American Eagle Outfitters reported EPS of $0.15 for the first quarter ended May 2, 2015, a significant increase from EPS of $0.02 for the comparable quarter last year, and above EPS guidance of $0.09 to $0.12.
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The EPS figures refer to diluted earnings per share. Total net revenue increased 8% to $700 million from $646 million last year. Consolidated comparable sales increased 7%, compared to a 10% decrease last year.
Gross profit increased 16% to $262 million and rose 260 basis points to 37.5% as a rate to revenue. A reduction in the markdown rate led to approximately 290 basis points of merchandise margin expansion, which was partially offset by 30 basis points of buying, occupancy and warehousing deleverage.
Selling, general and administrative expense of $185 million was flat to last year. As a rate to revenue, SG&A leveraged 210 basis points to 26.5% compared to 28.6% last year. Our expense reduction initiatives offset increases in incentive and variable selling expense, driven by strong sales performance.
Operating income increased to $42 million from $8 million last year, and the operating margin expanded 470 basis points to 6.0% as a rate to revenue. Other income of $6 million is primarily comprised of currency gains related to cash held in Canadian dollars. EPS of $0.15, a significant increase from EPS of $0.02 last year.
Total merchandise inventories at the end of the first quarter increased 1% to $333 million compared to $329 million last year. At cost per foot, inventory was flat. Second quarter 2015 ending inventory at cost per foot is expected to be up in the mid single-digits due to merchandise investments and positive sales trends.
In the first quarter, capital expenditures totaled $42 million. For fiscal 2015, the company continues to expect capital expenditures of approximately $150 million, which includes the chain-wide roll-out of the point of sale system, supporting technologies and the completion of our new fulfillment center, as well as new and remodeled store investments. ■