American Eagle shares fell approximately 13% in after-hours trading on Wednesday following the release of the company’s third-quarter earnings report, which included a disappointing holiday forecast and a reduction in its full-year outlook. The company attributed its challenges to consumers seeking value who are selective about spending only during specific shopping periods.
Although American Eagle slightly fell short of Wall Street’s revenue expectations, it exceeded profit forecasts. During the fiscal third quarter, the company reported a net income of $80 million, or 41 cents per share, compared to $96.7 million, or 49 cents per share, in the previous year. Adjusted for one-time charges, the company posted an adjusted profit of 48 cents per share. Sales decreased to $1.29 billion, down about 1% from the previous year.
This marks the third consecutive quarter in which American Eagle has not met Wall Street’s sales projections. CEO Jay Schottenstein acknowledged a strong back-to-school shopping season but noted inconsistent demand between major shopping events. Despite positive customer responses during key selling periods, the company remains cautious about potential fluctuations during non-peak times.
The retail industry has observed a trend of consumers engaging in significant shopping moments followed by sharp declines in sales. American Eagle anticipates a 1% increase in comparable sales for the holiday quarter, with total sales expected to decrease by approximately 4%. This outlook is lower than analyst expectations.
Due to uncertainties surrounding the 2024 election and the macroeconomic environment, American Eagle, like other retailers, has maintained a cautious stance for the latter part of the year. Despite the subdued forecast and sales performance, the company has experienced strong demand for its Aerie brand, achieving record revenue in the third quarter with a 5% increase in comparable sales.
