American Eagle Beats Q4 Profit Forecasts

American Eagle has beat analysts’ profit forecasts for the fourth quarter fiscal 2016 with $54.6 million in profits. The brand will also be closing some of its unprofitable stores.

According to an article on The Business of Fashion, American Eagle has beat analysts’ Q4 profit forecasts with $54.6 million in profits. The brand also announced plans to close some of its unprofitable stores.

The brand reported a net income of $54.6 million, or 30 cents per share. That’s compared to $81.7 million, or 42 cents per share, last year. Excluding one time items, earnings of 39 cents per share beat analysts estimates by one cent.

The brand reported a revenue of $1.1 billion from the quarter, which was lower than what analysts expected. Analysts expected about $1.11 billion.

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The brand also had profits of $212.4 million, or $1.16 per share, for the entire year. That’s compared to $2.18.1 million, or $1.11 per share.

In 2016, the brand opened 46 stores including 34 Aerie stores. The brand also closed 26 stores stores and it seems the brand will be closing a lot more than that this year.

Along with reporting Q4 profits, the brand announced it would be closing some of its unprofitable stores.

Jay Schottenstein, Executive Chairman and Interim CEO, released a statement saying,

we only have 46 stores that are unprofitable, and within the course of the next two years, 26 of those stores come up for renewal or lease expiration. Within the entire portfolio of 1,050 stores, we’ve got 580 stores that come up for lease expiration over the course of the next three years.

Schottenstein did not say how many of those unprofitable stores will be closed.

Regardless, the brand is doing what every brand should be doing and investing in selling and promoting its products online.

About 27% of the brand’s revenue now comes from online sales and those sales increase every year, according to Schottenstein. The brand has also had a 34% increase in mobile visits to its website.

Although people still shop at stores from brand’s like Zara and H&M, those brands still sell a lot of products online. They also invest in promoting those products on social media. So, closing stores and investing in selling its products online would most likely help the brand increase sales.

So, what do you think? Will sales and profits at American Eagle increase? Let me know in the comments below. Also, don’t forget to subscribe to get new posts sent directly to your inbox and follow me on Facebook, Instagram, and Snapchat.


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