http://www.morningstar.com/earnings/49399262-american-eagle-outfitters-aeo-q4-2012.aspx

American Eagle Outfitters AEO
Q4 2012 Earnings Call Transcript

Transcript Call Date 03/06/2013

Operator: Greetings, and welcome to the American Eagle Fourth Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Judy Meehan, Vice President of Investor Relations. Thank you. Ms. Meehan, you may now begin.

Judy Meehan - IR: Good morning, everyone. Joining me today are Robert Hanson, Chief Executive Officer; Roger Markfield, Executive Creative Director; and Mary Boland, Chief Financial and Administrative Officer.

Before we begin today's call, I need to remind you that during this conference call, we will make certain forward-looking statements. These statements are based upon information that represents the Company's current expectations or beliefs. The results actually realized may differ materially from those expectations or beliefs based on risk factors included in our quarterly and annual reports filed with the SEC.

Our comments today will focus on non-GAAP results from continuing operations. Please refer to the tables attached to the press release. We have also posted a financial supplement on our website which Mary will refer to.

Now, I'd like to turn the call over to Robert for opening remarks.

Robert L. Hanson - CEO: Good morning, everyone. I am pleased with the strength and consistency of our performance in 2012. As we were developing our long-term strategy plan, early last year we set our near term focus on five immediate priorities; driving a competitive top line; generating margin flow through from improved inventory management; rebalancing the store fleets; distorting our online business and gaining leverage on our infrastructure. The teams focused on these priorities and efforts to strength and merchandising led to one of our best years in recent history. We delivered a brand and product-driven customer experience sharper and more distinctive for our customers.

For the year, we well exceeded our targeted annual financial metrics revenue rose 11% to a record $3.5 billion, EBIT grew 51% and we generated strong returns with an ROIC of 18%. Our annual operating margin of 12.6% was the best rate since 2008.

In the fourth quarter, we achieved a 9% revenue increase and an operating margin of 15.9%. That was our best since 2007. EPS grew 41%.

I'm proud of how the team managed through an unpredictable period, achieving strong revenue growth following an 11% increase last year. That said, we continue to see plenty of opportunity for further improvements.

In 2012, we began concentrating our efforts on the first pillar of our strategy plan fortifying our brands' capabilities and processes. Throughout the year, the American Eagle Outfitters team created strong merchandise improvements, leading to comp growth across the assortment. The strength of the brand combined with the more distinctive lifestyle point of view, broadened our customer appeal.

Brand traffic, both online and in-store, grew at a healthy pace this year and we saw 36% increase in new customers, in our AE rewards program. We plan to build on our fortification initiatives, which I will speak to a bit later.

Read our Earnings Call Transcript disclaimer.
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