A view of the American Eagle Outfitters store in Arlington, Virginia.
Erin Scott | Reuters
Actions from American Eagle Outfitters fell in after-hours trading on Wednesday as the company cut its full-year outlook.
The company cut its forecast even though it matched Wall Street’s quarterly earnings expectations and beat revenue expectations.
The retailer said it now expects operating income to be between $250 million and $270 million, down from the $270 million to $310 million it forecast in March. It said it expected full-year revenue to stagnate in the low single digits, falling short of the flat-single-digit increase it had previously forecast.
Shares fell about 14% after the market closed following the company’s earnings report.
Here’s how the company fared in the three-month period ended April 29 compared to what Wall Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: 17 cents adjusted versus 17 cents expected
- Revenue: $1.08 billion vs. $1.07 billion expected
American Eagle, which includes its namesake brand and the Aerie brand, was significantly different from its competitor, Abercrombie & Fitch. Earlier on Wednesday, Abercrombie shares shot up as it reported a surprise profit and raised its outlook — along with raising American Eagle shares.
American Eagle lost those earlier gains as it reported its own quarterly results after the bell — including declining profits. Net income fell about 42% to $18.45 million, or 9 cents a share, compared with $31.74 million, or 16 cents a share, in the year-ago period.
Total net income rose 2% to $1.08 billion from the $1.06 billion the company reported in the year-ago period. Store sales increased by 5%. Digital revenue fell 4%.
Her brands had mixed results. Comparable sales of Aeria rose 2%, but comparable sales of the American Eagle brand namesake fell 2% compared to the year-ago period.
American Eagle has made strides with inventory levels. Many retailers, incl target, Kohl’s and more, stuck with too many items after shipments got stuck in the supply chain and consumer preferences shifted away from categories that were popular during the Covid pandemic.
Inventories at the end of the quarter were down 8% to $625 million compared to the year-ago period.
In a press release, CEO Jay Schottenstein said the company wants to build back its operating margins and pursue profitable growth. He said he was focusing on “inventory discipline, cost savings and efficiency across the business”, especially with a tougher economic backdrop.
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