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Online demand fuels American Eagle's recovery after coronavirus slump

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Reuters
Published
Jun 3, 2020
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American Eagle Outfitters Inc on Wednesday signaled a strong sales rebound in the current quarter, driven by a surge in online demand for the apparel retailer’s lingerie and athleisure brand, Aerie.


Photo: Aerie



Shares reversed course to climb as much as 18%, as the upbeat comments helped investors shrug off a bigger-than-expected quarterly loss due to the coronavirus-related store closures.

American Eagle said online demand for the Aerie brand, a bright spot for the company, jumped more than 100% in the second-quarter so far from a year earlier, while that at its namesake brand increased about 50%.

The company has tapped influencers like TikTok star Charlie D’Amelio for campaigns to draw in more customers online, as virus-led closures have dented demand and forced it to furlough staff and freeze hiring.

American Eagle also said sales at the over 500 stores it reopened so far had achieved 95% of last year’s productivity.

“We think we are getting more than our fair share of pent-up demand,” Chief Financial Officer Mike Mathias said on a post-earnings call.
Rival Abercrombie & Fitch had said sales at its U.S. stores were tracking at 80%.

Amid the disruptions caused by the outbreak, American Eagle suspended its second-quarter dividend and does not anticipate declaring a dividend for the rest of the year to preserve liquidity.

In the first quarter ended May 2, the retailer said overall digital demand rose 33%, while it surged 75% at Aerie, as people confined to their homes ordered more of its leggings and fleece wear.

Excluding one-time items, the company reported a loss of 84 cents per share, larger than analysts’ average estimate of a loss of 30 cents, according to IBES data from Refinitiv.

The retailer’s total revenue fell nearly 38% to $551.7 million, missing expectations.

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