American Eagle sales beat as jeans back in vogue

(Reuters) - American Eagle Outfitters Inc topped analysts’ estimates for quarterly same-store sales on Wednesday, as the apparel retailer cashed in on a revival in the popularity of jeans in the United States.

FILE PHOTO: Jeans are seen for sale in an American Eagle Outfitters retail store in Manhattan, New York, U.S., May 13, 2016. REUTERS/Mike Segar/File Photo

Even as athleisure continues to dominate current fashion scene, more shoppers are looking to get back into jeans as companies invest in making them more comfortable and fit better.

American Eagle has managed to stay ahead of the competition from companies such as Abercrombie & Fitch Co and Gap Inc as its stretchy and distressed jeans prove to be a hit with college students.

“Finding a perfect fit in jeans is really hard, and American Eagle has nailed the fit. That creates loyalty in their customers who keep coming back,” A Line Partners analyst Gabriela Santaniello said.

The jeans business has benefited as American Eagle successfully replicates its success at its Aerie brand, which has strongly resonated with young shoppers due to its focus on comfortable lingerie.

The company said it would launch a new curvy jeans collection and broaden its men’s lines with new fabric, fits and sizes in time for the back-to-school season.

The company’s same-store sales rose 6% in the first quarter ended May 4, beating analysts’ estimates of a 3.13% increase, according to IBES data from Refinitiv.

Same-store sales at Aerie also registered a 14% surge.

However, American Eagle warned of a potential impact on its business from U.S. President Donald Trump’s proposed higher tariffs on another $300 billion worth of goods from China.

“If tariffs are expanded to apparel, there would be an adverse effect on our financial results,” Chief Financial Officer Robert Madore said.

Madore said the company was working with its sourcing partners to “significantly” mitigate any potential impact from additional tariffs.

But proposed tariffs on goods imported from Mexico will not have an impact on the company, American Eagle said.

Excluding items, the company earned 24 cents per share in the first quarter, beating analysts’ estimates of 21 cents per share.

Total net revenue rose 7.7% to $886.3 million, beating analysts’ estimates of $855.6 million.

The company’s shares rose more than 3.3% to $19.10.

Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva