American Eagle Outfitters (AEO) earnings Q1 2025

American Eagle Outfitters reported quarterly earnings on Thursday that missed expectations, reflecting a $75 million write-down in spring and summer merchandise, following the retailer pulling its full-year guidance earlier this month due to macroeconomic uncertainty.

“The first quarter was a challenging period for our business,” CEO Jay Schottenstein said in a release. “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.”

The Pittsburgh retailer’s results do not come as a surprise for investors, considering it preannounced some of its results two weeks ago. At that time, it also announced it would withdraw its full-year guidance as it manages slow sales, steep discounting and a volatile macroeconomic environment.

Shares fell about 8% in extended trading.

Here’s how the apparel company did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Loss per share: 29 cents adjusted vs. loss of 22 cents expected
• Revenue: $1.09 billion vs. $1.09 billion expected

Prior to the preannouncement, analysts had been expecting earnings per share to be an 11-cent profit.

The company, which makes fashion clothing targeted at teens and young adults, reported an operating loss for the three-month period that ended May 3 of $85.18 million compared with a net income of $77.84 million a year earlier. 

Excluding one-time charges related to restructuring and a supply chain optimization project, AEO posted an adjusted operating loss of $68.06 million. The loss also reflects “higher than planned” promotions and a write-off of $75 million in spring and summer merchandise.

Revenue dropped to $1.09 billion, in line with expectations but down slightly from $1.14 billion a year earlier.

Comparable sales were down 3% during the quarter, led by a 4% decline at the company’s intimates and activewear line, Aerie. The namesake brand saw comparable sales down 2%.

AEO issued downbeat guidance for the second quarter, expecting revenue to be down 5% compared to an estimate of 4%, comparable sales down 3% and gross margin down year-over-year. Its operating income for the second quarter is expected to be between $40 million and $45 million.

Schottenstein said during a conference call with investors on Thursday that he was “disappointed” by the first-quarter results. He said earlier this month that the $75 million write-off is due to miscalculated merchandising strategies resulting in excess inventory and higher promotions.

Jennifer Foyle, president and executive creative director for AE & Aerie, said on Thursday’s call that the brand had misses on the merchandising product in a handful of key categories, which was compounded by a cool spring and a slow start to the quarter in February. She said shorts were a…