On this page of StockholderLetter.com we present the latest annual shareholder letter from AMERICAN EAGLE OUTFITTERS INC — ticker symbol AEO. Reading current and past AEO letters to shareholders can bring important insights into the investment thesis.
ANNUAL RE POR T 2023
We   re an American jeans and apparel brand
that   s true in everything we do. Rooted in
authenticity, powered by positivity, and
inspired by our community     we welcome
all and believe that putting on a really great
pair of #AEjeans gives you the freedom to
be true to you. Because when you   re at your
best, you put good vibes out there, and get
good things back in return.
AE. True to you.
The Aerie mission is to
empower all women
to love their real selves.
We make products that feel REAL good.
We celebrate body positivity     all bodies should
be happy and free of retouching.
We stand for inclusivity and real representation.
Every woman should see herself in Aerie.
We are a community that celebrates one another.
Because we show up stronger, together.
Let the real you shine.
May 17, 2024
Dear Fellow Stockholders:
Fiscal 2023 was a strong year for AEO. We achieved record revenue of $5.3 billion. We
also saw operating income of $223 million, and adjusted operating income(1) of
$375 million, which increased 39% compared to Fiscal 2022. Our customer file reached
an all-time high, underscoring the strength of our iconic brand portfolio and world-class
operations.
I   m very proud of how our team delivered this year. We continued to lead with
innovation, introducing exciting new merchandise collections and customer
experiences, while embracing new technologies to further strengthen our operations.
It was also a pivotal year for the company. We initiated a comprehensive review of our
business, as we seek to unlock stronger profitability and more consistent returns to stockholders. This work helped fuel a
significant turnaround in revenue and profit in the second half of the year, contributing to our strong full-year results.
As I look back on the year, I am particularly proud of the following achievements:
    Revenue of $5.3 billion rose 5%, marking a new record. We saw broad-based strength across brands and channels.
    Operating income of $223 million and $375 million in adjusted operating income.(1) Adjusted operating income
increased 39% compared to Fiscal 2022, our second-highest result since 2012.
    Aerie delivered exceptional growth and profit expansion. Record revenue of $1.7 billion rose 11% from Fiscal 2022,
with operating income of $276 million, up 65%. We continued to expand our customer base and delivered a winning
assortment across intimates, soft apparel and OFFLINE, our exciting activewear sub-brand.
    American Eagle expanded revenue while continuing to build profitability. Revenue of $3.4 billion was up 3% from
Fiscal 2022, with operating margin expanding 120 basis points to 17.8%. We also grew American Eagle   s customer file,
delivering early proof points of our focus on driving profitable growth.
    Strong operating cash flow of $581 million enabled us to invest in our brands and return $104 million in cash to
stockholders. This included a 25% increase in our quarterly cash dividend and one million shares repurchased during
the year. Additionally, we authorized 30 million shares for future repurchases.
    As we look to strengthen the organization and improve profitability, management took action to streamline
business priorities. This included restructuring the company   s international operations and fulfillment network to focus
on core capabilities that serve our brands and best customers.
    We welcomed new leadership to the organization. As part of our succession plan for our Chief Operations Officer
transition, we established two new positions to focus on key areas of our business. Sarah Clarke joined as our Chief
Supply Chain Officer, responsible for managing AEO   s global supply chain from sourcing through distribution. Valerie
van Ogtrop was appointed as Head of Brand Operations, a newly created role designed to drive greater brand
collaboration while fueling growth and profitability across American Eagle and Aerie.
    Furthering our commitment to transparency, we published our second    Building a Better World    report. This
highlighted progress toward our Planet (environment), People (social) and Practices (governance) goals. Our
commitment to continued transparency was rewarded by MSCI with an upgrade of our rating from    BBB    to    A.
Building on our achievements and profit improvement work initiated in Fiscal 2023, in Fiscal 2024 we launched    Powering
Profitable Growth,    our new long-term corporate strategy that aims to set AEO on a path to deliver consistent, profitable
growth from here. Our plan is centered on three main pillars:
    Amplify our brands.
    Execute with financial discipline.
    Optimize our operations, structuring the company to grow revenue at a three to five percent compound annual growth rate
(   CAGR   ) and operating income at a mid-to-high teens CAGR through Fiscal 2026.
We entered Fiscal 2024 well positioned with industry-leading brands, a solid balance sheet and best-in-class operations.
American Eagle is the largest, most consistent youth brand   dressing generations of customers. Aerie has a powerful
brand platform with an amazing community of customers and significant opportunity to grow brand awareness. We
continue to deliver the best shopping experience across digital and stores.
As we embark on this next chapter, I could not be more excited about our future. We remain steadfast in operating the
business with balance; staying agile and flexible to capitalize on demand opportunities, while optimizing profitability for the
future. We believe that we are built to last and well positioned for success.
On a more somber note, I am deeply saddened by the recent passing of Thomas R. Ketteler, who was a member of AEO   s
Board of Directors and an invaluable advisor from 1981 to 2021. He served as a member of the Audit, Compensation and
Nominating, Governance and Corporate Social Responsibility Committees.
Tom   s financial expertise, keen ability to provide meaningful perspective and passion for the company were truly unrivaled.
He was a cherished business partner to me for decades and was instrumental in growing AEO   s business from its earliest
days. We will remember Tom with the highest regard and remain grateful for his incredible service, commitment and
friendship.
On behalf of the Board of Directors and our entire team at AEO, thank you for your continued support.
Jay L. Schottenstein
Executive Chairman of the Board and Chief Executive Officer
(1)
Adjusted operating income is a financial measure that is not calculated in accordance with generally accepted accounting principles in the
United States (   GAAP   ), which is commonly referred to as a non-GAAP or adjusted measure. See Appendix A of this Annual Report for
additional detail on adjusted results and other important information regarding the use of non-GAAP or adjusted measures.
 • shareholder letter icon 5/17/2024 Letter Continued (Full PDF)
 • stockholder letter icon 4/26/2023 AEO Stockholder Letter
 • stockholder letter icon More "Apparel Stores" Category Stockholder Letters
 • Benford's Law Stocks icon AEO Benford's Law Stock Score = 99


AEO Shareholder/Stockholder Letter Transcript:

ANNUAL RE POR T 2023

We   re an American jeans and apparel brand
that   s true in everything we do. Rooted in
authenticity, powered by positivity, and
inspired by our community     we welcome
all and believe that putting on a really great
pair of #AEjeans gives you the freedom to
be true to you. Because when you   re at your
best, you put good vibes out there, and get
good things back in return.
AE. True to you.
The Aerie mission is to
empower all women
to love their real selves.
We make products that feel REAL good.
We celebrate body positivity     all bodies should
be happy and free of retouching.
We stand for inclusivity and real representation.
Every woman should see herself in Aerie.
We are a community that celebrates one another.
Because we show up stronger, together.
Let the real you shine.   

May 17, 2024
Dear Fellow Stockholders:
Fiscal 2023 was a strong year for AEO. We achieved record revenue of $5.3 billion. We
also saw operating income of $223 million, and adjusted operating income(1) of
$375 million, which increased 39% compared to Fiscal 2022. Our customer file reached
an all-time high, underscoring the strength of our iconic brand portfolio and world-class
operations.
I   m very proud of how our team delivered this year. We continued to lead with
innovation, introducing exciting new merchandise collections and customer
experiences, while embracing new technologies to further strengthen our operations.
It was also a pivotal year for the company. We initiated a comprehensive review of our
business, as we seek to unlock stronger profitability and more consistent returns to stockholders. This work helped fuel a
significant turnaround in revenue and profit in the second half of the year, contributing to our strong full-year results.
As I look back on the year, I am particularly proud of the following achievements:
    Revenue of $5.3 billion rose 5%, marking a new record. We saw broad-based strength across brands and channels.
    Operating income of $223 million and $375 million in adjusted operating income.(1) Adjusted operating income
increased 39% compared to Fiscal 2022, our second-highest result since 2012.
    Aerie delivered exceptional growth and profit expansion. Record revenue of $1.7 billion rose 11% from Fiscal 2022,
with operating income of $276 million, up 65%. We continued to expand our customer base and delivered a winning
assortment across intimates, soft apparel and OFFLINE, our exciting activewear sub-brand.
    American Eagle expanded revenue while continuing to build profitability. Revenue of $3.4 billion was up 3% from
Fiscal 2022, with operating margin expanding 120 basis points to 17.8%. We also grew American Eagle   s customer file,
delivering early proof points of our focus on driving profitable growth.
    Strong operating cash flow of $581 million enabled us to invest in our brands and return $104 million in cash to
stockholders. This included a 25% increase in our quarterly cash dividend and one million shares repurchased during
the year. Additionally, we authorized 30 million shares for future repurchases.
    As we look to strengthen the organization and improve profitability, management took action to streamline
business priorities. This included restructuring the company   s international operations and fulfillment network to focus
on core capabilities that serve our brands and best customers.
    We welcomed new leadership to the organization. As part of our succession plan for our Chief Operations Officer
transition, we established two new positions to focus on key areas of our business. Sarah Clarke joined as our Chief
Supply Chain Officer, responsible for managing AEO   s global supply chain from sourcing through distribution. Valerie
van Ogtrop was appointed as Head of Brand Operations, a newly created role designed to drive greater brand
collaboration while fueling growth and profitability across American Eagle and Aerie.
    Furthering our commitment to transparency, we published our second    Building a Better World    report. This
highlighted progress toward our Planet (environment), People (social) and Practices (governance) goals. Our
commitment to continued transparency was rewarded by MSCI with an upgrade of our rating from    BBB    to    A.   

Building on our achievements and profit improvement work initiated in Fiscal 2023, in Fiscal 2024 we launched    Powering
Profitable Growth,    our new long-term corporate strategy that aims to set AEO on a path to deliver consistent, profitable
growth from here. Our plan is centered on three main pillars:
    Amplify our brands.
    Execute with financial discipline.
    Optimize our operations, structuring the company to grow revenue at a three to five percent compound annual growth rate
(   CAGR   ) and operating income at a mid-to-high teens CAGR through Fiscal 2026.
We entered Fiscal 2024 well positioned with industry-leading brands, a solid balance sheet and best-in-class operations.
American Eagle is the largest, most consistent youth brand   dressing generations of customers. Aerie has a powerful
brand platform with an amazing community of customers and significant opportunity to grow brand awareness. We
continue to deliver the best shopping experience across digital and stores.
As we embark on this next chapter, I could not be more excited about our future. We remain steadfast in operating the
business with balance; staying agile and flexible to capitalize on demand opportunities, while optimizing profitability for the
future. We believe that we are built to last and well positioned for success.
On a more somber note, I am deeply saddened by the recent passing of Thomas R. Ketteler, who was a member of AEO   s
Board of Directors and an invaluable advisor from 1981 to 2021. He served as a member of the Audit, Compensation and
Nominating, Governance and Corporate Social Responsibility Committees.
Tom   s financial expertise, keen ability to provide meaningful perspective and passion for the company were truly unrivaled.
He was a cherished business partner to me for decades and was instrumental in growing AEO   s business from its earliest
days. We will remember Tom with the highest regard and remain grateful for his incredible service, commitment and
friendship.
On behalf of the Board of Directors and our entire team at AEO, thank you for your continued support.
Jay L. Schottenstein
Executive Chairman of the Board and Chief Executive Officer
(1)
Adjusted operating income is a financial measure that is not calculated in accordance with generally accepted accounting principles in the
United States (   GAAP   ), which is commonly referred to as a non-GAAP or adjusted measure. See Appendix A of this Annual Report for
additional detail on adjusted results and other important information regarding the use of non-GAAP or adjusted measures.



shareholder letter icon 5/17/2024 Letter Continued (Full PDF)
 

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