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WARRENDALE, PA-In its first flight outside North American boarders, retailer American Eagle Outfitters is preparing to spread its reach to Japan. During the company’s third quarter conference call Tuesday, James V. O’Donnell, chief executive officer, said he was “quite excited” that the company recently signed a memo of understanding to open stores in that country. The decision to expand in Japan was based on performance of AE’s direct business, which sees its highest international revenue coming from that country.

O’Donnell also revealed the company is planning to open another 40 to 50 stores during the next three to five years, targeting space in A- and B-class shopping centers, as well as lifestyle centers and urban locations. Additionally, AE will continue to renovate its existing units. Stores with completed renovations are seeing a 100% uptick in sales volume compared to non-renovated stores, said O’Donnell.

In addition to focusing on AE’s primary audience, 15 to 25 year olds, O’Donnell said the company is gearing up to open its first five stores in a new concept, Martin + Osa, which is aimed at a more mature clientele. The company is also expanding its intimates business with increased store presence and the testing of a side-by-side format.

During the quarter ended Oct. 29, sales increased 20.5% to $577.7 million from $479.6 million during the same year-ago period. Year-over-year comp-store sales increased 13.6%, compared to 26.8%; and gross profit for the quarter increased to $269.4 million, or 46.6% as a percent to sales, from $233.9 million, or 48.8% as a percent to sales last year.

Net income for the quarter increased to $73.3 million, or 47 cents per diluted share, from net income of $57.9 million, or 38 cents per diluted share last year. “I’m quite pleased with our third-quarter earnings,” said O’Donnell. During the quarter, the company also completed the repurchase of six million shares of common stock for approximately $139 million.

For the nine months ended Oct. 29, total sales increased 28% to $1.55 billion from $1.2 billion during the same period a year ago. Comparable store sales increased 19.8%, compared to a 17.5% increase last year. And net income for the period increased to $186.6 million, or $1.19 per diluted share, from net income of $112.4 million, or 75 cents per diluted share a year ago.

The company said it expects fourth quarter earnings per share to reach 73 cents to 75 cents, compared to earnings of 70 cents per share from continuing operations in the fourth quarter of last year. American Eagle Outfitters currently operates 797 AE stores in 50 states, the District of Columbia and Puerto Rico, and 71 AE stores in Canada.

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