Amer­i­can Ea­gle Fore­sees Strong Hol­i­day Earn­ings

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Amer­i­can Ea­gle Out­fit­ters Inc on Wed­nes­day joined other U.S. ap­parel mak­ers in fore­cast­ing strong earn­ings for the key hol­i­day sell­ing sea­son but said it ex­pected lower profit mar­gins com­pared with a year ear­lier. Madore’s re­marks sig­naled the com­pany might be as ag­gres­sive on pro­mo­tions as it was last De­cem­ber in the af­ter­math of Aero­postale’s bank­ruptcy, when it sought to keep shop­pers from flock­ing to­ward heav­ily dis­counted Aero­postale ap­parel.

Amer­i­can Ea­gle’s gross mar­gin - gross profit as a share of rev­enue - fell 1.2 per­cent­age points to 39 per­cent in the third quar­ter ended Oct. 28, hurt by higher ware­hous­ing and ship­ping costs on on­line or­ders as well as more pro­mo­tions. Still, Amer­i­can Ea­gle de­liv­ered third-quar­ter earn­ings and com­pa­ra­ble sales ahead of Wall Street tar­gets, driven by ro­bust de­mand for its Aerie line of lin­gerie as well as sur­pris­ingly strong sales for its name­sake brand. Re­cent sales at Amer­i­can Ea­gle have also been driven by newer trends in women’s jeans, help­ing the com­pany main­tain an en­vi­able 33 per­cent share of the U.S. denim mar­ket for young shop­pers. Last month, Gap Inc and Aber­crom­bie & Fitch also fore­cast strong hol­i­day-quar­ter earn­ings, driven by de­mand for their Old Navy and Hol­lis­ter ap­parel, re­spec­tively. Amer­i­can Ea­gle’s net in­come fell 16 per­cent to $63.7 mil­lion, bruised by pro­mo­tions and a

$14 mil­lion charge.

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