Investing.com – American Eagle stock (NYSE:AEO) plunged 12% in Thursday’s premarket trading following second-quarter revenue that was below expectations as digital sales fell.
Revenue rose 35% on-year to a record $1.19 billion as more buyers shopped at its stores after they reopened. However, revenue of $1.19 billion was below analysts’ estimate of $1.22 billion.
Chief Executive Officer Jay Schottenstein said the company has room to grow, and that it will hit $600 million in operating income this year.
American Eagle said its capex for the financial year will be at the lower end of the $250 million to $275 million guidance.
Digital sales decreased 5%, a sharp reversal considering they rose 57% in the first quarter. The company said the pandemic had last year accelerated digital sales and also created a significant backlog that shifted sales from the financial year’s first quarter to its second.
The company spent more on advertising, incentives and other selling expenses as economies reopened and it tried to attract more buyers to its stores.
Inventory costs rose 20% compared to a 21% decline last year. The company said it is optimizing inventory and positioning it for fall and back-to-school shopping, while keeping the cost impact below revenue growth.
Adjusted earnings per share of 60 cents beat estimates for 55 cents.