American Eagle reported disappointing preliminary results in the first quarter of 2025, expecting its revenue to drop by 5% to $1.1 billion. Additionally, comparable sales are projected to go down by 3%.
The parent company of American Eagle and Aerie predicted an operating loss of $85 million, which was due to more-than-expected promotional activity.
Jay Schottenstein, American Eagle’s CEO and executive chairman, commented: “We are clearly disappointed with our execution in the first quarter. Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory.
“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.
“Additionally, we are actively evaluating our forward plans. Our teams continue to work with urgency to strengthen product performance while improving our buying principles.”
The fashion retailer also shut down two fulfillment centers as part of its plan to optimize its supply chain, which added to a $17 million restructuring expense in the overall GAAP operating loss.
Earlier this year in March, American Eagle posted strong results for 2024; however, the company predicted a low outlook, citing ongoing consumer uncertainty.
Moving forward, the company withdrew its future guidance due to macroeconomic uncertainty, with many other retailers pulling back on their future outlook.
Footwear giant Crocs also withdrew its guidance recently due to the ongoing changing trade policies.
However, things are looking up for fashion retailers in the US as a temporary pause of increased tariffs between the US and China has been implemented.
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