American Eagle Outfitters 2014 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2014 American Eagle Outfitters annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 85

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85

Table of Contents
been sufficient to cover our uses of cash. Our management believes that cash flow from operations will be sufficient to fund anticipated
capital expenditures and working capital requirements.
Our goals are to drive improvements to our gross profit performance, bring greater consistency to our results and deliver profitable
growth over the long term.
Results of Operations
Overview
Fiscal 2014 performance was challenging with total sales declining 1% and adjusted earnings per share decreasing 15%. The retail
landscape was volatile throughout the year, resulting in a difficult spring season with financial performance well below our targets and
historical performance. Our improved merchandise assortment, reduced expenses and improved execution caused the business to stabilize by
mid-year, with financial improvement in the third and fourth quarters. AUR and units per transaction in the fall season were both improved
over last year.
Total net revenue for the year decreased 1% to $3.283 billion, compared to $3.306 billion last year. Total comparable sales decreased 5%.
By brand, including the respective AEO Direct sales, AEO Brand comparable sales decreased 6% and aerie Brand increased 6%. Gross margin
increased 150 basis points to 35.2%, compared to 33.7% last year.
Income from continuing operations was $0.46 per diluted share this year, compared to $0.43 per diluted share last year. On an adjusted
basis, income from continuing operations this year was $0.63 per diluted share, which excludes a ($0.17) per diluted share impact from
impairment and restructuring charges. This compares to adjusted income from continuing operations last year of $0.74 per diluted share, which
excludes a ($0.31) per diluted share impact from impairment charges, fabric charges, corporate and store asset write-offs, employee costs and
tax related items.
The preceding paragraph contains non-GAAP financial measures (“non-GAAP” or “adjusted”), comprised of earnings per share
information excluding non-GAAP items. This financial measure is not based on any standardized methodology prescribed by U.S. generally
accepted accounting principles (“GAAP”)
and is not necessarily comparable to similar measures presented by other companies. We believe that
this non-
GAAP information is useful as an additional means for investors to evaluate our operating performance, when reviewed in conjunction
with our GAAP financial statements. These amounts are not determined in accordance with GAAP and, therefore, should not be used
exclusively in evaluating our business and operations. The table below reconciles the GAAP financial measure to the non-GAAP financial
measure discussed above.
24
Earnings per Share For the
Fiscal Years Ended
January 31,
2015
February 1,
2014
Income from continuing operations per diluted share — GAAP Basis
$
0.46
$
0.43
Add: Asset Impairments(1)
0.11
0.14
Add: Restructuring Charges(2)
0.06
—
Add: Asset write
-
offs & corporate charges(3)
—
0.16
Add: Tax related items(4)
—
0.01
Income from continuing operations per diluted share
—
Non
-
GAAP Basis
$
0.63
$
0.74
(1)
Asset impairment costs of $0.11 per diluted share for Fiscal 2014 consist of:
•
$
25.1 million for the impairment of 48 AEO and 31 aerie stores
•
$
8.4 million for corporate items