The American Eagle Outfitters Powering Profitable Growth plan is structured to deliver mid-to-high teens annual operating income expansion on 3-5% annual revenue growth over the next three years, and an approximate 10% operating margin.
The company said the multi-year plan is centred around three key pillars:
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- Amplify our brands: Grow American Eagle, powering market leadership in denim and expansion into right-to-win adjacencies; Fuel Aerie’s expansion and Accelerate activewear opportunity with OFFLINE.
- Execute with financial discipline: Organization structured to deliver consistent profit growth and shareholder returns.
- Optimize operations: Leverage best-in-class operating capabilities to fuel our growth and profit roadmap.
“Amplifying American Eagle and Aerie’s stronghold in casual apparel is at the very center of our strategic plan. We see incredible growth opportunities as we elevate key businesses and expand into category adjacencies at American Eagle, fuel the #AerieReal movement in underpenetrated markets and accelerate OFFLINE’s significant potential in activewear. These efforts will be supported by a sharp focus on profit expansion. We will utilize our leading operating capabilities and leverage new technologies to maximize ongoing efficiencies and deliver the very best and innovative experiences for our customers,” commented Jay Schottenstein, AEO’s executive chairman of the board and CEO.
“I’m extremely excited about our Powering Profitable Growth strategy. We have passionate, driven and talented teams surrounded by a renewed focus on performance. Together we look forward to executing and delivering on our plan, creating long-term value for our shareholders,” Schottenstein continued.
Q4 results summary
AEO made the announcement on the back of its fourth-quarter results in which it detailed a 12% jump in fourth-quarter revenue (Q4) to $1.7bn.
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The company announced GAAP operating income of $9m down from $73.6m a year earlier. Net income fell to $6.3m from $54.6m.
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By GlobalDataFor the full year, net revenue increased to $5.3bn compared with $4.99bn.
But increased impairment and restructuring charges and SGA cost saw operating income slide to $222.7m from $247m a year earlier. Net income increased to $170m.
Schottenstein said: “I am proud of how the teams executed in the fourth quarter. As our profit improvement initiatives took hold, we delivered a material improvement in business, underscoring the power of our brands, operations and strategic focus. Customers responded well to our strong merchandise collections fueling positive results across brands and channels.
“We are entering 2024 with momentum and from a position of strength with an exciting line-up of innovation and customer engagement initiatives. Our balance sheet is healthy and we are seeing early proof points of our new long-term strategy to deliver industry-leading earnings growth and shareholder returns, which we look forward to sharing today.”
In January 2024, AEO increased its revenue forecast for Q4 to the low double digits, attributing the adjustment to its “confidence and precision” in delivering a winning product assortment during the holiday season.
