AEO Keenly Focused on Improving Product and Efficiencies

"Entering 2008, inventories are well-managed, down 5% per square foot, with plans to stringently control levels, while leveraging a “trigger” strategy in tune with shopper trends. The women’s assortment remains a sharp management focus, as well as the largest sales and margin opportunity at the AE brand...Although aggressive clearance of the denim category will hamper 1H08 sales and margins, the new trend-right assortment bodes well for the fall selling season. Following a comprehensive cost structure review, management has identified several areas for expense reduction, including store payroll and non-merchandise procurement. Savings benefits are expected to be evident in 2Q08, with management expecting to leverage full year SG&A expenses on a flat comp."

"The company should be well positioned to exceed expectations in the second half of 2008. We are reaffirming ...