• Q2 profit falls 3.3% to $19m
  • Sales up 11% to $740m
  • Company ups FY EPS guidance 

US teen clothing retailer American Eagle Outfitters has seen its second-quarter profit slip on the back of costs linked to the exit of its 77kids brand, but said it was pleased with results overall and has lifted its full-year earnings guidance.

Net income for the quarter ended 28 July declined 3.3% to US$19m. Operating income jumped 62.3% to $61.8m. Net sales increased 11% to $740m, while comparable store sales, including AE Direct, climbed 9%.

The after-tax loss for the 77kids business was $24m during the quarter, compared to an operating loss of $5m last year. The company expects to incur the remaining exit costs during the third quarter. Last month, American Eagle said it expects to incur an after-tax loss of $35-50m through the exit.

"While pleased with our results, and therefore raising our annual outlook, we continue to drive for long-term performance improvement through fortifying our brands, further strengthening our products, marketing and customer experience, enhancing operational disciplines and pursuing growth across North America," said CEO Robert Hanson.

Looking forward, the company raised its full-year earnings per share to range from $1.33 to $1.36, compared to earlier guidance of $1.16 to $1.22.