American Eagle Outfitters (AEO) saw its stock price plummet 7.85% in after-hours trading following the release of its disappointing first-quarter 2025 financial results and weak second-quarter guidance. The clothing retailer reported a significant earnings miss and provided a gloomy outlook for the upcoming quarter, causing investors to react negatively.

For the first quarter, American Eagle Outfitters reported a loss per share of $0.36, falling well short of analysts' expectations of $0.23 earnings per share. This represents a stark 205.88% decrease compared to the same period last year when the company posted earnings of $0.34 per share. Revenue for the quarter came in at $1.089 billion, slightly below the estimated $1.094 billion and down 5% year-over-year. The company's net income for Q1 was a concerning -$64.899 million, reflecting the challenging market conditions and operational difficulties faced by the retailer.

Adding to investor concerns, American Eagle Outfitters provided a weak outlook for the second quarter of fiscal 2025. The company anticipates a 5% decline in revenue and a 3% drop in comparable sales for Q2. Operating income is expected to be between $40 million and $45 million, indicating continued pressure on profitability. These projections, coupled with the poor Q1 performance, have led to a significant sell-off in AEO shares during after-hours trading as investors reassess the company's near-term prospects in a challenging retail environment.