Teen apparel retailer American Eagle Outfitters reported a bigger-than-expected rise in quarterly comparable sales, largely due to strong demand for its Aerie line of lingerie and personal care products.
Comparable sales of Aerie brand jumped 24 percent in the second quarter ended July 30, handily beating the 13.70 percent rise expected by analysts polled by Consensus Metrix.
Aerie's colorful and flirty intimate apparel has become a hit with millennials, more so after the Aerie Real marketing campaign in 2014 that featured plus-sized models.
American Eagle has also responded faster to changing fashion trends, in an attempt to win back customer who are increasingly shopping at fast-fashion companies such as Inditex's Zara, H&M and Forever 21.
Sales at stores open for at least a year rose 3 percent in the quarter, also topping 2.70 percent rise analysts had expected.
American Eagle's net income rose to $41.6 million, or 23 cents per share, in the quarter from $33.3 million, or 17 cents per share, a year earlier.
Operating margin rose by 1.6 percentage points to 8.3 percent as the company also cut back on promotions, while keeping its inventory in check.
American Eagle's net revenue rose 3.2 percent to $822.6 million. Analysts on average had expected revenue of $820.2 million, according to Thomson Reuters I/B/E/S.
The company also forecast third-quarter profit of 40-41 cents per share. Analysts had expected 40 cents.
Up to Tuesday's close, the stock had risen about 22 percent this year.
(Reporting by Subrat Patnaik in Bengaluru; Editing by Anil D'Silva)