MW American Eagle tried new styles for spring and summer. Did they resonate with buyers?

By Claudia Assis

American Eagle Outfitters Inc. on Tuesday warned investors of poor quarterly results as merchandise problems led to more markdowns, excess inventories and write-offs.

American Eagle $(AEO)$ shares dropped more than 9% in the extended session as the company also pulled its guidance for the year, called for an operational loss in the first quarter and said it was writing off its spring and summer merchandise.

"We are clearly disappointed with our execution in the first quarter," Chief Executive Jay Schottenstein said. "Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory. As a result, we have taken an inventory write-down on spring and summer goods."

The company called for first-quarter sales of about $1.1 billion, roughly in line with FactSet consensus and a 5% drop over first-quarter 2024 sales.

Comparable-store sales are expected to be down about 3%, which compares with Wall Street expectations of a fall of around 2.6%.

Executives said they expect a GAAP operating loss of around $85 million and an adjusted operating loss of about $68 million for the quarter.

That reflects the "higher-than-planned promotional activity in the quarter" and the summer-spring merchandise write-down of about $75 million, the retailer said.

The GAAP operating loss includes an additional asset impairment and restructuring charge of about $17 million, mostly related to closing two fulfillment centers as part of efforts to improve its supply network, the company said.

As for the 2025 guidance, American Eagle said it was withdrawing its outlook "due to macro uncertainty and as management reviews forward plans in the context of first-quarter results."

"We have entered the second quarter in a better position, with inventory more aligned to sales trends. Additionally, we are actively evaluating our forward plans. Our teams continue to work with urgency to strengthen product performance, while improving our buying principles," Schottenstein said.

American Eagle is expected to report full first-quarter results on May 29 after market close.

Analysts at BofA Securities said in a recent note that American Eagle, alongside other retail names such as Five Below Inc. (FIVE), Skechers USA Inc. $(SKX)$, Amer Sports Inc. (AS) and Boot Barn Holdings Inc. $(BOOT.UK)$, was among the most reliant on sourcing goods from China.

The U.S. and China agreed to a temporary tariff truce earlier this week, but not before triple-digit tariffs, talk of escalating tariffs and other tariff-related uncertainties roiled markets and disrupted trade, stoking fears of trade wars.

-Claudia Assis

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May 13, 2025 17:02 ET (21:02 GMT)

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