American Eagle Outfitters AEO shares plunge after earnings report

American Eagle Outfitters AEO shares plunge after earnings report

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

Erin Scott | Reuters

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

The company lowered its guidance despite matching Wall Street’s quarterly earnings expectations and beating sales expectations.

The mall retailer said it now expects operating profit to be between $250 million and $270 million, down from the range of $270 million to $310 million it forecast in March. For the year as a whole, it is assumed that sales will be in the low single-digit range and will therefore fall short of the constant to rising single-digit percentages previously forecast.

Sales trends slowed early in the second quarter, a pattern the retailer factored in in its forecasts. On a conference call about the results, Jen Foyle, the company’s creative director, said she hopes shoppers will buy more seasonal merchandise as Memorial Day approaches and the summer weather takes hold.

Following the release of the company’s earnings report after the close, shares plunged about 14%.

Here’s how the company performed for the three-month period ended April 29, compared to Wall Street expectations, based on a Refinitiv analyst poll:

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

American Eagle, which also owns the brand of the same name and the Aerie brand, differed significantly from its competitor. Abercrombie & Fitch. Abercrombie’s stock soared early Wednesday as the company posted a surprise earnings and upgraded its outlook, helping American Eagle’s stock rise as well.

American Eagle erased those earlier gains as the company reported its own quarterly results after the close, which included falling earnings. Net income fell about 42% to $18.45 million, or 9 cents a share, compared to $31.74 million, or 16 cents a share, in the year-ago period.

Total net sales increased approximately 2% to $1.08 billion from $1.06 billion in the prior-year period. Store sales increased by 5%. Digital sales fell 4%.

Its brands have had mixed results. Aerie comparable sales increased 2%, but comparable sales for American Eagle’s namesake brand declined 2% compared to the prior-year period.

American Eagle made progress on inventories. Many retailers including Goal, cabbage and others were stuck with too many goods after shipments stalled in the supply chain and consumer preferences shifted away from categories popular during the Covid-19 pandemic.

Inventory at the end of the quarter was down 8% year-over-year to $625 million.

In a press release, CEO Jay Schottenstein said the company aims to build back operating margins and aim for profitable growth. He said it focuses on “inventory discipline, cost savings and efficiencies across the business,” especially against the tougher economic backdrop.