American Eagle Outfitters posts flat revenue growth

Second quarter net revenues at American Eagle Outfitters, Inc. (AEO) reached 1.2 billion dollars, flat to the second quarter of 2021, while brand revenue declined 2%.

By brand, the company said in a release, Aerie revenue of 372 million dollars rose 11 percent, reflecting a 25 percent three-year revenue CAGR but comp sales declined 6 percent.

Revenues at American Eagle of 778 million dollars declined 8 percent, reflecting a 3 percent drop in three-year revenue CAGR. Comp sales declined 10 percent versus second quarter 2021.

“As we cycle exceptional demand from last year, a tougher macro environment is impacting consumer spending behaviour. Second quarter performance reflected these challenges, constraining revenue and amplifying margin pressure as we fully cleared through excess spring and summer goods,” said Jay Schottenstein, AEO’s executive chairman and chief executive officer.

AEO’s consolidated store revenue declined 2 percent and digital revenue declined 6 percent. Compared to pre-pandemic first quarter 2019, store revenue increased 1 percent and digital revenue increased 60 percent.

Gross profit of 370 million dollars declined 26 percent and reflected a gross margin rate of 30.9 percent compared to 42.1 percent last year. GAAP EPS was negative 24 cents and adjusted EPS was 4 cents.

The company added that quarter-to-date, demand trends remain difficult, with brand revenue down in the high-single digits following exceptional growth and a record Back-to-School season last year. AEO further said that assuming current trends continue, the third quarter gross-margin rate would be in the mid-30s and fourth quarter in the low-30s.

“Given ongoing external uncertainties, we have taken additional actions to improve financial performance. We have made more expansive expense reductions and are pulling back further on capital expenditures. As an additional cautionary move, we have paused our quarterly cash dividend to strengthen our cash position,” added Schottenstein.