American Eagle Outfitters (AEO) saw its stock price plummet 7.87% in after-hours trading on Thursday following the release of its disappointing first-quarter fiscal 2025 results and weak second-quarter guidance. The apparel retailer reported a larger-than-expected loss and provided a gloomy outlook for the upcoming quarter, causing investors to react negatively.

For the first quarter ended April 30, American Eagle Outfitters reported a loss per share of $0.36, significantly missing the analyst consensus estimate of a $0.22 loss. This represents a stark contrast to the $0.34 earnings per share reported in the same period last year. The company's quarterly revenue fell 4.7% to $1.089 billion, slightly below analysts' expectations of $1.094 billion. Comparable sales declined by 3%, with the American Eagle brand down 2% and Aerie brand dropping 4% compared to the previous year.

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. The retailer cited rising input costs, sluggish demand, and increased discounting as factors contributing to the challenging environment. Furthermore, American Eagle Outfitters has withdrawn its fiscal 2025 forecasts due to ongoing macroeconomic uncertainties, including potential tariff impacts. These projections, coupled with the poor Q1 performance, have led to a significant sell-off in AEO shares as investors reassess the company's near-term prospects in a challenging retail landscape.