Global speciality apparel retailer American Eagle Outfitters (AEO) has reported growth in the third quarter (Q3) of fiscal 2024 (FY24) driven by its strategic Powering Profitable Growth plan. 

For the 13 weeks ending on 2 November 2024, AEO posted total revenue of $1.28bn, a 1% drop from $1.30bn in the corresponding period of the previous year.  

Despite this, total comparable sales rose by 3%, following a 5% increase in 2023. This growth occurred amid the adverse impact of $45m due to the retail calendar shift. 

Comparable sales of the Aerie brand saw a 5% uplift on top of a 12% rise in 2023, while American Eagle's comparable sales grew by 3% after a 2% increase in the previous year.  

However, AEO's gross profit dipped by 3% to $526.62m from $543.79m year-on-year, and gross margin decreased to 40.9% compared to 41.8%, influenced by higher markdowns and costs related to the retail calendar shift. 

Operating income stood at $106m in Q3 FY24, which translates to an operating margin of 8.2%, including a $20m negative impact from the retail calendar shift.  

Its diluted earnings per share were recorded at $0.41, with adjusted diluted earnings per share at $0.48.  

Selling, general and administrative expenses of AEO fell by 3% to $351m and leveraged by 50 basis points due to lower compensation and professional fees, offset partially by increased advertising costs. 

The quarter also included an $18m impairment and restructuring charge, with $6m non-cash expenses as AEO continued its profit improvement initiatives and transitioned its Hong Kong retail operations from a company-owned to a licensed model. 

AEO executive board chairman and chief executive officer Jay Schottenstein stated: "Building on our positive performance in the first half of the year, third-quarter results provide another proof point of the effectiveness of our Powering Profitable Growth plan. Led by a strong back-to-school season, we achieved comparable sales growth across brands and channels and delivered adjusted operating income at the high end of our guidance range." 

Looking ahead to the full year 2024, AEO anticipates comparable sales growth of 3%, with total revenue up 1%. 

Comparable sales for the fourth quarter are anticipated to increase 1%, while total revenue is projected to decline 4%. This includes an $85m impact resulting from the retail calendar shift and there being one fewer selling week. Operating income is expected to fall between $125m and $130m.