American Eagle, Abercrombie beat revenue estimates on strong in-store sales

Apparel chains American Eagle Outfitters and Abercrombie & Fitch beat quarterly revenue estimates on Tuesday, as customers returning to schools and offices shopped more at physical stores following the easing of Covid-19 curbs.

People stuck at home during lockdowns turned to comfortable joggers and sweatshirts, but the reopening of schools, workplaces and public spaces following vaccinations have prompted them to splurge again on streetwear, including jeans and shirts.

“The start of the holiday season has been promising. Customers have come out early to shop and have been responding well to assortments,” Abercrombie & Fitch Chief Executive Officer Fran Horowitz said in a statement.

Most U.S. apparel sellers, including T.J. Maxx-parent TJX and Macy’s, have shrugged off holiday inventory concerns, saying they have ample goods despite port congestion and some factory closures.

American Eagle Outfitters said inventory at cost at the end of the third quarter increased 32% to $740 million, as it deployed pricier air freight to navigate global supply chain issues.

The apparel chain has been beefing up its logistics game, after it agreed this month to buy Quiet Logistics for $350 million, following its takeover of AirTerra earlier this year.

Total net revenue increased 24% from a year earlier to $1.27 billion in the third quarter ended Oct. 30, beating analysts’ average estimate of $1.23 billion, according to Refinitiv IBES.

American Eagle label revenue jumped 21% to $941 million, while that of Aerie brand, which sells leggings and bras, rose 28% to $315 million.

Shares in American Eagle Outfitters rose 4% premarket as overall net income soared 162% to $152.2 million. Adjusted profit was 76 cents per share.

Abercrombie & Fitch’s net sales rose 10% to $905.2 million, beating estimates of $896.9 million. It also announced a new $500 million share repurchase plan.