American Eagle Outfitters
US clothing chain American Eagle Outfitters has reported a drop in sales and earnings in its third-quarter but the retailer said results exceeded expectation. Total revenue was down 3% to US$1.2bn, while consolidated store revenues declined 4%. Digital sales were down 5%. AEO said its supply chain business, Quiet Platforms, contributed approximately 2 percentage points to revenue growth. Brand revenue declined 5%, better than the company’s expectation for a high single digit decline. The company’s gross margin rate of 38.7% compared to 44.3% last year as a result of higher markdowns and increased product costs. Earnings dropped to $81.3m from $152.2m last year.
“I’m pleased to deliver a third quarter that exceeded our expectations, with profit margins meaningfully improved from the first half of the year,” said CEO Jay Schottenstein. “Bold actions to rationalize inventory and reduce expenses are paying off. As we navigate the current macro environment, we remain focused on our strategic initiatives — leading with innovation and judiciously investing in capabilities that will differentiate us in the long-run. Our organization is strong and I have tremendous confidence in the resilience of our brands.”
Dick’s Sporting Goods
Dick’s Sporting Goods has booked a mixed third-quarter as sales increased but earnings fell 28%. Net sales were up 7.7% in the quarter to US$3bn. Comparable store sales increased 6.5% on top of a 12.8% increase in the third quarter of 2021, a 23.2% increase in the third quarter of 2020 and a 6% increase in the third quarter of 2019. Earnings amounted to $228m, representing a drop on earnings of $317m a year earlier. Despite this, the company has raised its full-year 2022 earnings per diluted share guidance to $10.50 to $11.10, up from $8.85 to $10.55 previously. Full year comparable store sales are expected in the range of negative 3% to negative 1.5%, up from negative 6% to negative 2% previously.
Net income and sales for the third quarter slumped at FootLocker Inc but its management team remains upbeat and has upped the sales outlook for the fourth quarter and full year. Third-quarter comp-store-sales fell 0.8% year-on-year. Total sales fell 0.7% to $2.17bn. Net income fell to $96m from $158m.
“Foot Locker’s solid third quarter results in the midst of ongoing macroeconomic challenges are a testament to the strengths of this organization that I am honored to now be leading,” said Mary Dillon, president and CEO. “Despite the tough environment, our expanding customer base remained resilient, and I’m proud that our team delivered sales above our expectations, thanks to their exceptional execution. I see tremendous opportunity to further leverage the power of our brand equity and our incredible field team to drive our growth in this exciting category.”
Andrew Page, Executive Vice President and Chief Financial Officer, said, “Following better-than-expected results for the third quarter and strong momentum coming out of the quarter, we are increasing our outlook for the fourth quarter and the full year. While the macroeconomic environment remains uncertain, our demand trends, and inventory position in high-quality product gives us confidence we can achieve our new range, while also remaining flexible to manage through ongoing volatility.”
Foot Locker anticipates total sales to be down 4-5% from 6-7% a year earlier and comp sales to be down 4-5% from earlier guidance of 8-9%.
Ross Stores has recorded a drop in earnings and sales for the third quarter as a result of higher promotions and one-off costs. Earnings amounted to US$342m from $385m a year earlier, while net sales dropped slightly to $4.56bn from $4.57bn in the year ago period. Comparable stores sales were down 3%. Earnings per share for fiscal 2022 are projected to be in the range of $4.21 to $4.34 versus $4.87 last year. CEO Barbara Rentler said: “Third-quarter results were above our expectations as we delivered stronger values throughout our stores. Operating margin for the period was 9.8% versus 11.4% last year, reflecting the deleveraging effect from the comparable sales decline as well as pressure from higher markdowns and unfavourable timing of packaway-related costs.”
Rocky Brands moved to a profit in the third quarter as the US retailer booked higher sales despite macroeconomic headwinds. Net sales increased 17.5% to US$147.5m, while retail sales for the quarter increased 7.3% to $23.4m. Gross margin, however, was lower at 35.2% compared to 37.4% a year earlier, but the company booked a net profit of $5.7m from losses of $0.4m last year.
“The third quarter was highlighted by strong sales growth compared to the year ago period even as the macroeconomic headwinds pressuring consumer discretionary spending intensified,” said CEO Jason Brooks. “Our top line performance underscores the strength of our brand portfolio, the desirability of our innovative, functional footwear, and the important relationships we’ve established with our consumers and retail partners. These important aspects of our business, combined with actions we’ve already taken to address cost pressures and reduce expenses, have the company in a good position to weather this challenging operating environment.”
Columbia Sportswear has seen a 19% increase in net sales for the third quarter to a record US$955m. Operating income rose 9% to $145.3m. Net income rose 11% year-on-year to $111.8m.
Chairman, president and CEO Tim Boyle said: “Third quarter net sales and earnings growth reflect broad momentum across our business and the power of our collective brand portfolio. Our strong balance sheet, balanced global distribution, and operating discipline position us to successfully navigate this dynamic environment. I’m confident we have the right strategies in place to unlock the significant growth opportunities we see across the business.
“We are investing in our strategic priorities to: accelerate profitable growth; create iconic products that are differentiated, functional and innovative; drive brand engagement through increased, focused demand creation investments; enhance consumer experiences by investing in capabilities to delight and retain consumers; amplify marketplace excellence, with digitally-led, omni-channel, global distribution; and empower talent that is driven by our core values, through a diverse and inclusive workforce.”
US footwear brand Skechers booked a 20.5% increase in sales in the third quarter to US$1.88bn thanks to growth of 14.9% at home and a 24.6% increase in international sales, primarily driven by wholesale. Gross margin was 47.1%, a decrease of 280 basis points, due to increased freight and logistics costs. Net earnings were $85.9m, representing a drop of 16.7%.
“Skechers’ record third quarter sales reflect double-digit growth across our segments and in most countries. These results are a testament to the demand for our comfort technology products,” said CFO John Vandemore. “Despite multiple macroeconomic headwinds, from foreign exchange rates to supply chain challenges and ongoing Covid-related lockdowns, we remain focused on our long-term growth strategy. We are encouraged that demand remains strong and as these headwinds moderate, we expect to see continued revenue growth and improved operating leverage.”