Shares of American Eagle Outfitters (NYSE: AEO) took a near 15% dive on Wednesday after the retailer posted disappointing same-store-sales growth due to a slow start to the back-to-school season.
The Company said sales lagged during the last two weeks of July, which is generally when back-to-school shopping begins. The month of August delivered strong results, however.
American Eagle posted same-store-sales growth of 2% during the second quarter versus an expected gain of 3.1%. By brand, American Eagle’s comparable sales shrank 1%, following a 7% increase last year. The Company’s Aerie brand saw same-store-sales soar 16%, building on a 27% increase last year.
Despite its lackluster comparable sales growth, American Eagle topped both earnings and revenue expectations for the period ended August 4. Adjusted earnings came in at USD 0.39 per share, compared to USD 0.32 forecasted by Wall Street. Revenue increased to USD 1.04 Billion, ahead of USD 1.01 Billion expected. The apparel Company said its total sales includes USD 40 Million recognized for license royalties from a third-party operator in Japan.
“Despite some of the challenges in the second quarter, we had a number of wins and accomplishments. Specifically, American Eagle Jeans continue to post record sales, marking six consecutive years of all-time highs in each and every quarter. This period we recorded strong double-digit growth across genders, capturing market share and further strengthening our number one market position,” said Jay L. Schottenstein, Executive Chairman and Chief Executive Officer.
For the third quarter American Eagle expects comparable sales to grow low to mid-single digits. EPS is forecasted to be in the between USD 0.47 to USD 0.49 per share.
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