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UPDATE 2-American Eagle sees sales rising on pent-up demand for apparel

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May 26 (Reuters) - American Eagle Outfitters Inc said on Wednesday sales of its jeans and tops was accelerating, after the apparel retailer reported a first-quarter results beat on increased spending, driven by stimulus checks.

Stimulus-led spending confidence among customers allowed the apparel retailer to cut promotions and sell at full prices, pushing the company’s gross margin to 42.2% from 36.7% in 2019.

“High demand is driving greater pricing power,” Chief Creative Officer Jennifer Foyle told analysts on a post-earnings call.

The company also said it was optimistic about the back-to-school season denim trends as it revamps fashion styles to cater to the looser fits that millennials and teens are sporting these days.

Pent-up demand for loose-fit jeans, tops and leggings coupled with the $1,400 stimulus checks that Americans received in March lifted the company’s sales for the first time since the onset of the pandemic.

The company also reported a 57% surge in digital revenue in the first quarter compared to 2019 levels, fueled by a redesigned app and enhanced curbside and in-store pickup features.

Brand Aerie recorded an 89% rise in revenue compared to 2019 levels, while revenue at the American Eagle label rose marginally.

Excluding one-time items, the company earned a profit of 48 cents per share, above analysts’ average estimate of a profit of 46 cents per share, according to IBES data from Refinitiv.

Total net revenue surged nearly 90% to $1.03 billion compared with expectations of $1.02 billion.

Shares of the company which have gained about 75% this year, were up marginally in after market trade, after closing up on Wednesday, spurred by better-than-expected results from rival Abercrombie & Fitch.

Reporting by Aditi Sebastian; Editing by Shinjini Ganguli

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