American Eagle Outfitters' management team acknowledged that the first quarter (Q1) presented significant challenges; however, as the quarter advanced, it achieved its sales targets.

It encountered merchandising setbacks in several principal categories, which were exacerbated by cooler spring weather and a sluggish February commencement.

AEO’s board executive chairman and chief executive officer, Jay Schottenstein said: "As we noted in our preliminary release, the first quarter was a challenging period for our business. While we are disappointed with the results, we are taking actions to better position the company and drive stronger performance in the upcoming quarters. Our brands remain resilient. The team is executing with urgency as we look to strengthen both the topline and profit flow-through."

Key metrics from American Eagle Outfitters' Q1

AEO posted total net revenue of $1.09bn in the first quarter, a 5% decrease from the $1.14bn recorded in Q1 FY24.

The company experienced a total comparable sales decline of 3%, with American Eagle and Aerie brands seeing decreases of 2% and 4%, respectively.

Gross profit for the quarter dropped to $322.42m, with gross margin of 29.6%.

Merchandise margins decreased by 960 basis points due to inventory write-downs, higher markdowns during the season, and increased product costs.

AEO reported selling, general and administrative expenses of $338.79m, increasing by 2% from $333.49m in Q1.

The company reported a net loss of $64.89m for the quarter, compared to a net income of $67.75m in the same period last year.

Outlook

AEO has maintained its position from last month's announcement that full-year guidance remains withdrawn amid the ongoing market uncertainties.

In the second quarter of the fiscal, the company anticipates a revenue decline of approximately 5% and a comparable sales decrease of about 3%.

Projected operating income for the quarter is expected to be between $40m and $45m.

AEO revised capital expenditures for 2025 to approximately $275m from an earlier estimate of around $300m.

"American Eagle Outfitters swings to Q1 loss on higher costs, sluggish demand" was originally created and published by Just Style, a GlobalData owned brand.

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