American clothing and accessories retailer American Eagle store seen in Hong Kong.
Budrul Chukrut | Lightrocket | Getty Images
American Eagle warned investors on Wednesday that consumers are pulling back on spending and it’s seen a “slower start” to the year than it expected.
“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” CEO Jay Schottenstein said in a news release. “While we anticipate improvement as the Spring season gets underway, we are also taking proactive steps to strengthen the top-line, manage inventory and reduce expenses. As we navigate through an uncertain consumer and operating landscape, we will also remain focused on our long-term strategic priorities.”
Shares fell about 5% in extended trading.
The downbeat commentary, which came along with weak guidance for the current quarter and year ahead, is the latest warning sign that the consumer might be slowing down as shoppers contend with persistent inflation and concerns around tariffs.
Over the last couple of weeks, a string of other retailers – including both strong companies and ones that tend to struggle – issued weak guidance and cautious commentary about the current macroeconomic conditions and warned 2025 might be a weaker than expected year for sales.
Beyond its outlook, American Eagle issued mixed holiday results and comparable sales that beat expectations. Here’s how the apparel company did in its fiscal fourth quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: 54 cents vs. 50 cents expected
- Revenue: $1.60 billion vs. $1.60 billion expected
The company’s reported net income for the three-month period that ended Feb. 1 was $104 million, or 54 cents per share, compared with $6.31 million, or 3 cents per share a year earlier.
Sales dropped to $1.60 billion, down slightly from $1.68 billion a year earlier. Like other retailers, American Eagle benefited from an extra week in the year-ago period, which has negatively skewed results.
For the current quarter, American Eagle is expecting to see a mid-single-digit decline in sales, while analysts expected revenue to increase 1.3%, according to LSEG. For the full year, it’s expecting sales to decline by a low single digit, compared with expectations of 3% growth, according to LSEG.