(AOF) – American chain of distribution of clothing, American Eagle Outfiiters (AEO) posted in the third quarter a total net turnover of 1.24 billion dollars. It fell 3% from the third quarter of 2021 to $1.27 billion. Its gross profit is $480 million compared to $565 million in the third quarter of 2021 and reflects a gross margin rate of 38.7% compared to 44.3% last year. Its $118 million operating profit also reflected a 9.5% margin that topped pre-pandemic levels in 2019.
Total inventory rose 8% to $798 million from $740 million last year.
For the fourth quarter, the company expects a gross margin of between 32% and 33%
“This third quarter exceeded our expectations, with profit margins significantly improved compared to the first half of the year. Bold actions to rationalize inventory and reduce expenses are bearing fruit. Our inventory is in good condition, up by 8% year over year, and progress continues into the fourth quarter. We remain disciplined and focused on improving profitability and cash flow, while maintaining a healthy balance sheet,” commented Jay Schottenstein, CEO AEO.
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big concerns
According to the Federation of specialized trade, Procos, activity from January to May is very significantly down compared to the same period in 2019, at – 8.8%. Store traffic in May 2022 remained lower than in May 2019, but the decline was limited to 6.5%, much better than in April (-19.6% compared to April 2019). In a very uncertain context, several elements weigh on the profitability of companies, in particular the increase in the cost of electricity and the indexation of rents, even if the composition of the ILC (commercial rent index) has been modified. Previously it was composed of 50% inflation, 25% construction cost index and 25% change in retail turnover. From now on, it will only take into account inflation and the cost of construction because the previous formula included sales made by the ‘pure players’ of the Net, which increased the rents of physical stores.