American Eagle Outfitters(US:AEO) ZACKSยท2025-05-14 17:55Core Viewpoint - American Eagle Outfitters, Inc. (AEO) has withdrawn its fiscal 2025 guidance due to macro volatility and disappointing preliminary first-quarter results, leading to a nearly 15% drop in after-hours trading [1] Financial Performance - For the first quarter, revenues are projected to be $1.1 billion, reflecting a nearly 5% decline year-over-year [2] - Comparable sales are expected to decrease by nearly 3%, with American Eagle down 2% and Aerie down 4% [2] - Management anticipates a GAAP operating loss of approximately $85 million and an adjusted operating loss of $68 million for the first quarter, which includes an asset impairment and restructuring charge of about $17 million [3] Inventory and Merchandising Challenges - The company faced challenges with merchandising actions, resulting in increased promotions and excess inventory, leading to a $75 million inventory charge related to spring and summer merchandise write-downs [4][2] - Despite these challenges, AEO has entered the fiscal second quarter with inventory better aligned to sales trends [5] Strategic Initiatives - AEO is focused on its "Powering Profitable Growth Plan," which aims to enhance operating income through disciplined cost management, digital investments, and supply-chain improvements [8] - The company continues to grow the Aerie brand through market expansion and innovation, supporting long-term revenue and margin goals [8] Market Context - AEO's shares have declined by 25.9% over the past six months, compared to a 0.4% decline in the industry, attributed to ongoing performance issues and challenges in the retail environment [6] - The company is facing headwinds from the consumer and macroeconomic landscape, with both earnings and revenues falling compared to the previous year [7]