American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, 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, and 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, and Micah Zayas, 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 in the 53rd week last year, third quarter 2024 results and today's discussion are presented for the 13 weeks ended November 2nd, 2024, compared to the 13 weeks ended October 28, 2023. Comparable sales metrics are presented for the 13 weeks ended November 2, 2024, compared to the 13 weeks ended November 4, 2023. 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 Jay.

Thanks, Judy, and good afternoon, everyone. We are pleased to report another strong quarter, building on positive performance in the first half of the year. Our powering profitable growth strategy is It's clearly delivering results. As we execute on these strategic initiatives, we're positioning AEO for healthy long-term growth and transforming how we operate to be more efficient and agile. This is all aimed at strengthening long-term profitability and building greater consistency in our performance. Third quarter comparable sales grew 3% on top of last year's strong 5% growth. with positive momentum across brands and channels. While we saw some demand choppiness, we successfully offset the bulk of this through expense efficiencies and delivered adjusted operating income at the high end of our guidance. Turning now to a few highlights of the quarter. First, we are making very good progress on our top strategic pillar, amplify our brands. Building on a solid foundation in Denim, As the number one brand for 15 to 25-year-olds and the number one brand for women of all ages, American Eagle achieved its sixth consecutive quarter of comparable sales growth and share gains in several key categories. Our strategies to fuel growth and go after new dressing occasions like social casual and men's active are gaining momentum with meaningful opportunities still ahead. Aerie achieved yet another record revenue result. also led by positive comp growth. With revenue on track to cross $1.7 billion this year, I'm so proud of the remarkable strides the teams have made. Aerie's unique brand DNA anchored in authenticity, positivity, and empowerment continue to resonate powerfully with women of all ages. And we are incredibly encouraged by continued momentum and market share growth in soft-dressing and activewear, which are two of our strongest long-term growth engines. There is no better validation of our strategic direction than the vote of our customers. On that note, we are pleased to see continued growth in our customer file across brands in the third quarter. And we were thrilled to see American Eagle and Aerie retain their top rankings as a shopping destination for a day's use. Yet again, In the fall edition of Piper Sandler's teen survey, this is a testament to our strong brand heritage and evergreen promise of delivering high-quality fashion at a great value to our customers. Turning to our second strategic pillar, optimizing our operations, we take great pride in the quality of our shopping experience, where we continue to invest and innovate. Openings and remodels are tracking well and delivering results in line with our expectations. Two recent call-outs in high-profile malls where we have seen terrific results are King of Pressure, Pennsylvania and Woodfield, Illinois, with all brands represented in a fresh and modern way. Additionally, we remain highly committed to elevating our e-commerce platform. We are successfully leveraging new tools like outfitting and sizing, as well as customer engagement tactics to improve conversion. Finally, within our third pillar of executing with financial discipline, we have continued to identify opportunities for cost efficiencies to drive more profit to the bottom line. SG&A dollars were down 3%, quarter over quarter, leveraging 50 basis points. We also set the stage for ongoing improvement through a number of restructuring actions we took during the quarter, which Mike will elaborate on. Lastly, our balance sheet remains in great shape. We exited the quarter with $160 million in cash and no debt. During the third quarter, we continued to advance our capital allocation priorities, investing in our brands and operation to drive growth while returning cash to our shareholders. With three successful quarters under our belt, we are poised to deliver significant progress across our strategic initiatives this year. And we expect to achieve mid-teen growth in operating income this year in line with our long-term roadmap. Yet, as Mike will review, we have adjusted our full-year guidance to reflect more caution fourth quarter demand outlook. This also incorporates pressure from a strong U.S. dollar. Before I turn it over to Jen, I want to underscore the strength of our brands and our commitment to powering their long-term potential while continuing to strengthen our operations. In the near term, we remain focused on delivering the holiday season as we execute on our strategic initiatives. Now over to Jen.