American Eagle Stock Sinks on Larger-Than-Expected Q1 Loss

Shares of American Eagle Outfitters (AEO) dropped Friday after the retailer posted a larger first-quarter loss than expected.

After the bell Thursday, the apparel seller reported $1.09 billion in revenue, in line with Visible Alpha estimates and its preliminary results released earlier this month. The company lost an adjusted $0.29 per share, compared to adjusted earnings per share of $0.34 in the same quarter a year ago and a larger loss than analysts had forecast.

Comparable sales declined by 3% in the quarter, larger than the 2.13% drop analysts had forecast, as sales declined across both the American Eagle and Aerie brands.

CEO Calls Q1 a ‘Challenging Period’

“As we noted in our preliminary release, the first quarter was a challenging period for our business,” CEO Jay Schottenstein said. “While we are disappointed with the results, we are taking actions to better position the company and drive stronger performance in the upcoming quarters.”

Earlier this month, American Eagle pulled its full-year outlook as the retailer wrote down some of its spring and summer inventory as it had more promotional events than expected in the quarter. The company said it was reviewing its plans amid macro uncertainty and the disappointing first quarter.

For the second quarter, American Eagle expects revenue to decline by 5% year-over-year as comparable sales fall by 3%, in line with analyst estimates. Last quarter, the company topped sales estimates but noted that it was seeing cautious consumers start to slow their spending.

American Eagle shares were down 9% an hour ahead of markets opening. They had lost about a third of their value on the year entering the day.