American Eagle (AEO) earnings Q3 2024

American Eagle issued weak vacation steering on Wednesday and lower its full-year forecast because it contends with value-seeking shoppers who’re solely keen to spend throughout key procuring moments. 

The attire retailer narrowly missed Wall Road’s expectations on the highest line, however beat on the underside line. 

Here is how American Eagle carried out throughout its third fiscal quarter in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by LSEG:

• Earnings per share: 48 cents adjusted vs. 46 cents anticipated
• Income: $1.29 billion vs. $1.30 billion anticipated

The corporate’s reported internet earnings for the three-month interval that ended Nov. 2 was $80 million, or 41 cents per share, in contrast with $96.7 million, or 49 cents per share, a 12 months earlier. Excluding one-time expenses associated to restructuring and impairment prices, American Eagle posted an adjusted revenue of 48 cents per share. 

Gross sales dropped to $1.29 billion, down about 1% from $1.3 billion a 12 months earlier. 

Whereas it was slender, Wednesday’s miss is the third quarter in a row that American Eagle has not met Wall Road’s gross sales targets.

Shares dropped about 13% in prolonged buying and selling.

In an announcement, CEO Jay Schottenstein touted a “sturdy” back-to-school procuring season however mentioned demand stays inconsistent in between main procuring occasions. 

“We’ve got entered the vacation season effectively positioned, with our main manufacturers providing high-quality merchandise, nice items and an impressive procuring expertise throughout channels,” Schottenstein mentioned. “Key promoting intervals have seen a optimistic buyer response, but we stay cognizant of potential choppiness throughout non-peak intervals.” 

Customers popping out for key procuring moments, after which sharply dropping off, has been a constant theme throughout the retail business. Foot Locker cited a comparable dynamic when reporting earnings earlier on Wednesday, as did Greenback Tree.

For its vacation quarter, American Eagle is anticipating comparable gross sales to be up round 1% with complete gross sales down about 4%, together with an $85 million influence from having one much less promoting week and a later begin to the vacation procuring season. The outlook is under the two.2% comparable gross sales progress StreetAccount was in search of and the 1% gross sales decline LSEG had anticipated. 

Because of this, American Eagle is now anticipating comparable gross sales to develop by 3% for the total 12 months, down from prior steering of 4% progress and under StreetAccount’s estimate of 4.1%. It is now anticipating full-year gross sales to be up 1%, down from earlier steering of between 2% and three% and under LSEG expectations of two.5% progress. 

Just like different retailers, American Eagle had taken a cautious strategy to the again half of the 12 months because it contended with uncertainty across the 2024 election and the general macroeconomic atmosphere. However in contrast to its opponents, it has stored that cautious tone.

Each Abercrombie & Fitch and Dick’s Sporting Items, which issued cautious outlooks earlier this 12 months, reversed their earlier temper when reporting earnings earlier this month. 

Regardless of the underwhelming outlook and gross sales miss, American Eagle is seeing sturdy demand for its Aerie model. Third-quarter income for Aerie got here in at an all-time excessive for the corporate and comparable gross sales grew 5%, on high of 12% progress from the year-ago interval.