American Eagle Outfitters reported first-quarter income and revenue in line with Street estimates but slashed its full-year forecast.
The teen apparel and accessories retailer reported its results the day after Abercrombie & Fitch raised its outlook after beating Street estimates on its top and bottom lines.
Net income fell about 42% to $18.45 million, or $0.9 cents per share, in the quarter ended April 29, compared with $31.74 million, or $0.16 cents a share, in the year-ago period. Adjusted earnings came to $0.17 per share, in line with analysts’ estimates. The company’s income took a hit from the restructuring of its Quiet Platforms logistics subsidiary that included workforce cutbacks.
Total net revenue rose 2% to $1.08 billion from the $1.06 billion,topping estimates of $10.7 billion. Store revenue increased 5%. Digital revenue dropped 4%.
By brand, Aerie’s revenue rose 12% to of $359, and comp sales increased 2%. American Eagle’s revenue fell 2% to $671 million, and comp sales declined 4%.
“We entered 2023 with a cautious plan, balancing continued optimism for our brands with the flexibility to navigate uncertainty in the macro environment,” said Jay Schottenstein, AEO’s executive chairman and CEO. “I am pleased to note that this strategy delivered for us, as we successfully managed through the first quarter and achieved results in-line with plan.”
Inventory declined 8% to $625 million in the quarter, compared to $682 million last year, with units down 9%. The company said it is maintaining inventory discipline with the second quarter planned below the sales trend.
“With ongoing macro challenges, we are maintaining a clear focus on inventory discipline, cost savings and efficiencies across the business,” said Schottenstein. “Looking forward, our priority is to rebuild operating margins, while also seeking opportunities for profitable growth and to deliver more consistent shareholder returns.”
American Eagle said it now expects operating income to range between $250 million and $270 million, below its previous forecast of $270 million to $310 million. It said it anticipates full-year revenue to be flat to down low single-digits, lagging the flat to up single-digits it projected before.