer Foyle, the global brand president. Retailers such as Lululemon and Gap’s Athleta have also benefited from the leggings boom. Obviously, these bottoms aren’t just for yoga anymore, as more and more women are actually wearing them everywhere.
Last summer, in the midst of the health crisis, Aerie developed a new athleisure brand called Offline by Aerie. The brand sells printed sports bras, sweatpants, printed T-shirts and other active items. Although it is sold in Aerie stores, American Eagle plans to open approximately 25 to 30 Offline by Aerie stores this year.
While the field is busy for athleisure, Foyle said the size of the market is huge. “I think there is room to take some market share,” said Foyle.
She added that the company is still on track to double its Aerie operations to $ 2 billion in annual sales by 2023.
Additionally, American Eagle said its profit margins have improved due to selling more items at full price and relying less on promotions.
American Eagle shares are up more than 270% in the past 12 months. It has a market cap of $ 5.5 billion, which is larger than its rival and Hollister owner Abercrombie & Fitch.
American Eagle will present in a virtual fireplace chat Thursday during JP Morgan’s 7th annual retail round. It is expected to report financial results for the quarter ended May 1 to May 26, after the market closed.