American Eagle Q1 off to ‘slower’ start, issues weak outlook; to remodel 95 stores
American Eagle Outfitters reported profit and comparative sales gains for the holiday quarter, but echoed other retailers in saying that consumer demand was slowing.
“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” stated Jay Schottenstein, executive chairman and CEO, in the company's earnings release. “While we anticipate improvement as the spring season gets underway, we are also taking proactive steps to strengthen the top-line, manage inventory and reduce expenses. As we navigate through an uncertain consumer and operating landscape, we will also remain focused on our long-term strategic priorities.”
On the earnings call, Schottenstein addressed consumers’ uncertainty about not only tariffs and inflation but also the cut-off of programs as they question how it will affect them.
The apparel retailer’s net income totaled $104 million, or $0.54 per share, for the quarter ended Feb. 1, compared with $6.31 million, or $0.03 per share, in the year-ago period. Analysts has expected earnings of $0.51 per share. (The prior year’s results were negatively impacted by $131 million impairment and restructuring charges.)
Sales dropped 4% to $1.60 billion in line with analysts’ estimates. (Similar to other retailers, American Eagle benefited from an extra week in the year-ago period.)
Comparable sales rose 3%, more than expected. By banner, comp sales increased 6% at Aerie and rose 1% at American Eagle.
For the full year, American Eagle’s revenues increased 1.3% to $5.33 billion. Total comparable sales increased 4%.
American Eagle has been updating its stores. It plans to remodel between 90 and 100 locations in 2025 as part of its planned $300 million capital expenditures outlay, which also includes a one-time $40 million cost of relocating to a new Manhattan office.
“2024 demonstrated significant progress on our Powering Profitable Growth Plan,” stated Schottenstein. “The team delivered strong operating profit growth with positive momentum across our brands and channels as well as disciplined expense management and operating efficiencies.”
For the current quarter, American Eagle expects a mid-single-digit decline in sales. For the full year, it expects sales to decline by a low single digit, compared with analysts’ expectations of 3% growth.
As of Feb. 1, American Eagle Outfitters operated a total of 1,186 stores.
