American Eagle earnings in for a hit from hefty freight costs
Reuters
American Eagle Outfitters
The apparel chain said it used pricier air freight in the latter half of 2021 to circumvent factory closures in Vietnam, but still faced an uneven flow of inventory in its high-margin Aerie
The U.S. retail industry has been wrestling with soaring freight prices for several months, and major logistics operators are expecting congestion, tight capacity and high freight rates to persist well into 2022.
Rival Abercrombie & Fitch
Still, American Eagle expects earnings to improve in the second half of this year as it does not plan to use elevated air freight.
“It’s definitely going to be a tale of two halves,” Chief Financial Officer Michael Mathias said during an earnings call.
The company also plans to discount more in the spring season after historically low levels last year, when the roll-out of federal stimulus checks enabled customers to spend more on its clothes and accessories.
In the fourth quarter ended Jan. 29, total net revenue increased 17% to $1.51 billion, in line with expectations, according to IBES data from Refinitiv.
American Eagle’s namesake division posted a 11% rise. Its Aerie line, which makes activewear, swimsuits and bralettes, recorded a 27% jump, marking its 29th consecutive quarter of double-digit growth.
The company also said it was pleased with the early performance of its spring collections thanks to faster shipment deliveries.
Adjusted earnings per share came in at 35 cents, also meeting expectations.
