Global speciality retailer American Eagle Outfitters (AEO) has withdrawn its financial guidance for fiscal year 2025 (FY25), citing prevailing macroeconomic uncertainties and the need for management to reassess future strategies in light of recent first-quarter (Q1) outcomes.
The company’s preliminary financial data for the first quarter indicates an anticipated revenue of around $1.1bn, marking a decrease of approximately 5% when compared to the same period in the previous year.
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The expected comparable sales figures show a decrease of about 3%, with the American Eagle brand seeing a 2% decline and Aerie experiencing a 4% drop.
For the quarter, AEO projects a generally accepted accounting principles (GAAP) operating loss in the vicinity of $85m, alongside an adjusted operating loss estimated at $68m.
The adjusted figure accounts for increased promotional activities that exceeded initial plans and includes an inventory charge close to $75m due to markdowns on spring and summer merchandise, notes the company.
Included in the GAAP operating loss is an additional charge for asset impairment and restructuring, totalling roughly $17m.
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By GlobalDataThis charge is primarily associated with the closure of two fulfilment centres, an action taken as part of AEO’s initiative to optimise its supply chain network.
AEO CEO and board executive chair Jay Schottenstein said: “We are clearly disappointed with our execution in the first quarter. 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.
“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.”
In FY24, AEO reported its total net revenue of $5.32bn, up 1% from $5.26bn in FY23.
