American Eagle's sales lifted by strong demand for Aerie line

(Reuters) - Teen apparel retailer American Eagle Outfitters Inc AEO.N reported a higher-than-expected rise in quarterly sales and profit as demand for its brands remained resilient in a grim retail environment.

American Eagle Outfitters shop in Singapore May 15, 2016. REUTERS/Thomas White

Comparable sales of the company’s Aerie brand, which sells intimate apparel and personal care products for women, jumped 32 percent in the first quarter, smashing the 14.9 percent rise that analysts polled by Consensus Metrix had expected.

Strong apparel collection and marketing campaigns are driving more traffic and new customers to Aerie, said Jennifer Foyle, global brand president of Aerie.

The company launched the Aerie Real campaign in 2014, in which its ads use photos of models that are not air brushed.

“That category (Aerie), we posted positive double-digit, growth across major businesses including bras, undies, apparel,” Foyle said on a post-earnings conference call.

Unlike its struggling rivals, the company has responded faster to changing fashion trends, slowly winning back young shoppers who have been flocking to fast-fashion companies such as Inditex's Zara and H&M HMb.ST.

The company has also focused on boosting its margins by cutting down on promotions and keeping its inventory in check.

American Eagle’s net income rose 39.3 pct to $40.5 million, or 22 cents per share, in the quarter ended April 30.

The company’s net revenue rose 7.1 pct to $749.4 million.

Analysts had expected a profit 18 cents per share on revenue of $731.4 million, according to Thomson Reuters I/B/E/S.

The company also forecast a second-quarter profit of 20-21 cents per share. Analysts on average expected a profit of 20 cents share.

Reporting by Subrat Patnaik in Bengaluru; Editing by Anil D’Silva