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Investing.com — Shares of American Eagle Outfitters, Inc. (NYSE:AEO) dived in early Friday trading after the company missed first quarter earnings estimates due to declining demand fueled by macro headwinds.
The clothing retailer said rising inflation, higher gas prices, and a stronger than anticipated pivot to other discretionary categories had impacted demand during the quarter, affecting its earnings numbers.
American Eagle reported earnings of $0.16 per share on revenue of $1.06 billion. Analysts polled by Investing.com expected earnings of $0.25 on revenue of $1.14 billion.
“The first quarter proved challenging, with demand well below our expectations, pressuring operating profit,” said Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.
“In hindsight, our plans entering the year were too optimistic,” he added.
For the second quarter, the company said it expects topline growth to trend similarly to the first quarter, reflecting higher markdowns to clear through spring inventory, higher freight costs and the impact of the supply chain acquisitions.
AEO lowered its outlook for the year. It now expects revenue up in the low single digits compared to Fiscal 2021.
“We are taking swift measures to adjust our inventory and expense base with a firm goal of entering the second half better aligned with demand trends,” commented Schottenstein.
