American Eagle Q1 sales inch forward, profits bleed
American Eagle Outfitters (AEO) Inc. announced on Thursday revenues for the first quarter inched forward 2%, as the youth apparel retailer's namesake American Eagle brand and online channel saw steep declines.
The Pittsburgh-based company said total revenues for the first quarter ending April 30 increased by $20 million to $1.055 billion, compared to $1.035 billion in the first quarter of 2021.
By brand, Aerie reigned supreme, with sales increasing 8% during the quarter to $322 million, while American Eagle (AE) sales declined 6% to $686 million.
By channel, AEO store sales increased 2%, partially offsetting a digital revenue decline of 6%. Compared to pre-pandemic first quarter 2019, store revenue increased 1% and digital revenue increased 48%, said the company.
“The first quarter proved challenging, with demand well below our expectations, pressuring operating profit. Comparisons from an extraordinary spring last year driven by stimulus payments and pent-up customer demand, were compounded by rising inflation, higher gas prices and a stronger than anticipated pivot to other discretionary categories," said Jay Schottenstein, AEO’s executive chairman of the board and chief executive officer.
"Aerie remains on a remarkable trajectory with revenue more than doubling and profit expanding over five-fold versus first quarter 2019. Greater focus in our assortment and real-estate footprint at AE continue to drive efficiencies in the business. We are committed to maintaining and building on these structural improvements and right-setting the business to deliver improved profitability in the second half."
With a mixed sales result, AEO said net income for the quarter plummeted to $31.7 million, from $95.5 million in the prior-year quarter.
"In hindsight, our plans entering the year were too optimistic. We are taking swift measures to adjust our inventory and expense base with a firm goal of entering the second half better aligned with demand trends," added Schottenstein.
Incorporating shifts in the macro environment, the company said it is lowering its outlook for the year. AEO now expects operating profit to be above $314 million achieved in fiscal 2019, with total revenue up in the low single digits compared to fiscal 2021.
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