American Eagle Outfitters (NYSE:AEO) reported a solid set of results for the first quarter, however, shares fell 18% in premarket Thursday after the clothing retailer slashed its full-year forecast, citing soft demand trends.
AEO reported EPS of $0.17 on revenue of $1.08 billion. This compares to the consensus for earnings of $0.17 per share on sales of $1.07B.
“We entered 2023 with a cautious plan, balancing continued optimism for our brands with the flexibility to navigate uncertainty in the macro environment. 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. Both Aerie and American Eagle saw solid improvement during the quarter and maintained strength in their categories,” commented Jay Schottenstein, AEO’s executive chairman of the Board and chief executive officer.
American Eagle Outfitters sees Q2 revenue down “low-single digits” compared to last year with operating income in the range of $25 million to $35 million.
“For the year, management expects revenue in the range of flat to down low-single digits to last year with operating income in the range of $250 million to $270 million.”
The guide down is a result of “ongoing macro challenges.”
“We are maintaining a clear focus on inventory discipline, cost savings and efficiencies across the business. Looking forward, our priority is to rebuild operating margins, while also seeking opportunities for profitable growth and to deliver more consistent shareholder returns,” Schottenstein added.
Telsey Advisory Group analysts slashed the price target to $12 per share from the prior $17.
“While first quarter results were largely in-line with expectations, the moderation to the outlook based on current sales trends is concerning, particularly as the business begins to lap easier compares from a year ago,” Telsey said in a note.
BofA analysts cut the target to $9 per share and reiterated an Underperform rating on AEO shares “as macroeconomic headwinds continue to challenge sales.”