Protective Mask Consumer Thursday, June 18, 2020 at American Eagle Outfitters Inc. at the Westfield San Francisco Center in San Francisco, California USA. The clothing store has sold out.

Michael Short | Bloomberg | Getty Images

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Charitable Trust American Eagle Clothing (AEO) The third-quarter results were stronger than expected on Tuesday morning and stocks were up sharply on Tuesday.

Divide the numbers;

Total net revenues increased 24% YoY to $ 1.27 billion, reaching $ 1.23 billion (FactSet). Adjusted earnings hit $ 0.61 per share, FactSet.

In terms of sales, consolidated store revenue increased by 29% due to double-digit traffic growth, digital revenue grew by 10% and lost 29% of last year’s hard-earned company. Both store and digital revenues and earnings for the quarter exceeded levels in the third quarter of 2013, a sign that the company is in a strong position against the epidemic.

The rise of formal attire, a trend that we believe will be a long history, continues to be a major factor in sales growth for the two major brands.

The strongest margins in years

The company’s third-quarter earnings are strongest since 2007, with 410 base points YOY ​​expanding to 44.3% (1 starting point 0.01%). This is estimated at about 42%. The increase is mainly due to the rental and supply benefits as well as strong product demand, high-cost sales, low promotional activity and inventory optimization initiatives, although high freight costs.

At 16.5%, operating margins are the strongest since 2007, exceeding an estimated 13.8%. Gross revenue during the quarter was $ 210 million, a significant increase compared to an estimated $ 170 million. The management said in a statement that it expects operating revenue “to exceed $ 600 million” this year.

Dismantling brands;

  • Under the brand name, ERI revenue increased by 28% YoY to $ 315 million. The pace here cannot be easily stopped by the results of the 28th consecutive quarter double-digit growth. The company has a strong demand throughout the Aerie portfolio, with significant strength in recent and offline active clothing. Ermie seems to be taking a market share as the management sees customers shopping in multiple and different categories. AUR or Average Retail Price (Average Retail Price) Increased by Seniors Thanks to high wholesale sales and strategic decision-making around promotions. Aerie’s operating margin increased by 16.5% by 200 bps by 2020 and reached a new third-place finish for the brand. Erie has overcome some of the challenges associated with the flow of packets in South Vietnam. These closures have mainly affected Aerie’s much-needed hiking business, which is a high margin category. So Aerie’s margins would be higher if they did not lose some business.
  • According to US Eagle, revenues increased by 21% to $ 941 million. During the quarter, riding sales grew in all males, while females achieved strong results in part in the signature jeans category. It was a tough time for the American eagle to return to school for its branding of jeans with new product offerings. When you hear about the users of the jeans cycle, you should include the American eagle because the company has a population of 1 for women of all ages and 1 for men of all ages.

We have also seen signs that the American eagle market is not a donor, as some believe. The company said in a statement that its customers’ portfolio is complete and that their customers are buying more and spending more. And thanks to the promotional and promotional discipline, AUR has grown, and the product margins have expanded. The operating margin of the quarter was 27.8%, which is a new high for the brand.

Key Topics – Chain and Supply Chain

The U.S. eagle’s exports increased by 32 percent to $ 740 million. The company said the increase was due in part to high air freight due to disruption to the global supply chain. The company has chosen to air their products on the day of the event so that their stores will have more stocks. Considering everything, management is happy with their storage space before what should be the strongest holiday season.

Updating on the popular supply chain and logistics topic, the company continues to effectively manage a challenging environment where there is little disruption outside of the factory closure in Vietnam. Thanks to advances in digital delivery, the cost of AEO delivery has actually fallen sharply. With that said, the company expects to spend between $ 70 million and $ 80 million on freight in the fourth quarter.

The management recently spent some time on the call for access to security logistics. During the conference call, COO Michael Rempel said the agreement gives AO “the ability to drive the highest sales and margin on the smallest stock, create greater accuracy in our placement decisions and deliver products to customers faster and at a lower cost.”

This deal followed the acquisition of AirTera. “We look forward to creating a unique platform that will improve logistics in the retail business,” said Jay Schotenstein, CEO of the Security Logistics and the recent acquisition of AirTerra.

A lot of fire power;

In terms of cash, the company completed a quarter of $ 741 million in cash on account. Thanks to a strong accounting system, US Eagle’s external translators have a lot of power to support investment in growth initiatives and stock returns. At our current level, we find 2.5% profit margin. Considering the cash flow, we do not assume that there will be future stock buying activity.

at last:

Overall, the eagle is an amazing quarterback for the American Eagle Outfitters, as the company proved to be one of the biggest going-to-school market winners in the beginning. With more than a decade of running on the brand’s side and margins in traditional clothing and active clothing, we think the platform is ready for this holiday season.

We were previously confused by the fact that the stock did not receive any credit in the market for this strong report. Why we decided to add it to our place this morning.

What is clear from the quarter is that the epidemic outside the US Eagle is a better company with the right product mix and exciting new logistics initiatives. This cheap stock exchange is going to increase the inflation rate and the profit margin of 2.5% for young teens.

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(Jim Kramer’s charity faith is long AEO.)