American Eagle (AEO) Q3 2023 Quarterly Earnings

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American clothing and accessories retailer American Eagle store seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

Budrul Chukrut | White clouds | Getty Images

Sections of American Eagle fell about 17% on Tuesday after the company issued a holiday forecast that didn’t impress.

For its holiday quarter, American Eagle expects sales to be in the single digits, ahead of the 3.4% growth analysts had forecast, according to LSEG. However, its operating income is expected to be between $105 million and $115 million, which is mostly lower than the $114 million forecast, according to StreetAccount.

The forecast was lowered by an expected 20% increase in sales and general administrative expenses, the company said.

The clothing retailer did better in its third fiscal quarter, however. Here’s how the company compared to Wall Street expectations, based on a survey of analysts by LSEG, formerly Refinitiv:

  • Earnings per share: 49 cents vs 48 cents expected
  • Income: $1.3 billion vs $1.28 billion expected

The company’s reported net income for the three months ended Oct. 28 was $96.7 million, or 49 cents per share, compared with $81.3 million, or 42 cents per share, a year earlier.

Sales rose to $1.3 billion, up about 5% from $1.24 billion a year earlier.

In the quarter, American Eagle’s gross margin came in at 41.8%, lower than the 42.1% that analysts had expected, according to StreetAccount.

American Eagle managed a 5% increase in sales despite an overall slowdown in the apparel industry but still underperformed Wall Street.

A similar dynamic emerged at his rival Abercrombie & Fitchwhich also reported earnings on Tuesday and a forecast that fell flat against strong sales growth.

For the full year, American Eagle expects revenue to be higher in the mid-single digits, compared to its previous guidance of low single digits. Analysts had expected full-year sales growth to be around 2.6%, according to LSEG.

The retailer tightened its forecast for full-year operating income and expects it to be between $340 million and $350 million, compared with prior guidance of $325 million to $350 million, and that’s what analysts had been expecting, according to StreetAccount. SG&A expenses are also expected to be up in the low double digits for the full year.

Retailers have been on pins and needles ahead of the crucial holiday shopping season over concerns that demand will slow in a sharp statement from American Eagle and Abercrombie & Fitch following similar sentiments from retailers. others who reported recent employment.

Tuesday too, both Best Buy and at Lowe’s they cut their forecasts, citing an unpredictable consumer and a continued slowdown in big-ticket purchases.

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