American Eagle Sees Sales Rising on Pent-Up Demand for Apparel

American Eagle Outfitters Inc said on Wednesday sales of its jeans and tops was accelerating, after the apparel retailer reported a first-quarter results beat on increased spending, driven by stimulus checks.

Stimulus-led spending confidence among customers allowed the apparel retailer to cut promotions and sell at full prices, pushing the company’s gross margin to 42.2 percent from 36.7 percent in 2019.

“High demand is driving greater pricing power,” chief creative officer Jennifer Foyle told analysts on a post-earnings call.

The company also said it was optimistic about the back-to-school season denim trends as it revamps fashion styles to cater to the looser fits that millennials and teens are sporting these days.

Pent-up demand for loose-fit jeans, tops and leggings coupled with the $1,400 stimulus checks that Americans received in March lifted the company’s sales for the first time since the onset of the pandemic.

The company also reported a 57 percent surge in digital revenue in the first quarter compared to 2019 levels, fuelled by a redesigned app and enhanced curb-side and in-store pickup features.

Brand Aerie recorded an 89 percent rise in revenue compared to 2019 levels, while revenue at the American Eagle label rose marginally.

Excluding one-time items, the company earned a profit of 48 cents per share, above analysts’ average estimate of a profit of 46 cents per share, according to IBES data from Refinitiv.

Total net revenue surged nearly 90 percent to $1.03 billion compared with expectations of $1.02 billion.

Shares of the company which have gained about 75 percent this year, were up marginally in after market trade, after closing up on Wednesday, spurred by better-than-expected results from rival Abercrombie & Fitch.

Reporting by Aditi Sebastian; Editing by Shinjini Ganguli