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American Eagle Outfitters (NYSE:AEO) shares were trading more than 14% lower after-hours following the company’s reported Q3 results, with EPS of $0.04 coming in worse than the consensus estimate of $0.14. Revenue was $1.2 billion (flat year-over-year), in line with the consensus estimate.
“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,” said Jay Schottenstein, AEO’s Executive Chairman of the Board and CEO.
The company expects the Q3 gross margin rate to be in the mid-30s and the Q4 rate in the low-30s. Management’s expansive expense reductions with a focus on store payroll, corporate expense, professional services and advertising, are now expected to drive $100 million in annualized expense reductions to plan, compared to the prior target of $60 million.
