A view of an American Eagle Outfitters store in Arlington, Virginia.
Erin Scott | Reuters
Shares of American Eagle Outfitters dropped Wednesday in after-hours trading, as the corporate lowered its full-year outlook.
The corporate cut its forecast, whilst it matched Wall Street’s quarterly earnings expectations and beat revenue expectations.
The mall retailer said it now expects operating income to range between $250 million and $270 million, below the $270 million to $310 million range it had predicted in March. It said it anticipates full-year revenue to be flat to down low single-digits, lagging the flat to up single-digits it projected before.
Sales trends slowed as the corporate began the second quarter, a pattern the retailer factored into its guidance. On an earnings call, Jen Foyle, the corporate’s executive creative director, said she hopes shoppers will buy more seasonal merchandise as Memorial Day hits and summer weather takes hold.
Shares plunged about 14% following the corporate’s earnings report after the market close.
Here’s how the corporate did for the three-month period that ended April 29 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: 17 cents, adjusted, versus 17 cents expected
- Revenue: $1.08 billion, versus $1.07 billion expected
American Eagle, which incorporates its namesake brand and the Aerie brand, diverged significantly from its competitor, Abercrombie & Fitch. Earlier Wednesday, shares of Abercrombie shot up because it posted a surprise profit and raised its outlook, lifting American Eagle’s stock with it.
American Eagle lost those earlier gains, because it reported its own quarterly results after the bell, including falling profits. Net income fell about 42% to $18.45 million, or 9 cents per share, compared with $31.74 million, or 16 cents a share, within the year-ago period.
Total net revenue rose about 2% to $1.08 billion from the $1.06 billion it reported within the year-ago period. Store revenue rose 5%. Digital revenue dropped 4%.
Its brands had mixed results. Aerie’s comparable sales increased 2%, but comparable sales for American Eagle’s namesake brand declined 2% compared with the year-ago period.
American Eagle made strides with inventory levels. Many retailers, including Goal, Kohl’s and others, got stuck with an excessive amount of merchandise after shipments got stuck in the provision chain and consumer preferences swung away from categories popular in the course of the Covid-19 pandemic.
Inventory declined 8% to $625 million at the top of the quarter in comparison with the year-ago period.
In a news release, CEO Jay Schottenstein said the corporate wants to construct back its operating margins and chase profitable growth. He said it is targeted on “inventory discipline, cost savings and efficiencies across the business,” particularly with the tougher economic backdrop.
