CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
|---|---|---|---|
| Statement of Financial Position [Abstract] | |||
| Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
| Preferred stock, issued | 0 | 0 | 0 |
| Preferred stock, outstanding | 0 | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 |
| Common stock, shares issued | 249,566,000 | 249,566,000 | 249,566,000 |
| Common stock, shares outstanding | 187,312,000 | 168,699,000 | 168,454,000 |
| Treasury stock, shares | 62,254,000 | 80,867,000 | 81,112,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
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| Income Statement [Abstract] | ||||||
| Total net revenue | [1] | $ 1,198,124 | $ 1,194,156 | $ 2,253,161 | $ 2,228,769 | |
| Cost of sales, including certain buying, occupancy and warehousing expenses | 828,107 | 691,765 | 1,495,118 | 1,290,188 | ||
| Gross profit | 370,017 | 502,391 | 758,043 | 938,581 | ||
| Selling, general and administrative expenses | 307,832 | 293,939 | 606,587 | 558,430 | ||
| Depreciation and amortization expense | 48,171 | 40,456 | 95,540 | 78,727 | ||
| Operating income | [1] | 14,014 | 167,996 | 55,916 | 301,424 | |
| Debt related charges | 60,066 | 60,066 | ||||
| Interest expense, net | 3,421 | 8,921 | 8,009 | 17,426 | ||
| Other income, net | (1,839) | (1,363) | (6,283) | (3,223) | ||
| (Loss) income before income taxes | (47,634) | 160,438 | (5,876) | 287,221 | ||
| (Benefit) provision for income taxes | (5,168) | 38,927 | 4,850 | 70,244 | ||
| Net (loss) income | $ (42,466) | $ 121,511 | $ (10,726) | $ 216,977 | ||
| Net (loss) income per basic share | $ (0.24) | $ 0.73 | $ (0.06) | $ 1.29 | ||
| Net (loss) income per diluted share | $ (0.24) | $ 0.58 | $ (0.06) | $ 1.04 | ||
| Weighted average common shares outstanding - basic | 180,189 | 167,491 | 174,544 | 168,036 | ||
| Weighted average common shares outstanding - diluted | 180,189 | 208,933 | 174,544 | 208,400 | ||
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
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| Statement of Comprehensive Income [Abstract] | ||||
| Net (loss) income | $ (42,466) | $ 121,511 | $ (10,726) | $ 216,977 |
| Other comprehensive income: | ||||
| Foreign currency translation adjustments | 298 | 916 | 828 | 3,854 |
| Other comprehensive income | 298 | 916 | 828 | 3,854 |
| Comprehensive (loss) income | $ (42,168) | $ 122,427 | $ (9,898) | $ 220,831 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
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| Statement of Stockholders' Equity [Abstract] | ||||
| Cash dividends declared and dividend equivalents, Per share | $ 0.18 | $ 0.18 | $ 0.36 | $ 0.3175 |
Interim Financial Statements |
6 Months Ended |
|---|---|
Jul. 30, 2022 | |
| Accounting Policies [Abstract] | |
| Interim Financial Statements | 1. Interim Financial Statements The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company", “we”, and “our”), a Delaware corporation, at July 30, 2022 and July 31, 2021 and for the 13 and 26 week periods ended July 30, 2022 and July 31, 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2022 (the “Fiscal 2021 Form 10-K”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the notes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly Report. The Company operates under the American Eagle® ("AE") and Aerie® brands. We also operate Todd Snyder New York ("Todd Snyder"), a premium menswear brand, and Unsubscribed, a new brand with a focus on consciously-made slow fashion. Founded in 1977, the Company is a leading multi-brand specialty retailer that operates more than 1,000 retail stores in the U.S. and internationally, online through our digital channels at www.ae.com and www.aerie.com, www.toddsnyder.com, www.unsubscribed.com and more than 260 international store locations managed by third-party operators. We offer a broad assortment of high quality, on-trend apparel, accessories, and personal care products at affordable prices for men and women under the AE brand, and intimates, apparel, active wear, and swim collections under the Aerie brand. We sell directly to consumers through our retail channel, which includes our stores and concession-based shop-within-shops. We operate stores in the U.S., Canada, Mexico, and Hong Kong. We also have license agreements with third parties to operate American Eagle and Aerie stores throughout Asia, Europe, India, Latin America, and the Middle East. The Company's online business, AEO Direct, ships to 81 countries worldwide.
In Fiscal 2021, we acquired AirTerra, Inc. ("AirTerra") and Quiet Logistics, Inc. ("Quiet Logistics"), creating a new supply chain platform ("Quiet Platforms”). AirTerra is a middle-mile freight consolidator that provides cost effective shipping solutions. Quiet Logistics is a leading logistics company that operates a network of in-market fulfillment centers, locating products closer to need, creating inventory efficiencies, cost benefits and affordable same-day and next-day delivery options for customers and stores. Both acquisitions represent an important step in our ongoing supply chain transformation strategy. Quiet Platforms provides fulfillment benefits to American Eagle and Aerie. Additionally, it also provides AEO with a new long-term growth opportunity by extending its cutting-edge shared supply chain assets and capabilities to the platform's third party customer file of small and mid-sized retailers. Historically, our operations have been seasonal, with a large portion of total net revenue and operating income occurring in the third and fourth fiscal quarters, reflecting increased demand during the back-to-school and year-end holiday selling seasons, respectively. Our quarterly results of operations also may fluctuate based upon such factors as the timing of certain holiday seasons, the number and timing of new store openings, the acceptability of seasonal merchandise offerings, the timing and level of markdowns, store closings and remodels, competitive factors, weather and general economic and political conditions. COVID-19 Pandemic Impacts related to the ongoing COVID-19 pandemic have been significantly negative for the retail industry, our Company, our customers, and our associates. We have experienced and may continue to experience significant disruptions to our business due to the COVID-19 pandemic and the related suggested and mandated social distancing and shelter-in-place orders. While stores have been impacted by reduced mall traffic, we have focused on our omni-channel capabilities. As of July 30, 2022, all of our stores have reopened and remain open, although we continue to see residual impacts on foot traffic and in-store revenues. The impacts of the COVID-19 pandemic on our business are discussed in further detail within these Notes to the Consolidated Financial Statements and within Item 2 of this Quarterly Report, of which these Notes form a part. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||
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Jul. 30, 2022 | |||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At July 30, 2022, the Company operated in two reportable segments, American Eagle and Aerie. Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2022” refers to the 52-week period that will end on January 28, 2023. “Fiscal 2021” refers to the 52-week period ended January 29, 2022. “Fiscal 2020” refers to the 52-week period ended January 30, 2021. Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies the accounting for convertible debt instruments. The new guidance eliminates two of the three models in Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share (“EPS”) calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2020-06 effective January 30, 2022 under the modified retrospective method. Refer to Note 5 and Note 8 to the Consolidated Financial Statements for additional information regarding EPS and the long-term debt, respectively. Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into United States dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended July 30, 2022, an unrealized gain of $0.3 million was included in other comprehensive income. During the 26 weeks ended, July 30, 2022, an unrealized gain of $0.8 million was included in other comprehensive income, primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates. Cash and Cash Equivalents and Short-Term Investments The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with a maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. Receivables The Company maintains an allowance for doubtful accounts for estimated losses from the failure of certain of our customers to make required payments for products or services delivered. The Company estimates this allowance based on the age of the related receivable, knowledge of the financial condition of customers, review of historical and expected future receivables and reserve trends and other pertinent information. If the financial condition of customers deteriorates or an unfavorable trend in receivable collections is experienced in the future, additional allowances may be required. Historically, the Company’s reserves have approximated actual experience. Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows:
As of July 30, 2022, the weighted average remaining useful life of our assets was approximately 6.1 years. In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ("ROU") assets associated with retail stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income within the Consolidated Statements of Operations. No asset impairment charges were recorded during the 13 or 26 weeks ended July 30, 2022 or July 31, 2021. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. Goodwill and Intangible Assets, net The Company’s goodwill is primarily related to the acquisition of Quiet Logistics in Fiscal 2021, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. As a result of the Company's annual goodwill impairment test as of January 29, 2022, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 30, 2022 and July 31, 2021. Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended July 30, 2022 or July 31, 2021. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets. Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed ("gift card breakage") and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. During the 13 weeks ended July 30, 2022 and July 31, 2021, the Company recorded approximately $2.2 million and $2.0 million, respectively, of revenue related to gift card breakage. During the 26 weeks ended July 30, 2022 and July 31, 2021, the Company recorded $4.9 million and $4.4 million, respectively, of revenue related to gift card breakage. Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. Leases The Company leases all store premises, regional distribution facilities, some of its office space, and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. Co-branded Credit Card The Company offers a co-branded credit card and a private label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. For further information on the Company’s loyalty program, refer to the Customer Loyalty Program caption below. Customer Loyalty Program The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The portion of the sales revenue attributed to the reward points is deferred and recognized when the reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and other and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets. Long-Term Debt
In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due 2025 (the "2025 Notes"). Prior to the adoption of ASU 2020-06 in Fiscal 2022, the 2025 Notes were accounted for under the cash conversion model, which is one of the models eliminated by ASU 2020-06. The adoption of ASU 2020-06 resulted in the 2025 Notes being accounted for as a single balance in long-term debt, rather than being accounted for as separate debt and equity components. As of July 30, 2022, approximately $69.6 million aggregate principal of the 2025 Notes remain outstanding. In June 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides senior secured asset based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027.
Refer to Note 8 to the Consolidated Financial Statements for additional information regarding Long-Term Debt. Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the Company’s effective income tax rate. The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance, requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss). Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. Revenue Recognition The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on gift card breakage, determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption above. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to the Customer Loyalty Program caption above for additional information. Revenue associated with Quiet Platforms is recognized as the services are performed. Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”) and buying, occupancy and warehousing costs and services. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. SG&A expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, SG&A expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. Debt Related Charges Debt related charges consists primarily of a $55.7 million induced conversion expense on the exchange of the 2025 Notes, along with certain other costs related to actions we took to strengthen our capital structure during the 13 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the 2025 Notes. Interest Expense, Net Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under our Credit Facility, as offset by interest income from cash, cash equivalents and short-term investments. Other Income, Net Other income, net consists of allowances for uncollectible receivables, foreign currency fluctuations and changes in other non-operating items. Segment Information We have two reportable segments: American Eagle and Aerie. For additional information regarding the Company’s segments and geographic information, refer to Note 12 to the Consolidated Financial Statements. |
Cash and Cash Equivalents and Short-Term Investments |
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| Cash, Cash Equivalents and Short-term Investments | 3. Cash and Cash Equivalents and Short-Term Investments The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded in the Consolidated Balance Sheets:
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | 4. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — Quoted prices in active markets. • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments.
Long-Term Debt As of July 30, 2022, the fair value of the Company's $307.7 million in outstanding borrowings under its Credit Facility approximated the carrying value. As of July 31, 2021, the Company had no outstanding borrowings under its previous credit agreement. The Company had approximately $69.6 million aggregate principal of the 2025 Notes outstanding at July 30, 2022. The fair value of the Company's 2025 Notes is not required to be measured at fair value on a recurring basis. Upon issuance, the fair value of the 2025 Notes was measured using two approaches that consider market related conditions, including market benchmark rates and a secondary market quoted price, and is therefore within Level 2 of the fair value hierarchy. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements. Non-Financial Assets The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value. There were no asset impairment charges recorded during the 13 or 26 weeks ended July 30, 2022 and July 31, 2021. The Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. The Company last performed an annual goodwill impairment test using Level 3 inputs as defined in ASC 820 as of January 29, 2022. As a result of the Company's annual goodwill impairment test, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 30, 2022 and July 31, 2021. |
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Earnings per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per Share | 5. Earnings per Share The following is a reconciliation between the amounts used in the calculation of basic and diluted earnings per share:
(1) For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. (2) For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company’s 2025 Notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. Dilutive and anti-dilutive shares relate to share-based compensation. Refer to Notes 8 and 9 to the Consolidated Financial Statements for additional information regarding the 2025 Notes and share-based compensation, respectively. On June 3, 2022, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with JPMorgan Chase Bank (“JPM”). Pursuant to the terms of the ASR Agreement, on June 3, 2022, the Company paid $200.0 million in cash and received an initial delivery of 13.4 million shares of its common stock on June 3, 2022. At final settlement, on July 28, 2022, an additional 3.7 million shares were received. The cumulative repurchase under the ASR Agreement was 17.0 million shares repurchased at an average price per share of $11.75. The aforementioned shares have been recorded as treasury stock. |
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Property and Equipment |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | 6. Property and Equipment Property and equipment consists of the following:
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Goodwill and Intangible Assets, net |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets, net | 7. Goodwill and Intangible Assets, net Goodwill and definite-lived intangible assets, net consist of the following:
(1) Accumulated impairment includes $1.7 million recorded in Fiscal 2019 and $2.5 million recorded in Fiscal 2016.
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Long-Term Debt, Net |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt, Net | 8. Long-Term Debt, Net Our long-term debt consisted of the following:
2025 Notes In April 2020, the Company issued $415 million aggregate principal amount of 2025 Notes in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The 2025 Notes have a stated interest rate of 3.75%, payable semi-annually. The Company may redeem the 2025 Notes, in whole or in part, at any time beginning April 17, 2023. The Company used the net proceeds from the issuance for general corporate purposes. The Company does not have the right to redeem the 2025 Notes prior to April 17, 2023. On or after April 17, 2023 and prior to the scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the 2025 Notes, at its option, for cash, if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period. Beginning January 2025, noteholders may convert their notes for approximately 120.9 shares of the Company's common stock per $1,000 principal amount of the notes, equivalent to a conversion price of approximately $8.27 per share. Note Exchange In June 2022, the Company entered into separate privately negotiated exchange agreements with certain holders of the 2025 Notes, to exchange $342.4 million in aggregate principal amount of the 2025 Notes for a combination of cash and shares of the Company's common stock, plus payment for accrued and unpaid interest (the "Note Exchange"). The Company paid cash of $136.1 million to redeem the principal amount of the 2025 Notes with a carrying value of $339.2 million and issued approximately 34.7 million shares of the Company's common stock. In connection with these transactions, the Company recognized a pre-tax inducement charge of approximately $55.7 million during the 13 weeks ended July 30, 2022, which was recorded within debt related charges on the Consolidated Statements of Operations. Following the Note Exchange, approximately $69.6 million aggregate principal amount of the 2025 Notes remained outstanding at July 30, 2022. The effective interest rate for the 2025 Notes is 4.3% and we calculated the effective yield using a market approach. The remaining amortization period of the discount was 2.75 years as of July 30, 2022. Interest expense for the 2025 Notes was:
Refer to Note 2 and Note 5 to the Consolidated Financial Statements for additional information regarding the impact of the adoption of ASU 2020-06. The following table discloses conversion amounts if the 2025 Notes were all converted as of the end of the period:
Revolving Credit Facility In June 2022, the Company entered into the amended and restated Credit Agreement which provides senior secured asset-based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations pursuant to the Credit Facility. The Credit Facility expires on June 24, 2027. Before amendment and restatement, the Company's previous credit agreement that provided senior secured asset-based revolving credit for loans and letters of credit up to $400 million and was scheduled to expire on January 30, 2024. All obligations under the Credit Facility are unconditionally guaranteed by certain subsidiaries. The obligations under the Credit Agreement are secured by certain assets of the Company and certain subsidiaries. As of July 30, 2022, the Company was in compliance with the terms of the Credit Agreement and had $307.7 million in outstanding borrowings and $7.9 million outstanding in stand-by letters of credit. No loans were outstanding under the Company's previous credit agreement as of July 31, 2021. Borrowings under the Credit Facility accrue interest at the election of the Company at an adjusted secured overnight financing rate ("SOFR") rate of SOFR plus 0.10% plus an applicable margin (ranging from 1.125% to 1.375%) or an alternate base rate plus an applicable margin (ranging from 0.125% to 0.375%), with each such applicable margin being based on average borrowing availability under the Credit Facility. Interest is payable quarterly and at the end of each applicable interest period. The weighted average interest rate for borrowings during the 13 weeks ended July 30, 2022 was 2.7%. The total interest expense related to the Credit Facility for both the 13 and 26 weeks ended July 30, 2022 was $1.0 million. |
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Share-Based Compensation |
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| Share-Based Compensation | 9. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation, which requires the Company to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 and 26 weeks ended July 30, 2022 was $8.6 million ($7.7 million, net of tax) and $22.9 million ($20.4 million, net of tax), respectively, and for the 13 and 26 weeks ended July 31, 2021 was $9.0 million ($6.8 million, net of tax) and $21.6 million ($16.4 million, net of tax), respectively. Stock Option Grants The Company has granted time-based stock option awards, which vest over the requisite service period of the award or at an employee’s eligible retirement date, if earlier. A summary of the Company’s stock option activity for the 26 weeks ended July 30, 2022 follows:
(1) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on July 30, 2022. Cash received from the exercise of stock options and the actual tax benefit realized from share-based payments was $1.4 million and $0.4 million, respectively, for the 26 weeks ended July 30, 2022. Cash received from the exercise of stock options and the actual tax benefit realized from share-based payments was $13.1 million and $4.1 million, respectively, for the 26 weeks ended July 31, 2021. As of July 30, 2022, there was $9.6 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.2 years. The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. Restricted Stock Grants Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of time-based restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant. A Monte-Carlo simulation was utilized for performance-based restricted stock awards. A summary of the Company’s restricted stock activity is presented in the following table:
As of July 30, 2022, there was $38.4 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.2 years. Based on current probable performance, there is $11.4 million of unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of performance goals is probable over a to three year period. As of July 30, 2022, the Company had 4.5 million shares available for all equity grants. |
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Income Taxes |
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| Income Tax Disclosure [Abstract] | |
| Income Taxes | 10. Income Taxes The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax benefit rate for the 13 weeks ended July 30, 2022 was 10.9% compared to the effective income tax rate of 24.3% for the 13 weeks ended July 31, 2021. The effective income tax rate for the 26 weeks ended July 30, 2022 was -82.5% compared to 24.5% for the 26 weeks ended July 31, 2021. The change in the effective tax rate, as compared to the prior period, is primarily due to the Note Exchange as a portion of the inducement charge was not deductible, lower excess tax benefits on share-based payments, and state legislative changes. The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended July 30, 2022. Over the next twelve months, the Company believes that it is reasonably possible that unrecognized tax benefits may decrease by approximately $0.8 million due to settlements, expiration of statute of limitations, or other changes in unrecognized tax benefits. |
Legal Proceedings |
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| Commitments and Contingencies Disclosure [Abstract] | |
| Legal Proceedings | 11. Legal Proceedings The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or consolidated cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims. |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting | 12. Segment Reporting In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified two operating segments (American Eagle brand and Aerie brand) that also represent our reportable segments and reflect the Chief Operating Decision Maker’s (defined as our CEO) internal view of analyzing results and allocating resources. Additionally, our Todd Snyder brand, Unsubscribed brand, and Quiet Platforms have been identified as separate operating segments; however, as they do not meet the quantitative thresholds for separate disclosure, they have been included in the Corporate and Other category, as permitted by ASC 280. Our CEO analyzes segment results and allocates resources between segments based on the adjusted operating income (loss), or the operating income (loss) in periods where there are no adjustments, of each segment. Adjusted operating income (loss) is a non-GAAP financial measure ("non-GAAP" or "adjusted") that is defined by the Company as operating income excluding impairment, restructuring and COVID-19 related charges. Adjusted operating income (loss) is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance, when reviewed in conjunction with our GAAP consolidated financial statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. There were no adjustments to operating income in either the 13 or 26 weeks ended July 30, 2022 or July 31, 2021 for any segment, therefore adjusted operating income (loss) is not presented in the table below. Reportable segment information is presented in the following table:
(1) Corporate and Other includes revenue and operating results of the Todd Snyder brand, Unsubscribed brand, and Quiet Platforms (net of intersegment eliminations), which have been identified as separate operating segments, but are not material to disclose as separate reportable segments. Corporate operating costs represent certain costs that are not directly attributable to another reportable segment. (2) The difference between operating income (loss) and income before income taxes includes the following, which are not allocated to our reportable segments: - For the 13 weeks ended July 30, 2022: debt related charges of $60.1 million; interest expense, net of $3.4 million; and other income, net of $1.8 million. For the 26 weeks ended July 30, 2022: debt related charges of $60.1 million; interest expense, net of $8.0 million; and other income, net of $6.3 million. - For the 13 weeks ended July 31, 2021: interest expense, net of $8.9 million and other income, net of $1.4 million. For the 26 weeks ended July 31, 2021: interest expense, net of $17.4 million and other income, net of $3.2 million. We do not allocate assets at the reportable segment level and therefore our CEO does not use segment asset information to make decisions. The following table presents summarized geographical information:
(1) Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries, and international franchise royalty revenue. |
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||
| Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At July 30, 2022, the Company operated in two reportable segments, American Eagle and Aerie. |
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| Fiscal Year | Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2022” refers to the 52-week period that will end on January 28, 2023. “Fiscal 2021” refers to the 52-week period ended January 29, 2022. “Fiscal 2020” refers to the 52-week period ended January 30, 2021. |
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| Estimates | Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies the accounting for convertible debt instruments. The new guidance eliminates two of the three models in Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share (“EPS”) calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2020-06 effective January 30, 2022 under the modified retrospective method. Refer to Note 5 and Note 8 to the Consolidated Financial Statements for additional information regarding EPS and the long-term debt, respectively. |
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| Foreign Currency Translation | Foreign Currency Translation In accordance with ASC 830, Foreign Currency Matters, the Company translates assets and liabilities denominated in foreign currencies into United States dollars (“USD”) (the reporting currency) at the exchange rates prevailing at the balance sheet date. The Company translates revenues and expenses denominated in foreign currencies into USD at the monthly average exchange rates for the period. Gains or losses resulting from foreign currency transactions are included in the consolidated results of operations, whereas related translation adjustments are reported as an element of other comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. We are exposed to the impact of foreign exchange rate risk primarily through our Canadian and Mexican operations where the functional currency is the Canadian dollar and Mexican peso, respectively. The impact of all other foreign currencies is currently immaterial to our consolidated financial results. During the 13 weeks ended July 30, 2022, an unrealized gain of $0.3 million was included in other comprehensive income. During the 26 weeks ended, July 30, 2022, an unrealized gain of $0.8 million was included in other comprehensive income, primarily related to the fluctuations of the USD to Mexican peso and USD to Canadian dollar exchange rates. |
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| Cash and Cash Equivalents and Short-term Investments | Cash and Cash Equivalents and Short-Term Investments The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Short-term investments classified as available-for-sale include certificates of deposit with a maturity greater than three months, but less than one year. Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments. |
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| Receivables | Receivables The Company maintains an allowance for doubtful accounts for estimated losses from the failure of certain of our customers to make required payments for products or services delivered. The Company estimates this allowance based on the age of the related receivable, knowledge of the financial condition of customers, review of historical and expected future receivables and reserve trends and other pertinent information. If the financial condition of customers deteriorates or an unfavorable trend in receivable collections is experienced in the future, additional allowances may be required. Historically, the Company’s reserves have approximated actual experience. |
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| Merchandise Inventory | Merchandise Inventory Merchandise inventory is valued at the lower of average cost or net realizable value, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts when control of the merchandise has transferred to the Company. The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends. |
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| Property and Equipment | Property and Equipment Property and equipment is recorded on the basis of cost with depreciation computed utilizing the straight-line method over the asset’s estimated useful life. The useful lives of our major classes of assets are as follows:
As of July 30, 2022, the weighted average remaining useful life of our assets was approximately 6.1 years. In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company’s management evaluates the value of leasehold improvements, store fixtures, and operating lease right-of-use ("ROU") assets associated with retail stores. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded separately as a component of operating income within the Consolidated Statements of Operations. No asset impairment charges were recorded during the 13 or 26 weeks ended July 30, 2022 or July 31, 2021. When the Company closes, remodels, or relocates a store prior to the end of its lease term, the remaining net book value of the assets related to the store is recorded as a write-off of assets within depreciation and amortization expense. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property and equipment. |
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| Goodwill and Intangible Assets, net | Goodwill and Intangible Assets, net The Company’s goodwill is primarily related to the acquisition of Quiet Logistics in Fiscal 2021, as well as its importing operations and Canadian business, and represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other, the Company evaluates goodwill for possible impairment at least annually as of the last day of the fiscal year and upon occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment charge is recorded in the period of the evaluation based on that difference. As a result of the Company's annual goodwill impairment test as of January 29, 2022, the Company concluded that its goodwill was not impaired. No indicators of impairment were present during the 13 or 26 weeks ended July 30, 2022 and July 31, 2021. Definite-lived intangible assets are initially recorded at fair value, with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s definite-lived intangible assets, which consist primarily of trademark assets, are generally amortized over 10 to 15 years. The Company evaluates definite-lived intangible assets for impairment in accordance with ASC 360 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows is less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No definite-lived intangible asset impairment charges were recorded during the 13 or 26 weeks ended July 30, 2022 or July 31, 2021. Refer to Note 7 to the Consolidated Financial Statements for additional information regarding goodwill and intangible assets. |
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| Gift Cards | Gift Cards Revenue is not recorded on the issuance of gift cards. The value of a gift card is recorded as a current liability upon issuance and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed ("gift card breakage") and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. During the 13 weeks ended July 30, 2022 and July 31, 2021, the Company recorded approximately $2.2 million and $2.0 million, respectively, of revenue related to gift card breakage. During the 26 weeks ended July 30, 2022 and July 31, 2021, the Company recorded $4.9 million and $4.4 million, respectively, of revenue related to gift card breakage. |
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| Construction Allowances | Construction Allowances As part of certain lease agreements for retail stores, the Company receives construction allowances from lessors, which are generally comprised of cash amounts. The Company records a receivable and an adjustment to the operating lease ROU asset at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized as part of the single lease cost over the term of the original lease (including the pre-opening build-out period). The receivable is reduced as amounts are received from the lessor. |
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| Self-Insurance Liability | Self-Insurance Liability The Company uses a combination of insurance and self-insurance mechanisms for certain losses related to employee medical benefits and worker’s compensation. Costs for self-insurance claims filed and claims incurred but not reported are accrued based on known claims and historical experience. Management believes that it has adequately reserved for its self-insurance liability, which is capped by stop loss contracts with insurance companies. However, any significant variation of future claims from historical trends could cause actual results to differ from the accrued liability. |
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| Leases | Leases The Company leases all store premises, regional distribution facilities, some of its office space, and certain information technology and office equipment. These leases are generally classified as operating leases. Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes and certain other expenses. When measuring operating lease ROU assets and operating lease liabilities, the Company only includes cash flows related to options to extend or terminate leases once those options are executed. Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of operating lease ROU assets and operating lease liabilities. When determining the present value of future payments for an operating lease that does not have a readily determinable implicit rate, the Company uses its incremental borrowing rate as of the date of initial possession of the leased asset. For leases that qualify for the short-term lease exemption, the Company does not record an operating lease liability or operating lease ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less. |
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| Co-Branded Credit Card | Co-branded Credit Card The Company offers a co-branded credit card and a private label credit card under the AE and Aerie brands. These credit cards are issued by a third-party bank (the “Bank”) in accordance with a credit card agreement (the “Agreement”). The Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. We receive funding from the Bank based on the Agreement and card activity, which includes payments for new account activations and usage of the credit cards. We recognize revenue for this funding as we fulfill our performance obligations under the Agreement. This revenue is recorded in other revenue, which is a component of total net revenue in our Consolidated Statements of Operations. For further information on the Company’s loyalty program, refer to the Customer Loyalty Program caption below. |
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| Customer Loyalty Program | Customer Loyalty Program The Company offers a highly digitized loyalty program called Real Rewards by American Eagle and Aerie™ (the “Program”). This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. Points earned under the Program on purchases at American Eagle and Aerie are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The portion of the sales revenue attributed to the reward points is deferred and recognized when the reward is redeemed or when the points expire, using the relative stand-alone selling price method. Additionally, reward points earned using the co-branded credit card on non-AE or Aerie purchases are accounted for in accordance with ASC 606. As the points are earned, a current liability is recorded for the estimated cost of the reward, and the impact of adjustments is recorded in revenue. The Company defers a portion of the sales revenue attributed to the loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. |
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| Sales Return Reserve | Sales Return Reserve Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. The presentation on a gross basis consists of a separate right of return asset and liability. These amounts are recorded within (i) prepaid expenses and other and (ii) other current liabilities and accrued expenses, respectively, on the Consolidated Balance Sheets. |
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| Long-Term Debt | Long-Term Debt
In April 2020, the Company issued $415 million aggregate principal amount of convertible senior notes due 2025 (the "2025 Notes"). Prior to the adoption of ASU 2020-06 in Fiscal 2022, the 2025 Notes were accounted for under the cash conversion model, which is one of the models eliminated by ASU 2020-06. The adoption of ASU 2020-06 resulted in the 2025 Notes being accounted for as a single balance in long-term debt, rather than being accounted for as separate debt and equity components. As of July 30, 2022, approximately $69.6 million aggregate principal of the 2025 Notes remain outstanding. In June 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides senior secured asset based revolving credit for loans and letters of credit up to $700 million, subject to customary borrowing base limitations (the "Credit Facility"). The Credit Facility expires on June 24, 2027.
Refer to Note 8 to the Consolidated Financial Statements for additional information regarding Long-Term Debt. |
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| Income Taxes | Income Taxes The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statements carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits, may materially impact the Company’s effective income tax rate. The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The calculation of deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance, requires management to make estimates and assumptions. The Company believes that its estimates and assumptions are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income (loss). Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes. |
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| Revenue Recognition | Revenue Recognition The Company recognizes revenue pursuant to ASC 606. Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets. Revenue is recorded net of estimated and actual sales returns and promotional price reductions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined using historical average return percentages. Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on gift card breakage, determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption above. The Company recognizes royalty revenue generated from its license or franchise agreements based on a percentage of merchandise sales by the licensee/franchisee. This revenue is recorded as a component of total net revenue when earned and collection is probable. The Company defers a portion of the sales revenue attributed to loyalty points and recognizes revenue when the points are redeemed or expire, consistent with the requirements of ASC 606. Refer to the Customer Loyalty Program caption above for additional information. Revenue associated with Quiet Platforms is recognized as the services are performed. |
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| Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses | Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively, “merchandise costs”) and buying, occupancy and warehousing costs and services. Design costs are related to the Company's Design Center operations and include compensation, travel and entertainment, supplies and samples for our design teams, as well as rent and depreciation for our Design Center. These costs are included in cost of sales as the respective inventory is sold. Buying, occupancy and warehousing costs and services consist of compensation, employee benefit expenses and travel and entertainment for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales. |
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| Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. SG&A expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales. Additionally, SG&A expenses do not include rent and utilities related to our stores, operating costs of our distribution centers, and shipping and handling costs related to our e-commerce operations, all of which are included in cost of sales. |
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| Debt Related Charges | Debt Related Charges Debt related charges consists primarily of a $55.7 million induced conversion expense on the exchange of the 2025 Notes, along with certain other costs related to actions we took to strengthen our capital structure during the 13 weeks ended July 30, 2022. Refer to Note 8 to the Consolidated Financial Statements for additional information regarding the 2025 Notes. |
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| Interest Expense, Net | Interest Expense, Net Interest expense, net primarily consists of interest expense related to the Company’s 2025 Notes and borrowings under our Credit Facility, as offset by interest income from cash, cash equivalents and short-term investments. |
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| Other Income, Net | Other Income, Net Other income, net consists of allowances for uncollectible receivables, foreign currency fluctuations and changes in other non-operating items. |
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| Legal Proceedings and Claims | The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), the Company records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position, results of operations or consolidated cash flows of the Company. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims. |
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| Segment Information | Segment Information We have two reportable segments: American Eagle and Aerie. For additional information regarding the Company’s segments and geographic information, refer to Note 12 to the Consolidated Financial Statements. |
Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||
| Useful Lives of Major Classes of Assets | The useful lives of our major classes of assets are as follows:
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Cash and Cash Equivalents and Short-Term Investments (Tables) |
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| Fair Market Values for Cash and Short-term Investments | The following table summarizes the fair market values for the Company’s cash and short-term investments, which are recorded in the Consolidated Balance Sheets:
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Fair Value Measurements (Tables) |
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Jul. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Financial Assets Measured at Fair Value on a Recurring Basis | The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3 to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments.
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Earnings per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation Between Basic and Diluted Earnings per Share | The following is a reconciliation between the amounts used in the calculation of basic and diluted earnings per share:
(1) For the 13 and 26 weeks ended July 30, 2022, there were 3.9 million and 1.9 million potentially dilutive equity awards, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. (2)
For the 13 and 26 weeks ended July 30, 2022, there were 25.3 million and 36.8 million potentially dilutive shares from the Company’s 2025 Notes, respectively, that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. |
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Property and Equipment (Tables) |
7 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | Property and equipment consists of the following:
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Goodwill and Intangible Assets, net (Tables) |
7 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Definite-lived intangible assets, net | Goodwill and definite-lived intangible assets, net consist of the following:
(1) Accumulated impairment includes $1.7 million recorded in Fiscal 2019 and $2.5 million recorded in Fiscal 2016.
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Long-Term Debt, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Long-Term Debt | Our long-term debt consisted of the following:
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| Schedule of Interest Expense for Notes | Interest expense for the 2025 Notes was:
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| Schedule of Notes Conversion Amounts | The following table discloses conversion amounts if the 2025 Notes were all converted as of the end of the period:
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Share-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity |
(1)
Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on July 30, 2022. |
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| Black-Scholes Option Valuation Assumptions | The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options. (2) Based on historical volatility of the Company’s common stock. (3)
Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience. |
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| Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity is presented in the following table:
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Reportable Segment Information | Reportable segment information is presented in the following table:
(1) Corporate and Other includes revenue and operating results of the Todd Snyder brand, Unsubscribed brand, and Quiet Platforms (net of intersegment eliminations), which have been identified as separate operating segments, but are not material to disclose as separate reportable segments. Corporate operating costs represent certain costs that are not directly attributable to another reportable segment. (2) The difference between operating income (loss) and income before income taxes includes the following, which are not allocated to our reportable segments: - For the 13 weeks ended July 30, 2022: debt related charges of $60.1 million; interest expense, net of $3.4 million; and other income, net of $1.8 million. For the 26 weeks ended July 30, 2022: debt related charges of $60.1 million; interest expense, net of $8.0 million; and other income, net of $6.3 million. - For the 13 weeks ended July 31, 2021: interest expense, net of $8.9 million and other income, net of $1.4 million. For the 26 weeks ended July 31, 2021: interest expense, net of $17.4 million and other income, net of $3.2 million. |
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| Summary of Geographical Information | The following table presents summarized geographical information:
(1)
Amounts represent sales from American Eagle and Aerie international retail stores, e-commerce sales that are billed to and/or shipped to foreign countries, and international franchise royalty revenue. |
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Interim Financial Statements - Additional Information (Details) |
Jul. 30, 2022
Country
Store
|
|---|---|
| Accounting Policies [Abstract] | |
| Number of retail stores | 1,000 |
| Number of international store locations | 260 |
| Number of countries company operates in | Country | 81 |
Summary of Significant Accounting Policies - Additional Information (Detail) |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|---|---|
|
Jan. 31, 2019
USD ($)
|
Jul. 30, 2022
USD ($)
|
Jul. 31, 2021
USD ($)
|
Jul. 30, 2022
USD ($)
Segment
|
Jul. 31, 2021
USD ($)
|
Jan. 29, 2022
USD ($)
|
Jun. 30, 2022
USD ($)
|
Apr. 30, 2020
USD ($)
|
|
| Significant Accounting Policies [Line Items] | ||||||||
| Number of reportable segments | Segment | 2 | |||||||
| Unrealized gain included in other comprehensive income | $ 298,000 | $ 916,000 | $ 828,000 | $ 3,854,000 | ||||
| Weighted average remaining useful life, assets | 6 years 1 month 6 days | |||||||
| Asset impairment charges | 0 | 0 | $ 0 | 0 | ||||
| Goodwill impairment charge | $ 0 | |||||||
| Definite-lived impairment charges | 0 | 0 | 0 | 0 | ||||
| Revenue related to gift card breakage | 2,200,000 | $ 2,000,000.0 | $ 4,900,000 | $ 4,400,000 | ||||
| Reward expiration period | 60 days | |||||||
| Debt related charges | 60,066,000 | $ 60,066,000 | ||||||
| Credit Card Reward Program Description | This Program features both shared and unique benefits for loyalty members and credit card holders. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited. | |||||||
| Credit Agreement | Credit Facility | ||||||||
| Significant Accounting Policies [Line Items] | ||||||||
| Loans and letters of credit maximum borrowing capacity | $ 400,000,000 | 700,000,000 | $ 700,000,000 | $ 700,000,000 | ||||
| Line of credit facility, expiration date | Jan. 30, 2024 | Jun. 24, 2027 | ||||||
| 2025 Notes | ||||||||
| Significant Accounting Policies [Line Items] | ||||||||
| Aggregate principal amount of debt issued | 69,600,000 | $ 69,600,000 | $ 415,000,000 | |||||
| Debt related charges | $ 55,700,000 | |||||||
| Minimum | ||||||||
| Significant Accounting Policies [Line Items] | ||||||||
| Definite-lived intangibles, useful life | 10 years | |||||||
| Maximum | ||||||||
| Significant Accounting Policies [Line Items] | ||||||||
| Definite-lived intangibles, useful life | 15 years | |||||||
| ASU 2020-06 | ||||||||
| Significant Accounting Policies [Line Items] | ||||||||
| Change in accounting principle, accounting standards update, adopted | true | true | ||||||
| Change in accounting principle, accounting standards update, adoption date | Jan. 30, 2022 | Jan. 30, 2022 | ||||||
Summary of Significant Accounting Policies - Useful Lives of Major Classes of Assets (Parenthetical) (Detail) |
6 Months Ended |
|---|---|
Jul. 30, 2022 | |
| Maximum | Leasehold Improvements | |
| Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items] | |
| Useful lives in asset class | 10 years |
Cash and Cash Equivalents and Short-Term Investments - Fair Market Values for Cash and Short-term Investments (Detail) - USD ($) $ in Thousands |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
|---|---|---|---|
| Cash and cash equivalents: | |||
| Cash and cash equivalents | $ 98,214 | $ 434,770 | $ 773,994 |
| Short-term investments | |||
| Short-term investments | 50,000 | ||
| Cash and cash equivalents and short-term investments | 98,214 | 434,770 | 823,994 |
| Cash | |||
| Cash and cash equivalents: | |||
| Cash and cash equivalents | 98,111 | 138,758 | 498,211 |
| Interest Bearing Deposits | |||
| Cash and cash equivalents: | |||
| Cash and cash equivalents | $ 103 | $ 296,012 | 275,783 |
| Certificates of Deposit | |||
| Short-term investments | |||
| Short-term investments | $ 50,000 |
Fair Value Measurements - Additional Information (Detail) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|---|
Apr. 30, 2020 |
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Fair Value Measurements Disclosure [Line Items] | |||||
| Impairment charges | $ 0 | $ 0 | $ 0 | $ 0 | |
| 2025 Notes | |||||
| Fair Value Measurements Disclosure [Line Items] | |||||
| Aggregate principal amount | $ 415,000,000 | 69,600,000 | $ 69,600,000 | ||
| Debt instrument, maturity year | 2025 | 2025 | |||
| Revolving Credit Facility | |||||
| Fair Value Measurements Disclosure [Line Items] | |||||
| Outstanding borrowings | $ 307,700,000 | $ 0 | $ 307,700,000 | $ 0 | |
Earnings per Share - Reconciliation Between Basic and Diluted Earnings per Share (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|||||
| Weighted average common shares outstanding: | ||||||||
| Basic number of common shares outstanding | 180,189 | 167,491 | 174,544 | 168,036 | ||||
| Dilutive effect of convertible notes | 36,367 | 35,083 | ||||||
| Dilutive effect of stock options and non-vested restricted stock | 5,075 | 5,281 | ||||||
| Diluted number of common shares outstanding | 180,189 | 208,933 | 174,544 | 208,400 | ||||
| Anti-Dilutive Shares | [1],[2] | 29,221 | 130 | 38,763 | 130 | |||
| ||||||||
Earnings per Share - Reconciliation Between Basic and Diluted Earnings per Share (Parenthetical) (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
| Awards excluded from diluted earnings per share calculation | [1],[2] | 29,221 | 130 | 38,763 | 130 | |||
| Equity Awards | ||||||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
| Awards excluded from diluted earnings per share calculation | 3,900 | 1,900 | ||||||
| 2025 Notes | ||||||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
| Awards excluded from diluted earnings per share calculation | 25,300 | 36,800 | ||||||
| ||||||||
Earnings per Share - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
Jul. 28, 2022 |
Jun. 03, 2022 |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
|---|---|---|---|---|---|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
| Cumulative treasury stock, shares | 62,254 | 80,867 | 81,112 | ||
| Cumulative aggregate cost of treasury stock | $ 970,536 | $ 1,378,106 | $ 1,379,025 | ||
| ASR Agreement | JPM | |||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
| Payments for accelerated share repurchase | $ 200,000 | ||||
| Cumulative treasury stock, shares | 17,000 | ||||
| Number of shares repurchased | 3,700 | 13,400 | |||
| Shares repurchased price per share | $ 11.75 |
Property and Equipment (Detail) - USD ($) $ in Thousands |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
|---|---|---|---|
| Property, Plant and Equipment [Abstract] | |||
| Property and equipment, at cost | $ 2,603,212 | $ 2,480,438 | $ 2,330,665 |
| Less: Accumulated depreciation and impairment | (1,827,243) | (1,752,166) | (1,689,269) |
| Property and equipment, net | $ 775,969 | $ 728,272 | $ 641,396 |
Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net (Detail) - USD ($) $ in Thousands |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
||
|---|---|---|---|---|---|
| Intangible Assets, Net (Including Goodwill) [Abstract] | |||||
| Goodwill, Gross | $ 275,602 | $ 275,612 | $ 20,561 | ||
| Accumulated impairment | [1] | (4,196) | (4,196) | (4,196) | |
| Goodwill, net | 271,406 | 271,416 | 16,365 | ||
| Intangible assets, at cost | 145,765 | 145,243 | 93,335 | ||
| Accumulated amortization | (47,114) | (42,542) | (39,080) | ||
| Intangible assets, net | $ 98,651 | $ 102,701 | $ 54,255 | ||
| |||||
Goodwill and Intangible Assets, net - Summary of Goodwill and Definite-lived Intangible Assets, Net, (Parenthetical) (Detail) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Feb. 01, 2020 |
Jan. 28, 2017 |
|
| Intangible Assets, Net (Including Goodwill) [Abstract] | ||
| Accumulated impairment | $ 1.7 | $ 2.5 |
Long-Term Debt, Net - Components of Long-Term Debt (Detail) - USD ($) $ in Thousands |
Jul. 30, 2022 |
Jan. 29, 2022 |
Jul. 31, 2021 |
|---|---|---|---|
| Debt Instrument [Line Items] | |||
| Total long-term debt, net | $ 376,522 | $ 341,002 | $ 331,680 |
| 2025 Notes - equity portion, net of tax | 58,454 | 58,454 | |
| Revolving Credit Facility | |||
| Debt Instrument [Line Items] | |||
| Credit facility borrowings | 307,700 | 0 | |
| Credit Facility | |||
| Debt Instrument [Line Items] | |||
| Credit facility borrowings | 307,700 | ||
| 2025 Notes | |||
| Debt Instrument [Line Items] | |||
| 2025 Notes principal | 69,601 | 412,025 | 412,025 |
| Less: unamortized discount | 779 | 71,023 | 80,345 |
| 2025 Notes, net | $ 68,822 | $ 341,002 | $ 331,680 |
Long-Term Debt, Net - Schedule of Interest Expense for Notes (Detail) - 2025 Notes - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Debt Instrument [Line Items] | ||||
| Accrued interest for interest payments | $ 2,008 | $ 3,815 | $ 5,914 | $ 7,749 |
| Amortization of discount | 255 | 4,956 | 782 | 9,384 |
| Total interest expense | $ 2,263 | $ 8,771 | $ 6,696 | $ 17,133 |
Long-Term Debt, Net - Schedule of Notes Conversion Amounts (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
6 Months Ended | |
|---|---|---|
Jul. 30, 2022 |
Apr. 30, 2020 |
|
| Debt Instrument [Line Items] | ||
| Conversion price per share | $ 8.27 | |
| 2025 Notes | ||
| Debt Instrument [Line Items] | ||
| Number of shares convertible | 8,418 | |
| Conversion price per share | $ 8.27 | |
| Value in excess of principal if converted | $ 36,870 |
Share-Based Compensation - Black-Scholes Option Valuation Assumptions (Detail) |
6 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
|||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
| Risk-free interest rate | [1] | 2.50% | 0.90% | |||||
| Dividend yield | 3.80% | 1.60% | ||||||
| Volatility factor | [2] | 52.20% | 50.70% | |||||
| Weighted-average expected term | [3] | 4 years 6 months | 4 years 6 months | |||||
| ||||||||
Share-Based Compensation - Summary of Restricted Stock Activity (Detail) shares in Thousands |
6 Months Ended |
|---|---|
|
Jul. 30, 2022
$ / shares
shares
| |
| Time Based Restricted Stock Units | |
| Shares | |
| Nonvested - beginning of period | shares | 2,702 |
| Granted | shares | 1,578 |
| Vested | shares | (1,189) |
| Cancelled | shares | (181) |
| Nonvested - end of period | shares | 2,910 |
| Weighted-Average Grant Date Fair Value | |
| Nonvested - beginning of period | $ / shares | $ 16.25 |
| Granted | $ / shares | 16.59 |
| Vested | $ / shares | 14.93 |
| Cancelled | $ / shares | 14.27 |
| Nonvested - end of period | $ / shares | $ 17.10 |
| Performance-Based Restricted Stock Units | |
| Shares | |
| Nonvested - beginning of period | shares | 1,462 |
| Granted | shares | 549 |
| Vested | shares | (257) |
| Cancelled | shares | (76) |
| Nonvested - end of period | shares | 1,678 |
| Weighted-Average Grant Date Fair Value | |
| Nonvested - beginning of period | $ / shares | $ 20.95 |
| Granted | $ / shares | 19.16 |
| Vested | $ / shares | 21.28 |
| Cancelled | $ / shares | 21.16 |
| Nonvested - end of period | $ / shares | $ 20.30 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||||
| Reasonably possible amount of reduction in unrecognized tax benefit over the next twelve months | $ 0.8 | $ 0.8 | ||
| Effective income tax benefit rate | 10.90% | 24.30% | 82.50% | 24.50% |
Segment Reporting - Additional Information (Detail) |
6 Months Ended |
|---|---|
|
Jul. 30, 2022
Segment
| |
| Segment Reporting Information [Line Items] | |
| Number of operating segments | 2 |
| Number of reportable segments | 2 |
Segment Reporting - Summary of Reportable Segment Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|||||
| Segment Reporting Information [Line Items] | ||||||||
| Total net revenue | [1] | $ 1,198,124 | $ 1,194,156 | $ 2,253,161 | $ 2,228,769 | |||
| Operating income (Ioss) | [1] | 14,014 | 167,996 | 55,916 | 301,424 | |||
| Capital expenditures | [1] | 69,464 | 49,399 | 127,858 | 86,205 | |||
| Operating Segments | American Eagle | ||||||||
| Segment Reporting Information [Line Items] | ||||||||
| Total net revenue | 777,828 | 845,882 | 1,463,407 | 1,573,584 | ||||
| Operating income (Ioss) | 109,110 | 198,896 | 213,015 | 350,128 | ||||
| Capital expenditures | 18,754 | 17,189 | 34,524 | 30,628 | ||||
| Operating Segments | Aerie | ||||||||
| Segment Reporting Information [Line Items] | ||||||||
| Total net revenue | 371,683 | 335,795 | 693,395 | 633,282 | ||||
| Operating income (Ioss) | 11,830 | 70,646 | 54,903 | 140,624 | ||||
| Capital expenditures | 30,244 | 16,641 | 61,259 | 27,460 | ||||
| Corporate and Other, Non-Segment | ||||||||
| Segment Reporting Information [Line Items] | ||||||||
| Total net revenue | [2] | 48,613 | 12,479 | 96,359 | 21,903 | |||
| Operating income (Ioss) | [2] | (106,926) | (101,546) | (212,002) | (189,328) | |||
| Capital expenditures | [2] | $ 20,466 | $ 15,569 | $ 32,075 | $ 28,117 | |||
| ||||||||
Segment Reporting - Summary of Reportable Segment Information (Parenthetical) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Segment Reporting [Abstract] | ||||
| Debt related charges | $ 60,100 | $ 60,100 | ||
| Interest expense, net | 3,421 | $ 8,921 | 8,009 | $ 17,426 |
| Other income, net | $ 1,839 | $ 1,363 | $ 6,283 | $ 3,223 |
Segment Reporting - Summary of Geographical Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|||||
| Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||
| Total net revenue | [1] | $ 1,198,124 | $ 1,194,156 | $ 2,253,161 | $ 2,228,769 | |||
| United States | ||||||||
| Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||
| Total net revenue | 1,027,158 | 1,030,308 | 1,935,323 | 1,939,966 | ||||
| Foreign | ||||||||
| Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||
| Total net revenue | [2] | $ 170,966 | $ 163,848 | $ 317,838 | $ 288,803 | |||
| ||||||||
Impairment and Restructuring Charges - Summary of Impairment and Restructuring Charges (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Restructuring and Related Activities [Abstract] | ||||
| Impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
Impairment and Restructuring Charges - Summary of Impairment and Restructuring Charges (Parenthetical) (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 30, 2022 |
Jul. 31, 2021 |
Jul. 30, 2022 |
Jul. 31, 2021 |
|
| Restructuring Cost and Reserve [Line Items] | ||||
| Asset Impairment Charges | $ 0 | $ 0 | $ 0 | $ 0 |