American Eagle Outfitters, Inc.

Greetings and welcome to the AEO second quarter 2023 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 Meehan. Thank you, Ms. Meehan. You may begin.

Good afternoon, 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 ARRI, 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 Results actually realized 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. Additionally, you can find the second quarter investor presentation posted on our corporate website at www.AEO-inc.com in the investor relations section. And now I will turn the call over to Jay.

Good afternoon. Thanks for joining us today. I am pleased to report second quarter revenue and operating profit that exceeded our expectations, reflecting stronger demand and improved profit flow through. Business picked up in June across brands and channels, with strength sustaining into July as our early back-to-school collections rolled out. The teams executed well during the period. We made quick product adjustments, chasing demand profitably, while also maintaining healthy inventories and controlling promotions. Record revenue of $1.2 billion was up slightly to last year, while operating income of $65 million increased significantly to last year. We generated strong cash flow, ending the quarter with a healthy balance sheet and cash of $125 million, up $77 million to last year. As previously discussed, we have spent this past several months reviewing our cost structure to find areas where we can be more efficient as we continue to grow. We have identified opportunities to improve profitability over the next 12 to 24 months. We began to take action on these items in the second quarter and starting to see results, which Mike will review. Now, onto a few highlights of the quarter. American Eagle continues its leadership in casual wear, and that's evident in recent performance where demand has been strong, particularly during peak shopping periods. We have seen encouraging results across genders as new products are introduced. Extensions like AE77, our premium capsule, and 24-7, our entry into men's activewear, are injecting new energy and expanding our reach. As the teams will discuss, we are excited about the launch of the new store design to update and modernize the shopping experience. The online channel is also being enhanced with new features, which is driving better overall metrics. ARRI achieved yet another record revenue quarter with strong profit. As Jen will review, we saw incredible demand across our core apparel collection and are active where extension continues to be on fire. We are also seeing renewed momentum in elements where we've introduced new collections. I see a very bright future for the ARRI and offline brand, where we are just beginning to see the real potential I'd also like to comment on our Todd Snyder brand, where we have been seeing strong growth. Over the past year, we have selectively expanded into high fashion metrics, bringing Todd's modern creations and upscale experience to new customers. We expect to reach over $100 million in revenue this year. I could not be more excited for what's ahead. Entering the third quarter, it's been encouraging to see sustained strength across our entire brand portfolio. As we continue to fuel this momentum with strong merchandise and innovative marketing, we will stay focused on delivering efficiencies across the business and improve profit flow through. Before I turn the call over to Jen, I want to touch on the leadership transition announced last month. As noted, Michael Impel, our Chief Operating Officer, has made the decision to leave the company at the end of the fiscal year. While I'm personally sad to see him go, I want to thank Michael for his incredible leadership and partnership over the last 23 years. Michael has been a tremendous asset to the company, investing in technology and infrastructure to create our world-class operations. He leaves AEO with a strong foundation to build on from here including excellent teams to help support a successful transition. With that, I'll turn the call over to Jay.