American Eagle reports second quarter results, digital revenue increases 74%

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American Eagle reports second quarter results, digital revenue increases 74%

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American Eagle Outfitters, Inc. (NYSE: AEO) announced its second-quarter of 2020 financial results, ended 1st August 2020, on 9th September 2020.

American Eagle Outfitters is an American lifestyle, clothing, and accessories brand.

The total net revenue decreased by 15% while digital reported revenue increased by 74%.

American Eagle Outfitters Chairman and Chief Executive Officer, Jay Schottenstein commented, “In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business – a true testament to the agility, talent, and commitment of our team. “. He added, “Throughout this event, we operated with strong disciplines, reduced expenses, cut inventories, and carefully managed liquidity. We controlled what we could, and generated positive free cash flow, strengthening our balance sheet.”


  1. Net Revenue:
        1. The net revenue decreased by 15%, from $1,040.9 million last year to $883.5 million reported in the second fiscal quarter of 2020.
        2. This decline from last year largely reflected store closures during the second quarter of 2020.
        3. Included in total net revenue over the same period last year was $40 million recognized for license royalties from a third-party operator of AE stores in Japan.
        4. 88% of the total sales reported were from the United States while the rest of 12% were international sales.
        5. By brand, American Eagle brand revenue slashed 26% while Aerie brand revenue rose by 32%.
  2. Gross Profit:
        1. Gross profit decreased 31%  to $265.2 million this quarter as compared to $382.6 million last year.
        2. The gross margin for the second quarter of 2020 declined to 30% as compared to 36.7% last year.
        3. The gross margin slump reflected a contraction in in-store revenue and costlier delivery and distribution center expenses.
  3. Operating Expenses:
        1. Selling, general and administrative expenses lowered  12%, mainly due to store closures and disciplined cost controls.
        2. Impairment, restructuring, and COVID-19 related charges were $14.6 million. These charges consisted of $13.9 million of incremental COVID-19 related expenses including personal protective equipment and supplies and $0.7 million of severance costs.
        3. Depreciation and amortization expense decreased to $39.1 million as compared to $44.9 million reported last year. Decrease of 13%.
  4. Net income: 
        1. Net Income decreased to a net loss of $13.8 million reported in the second quarter of 2020.
  5. Digital Demand:
        1. Digital Demand Sales represent sales orders placed online through the company’s e-commerce channels during the period.
        2. Total ordered sales through the website increased by 48%.
        3. Digital ordered sales increased 113% for Aerie Brand and 21% for the AE brand.
  6. Due to store closures related to COVID-19, the company did not publish comparable sales this quarter as the periods are not comparable
  7. A total of $899 million amount reported for cash and cash equivalents for the quarter ended 1st August 2020.
  8. Adjusted EBITDA reported for $43 million.


While this quarter presented improved results from last quarter the company experienced a downfall as compared to last year due to the lockdown imposed to contain coronavirus from spreading which heavily impacted offline sales.

The company is said to be evaluating its fleet and reduce the fixed costs associated with the stores. As customer acquisition switched to online means.

Mike Mathias, Vice President, and Chief Financial Officer commented, “At the end of this year, we expect to close 40 to 50 locations, which have been specifically chosen based on lease tenure, mall profile, proximity to other stores, and customer engagement levels. We are very confident in our ability to transfer customers and sales from these locations.”

Aerie’s growth is a primary priority for the company as of now as its digital channel has consistently surpassed expectations. The company is planning to inaugurate about 25 new stores.

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