American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the 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. It is now my pleasure to introduce your host, Judy Nieham, Senior Vice President, Corporate Communications and IR. Thank you, Judy. You may begin.

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 Rempel, 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 realized 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. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the investor relations section. Here, you can also find the third quarter investor presentation. And now, I'll turn the call over to Gary.

Good morning. Thank you for joining us today. I'm pleased that we delivered third quarter results well above our expectations, despite current macro conditions and tough comparisons, as we left significant pent-up demand and stimulus. While down to last year's record performance, revenue of 1.2 billion was our second highest third quarter in history, and our operating profit of 118 million exceeded the third quarter of 2019. I'm also pleased that our profit margins reflected a material improvement compared to the first half of the year. Our aggressive actions to reset inventory and reduce expenses are paying off. We continue to make progress and enter the fourth quarter very well positioned. Our brands are strong and customer engagement continues at a healthy pace. Erie remains a standout in the industry. And I'm very proud of the multi-year growth we've achieved. I'm also encouraged with performance of our new area and offline stores, which demonstrate strong acceptance by our customers. AE profits and margins improved compared to the third quarter of 2019, reflecting strong product assortment, as well as the team's focus on rationalizing unproductive SKUs and closing unprofitable stores. Top sales relative to 2019 were flat, and as Jen will review, we have plans in place to improve the trend. Quiet platform is providing significant operational efficiencies and needed capacity for our brands, as Michael will review. The third-party customer base is ramping up as other brands look to upgrade their supply chain operations, and drive efficiencies to better compete in the current retail environment. I remain also excited about the potential for quiet. As we evaluate go-forward plans, we're exploring different options to support future growth. Overall, our third quarter was a strong step in the right direction, yet we remain highly focused on driving further improvement. In an uncertain macro environment, we are leveraging the strength of our operations to control what we can and best position ourselves to respond effectively to changing macro conditions. As the supply chain environment continues to normalize, we're using this to our advantage. We are planning inventories tightly and exercising our capabilities to chase into demand. At the same time, we're also reducing expenses and capital expenditures with a firm focus on proving the bottom line and driving stronger free cash flow. As we navigate the near term, we will cautiously invest across key strategic initiatives that provide a competitive advantage and allow our business to emerge from the current environment even stronger. I want to thank our teams for their hard work and dedication over the past several months. We were swift and took decisive actions across the business, and this is now showing up in our results. Looking ahead, we will remain focused and disciplined. Our brands remain incredibly strong. I'm confident we will continue to make great progress. Now I'll turn it to Jen.