American Eagle Outfitters, Inc.’s (AEO) shares climbed 3.8% as reports said that the company’s executive chairman and interim Chief Executive Officer (CEO), Jay L. Schottenstein, has announced his new investment in the company.
Schottenstein declared that he purchased 148,942 shares of the company at $14.13 a piece, for a total amount of nearly $2.1 million. Incidentally, this is not the CEO’s first investment in the company. Earlier this year he had invested about $6.42 million in the company, buying shares worth $12.84 each.
Schottenstein has been the chairman of American Eagle since 1980. Alongside, he has been serving DSW Inc. (DSW) in the same role for nearly nine years now. Apart from the acquisition of American Eagle shares, Schottenstein has made several other investments, reflecting his confidence in the company and highlighting its growth prospects.
American Eagle enjoys a healthy financial status and hence is good from an investment viewpoint. As of Aug 2, 2014, its cash and short-term investments stood at $262.6 million with no debt on its balance sheet.
Moreover, cash flow from operations came in at $29.6 million in the fiscal second-quarter 2014, compared to a negative flow of $9.5 billion in the comparable quarter last year. Also, during the reported quarter, the company spent $74 million in capital expenditure, underscoring its inherent financial strength.
American Eagle recently posted its second-quarter fiscal 2014 results with both the top and bottom line beating estimates on the back of successful implementation of its strategic initiatives.
Earnings of 3 cents a share exceeded the Zacks Consensus Estimate of break-even, while net sales of $710.6 million surpassed the Zacks Consensus Estimate of $685 million. However, on a year-over-year basis, net sales of this Zacks Rank #3 (Hold) company slipped 2.3%, while earnings plunged 70%, owing to a tough retail environment.
Going forward, management remains confident of the company’s prospects given its better-than-expected performance amid a difficult retail environment. Further, the company intends to continue enhancing its omni-channel network, curtailing expenses and enriching customer experience. With these efforts underway, American Eagle is likely to achieve better operating results and drive shareholder value.
Better-ranked stocks in the apparel-shoe industry include Citi Trends, Inc. (CTRN), carrying a Zacks Rank #1 (Strong Buy) and Abercrombie & Fitch Co. (ANF) with a Zacks Rank #2 (Buy).
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