American eagle They warned investors on Wednesday that consumers are withdrawing the expense and has seen a “slower start” until the year of what I expected.
“When entering 2025, the first quarter has a slower start than expected, which reflects a less solid demand and a colder climate,” said CEO Jay Schottenstein in a press release. “While we anticipate the improvement as the spring season progresses, we are also taking proactive measures to strengthen the upper line, administer the inventory and reduce the expenses. As we sail through an uncertain consumer and an operational panorama, we will also continue focused on our long -term strategic priorities.”
The shares fell around 5% in the extended trade.
The descending comment, which came along with a weak orientation for the quarter and the year that is coming, is the last warning sign that the consumer could be decreasing as buyers fight with inflation and persistent concerns around tariffs.
In the last two weeks, a series of other retailers, including both strong companies and those that tend to fight, issued a weak orientation and caution comments about the current macroeconomic conditions and warned that 2025 could be a weaker year than expected for sales.
Beyond its perspective, American Eagle issued mixed vacation and comparable sales results that exceed expectations. This is how the clothing company did in its fourth fiscal quarter compared to what Wall Street was anticipating, based on a LSEG analysts survey:
- Profit per action: 54 cents against 50 expected cents
- Revenue: $ 1.60 billion compared to $ 1.60 billion expected
The company’s net income for the company for the three -month period that ended on February 1 was $ 104 million, or 54 cents per share, compared to $ 6.31 million, or 3 cents per share, a year earlier.
Sales fell to $ 1.60 billion, a bit of $ 1.68 billion the previous year. Similar to other retailers, American Eagle benefited from an extra week in the previous year, which has negatively biased results.
Comparable sales, which do not include the effect of one week of sale, increased 3% during quarter, in advance to the expectations of UP 2.1%, according to streetacount. Aerie, the American Eagle and ActiveWear intimate line, promoted the company’s growth during the quarter with the comps up to 6%. Meanwhile, the company’s homonym banner saw comparable sales by 1%.
For the current quarter, American Eagle hopes to see a decrease in medium digit digits in sales, while analysts expected income to increase 1.3%, according to LSEG. Throughout the year, it expects sales to decrease in a single low digit, compared to the expectations of a growth of 3%, according to LSEG.
In a call with analysts, Finance Chief Michael Mathias said that aerie sales are expected to be positive for the year, but that growth will be compensated by a more pronounced decrease in the American Eagle banner.
Tariffs are also expected to weigh on the results, Mathias said. Currently, the company obtains just under 20% of its China products and awaits a coup of $ 5 million to $ 10 million from the new tasks in fiscal year 2025, which will also affect the gross margin of American Eagle. At this time, the company does not plan to transmit those costs to the consumer and is working to obtain its exposure to China to less than 10% at the end of the fiscal year, Mathias said.
During the past year, American Eagle has made significant advances to improve profitability, but has seen a slower sales growth. In the previous three quarters, Wall Street sales expectations were lost, and on Wednesday, it issued income numbers that were in line with the analysts’ forecasts but did not exceed them.
During the quarter, the company acknowledged that it had some product failures and had certain items that were exhausted, which affected sales, but American Eagle stores are also wearing their results. The company still has a great trace of shopping centers, and although there are some signs that shopping centers are seeing a resurgence, traffic has still significantly decreased in the US shopping centers. UU. For example, online sales are expected to be positive during the first quarter, while sales of stores will fall more steep than a single digit digit.
To combat the effect of the decrease in shopping centers, the rival Abercrombie & Fitch has worked to move its stores to places outside the shopping centers, while American Eagle has been working to remodel its existing fleet. Currently, the company’s stores are on average, and they are working to reduce it to seven. In fiscal year 2024, he remodeled around 56 stores, and in the following year, the company plans to remodel between 90 and 100 doors as part of its capex guide of $ 300 million.
In previous quarters, American Eagle has said that he has been affirming with an uncertain economic environment and a consumer that tends to come out and buy during the key moments, but now a wide range of other retailers report similar dynamics as cracks in the economy.
In February, consumer confidence saw the greatest fall since 2021, employment growth slowed down more than expected and unemployment increased. These signs and the effect they have had on the markets have led to the concerns that a recession could come, especially if the commercial war of President Donald Trump continues with Canada, Mexico and China.
A deceleration economy is bad news for any retailer, but especially those who mainly sell discretionary goods, such as new clothes. During a call with analysts, Schottenstein shared his thoughts about the consumer and said that the most important thing that affects buyers is uncertainty.
“They are afraid of the unknown, not only to tariffs, not only to inflation. They see the government cutting people. They do not know how they will affect them. They see that programs are cut, they do not know how that will affect them,” said Schottenstein. “They just don’t know how they will affect them … they become very conservative.”
