American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. I would now like to turn the call over to Judy Mahan, Senior Vice President, Corporate Communications and Investor Relations. 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, 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 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. Consistent with the retail calendar and the 53rd week last year, second quarter 2024 results and today's discussion are presented for the 13 weeks ended August 3rd, 2024, compared to the 13 weeks ended July 29, 2023. Comparable sales metrics are presented for the 13 weeks ended August 3, 2024, compared to the 13 weeks ended August 5, 2023. 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'll turn the call over to Jay.

Thanks, Judy, and good morning, everyone. During the second quarter, we continued executing on our strategy plan, powering profitable growth, removing our iconic brands forward and strengthening our operating capabilities to continue driving shareholder value. Our second quarter results were strong proof. Consolidating financial results showed improvement across the majority of our key performance metrics. We delivered our sixth consecutive quarter of record revenue while also achieving meaningful operating income growth. Second quarter results built on our strong first quarter performance, locking in a solid first half. We made consistent progress across our strategic priorities in line with our multi-year plan. As a reminder, our three key pillars are first, amplify our brands. Second, optimize our operations. And third, execute with financial discipline. Touching on the strategic and financial highlights for the quarter. To start, second quarter revenue of $1.3 billion was a new record for the company. We achieved 4% comp growth and a total revenue increase of 8% for the quarter. Notably, both brands and channels posted nice growth. We have two of the most beloved brands in retail. American Eagle and Airy, each with their own exciting roadmap for expansion. AE has defined American casual fashion for countless generations. I love seeing it come to life in new ways as we leverage our powerful legacy and execute on our growth initiatives. AE's comps grew 5% in the second quarter. We are gaining momentum and growing market share in a number of our focus categories. Our new lived-in store design has now been rolled out to approximately 30 locations, and we are seeing great results with remodeled stores outperforming the balance of the fleet. Aerie is a very special brand, anchored in body positivity and woman empowerment. As we build brand awareness and expand it to new categories, we are reaching new heights. In the second quarter, Aerie achieved another record revenue result, with COPS increasing 4% driven by strength in apparel and our offline active sub-brand. New area and offline stores are performing very well, expanding our reach and bringing in new customers. Second, in line with our focus on delivering profitable growth, we also continue to realize efficiency across key focus areas. This throws significant leverage in our cost base, as we submitted new operating principles across the business and delivered 55% growth in operating income year over year. Third, we exited the quarter with our balance sheet in excellent shape, with $192 million in cash and no debt. During the second quarter, we leveraged healthy cash flow to fuel long-term investments in our brands and operations. We also returned $120 million in cash to our shareholders through a combination of dividends and share repurchases. This brings year-to-date returns to $180 million, consistent with our commitment to delivering value to our shareholders. And lastly, in the second quarter, we are very excited to welcome a new board member, Stephanie Pululi-Essa. Stephanie brings a strong track record as a proven strategist with over three decades of brand building experience in the consumer sector. She'll compliment our outstanding board, which has always brings strong expertise and invaluable advice to our organization. Now, as I look forward, I'm pleased with the positive customer response to new fall collections. New product innovations combined with our unique formula of outstanding quality and style, offered a great value as a cornerstone of our brands, positioning us perfectly for today's consumers. Across brands, I'm optimistic that we will continue to deliver great experiences for our customers in the upcoming seasons. At the same time, we recognize the importance of inventory and expense discipline in this dynamic macro environment, and that will remain a core focus across the organization. In closing, the second quarter results lock in a solid first half for AEO and our powering profitable growth strategy. As Mike will review, we are on track to deliver operating profits of $455 to $465 million at the high end of our previous outlook. Looking beyond this, I'm confident we have the right plan in place to further expand our brands and deliver sustainable profit growth over the long term. Our focus on greater efficiencies, is yielding results, and we will remain steadfast in making continued progress to drive shareholder value. Now over to Jen.