AMERICAN EAGLE
OUTFITTERS
ae.com
Safe Harbor Statement
Any Remarks that we make today about future
expectations, plans and prospects for American Eagle
Outfitters which are not historical facts, are forwardlooking statements that involve risks and uncertainties.
For a discussion of such risks and uncertainties, which
could cause the Company’s actual results to differ from
those contained in the forward-looking statements,
please read the section entitled “Safe Harbor Statement,
Seasonality, and Business Risks” in the Company’s most
recent Form 10-K and Form 10-Q, each on file with the
Securities and Exchange Commission.
AMERICAN EAGLE
OUTFITTERS
ae.com
2
First Half 2005 Recap
Sales
$967 Million
Sales Growth
+33%
Comp Store Sales
+24%
Operating Income
$174 Million
Operating Margin
17.9% vs. 12.9%
Earnings Per Share
$0.74 vs. $0.41 -- 80% Growth
AMERICAN EAGLE
OUTFITTERS
ae.com
3
AE Cash Flow
($ in millions)
2004
Net Income
$224
$113
+ Depreciation & Amortization
+68
+37
- Capital Expenditures
-97
-39
-9
-19
$186
$92
- Dividend Payments
Free Cash Flow
First Half 2005
AMERICAN EAGLE
OUTFITTERS
ae.com
4
Second Quarter Balance Sheet Data
2005
2004
$751 Million
$359 Million
Current Ratio
4.0x
3.0x
Return on Equity (TTM)
30%
18%
Cash, Short & Long-Term
Investments
AMERICAN EAGLE
OUTFITTERS
ae.com
5
AE Corporate Vision:
• We will be a highly profitable, international, multichannel retail organization.
• We will grow through a portfolio of our own distinct and
segmented casual lifestyle apparel brands.
AMERICAN EAGLE
OUTFITTERS
ae.com
6
Will Be Achieved
Through:
• Customer focus
• Innovation
• A diverse world-class
team
AMERICAN EAGLE
OUTFITTERS
ae.com
7
What Have We Achieved?
AMERICAN EAGLE
OUTFITTERS
ae.com
Strong Brand Positioning
AMERICAN EAGLE
OUTFITTERS
ae.com
Coolest Brands (12-19 Year Olds)
Spring 2000
Spring 2005
Brand
Total
Brand
Total
Nike
20%
Nike
18%
Abercrombie & Fitch
14%
Sony
12%
Old Navy
13%
American Eagle
10%
Tommy Hilfiger
12%
Abercrombie & Fitch
8%
Sony
11%
Coca-Cola/Adidas/Ford
7%
Gap
10%
Old Navy/Hollister/Pepsi
6%
Nintendo
6%
Microsoft
5%
Coke/Pepsi
5%
Aeropostale
5%
American Eagle
5%
Chevrolet
4%
AMERICAN EAGLE
OUTFITTERS
ae.com
Source: Teen Research Unlimited
10
Specialty Stores Shopped Last 12 Months
Spring 2005 (12-19 Year Olds)
Store
Total
Old Navy
48%
American Eagle
28%
Gap
25%
Pacific Sunwear
Victoria’s Secret
25%
24%
Hot Topic
23%
Aeropostale
23%
Abercrombie & Fitch
20%
Hollister
15%
Express/Wet Seal
14%
AMERICAN EAGLE
OUTFITTERS
ae.com
11
Source: Teen Research Unlimited
20 Consecutive Months of Positive Comps
2005
2004
1Q
+27.1%
1Q
+9.8%
2Q
+21.1%
2Q
+13.8%
August
+11.8%
3Q
+26.8%
September
+13.0%
4Q
+28.6%
YTD 2005
+20.1%
FY 2004
+21.4%
AMERICAN EAGLE
OUTFITTERS
ae.com
12
Operating Metrics
YTD September 2005
YTD September 2004
Comparable Store Sales
+20%
Comparable Store Sales
+16%
Transactions Per Store
+15%
Transactions Per Store
+10%
Average Unit Retail Price
+8%
Average Unit Retail Price
+7%
AMERICAN EAGLE
OUTFITTERS
ae.com
13
YTD Comps Strong
Across Regions
Northeast
+21%
Mid-Atlantic
+23%
Southeast
+24%
Southwest
+22%
Canada
+20%
Midwest
+16%
West
+15%
AMERICAN EAGLE
OUTFITTERS
ae.com
14
Record Operating Profit
19.3%
$ in millions
Operating Margin Up 1,000 bps
13.3%
12.6%
11.5%
9.3%
$141
2000
$160
$159
$133
2001
2002
2003
$363
2004
AMERICAN EAGLE
OUTFITTERS
ae.com
15
What is Driving Improved
Performance?
AMERICAN EAGLE
OUTFITTERS
ae.com
Strengthened
Merchandising/Design
Operation
• New Talent
• Restructured Process
- Improved Product
- Reduced Late Deliveries
- 6 Collections/10 Floorsets
AMERICAN EAGLE
OUTFITTERS
ae.com
17
Sharp Focus on Target
Customer
• The widest segment of
the 15-25 year old market
• The “Go To” brand for
high school and college
kids
AMERICAN EAGLE
OUTFITTERS
ae.com
18
Merchandise Strengths
• Fashion trends made
wearable
• Everyday essentials
• Easy on the wallet
• Built to last
AMERICAN EAGLE
OUTFITTERS
ae.com
19
Staying True To Value Message:
Denim
$29.50/
$39.50
Graphic
Tees
$19.50
Sweaters
$39.50
Layering
Tees
$24.50/
$29.50
Hoodies
$29.50/
$39.50
Rugbys
$34.50/
$36.50
AMERICAN EAGLE
OUTFITTERS
ae.com
20
Teen Specialty Apparel Retail Marketplace
Abercrombie &
Fitch
Higher
J. Crew
Gap
PRICE
Pacific Sunwear
Value
American
Eagle
Outfitters
Hot Topic
Hollister
Aeropostale
Lower
Younger
20 Year Old
AGE
AMERICAN EAGLE
OUTFITTERS
ae.com
Older
What Differentiates Us…
we are:
we are not:
real
cool
essential
quality
good value
fun
friendly
open-minded
too trendy
trashy
disposable
cheap
overpriced
formal
intimidating
elitist
AMERICAN EAGLE
OUTFITTERS
ae.com
22
Strong New Store Economics
First 12 Months of Operations (67 stores)*
Average Net Sales: $2.12 Million
Average Gross Feet: 5,857
Four Wall Profit:
$405,630; 19% to Sales
Cash Flow: $470,653; 22% to Sales
Investment: $527,996
Pre-tax ROI: 89%
After-tax ROI: 55%
* First 12 months of operation for 67 stores opened since the beginning of 2003
AMERICAN EAGLE
OUTFITTERS
ae.com
23
2004 Remodeled Stores*
Pre-Remo
Post-Remo
% Growth
$1,925,000
$2,826,000
+47%
Sales/Foot
Profit
$448
$492,000
$514
$900,000
+15%
+83%
Profit/Foot
$114
$164
+44%
Square Footage
4,300
5,500
+28%
Sales
* Trailing 12 months of operations for 20 stores
AMERICAN EAGLE
OUTFITTERS
ae.com
24
Holiday 2005 Collection
AMERICAN EAGLE
OUTFITTERS
ae.com
Strong Real Estate Portfolio
Since 1999:
• Opened 220 “A” Center Stores
• 260 Store Renovations
• 94 Store Location Upgrades
• Flagship Stores – New York,
LA, San Francisco, Seattle
• New Markets – Alaska, Puerto
Rico, Hawaii
AMERICAN EAGLE
OUTFITTERS
ae.com
33
AE Marketing
• “Live Your Life” 2005 Tagline
• “AE All Access” – Loyalty
• Direct Mail – Best Customer Focus
• MTV On-Going Partnership
• Grassroots – Football Stadium Campaign
AMERICAN EAGLE
OUTFITTERS
ae.com
34
What Will Drive
Future Growth?
AMERICAN EAGLE
OUTFITTERS
ae.com
Develop New Concept
• World-Class Team in Place
• Mall-Based Lifestyle Brand
• Fills a Void in the Marketplace
• Complementary to AE Brand
• Test Stores Open 2006
AMERICAN EAGLE
OUTFITTERS
ae.com
36
Growth Opportunity -- Maximize AE Brand
• Continue Store Growth Æ square footage +5-6%
• Increase Store Sales Productivity Æ Goal $550-$600/foot
• Build Powerful Categories (Denim, Knits)
• Pursue Sub-Brand Opportunities (Intimates, Personal Care)
• Maximize AE Direct
• Explore International
AMERICAN EAGLE
OUTFITTERS
ae.com
37
Financial Goals:
• Positive Comp Store
Sales/Higher Productivity
• Steady IMU Improvement
• Expense Leverage
• Double-Digit EPS Growth
AMERICAN EAGLE
OUTFITTERS
ae.com
38
New Store Growth
Continues – 2006 Plan
• 40 – 50 New Stores
• 45 – 50 Renovations
AMERICAN EAGLE
OUTFITTERS
ae.com
39
Our Vision:
• Highly profitable
• International
• Multi-channel
• Portfolio of brands
Our Goal:
• Double-digit EPS growth
AMERICAN EAGLE
OUTFITTERS
ae.com
40
AMERICAN EAGLE
OUTFITTERS
ae.com