Executive Summary

• American Eagle Outfitters reported 3Q16 EPS of $0.41, in line with the consensus estimate.
• Total revenues were $940.6 million versus expectations of $939.6 million. Comps were up 2%, but came in below expectations of 2.9%. AE brand comps were up 0.4%, while Aerie comps were up 21%, marking the sixth consecutive quarter in which Aerie posted comps above 20%. The company noted strength in the digital channels in the period.
• Management provided 4Q16 EPS guidance of $0.37–$0.39 versus consensus of $0.46. Comps are expected to be flat to up by low single digits versus consensus of 3.8%. Management noted that it is taking a cautious view because the retail climate, particularly in malls, is tough, and the pace of traffic choppy.