American Eagle Comes to Earth on Q3 Earnings

American Eagle Outfitters (NYSE: AEO) fell in Wednesday trading, on reporting in-line earnings for its third quarter, while sales missed estimates. The company issued weak fourth-quarter earnings guidance.

The Pittsburgh-based company reported Earnings per Share of $0.48 for the quarter, compared to $0.36 for the prior-year quarter, an increase of 33%. EPS of $0.48 increased 30% compared to adjusted EPS of $0.37 last year.

Total net revenue increased $43 million, or 5% to $1.004 billion compared to $960 million last year. As a result of the shifted 2018 retail calendar, approximately $40 million of total net revenue shifted out of the third quarter and was recorded in the second quarter. The shift of revenue adversely affected third quarter operating income.

AEO CEO Jay Schottenstein exulted, "I am proud to announce another outstanding performance this period for AEO, marking record sales and our first $1-billion third-quarter. American Eagle and Aerie had extremely well-executed back-to-school and fall seasons, fueling strong sales across stores and double-digit growth in digital, on lower promotional activity across channels."

Also in the third quarter, capital expenditures totaled $43 million, with more than half related to store remodeling projects and new openings, and the balance to support the digital business, omni-channel tools and general corporate maintenance. AEO continues to expect capital expenditures to be in the range of $180 million to $190 million this year.

Moreover, during the quarter, the company repurchased one million shares for approximately $25 million.

Shares shied lower 83 cents, or 4.4%, to $18.20