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American Eagle Shares Sink on Revenue Miss Despite EPS Beat

EditorLina Guerrero
Published 05/29/2024, 04:30 PM
© Reuters

PITTSBURGH - Shares of American Eagle Outfitters , Inc. (NYSE: NYSE:AEO) fell 6% as the company reported a revenue miss for the first quarter, despite posting a higher-than-expected earnings per share (EPS). The apparel retailer announced a first-quarter EPS of $0.34, surpassing analyst estimates by $0.06, but revenue fell short at $1.14 billion compared to the $1.15 billion consensus estimate.

The company's first-quarter performance showed a 6% increase in revenue compared to the same period last year, with notable growth across both the American Eagle and Aerie brands. American Eagle's comparable sales grew by 7%, while Aerie's comparable sales saw a 6% increase. Gross profit for the quarter rose by 12%, reaching $464 million, which the company attributed to strong inventory management and a shift to a more profitable clearance strategy.

Jay Schottenstein, AEO's Executive Chairman of the Board and Chief Executive Officer, stated, "Our strong first quarter results underscore the power of our iconic brand portfolio and demonstrate great progress on our Powering Profitable Growth strategy." He expressed confidence in the company's ability to deliver on plans for 2024 and beyond, citing significant growth opportunities across the brands.

Looking ahead, American Eagle's management continues to expect operating income for fiscal 2024 to be in the range of $445 to $465 million, indicating a revenue increase of 2 to 4% from the previous year. This forecast includes the impact of one less selling week due to the retail calendar shift. For the second quarter, the company anticipates operating income between $95 to $100 million, with revenue expected to rise in the high-single digits, including a roughly $55 million positive impact from the retail calendar shift.

Despite the positive outlook and EPS beat, investors responded negatively to the revenue miss, leading to a 6% decline in the company's stock price. The market's reaction reflects concerns over the company's ability to maintain sales momentum in a competitive retail environment. American Eagle remains focused on optimizing operations and driving efficiencies to support its growth strategy and shareholder returns.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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