American Eagle Outfitters pulls guidance, writes down $75M in inventory

Dive Brief:

Citing macroeconomic uncertainty and its first-quarter performance thus far, American Eagle Outfitters has withdrawn its fiscal year 2025 guidance, per a company press release Tuesday.
The apparel brand’s preliminary Q1 results reveal a 5% year-over-year decrease in revenue, to $1.1 billion. The company (which plans to report final Q1 results on May 29) also expects comps to decline by about 3% overall, with a 2% drop for American Eagle and a 4% decrease for Aerie.
The company also expects an operating loss of about $85 million and an adjusted operating loss of approximately $68 million. The former accounts for a $17 million charge related to the closure of two fulfillment centers while the latter metric accounts for a $75 million write-down of inventory.

Dive Insight:

American Eagles Outfitters CEO Jay Schottenstein expressed disappointment in the retailer’s first-quarter results.

“Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory,” Schottenstein said in a statement. “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.”

The retail industry is dealing with quickly changing trade policy in the U.S., with an update on Monday that reduced heightened tariff rates with China for 90 days. American Eagle Outfitters’ webpage on responsible sourcing notes that the company works with 101 factories in China. Additionally, the webpage says the retailer uses another 67 factories in Vietnam and just 12 in the U.S.

American Eagle Outfitters in March reported Q4 2024 net revenue declined 4% to $1.6 billion while comps rose 3% and operating income rose slightly to $142 million. The company at the time expected its Q1 2025 results to feature a mid-single-digit revenue decline and an operating income of $20 million to $25 million.

The apparel retailer had also provided a fiscal year 2025 outlook with a low-single-digit revenue decline and an operating income between $360 million and $375 million.

Meanwhile, American Eagle Outfitters in March also announced a $200 million share repurchase plan, accounting for about 9.5% of the company’s fully diluted outstanding stock. Schottenstein said in a statement at the time that the move reflected the company’s “strong capital position and confidence in our long-term strategic growth plan.”