American Eagle Outfitters, Inc.

Greetings and welcome to the American Eagle Outfitters fourth 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 Judy Meehan. Please go ahead.

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 American Eagle and Aerie, and Mike Mathias, Chief Financial Officer. Before I 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 really 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. 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 current website at www.aeo-inc.com in the investor relations section. Here you can also find the fourth quarter and fiscal year investor presentation. And now I'll turn the call over to Jay.

Thanks, Judy, and good afternoon, everyone. 2024 was a solid year for AEO. We launched our new powering profitable growth strategy and lining the organization's focus on three key priorities. Amplify our brands, optimize our operations, and execute with financial discipline. And we achieved excellent results. Record revenue of $5.3 billion was fueled by 4% comparable sales growth, reflecting positive momentum across brands and channels. Adjusted operating profit of $445 million marked one of our strongest years in history, and we drove significant operating margin expansion. This included strong fourth quarter results, which came in slightly ahead of the outlook provided in January. Comparable sales rose 3%, building on an 8% increase in the fourth quarter of 2023. Area top sales rose 6%, and American Eagle was up 1%. Additionally, fourth quarter operating income of $142 million was the highest we've delivered in over a decade, with good operating margin expansion. Full year cash flow from operations was over $470 million, and we returned over $280 million to our shareholders in the form of buybacks and dividends. Reflecting on year one of our plan, We had some clear wins, yet meaningful opportunities remained and we are fine tuning our strategy moving forward. Touching on a few highlights. Within our amplified pillar, both American Eagle and Aerie continue to resonate strongly with customers this year, delivering positive cop growth and expanding their customer accounts. American Eagle maintained its number one ranking in Denim with our core customer base and achieved a sixth consecutive quarter of positive top growth. Women's was a standout, reflecting strong traction with new dressing occasions. Men saw sequential improvement, and as Jen will share, we remain focused on reinvigorating growth. Turning to Aerie, we crossed $1.7 billion in revenue in 2024. Soft apparel and our activewear collection offline were the big highlights. more than offsetting softness and intimacy swim. I am pleased to note that in leggings, we are now the number two ranked specialty brand with our core demo. As Jen will review shortly, we have targeted strategies across Aerie and offline to continue strong growth through greater brand awareness and expanding our collections. Moving on to Optimize Pillar. In 2024, we placed a heightened emphasis on improving our operating capabilities. As Mike will review, we made strategic investments in our store fleet and digital platform to support growth across channels. And we continue to build speed and agility in our supply chain while ensuring we are delivering the best products and value to our customers. Lastly, under our third pillar, execute with financial discipline, We maintained sharp control over expenses and drove efficiencies across the business, yielding improved profit flow through. In short, we executed on our strategic initiative, demonstrating the power of our iconic brands and made structural improvements to fuel long-term success. Now, as we shared in our press release this morning, 2025 has started off softer than anticipated. First quarter-to-date sales have been impacted by a less robust consumer environment and cold weather. For the year, ongoing consumer uncertainty and changes in the operating landscape, including tariffs and a strengthening U.S. dollar, are also creating factors for us to navigate. Against this backdrop, we currently expect full-year revenue and operating income to be down relative to last year. Jen and team are focused on driving improvements to strengthen top line growth. Additionally, as Mike will review, we are taking proactive action to drive additional expense savings. With the benefit of both top line and cost initiatives building throughout the year, I am confident that we can improve business performance as the year progresses. Lastly, as we review our capital allocation plan moving forward, We are increasing our share repurchase authorization. That being the high level of confidence we have in our long-term growth prospects, we will continue to be opportunistic with our share repurchase program, putting on the nearly $200 million in buybacks completed in 2024. Before I turn the call over to Jen, I want to underscore the strength of our brands, operation, and talent. We have been through challenging times before, but we've always emerged stronger. I know our team's determination, focus, and creativity will continue to drive us forward. With that, I'll pass it to Jen.