American Eagle Outfitters shares fell as retailers’ expectations fell

shares American Eagle Outfitters It fell Wednesday in after-hours trading, as the company cut its full-year outlook.

The company lowered its forecast, even as it matched Wall Street’s quarterly earnings forecast and beat revenue forecasts.

The mall retailer said it now expects operating income to be in the $250 million to $270 million range, which is down from the $270 million to $310 million range it forecast in March. She said she expects full-year revenue to be flat to below low single digits, falling flat to higher than it had previously forecast.

Sales trends slowed as the company got into the second quarter, a pattern that the retailer factored into in its guidance. On the earnings call, Jane Foyle, the company’s executive creative director, said she hopes shoppers will buy more seasonal merchandise as Memorial Day and summer weather roll around.

Shares fell about 14% following the company’s after-market earnings report.

Here’s what the company did in the three-month period ended April 29 compared to what Wall Street was expecting, based on a Refinitiv survey of analysts:

• Earnings per share: 17 cents adjusted versus 17 cents expected
• Revenue: $1.08 billion, compared to an expected $1.07 billion

American Eagle, which includes its namesake brand and the Aerie brand, has diverged significantly from its competitor, Abercrombie & Fitch. Earlier Wednesday, shares of Abercrombie soared as it posted a surprise profit and raised its forecast, lifting American Eagle shares with it.

Undoing those earlier gains, American Eagle reported its quarterly results after the bell, including a drop in earnings. Net income fell about 42% to $18.45 million, or 9 cents per share, compared to $31.74 million, or 16 cents per share, in the same period last year.

Total net revenue increased about 2% to $1.08 billion from $1.06 billion in the year-ago period. Store revenue increased by 5%. Digital revenue decreased by 4%.

Its brands have had mixed results. Aerie’s comparable sales were up 2%, but comparable sales of its namesake American Eagle brand were down 2% year-over-year.

American Eagle has made great strides in inventory levels. Many retailers, incl license plateAnd kohl and others, stuck with a lot of merchandise after shipments got stuck in the supply chain and consumer preferences shifted away from popular categories during the Covid-19 pandemic.

Inventory decreased 8% to $625 million at the end of the quarter compared to the same period last year.

In a press release, CEO Jay Schottenstein said the company wants to rebuild its operating margins and chase profitable growth. It’s focused on “inventory discipline, cost savings and efficiencies across the business,” he said, particularly against a tougher economic backdrop.