New York, USA – American Eagle Outfitters, a well-known apparel company, faced a 5% drop in shares during extended trading on Wednesday following the release of their latest financial results.
According to a survey conducted by LSEG, analysts were anticipating earnings per share at 28 cents, while the company reported 34 cents. Similarly, revenue fell slightly short of the expected $1.15 billion, coming in at $1.14 billion.
Despite the slightly underwhelming revenue figure, American Eagle’s net income for the three-month period ending on May 4 saw a significant increase compared to the same period last year. The company reported a net income of $67.8 million, or 34 cents per share, a substantial rise from the $18.5 million, or 9 cents per share, reported a year earlier.
Sales also saw a positive trend, rising to $1.14 billion, marking a 6% increase from the previous year’s $1.08 billion. Looking ahead, American Eagle reiterated its full-year operating income expectations, foreseeing a revenue growth of up 2% to 4% from the prior year, falling slightly below market estimates.
Finance chief Mike Mathias expressed caution regarding the company’s outlook for the latter half of the year, citing upcoming challenges such as tough comparisons, Federal Reserve interest rate decisions, and potential market volatility surrounding the upcoming presidential election.
American Eagle is eager to assess the back-to-school shopping season to gain insights into the rest of the year’s performance. The company expects an operating income range of $95 million to $100 million for the current quarter, aligning with analysts’ expected 7.4% revenue growth.
To fuel growth, American Eagle is implementing a new three-year strategy aimed at achieving annual sales growth of 3% to 5% and targeting an operating margin of around 10%. The company has already seen positive results from efforts to optimize its product assortment and store formats, with improved gross margins and increased customer engagement.
President and executive creative director Jennifer Foyle highlighted the company’s focus on streamlining its product range to meet customer demands more effectively. The introduction of new store designs has also been well-received, signaling a positive response from consumers.