ITEM 8.01. OTHER EVENTS.
Convertible Notes Offering
On
A copy of the press release is being filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
This Current Report on Form 8-K does not and will not constitute an offer to sell, or the solicitation of an offer to buy, the notes, any shares of the Company's common stock issuable upon conversion of the notes, or any other securities, nor will there be any sale of the notes or any such shares or other securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer will be made only by means of a private offering memorandum.
Update Regarding COVID-19
On
Prior to the impact of the COVID-19 pandemic, our comparable period sales
performance from
We continue to operate our digital business. Since the first day that stores
were closed to the public, our digital sales growth has accelerated,
significantly exceeding our expectations. In 2019, our digital business
represented approximately 29% of total revenue. In order to support online
demand and utilize in-store inventory, we continued to leverage our store
network for buy-online/ship-from-store capabilities. Additionally, we plan to
introduce Curbside Pick-Up by
Despite the strength in digital, we generate the majority of our revenue through
stores and there can be no assurance that the current performance in our digital
sales growth will continue. The store closures will remain in place until state
and local governments allow us to re-open. When we are able to re-open our
stores, we cannot assure that in-store customer traffic will return to levels
prior to the outbreak of COVID-19. As a result, we expect our results for the
current fiscal quarter and for fiscal 2020 will be significantly adversely
impacted. The longer our stores remain closed to the public, the greater impact
it will have on our financial results. We have withdrawn our fiscal 2020 outlook
issued on
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We are also taking several precautionary measures and appropriately adjusting our operational needs due to the impact of COVID-19, including taking a series of actions to preserve financial strength as follows:
• a suspension of our share repurchase program and deferred payment of the first quarter cash dividend; • temporary furloughs of store, field and corporate associates beginningApril 5, 2020 , largely reflecting the continued uncertainty around the duration of store closures; • reductions to operating expenses, which include delayed merit increases for associates, a hiring freeze and other cost saving initiatives; • cuts to inventory receipts to align with lower demand due to store closures; and • planned reductions to capital expenditures across stores, information technology and other projects of at least$100 million from the previous guidance of planned expenditures of$225 million to$275 million for Fiscal 2020.
In addition, we have had productive discussions with our vendors to reduce purchases and extend terms, as well as with our landlords regarding the extension of payment terms.
Furthermore, as of
While our digital business, including buy-online/ship-from-store capabilities, is continuing, we are unable to accurately predict the impact that the COVID-19 pandemic will have on our operations and financial results going forward due to:
• the currently unknown duration of the COVID-19 pandemic; • the impact of governmental regulations that have been, and may in the future be, imposed in response to the pandemic, including regulations which could adversely affect our or cause us to cease our digital business if we are required to close our distribution and fulfillment centers or are otherwise unable acquire or deliver merchandise; • potential changes in consumer behavior and shopping patterns, including traffic through stores once they reopen; • the deterioration in the economic conditions inthe United States , which potentially could have an impact on discretionary consumer spending; • the ability of our distribution centers to maintain adequate staffing to meet increased customer demand; • the impact on our landlords and resulting ability of us to keep our stores open; and • the impact of COVID-19 on our and our vendors' supply chain, including impact on adequate inventory levels and supply chain costs, and on our third-party delivery service providers.
The novel coronavirus (COVID-19) pandemic has had and is expected to continue to have an adverse effect on our business and results of operations.
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Except as identified below, there have been no material changes to the Company's
risk factors disclosed in Part I, Item 1A of the Company's Annual Report on Form
10-K for the year ended
In late 2019, COVID-19 was first detected in
We are unable to accurately predict the impact that COVID-19 will have on our
operations going forward due to uncertainties that will be dictated by the
length of time that such disruptions continue, which will, in turn, depend on
the currently unknowable duration of the COVID-19 pandemic and the impact of
governmental regulations that might be imposed in response to the pandemic,
which could, among other things, require that we close our distribution and
fulfillment centers or otherwise make it difficult or impossible to operate our
e-commerce business, regarding the length of time that COVID-19 disruptions will
continue. These disruptions will largely depend on the duration of the COVID-19
pandemic and the governmental regulations that may be imposed in response to the
pandemic, the extent of which is currently unknowable. The regulations could,
among other things, require that we close our distribution and fulfillment
centers or otherwise make it difficult or impossible to operate our e-commerce
business. Numerous state and local jurisdictions have imposed, and others in the
future may impose, shelter-in-place orders, quarantines, executive orders and
similar government orders and restrictions for their residents to control the
spread of COVID-19. Such orders or restrictions, have resulted in temporary
store closures, work stoppages, slowdowns and delays, travel restrictions and
cancellation of events, among other effects, thereby negatively impacting our
operations. In addition, we expect to be impacted by the deterioration in the
economic conditions in
To the extent the COVID-19 pandemic adversely affects our business and financial
results, it may also have the effect of heightening many of the other risks
described in "Risk Factors" under Item 1A and "Management's Discussion and
Analysis of Financial Condition and Results of Operation" under Item 7 of our
Annual Report on Form 10-K for the year ended
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Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
This Current Report on Form 8-K includes forward-looking statements, including
statements regarding the anticipated terms of the notes being offered, the
completion, timing and size of the proposed offering, the intended use of the
proceeds, our introduction of Curbside Pick-Up, the re-opening of our stores,
our financial results and reduction to capital expenditures, our liquidity and
our continued operations. Forward-looking statements represent AEO's current
expectations regarding future events and are subject to known and unknown risks
and uncertainties that could cause actual results to differ materially from
those implied by the forward-looking statements, and there can be no assurance
that future developments affecting AEO will be those that it has anticipated.
Among those risks and uncertainties are market conditions, including market
interest rates, the trading price and volatility of AEO's common stock and risks
relating to AEO's business, including the anticipated impact to consumer demand,
AEO's supply chain and AEO's financial results due to the spread of COVID-19 and
other risks described in periodic reports that AEO files from time to time with
the
For additional information on these and other factors that could affect AEO's
actual results, see the risk factors set forth in AEO's filings with the
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits. Exhibit Number Description 99.1 Press Release datedApril 22, 2020 byAmerican Eagle Outfitters, Inc. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 5
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