American Eagle Outfitters AEO shares plunge after earnings

A view of the American Eagle Outfitters store in Arlington, Virginia.

Erin Scott | Reuters

shares American Eagle Apparel Shares fell in after-hours trading on Wednesday as the company lowered its full-year outlook.

The company lowered its forecast even though it met Wall Street’s quarterly earnings expectations and beat revenue expectations.

The mall retailer said it now expects operating income to be between $250 million and $270 million, down from a March forecast of $270 million to $310 million. The company said it expects full-year revenue to be flat to low single digits, lagging its previous forecast of flat to single digit growth.

The retailer incorporated the pattern into its guidance as sales trends slowed as the company began its second quarter. On the earnings call, Jen Foyle, the company’s executive creative director, said she expects shoppers to buy more seasonal items as Memorial Day approaches and summer weather arrives.

Shares plunged about 14% after the company released its earnings report after the close.

Here’s how the company performed in the three-month period ended April 29, compared with Wall Street expectations, according to a Refinitiv survey of analysts:

  • Earnings per share: 17 cents adjusted vs. 17 cents expected
  • Revenue: $1.08 billion vs. $1.07 billion expected

American Eagle, including its namesake and Aerie brands, is very different from its competitors, Abercrombie & Fitch. Early Wednesday, Abercrombie shares soar Shares of American Eagle lifted as it posted a surprise profit and raised expectations.

American Eagle lost earlier gains as it reported its own quarterly results after the close, including a drop in profit. Net income fell about 42% to $18.45 million, or 9 cents a share, from $31.74 million, or 16 cents a share, a year earlier.

Total net revenue rose about 2 percent to $1.08 billion from $1.06 billion a year earlier. Store revenue rose 5%. Digital revenue fell 4%.

Its brand has had mixed results. Aerie’s comparable sales rose 2%, but American Eagle’s namesake brand’s comparable sales fell 2% compared with the same period last year.

American Eagle has made great strides in inventory levels.many retailers including Target, Cole’s and others, Stuck with too many items After shipments were stuck in the supply chain and consumer preferences deviated from categories that were popular during the Covid-19 pandemic.

Inventory at the end of the quarter was down 8% to $625 million compared to the same period last year.

In a press release, CEO Jay Schottenstein said the company wants to rebuild its operating margins and pursue profitable growth. Its focus is on “inventory discipline, cost savings and efficiencies across the business,” especially amid tough economic times, he said.

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