American Eagle sees strong holiday season, shares up

(Reuters) - Teen clothing retailer American Eagle Outfitters Inc said it was heading into a strong holiday season as both its casual clothes and lingerie sold well, and more customers shopped at its stores despite fewer discounts than last year.

Shares of the company rose 8 percent Wednesday morning on the New York Stock Exchange.

"Our holiday season and fourth quarter have started off strongly and consistent with our expectations," said Chief Executive Officer Robert Hanson.

"Against strong double-digit sales gains last year, we drove positive comparable sales and record sales volumes on Black Friday and over the Wednesday-through-Sunday period," Hanson said on a conference call with analysts.

American Eagle said there was 20 percent growth in its active customer base for both the namesake brand and Aerie, its lingerie business.

Aerie had long been a drag on its bottom line, but this quarter, the unit saw comparable sales rise 5 percent and the CEO said the unit also saw "top line and bottom line growth."

American Eagle, which prices its clothes in between peers Abercrombie & Fitch Co and Aeropostale Inc , earned $78.6 million, or 39 cents per share, in the third quarter, up from $52.4 million, or 27 cents per share, a year ago. Sales rose 11 percent to $910 million.

Inventories were down 11 percent on a cost-per-foot basis for leasing space, the company said. This also resulted in less steep markdowns, helping margins.

"American Eagle is ...essentially driving its business by chasing products into where the demand exists," said Brian Sozzi, Chief Equities Analyst of NBG Productions.

"To us, this shows the American Eagle buying teams are on the pulse of teen fashion preferences; to generate more than 10 percent comparable sales on this type of lean inventory is impressive," he wrote in a note.

American Eagle now expects full-year earnings of between $1.38 and $1.40 per share from continuing operations, up from its prior forecast of $1.33 to $1.36.

Analysts, on average, were expecting earnings of $1.37 per share for the year, according to Thomson Reuters I/B/E/S.

The company's initiatives to keep its fashion fresh resonated with its teen clientele, leading to a 10-percent jump in same-store sales in the quarter ended October 27.

American Eagle shares closed at $19.39 on Tuesday on the New York Stock Exchange. They were up at $20.94 Wednesday morning on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee in Chicago and Siddharth Cavale in Bangalore; Editing by Akshay Lodaya, Maju Samuel and Gunna Dickson)