A shopper walks past an American Eagle store on November 21, 2023 in Glendale, California.
Justin Sullivan | Getty Images
American eagle Shares fell nearly 13% in extended trading Wednesday after the company reported third-quarter earnings in which it issued weak holiday guidance and lowered its full-year forecast. The company said it competes with value-seeking consumers who are willing to spend only during key shopping moments.
The clothing retailer narrowly missed Wall Street expectations on the top score, but beat the bottom line.
Here's how American Eagle performed during its fiscal third quarter compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:
Earnings per share: 48 cents adjusted vs. 46 cents expected Revenue: $1.29 billion vs. $1.30 billion expected
The company's reported net income for the three-month period ending Nov. 2 was $80 million, or 41 cents per share, compared with $96.7 million, or 49 cents per share, a year earlier. Excluding one-time charges related to restructuring and impairment charges, American Eagle reported adjusted earnings of 48 cents per share.
Sales fell to $1.29 billion, down about 1% from $1.3 billion the previous year.
Although narrow, Wednesday's loss marked the third straight quarter in which American Eagle missed Wall Street sales targets.
In a statement, CEO Jay Schottenstein praised the “strong” back-to-school shopping season, but said demand remains inconsistent among major shopping events.
“We enter the holiday season well-positioned, with our leading brands offering quality merchandise, great gifts and a premium cross-channel shopping experience,” Schottenstein said. “Key selling periods saw positive customer response, however we remain aware of potential volatility during off-peak periods.”
Consumers going out to enjoy prime shopping moments, followed by sharply declining sales, has been a consistent theme throughout the retail industry. Foot locker He cited a similar dynamic when announcing earnings earlier Wednesday, as I did Dollar tree.
For the holiday quarter, American Eagle expects comparable sales to rise approximately 1%, with total sales down approximately 4%, including the impact of $85 million from a lower sales week and a later start to the holiday shopping season. The forecast is lower than the 2.2% comparable sales growth that StreetAccount was looking for and the 1% sales decline that LSEG expected.
As a result, American Eagle now expects comparable sales to grow 3% for the full year, down from previous guidance of 4% growth and below StreetAccount's estimate of 4.1%. It now expects full-year sales to rise 1%, down from previous guidance of 2% to 3% and below LSEG's forecast of 2.5% growth.
Similar to other retailers, American Eagle took a cautious approach in the latter half of the year as it faced uncertainty surrounding the 2024 election and the overall macroeconomic environment. But unlike her competitors, she maintained that cautious tone.
both of them Abercrombie & Fitch and Dick's sporting goodswhich issued a cautious outlook earlier this year, reversed its previous mood when it announced its earnings earlier this month.
Despite disappointing forecasts and weak sales, American Eagle is seeing strong demand for its Aerie brand. Aerie's third-quarter revenue reached an all-time high for the company, and comparable sales grew 5%, on top of 12% growth from the same period last year.
