Shares of American Eagle Plummet as Holiday Forecast Falls Short
American Eagle, the popular American clothing and accessories retailer, experienced a significant drop in premarket trading as shares plummeted 15%. The hit came after the company issued a holiday forecast that failed to impress investors and raised concerns within the retail industry.
Holiday Quarter Expectations
While American Eagle expects sales for the holiday quarter to be up high-single digits, surpassing analysts’ expectations of 3.4% growth, the forecast dimmed due to its anticipated 20% uptick in selling and general administrative expenses. The company also expects its operating income to range between $105 million and $115 million, mostly falling below the expected $114 million.
Fiscal Third Quarter Performance
Despite the disappointing holiday forecast, American Eagle reported strong performance in its fiscal third quarter. The company surpassed Wall Street’s expectations, with earnings per share of 49 cents compared to the anticipated 48 cents, and revenue of $1.3 billion beating the expected $1.28 billion. Net income for the period ending October 28 was $96.7 million, a jump from $81.3 million the previous year, while sales increased by 5% to $1.3 billion.
Impacts on the Retail Industry
American Eagle’s ability to achieve sales growth amidst a slowdown in the apparel industry was noteworthy. However, the retailer’s performance failed to impress investors, and similar sentiments were echoed by Abercrombie & Fitch, which reported underwhelming earnings and forecasts. Both companies’ results reflect the concerns shared by other retailers, which have expressed uncertainty about current market demand and exhibited muted forecasts.
1. What is American Eagle’s holiday quarter sales growth forecast?
American Eagle expects sales for the holiday quarter to be up high-single digits, surpassing analysts’ expectations of 3.4% growth.
2. What is American Eagle’s expected operating income for the holiday quarter?
American Eagle anticipates its operating income to range between $105 million and $115 million, falling mostly below the expected $114 million.
3. How did American Eagle perform in its fiscal third quarter?
American Eagle exceeded Wall Street’s expectations in its fiscal third quarter, with higher earnings per share of 49 cents and revenue of $1.3 billion, up 5% from the previous year.
4. How does American Eagle’s performance impact the retail industry?
While American Eagle achieved sales growth amidst an industry slowdown, its performance failed to impress investors. This echoes similar sentiments from other retailers, indicating concerns about current market demand and resulting in muted forecasts.