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 guidance for the holidays and lowered its forecast for the full year. The company said it is competing with profit-seeking shoppers who are willing to spend only during important shopping periods.
The stockbroker narrowly missed Wall Street’s top-line expectations, but hit the bottom.
Here’s how American Eagle performed during the fiscal third quarter compared to Wall Street’s expectations, based on a survey of analysts by LSEG:
- Earnings per share: 48 cents adjusted compared to the 46 cents expected
- Net worth: $1.29 billion compared to $1.30 billion expected
The company’s reported net income for the three months ended 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 posted adjusted earnings of 48 cents per share.
Sales fell to $1.29 billion, down about 1% from $1.3 billion a year ago.
Although it was small, Wednesday’s miss was the third quarter in a row that American Eagle missed Wall Street’s sales targets.
In a statement, CEO Jay Schottenstein hailed a “strong” back-to-school shopping season but said demand was inconsistent amid major shopping events.
“We’ve entered the holiday season in a strong position, with our leading brands offering high-quality merchandise, great gifts and a great shopping experience across all channels,” said Schottenstein. “Primary sales periods have seen positive customer response, however we are always aware of the potential for excitement during off-peak periods.”
Consumers going out in search of important shopping moments followed by sales declines has been a consistent theme throughout the retail industry. Foot Locker he mentioned the same volatility when he reported earnings earlier on Wednesday, as it did The Dollar Tree.
For its holiday quarter, American Eagle expects comparable sales to rise about 1%, while total sales are down about 4%, including an $85 million impact from having one week of slow sales and a later start to the holiday shopping season. The outlook is below the 2.2% comparable sales growth that StreetAccount was looking for and the 1% decline in LSEG sales that was expected.
As a result, American Eagle now expects comparable sales to grow 3% for the full year, down from prior guidance of 4% growth and below the StreetAccount estimate of 4.1%. It now expects full-year sales to rise 1%, down from previous guidance of between 2% and 3% and below LSEG’s expectation of 2.5% growth.
Similar to other retailers, American Eagle had taken a cautious approach in the back half of the year as it contended with uncertainty over the 2024 election and the general economic climate. But unlike its rivals, it has maintained that cautious tone.
Both Abercrombie & Fitch again Dick’s Sporting Goodswhich issued cautious views earlier this year, reversed its previous stance when it reported earnings earlier this month.
Despite the negative outlook and sales losses, American Eagle is seeing strong demand for its Aerie brand. Aerie’s third-quarter revenue was a record for the company, and comparable sales grew 5%, on top of a 12% increase from the year-ago period.
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