This May Be Why American Eagle Just Crushed its Earnings Estimates

Retail apparel company American Eagle reported its fiscal first-quarter earnings this week and crushed estimates.

As more teenagers head back to the mall, retail companies like Urban Outfitters and Abercrombie & Fitch have also been seeing strong results.

On Tuesday, Urban Outfitters reported fiscal first-quarter earnings 54 cents per share on revenue of $927.4 million. Analysts were expecting earnings of 17 cents per share on sales of $900.1 million, according to a Refinitiv survey.

Abercrombie & Fitch, reported Wednesday adjusted first-quarter earnings per share of 67 cents on revenue of $781.4 million. This was better than the loss of 38 cents per share and revenue of $687 million that analysts were expecting.

Sales at its namesake Abercrombie brand rose 59.6% year over year, and were up 11% from 2019 levels, while at Hollister, sales jumped 62% from the year-ago period, and were up 3.3% on a two-year basis.

It was in April that American Eagle had preannounced that its first quarter sales would be on pace to top $1 billion. The company also revealed that momentum was accelerating into the second quarter.

For the period ended May 1st, American Eagle reported earnings per share of 48 cents versus the 46 cents expected per Refinitiv estimates. Revenue clocked in at $1.03 billion compared to the $1.02 billion that was expected.

American Eagle’s net income for the period ended May 1 grew to $95.5 million, or 46 cents per share, compared with a loss of $257.2 million, or $1.54 per share, a year earlier. Excluding one-time adjustments, the company earned 48 cents per share, 2 cents ahead of analyst expectations.

Revenue climbed to $1.03 billion from $551.7 million a year earlier.

The company’s namesake American Eagle brand experienced sales moving up slightly from 2019 levels, at $728 million. The Aerie line’s revenue grew 89% on a two-year basis, to $297 million.

Jen Foyle, chief creative officer at American Eagle Outfitters and global president of Aerie, told CNBC that the company has pulled back on promotions, helping to boost profits.

“We continue to just focus on really getting the outfits [right] and completing the look,” Foyle said. “Focusing on tops and dresses and fashion. … We’ve really started to attack that, fast.”

American Eagle did not provide an outlook.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.