American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters Inc. Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would like to turn the conference over to your host, Judy Meehan, Vice President of Investor Relations. Thank you. You may begin.

Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Chief Executive Officer, Chad Kessler, American Eagle Global Brand President, Jen Foyle, Aerie Global Brand President, and Bob Maydor, Chief Financial Officer. Before we begin today's call, I need to remind you that 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 may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Also, please note that during this call and in the accompanying press release, certain financial metrics are presented on both a GAAP and non-GAAP-adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release. which is posted on the company's new external website at www.AEO-inc.com in the investor relations section. Here you can also find the third quarter investor presentation. Consistent with the retail calendar in the 53rd week last year and the third quarter's financial report and discussion today, reflect the quarter ended November 3rd, 2018, compared to the quarter ended October 28th, 2017. Comparable sales are shifted to reflect the comparable period of the quarter ended November 3rd, 2018 against November 4th, 2017. Thanks, now I'll turn the call over to Jay.

Okay, thank you, Judy, and good afternoon, everyone, and thanks for joining us today. I'm very pleased to report another outstanding quarter in which we delivered record third quarter sales. For the first time ever, we reached third quarter revenue over $1 billion. Additionally, this marked the 15th consecutive quarter of positive comp growth for AEO. This is quite an accomplishment and demonstrates the strength of our brands and meaningful progress over the past four years. Consolidated comparable sales increased 8%. We achieved strong top-line growth across brands and channels on lower promotional activity leading to higher gross profit. American Eagle and Aerie had extremely well-executed back-to-school and fall seasons. With a comp increase of 5%, American Eagle built on its number one overall brand position and leading jeans business. Aerie achieved an impressive comp increase of 32%. The 16th consecutive quarter, a double-digit comp growth. Store of comparable sales rose 6%, continuing a positive trend for four quarters now. Once again, our online sales increased in the double digits. A clear focus on our strategic priorities and execution against these priorities have delivered results and will guide us into the future. These strategic priorities include leveraging our leading brand position in American Eagle to expand our market share. accelerating the growth and expansion of Aerie, elevating the customer experience, and delivering financial returns. American Eagle continues to dominate as a real youth-inspired brand with a team that consistently delivers outstanding quality, compelling new styles, and great fits. In addition to being a leading jeans and bottom business, We are highly focused on fueling all categories to complement our bottoms business and build great outfitting. Expanding our reach and building on a great brand platform of inclusivity and youthful optimism will guide future growth. Area is rapidly gaining share in the intimate apparel market as a leader in the body positivity movement. Market share gains have been impressive and results have been spectacular. Still in the early stages of growth, Aerie is a significant growth engine for AEO Inc. We are accelerating that growth with our sights on the next grand milestone of $1 billion. I'd like to congratulate Jen and the entire Aerie team for being honored by Adweek with the prestigious Brand Genius Award for Apparel. This honor places Jen and the team as one of the boldest, and most imaginative brand leaders of the year. We put our customers at the center of everything we do, and strengthening our connection, engagement, and overall customer experience is a major strategy and brand indicator. Our physical stores are important to our business. Over the past years, we've been raising the bar in the field organization to improve in-store service levels. It's absolutely critical to have the right associates engaging customers and driving a great shopping experience. The store team has been delivering and investments are paying off. We are seeing some of the strongest store comps in years, driven by higher conversion, improved traffic, and transaction growth. We're also focused on expanding our marketing reach and improving experiences with the targeted emails, product recommendations, and digital marketing tactics. Our efforts in data analytics and customer insights will continue to put our brands in a leadership position. I'm so proud of our digital team where we've seen tremendous consistent growth leading us to over $1 billion in online sales. Record volumes posted this Thanksgiving at Cyber Week with our highest volume days ever and were executed seamlessly. We've made some omni-channel investments, including a new digital call center, distribution facility automation, and we are transitioning to an updated digital platform next year. These investments will provide customer experience upgrades and take us to $2 billion and beyond. Smart investments in our brands, channels, and our people today will support further growth and long-term success for AEO. On the heels of a strong third quarter, we are pleased with our holiday sales results today. I'd like to take a minute to congratulate and thank the team for outstanding execution and performance. As we look ahead to 2019, in April we will celebrate 25 years as a public company. And we are honored to be recognized as Reseller of the Year by the American Apparel and Footwear Association. Today we're operating two of the most successful and recognizable lifestyle brands in the marketplace with much significant growth ahead. Thanks and happy holiday to all of you. Now I'd like to turn it over to Chad.