American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters second quarter 2021 earnings conference call. At this time all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question you may press star 1 on your telephone keypad. If anyone should require operator assistance during the conference please press star 0 on your telephone keypad. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Ms. Judy Meeham. Thank you, ma'am. Please go ahead.

Good morning, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer, Jen Foyle, President, Executive Creative Director for AE and Aerie, Michael Rumpel, Chief Operating Officer, and Mike Mathias, 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 really may differ materially based on risk factors included in our SEC filing. 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. Reconciliation of adjusted results to the GAAP results are available in a table attached to the earnings release, which is posted on our corporate website at aeo-inc.com in the investor relations section. Here you can also find the second quarter investor presentation. As a note, our second quarter fiscal 2021 results are primarily compared to second quarter fiscal 2020, with comparisons to second quarter fiscal 2019 included where applicable. And now I'll turn the call over to Jay.

Mr. Thank you, Judy, and good morning, everyone. I'm very proud to announce a record second quarter fueled by strong customer demand for our products and brands. Financial results exceeded our expectations. Revenue increased 35% over last year. On a comparable basis, revenue increased 19% to 2019. Sales of $1.2 billion and profits of $168 million were the highest in our history. With our renewed focus entering this year, we are running the business better than ever across the board. As I said in January, we have the best talent in the industry. And these results are clear evidence of that. So I'd like to start by thanking the entire AEO family for this significant accomplishment. Their passion, talent, and commitment are taking our brand and company to new heights. As I also said at our January investor meeting, we are on offense, emerging from 2020 with strength and focus. A real power, real growth plan is our guiding light. I'm very pleased that we are making swift progress on our pillars, putting us ahead of schedule on our financial targets. Today, the team will take you through the details of our performance, but I'd like to start with a few highlights. Aerie just continues to deliver exceptional multi-year growth. As the brand is scaling, we are seeing significant profits flow through. This quarter was one more proof point of the excitement behind this brand. I couldn't be more optimistic about the potential ahead as we make our way to the next billion dollars in revenue. American Eagle is simply proving to be a powerful brand we always knew it was. Its dominant market position, combined with a fresh focus on inventory management, have resulted in the best margins and profits in years. Under Jen's leadership, re-energized product and marketing are yielding results, and the timing couldn't be better. As a number one jeans brand, we are well positioned to capitalize on strong demand fueled by emerging trends. Across channels, stores and digitals are firing in all cylinders and driving meaningful profitability. Our multi-year investment to improve our customer shopping experience and enhance our supply chain are delivering strong returns. We're gaining new customers, and the relaunch of our loyalty program has been a success. Across operations, we are creating efficiencies, increasing our speed and agility. The supply chain delivered great results, even in the face of hindrance. While we made great progress, we are just hitting our stride. I see so much opportunity for us to generate incremental value moving forward. Our focus on ROI is also evident in the second quarter. We drove incredible margin recovery and cash flow. Our balance sheet is healthy, and we're operating from a position of financial strength. I'm pleased that in June you raised our quarterly cash dividend by 31%, reflecting our confidence in the strength and sustainability of future cash flow. Everything we do at AEO is done with purpose. We run our day-to-day business in keeping with our values to build a better world. To that end, we are making great progress on creating more sustainable products. This year, we have more than doubled the number of our most sustainable real goods, styles across all merchandise categories. Water energy reduction and responsible sourcing remains top priorities. I am extremely pleased by recent recognition from staff at antisemitism.org for a dedication to combat racism by creating inclusive and diverse corporate culture. This is something we strive for every day through innovative associate programs designed to build a collaborative environment. This spring, we helped raise over $1.7 million for important causes, including Bring Change to Mind and It Gets Better, two organizations that are making an impact to uplift youth and support mental health. I am really proud of all the work we are doing to strengthen belonging within our company and our communities. AEO's top talent is a keystone of our great company. Last month, AEO was named to Fast Company's Best Places to Work for Innovators, a distinction that recognizes our deep commitment to encouraging innovation across the organization. As the pandemic continues, our top priority is to keep our people safe our leading health and safety measures remain in place across all facilities we have consistent communication support and education for our associates and strongly encourage vaccinations before i turn it to jen i want to reiterate how pleased i am with our performance here today and how excited i am for what's to come we continue to execute well across all areas of the company Although the current operating environment is presenting challenges from the ongoing pandemic to supply chain disruption, there's a lot within our control. I'm very pleased with current business trends. We continue to see strong demand for our brands. The macro backdrop is favorable. Consumers are spanning, and new fashion trends are a positive. We're focused on leveraging the agility we gained last year and the strength of our capabilities to deliver to our customers and post a strong second half. With all this in mind, I am confident in our ability to achieve operating income of $600 million this year. With that, I'll turn the call over to Jay.