American Eagle Outfitters Inc. reported a wider-than-expected first-quarter loss amid pandemic store closures and “aggressive’ inventory liquidation.
But on its quarterly earnings call, the apparel retailer said that as its stores reopen, sales are averaging about 95% of their normal levels. To date, Express has reopened 556 stores, with enhanced safety measures in place, or about about of its total portfolio.
"We think we are getting more than our fair share of pent-up demand,” American Eagle CFO Mike Mathias said on the call. "Clearly we’re the strongest store in the mall, and our customers are continuing to come to us.”
Express swung to a net loss of $257.2 million, or $1.54 a share, for the quarter ended May 2, from net income of $40.8 million, or $0.23 a share, in the year-ago period. The adjusted loss per share was $0.84 cents versus analysts’ estimates of $0. 30.
Revenue fell 37.7% to $551.7 million, missing estimates of $636.6 million. By brand, American Eagle sales fell 45%. Aerie, American Eagle’s high-flying intimates brand, had a 2% drop compared with a 28% rise last year.
Digital revenue rose 9%, with "strong demand" was partly offset by delays in fulfillment that led to higher-than-normal DC backlogs.
“Store closures and aggressive inventory liquidation had a significant impact on our first quarter financials,” said Jay Schottenstein, AEO’s chairman and CEO. “Yet customer engagement remained high and digital demand accelerated, well-exceeding our expectations. Aerie’s performance was truly exceptional despite store closures.”
The company said it has suspended its second-quarter dividend to preserve liquidity, and does not expect to declare a dividend for the rest of this year.
“American Eagle and Aerie will be well-positioned for the back-to-school and fall seasons,” Schottenstein said. “We will offer compelling new collections and deliver the best customer experiences. AEO entered this crisis with a strong balance sheet and two of the most recognized, trusted and loved brands. Recent liquidity measures will protect our financial strength and enable us to continue to invest in our business, further solidifying our competitive position. We view this moment as an inflection point to accelerate strategies to emerge stronger, leaner, and more agile to effectively win in a post-COVID-19 world.”