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American Eagle Outfitters says profit improving as teen retailer cuts costs

Tribune-Review
| Wednesday, November 12, 2014 10:26 a.m

American Eagle Outfitters Inc. raised its profit guidance for the third quarter, saying its efforts to reduce discounts and cut costs are working.

But the South Side-based teen clothing retailer said it remains hesitant about whether it will see further improvement during the holiday shopping season.

“Third-quarter earnings exceeded our expectations, and margins were ahead of last year,” interim CEO Jay Schottenstein said Wednesday. “Yet as we approach the holidays, we remain cautious given the ongoing weakness in mall traffic.”

The company expects to be able to give a firmer outlook on holiday shopping trends after Thanksgiving weekend, and the kick-off to the traditional start to Christmas shopping. American Eagle will report its third quarter results Dec. 4.

For the 13 weeks ended Nov. 1, American Eagle’s fiscal third quarter, the company expects adjusted net income of 22 cents a share, up from earlier guidance for adjusted net income in the range of 17 cents to 19 cents a share.

Wall Street cheered the higher guidance. American Eagle’s shares closed up $1.29 to $13.80, a 10 percent gain.

Adjusted net income excludes 17 cents a share in one-time costs related to corporate and store-level expense reductions, the company said.

Including those one-time charges, American Eagle said it expects net income of 5 cents a share, compared with 13 cents a share a year earlier.

American Eagle fired CEO Robert Hanson in January after two years. The company is facing mounting pressure from competitors and weaknesses that have dogged retailers since the recession.

Schottenstein, who had been executive chairman and is the retailer’s seventh-largest shareholder, is running the company while a search is under way for a permanent CEO.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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