American Eagle Outfitters 2011 Annual Report Download - page 25

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Table of Contents
The following table shows, for the periods indicated, the percentage relationship to net sales of the listed items included in our Consolidated Statements
of Operations.
For the Fiscal Years Ended
January 29,
2012
January 29,
2011
January 30,
2010
Net sales 100.0% 100.0% 100.0%
Cost of sales, including certain buying, occupancy and warehousing expenses 64.3 60.5 60.1
Gross profit 35.7 39.5 39.9
Selling, general and administrative expenses 23.3 24.0 24.6
Loss on impairment of assets 0.7 — —
Depreciation and amortization expense 4.4 4.8 4.7
Operating income 7.3 10.7 10.6
Realized loss on sale of investment securities — (0.8) (0.1)
Other income (expense), net 0.2 — (0.1)
Income before income taxes 7.5 9.9 10.4
Provision for income taxes 2.7 3.8 3.1
Income from continuing operations 4.8 6.1 7.3
Loss from discontinued operations, net of tax — (1.4) (1.5)
Net income 4.8% 4.7% 5.8%
Our operations are conducted in one reportable segment, which includes our 911 U.S. and Canadian AE retail stores, 158 aerie by American Eagle retail
stores, 21 77kids by american eagle retail stores and AEO Direct, as of January 28, 2012.
Comparison of Fiscal 2011 to Fiscal 2010
Net Sales
Net sales increased 6% to $3.160 billion compared to $2.968 billion last year. For Fiscal 2011, comparable stores sales increased 3% compared to a 1%
decrease last year. By brand, AE comparable store sales increased 3% and aerie increased 2%. AEO Direct sales increased 15%. AE men's comparable store
sales increased in the mid single-digits and AE women's comparable store sales increased in the low single-digits.
For the year, a mid single-digit increase in transactions and a low single-digit increase in AUR, slightly offset by a low single-digit decrease in the units
per transaction, contributed to the overall 3% comparable store sales increase.
Gross Profit
Gross profit decreased 4% to $1.128 billion from $1.171 billion in Fiscal 2010. Gross profit as a percent to net sales decreased by 380 basis points to
35.7% from 39.5% last year. The percentage decrease was attributed to a 360 basis point decrease in merchandise margin and a 20 basis point increase in
buying, occupancy and warehousing costs, as a percent to net sales. The decrease in merchandise margin was primarily the result of average unit cost
increases, driven by higher product costs, and increased markdowns from our promotional activity. Buying, occupancy and warehousing expenses increased
as a rate to sales as a result of the impact of increased rent, partially offset by the 3% increase in comparable store sales for the year.
There was $5.5 million of share-based payment expense, consisting of time-based awards, included in gross profit this year compared to $8.4 million
last year.
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