American Eagle Outfitters(AEO) - 2026 Q1 - Quarterly Report

Financial Performance - Total net revenue decreased 5% to $1.090 billion from$1.144 billion, with American Eagle revenue decreasing 4% and Aerie revenue decreasing 3% year-over-year [144]. - Gross profit decreased 31% to $322 million year-over-year, resulting in a gross margin of 29.6$85 million compared to operating income of $77 million last year, with an adjusted operating loss of$68 million this year [144]. - Comparable sales for American Eagle decreased 2% year-over-year, while Aerie's comparable sales decreased 4% year-over-year [144]. - Total comparable sales decreased by 3%, compared to a 7% increase last year [146]. - Net loss income was $64.9 million, or 6.0$67.8 million, or 5.9% of net revenue, representing a 196% decrease [163]. - Total operating loss was $85.2 million, a decrease of$163.0 million compared to an operating income of $77.8 million in the same period last year, reflecting a 209$75 million inventory charge related to a write-down of spring and summer merchandise [142]. - Impairment and restructuring charges amounted to $17.1 million, representing 1.6$221.1 million for the 13 weeks ended May 3, 2025, compared to a decrease of $53.6 million in the same period last year [172]. - Total cash used in operating activities was$(54.7) million for the 13 weeks ended May 3, 2025, compared to $(38.1) million in the prior year, reflecting an increase in cash outflow of$16.6 million [172]. Capital Expenditures and Financing - For the 13 weeks ended May 3, 2025, capital expenditures totaled $61.6 million, a 70$36.2 million in the same period last year [180]. - The company expects capital expenditures for Fiscal 2025 to be approximately $275 million to support expansion efforts and technology upgrades [180]. - Cash used for financing activities for the 13 weeks ended May 3, 2025, included$201.5 million for stock repurchases under the ASR Agreement [175]. - The company repurchased approximately 0.7 million shares for $7.9 million during the 13 weeks ended May 3, 2025 [185]. - The company entered into an accelerated share repurchase agreement to repurchase$200 million of its common stock, with an initial delivery of approximately 14.5 million shares [184]. Shareholder Returns - The Board declared a quarterly cash dividend of $0.125 per share, paid on April 25, 2025 [186]. - The company has 54.0 million shares remaining authorized for repurchase through February 3, 2029 [183]. Other Financial Metrics - Interest income decreased by$3.2 million, or 94%, to $(0.2) million for the 13 weeks ended May 3, 2025, compared to$(3.4) million in the prior year [160]. - The effective tax rate increased to 23.3% for the 13 weeks ended May 3, 2025, compared to 18.0% for the same period in 2024 [162]. - An unrealized gain of $14 million was included in accumulated other comprehensive income for the 13 weeks ended May 3, 2025, due to foreign exchange rate risk [189]. - As of May 3, 2025, the company had$110.0 million in borrowings and $12.0 million in stand-by letters of credit under its Credit Facility [179].