Reuters
2 min read
In This Article:
(Reuters) - American Eagle Outfitters withdrew its annual forecasts on Tuesday and took a $75 million inventory charge on its spring and summer collection due to economic uncertainty fueled by tariffs, sending its shares crashing 18% in extended trading.
Persistently high inflation in the United States, American Eagle's biggest market, along with uncertainty around tariff-related price hikes, has forced consumers in the country to temper spending on non-essential purchases so far the year.
"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," American Eagle CEO Jay Schottenstein said.
In March, American Eagle had forecast a low-single digit decline in annual revenue and operating income between $360 million and $375 million, adding that the first quarter was off to a slow start due to weaker demand and colder weather.
American Eagle joins several companies that have withdrawn or cut their annual targets following a global trade war triggered by U.S. President Donald Trump's tariffs.
While the U.S. and China reduced duties and agreed to a 90-day pause on Monday, uncertainty lingers.
In March, the company's executives had also noted that the Trump administration's tariffs on China could have a roughly $5 million to $10 million impact on its annual margins.
The company announced its preliminary first-quarter results on Tuesday, reporting an about 5% decline in revenue to $1.1 billion, roughly in-line with estimates, according to data compiled by LSEG.
Comparable sales fell across its namesake and women's intimate wear brand Aerie in the first quarter, the company said.
Its adjusted quarterly operating loss included a restructuring charge of about $17 million related to closing two fulfillment centers as part of its supply chain network optimization project, the company said, adding that it was "actively evaluating its forward plans".
(Reporting by Juveria Tabassum in Bengaluru; Editing by Leroy Leo)
