American Eagle reports Q1 loss, withdraws 2025 guidance

PITTSBURGH - American Eagle Outfitters, Inc. (NYSE: AEO) disclosed preliminary financial results for the first quarter ended May 3, 2025, indicating a decline in revenue and comparable sales, and an expected operating loss. The company also announced the withdrawal of its fiscal year 2025 guidance amid market uncertainty. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with liquid assets exceeding short-term obligations and a healthy current ratio of 1.53.

Revenue for the quarter is anticipated to be around $1.1 billion, a decrease of about 5% from the same period last year. Comparable sales are expected to fall by approximately 3%, with the American Eagle brand down 2% and Aerie down 4%. A GAAP operating loss of roughly $85 million and an adjusted operating loss of $68 million are projected for the quarter. Despite recent challenges, InvestingPro analysis suggests the stock is currently undervalued, trading at a P/E ratio of 7.42, with analysts projecting profitability for the current fiscal year.

The adjusted operating loss accounts for increased promotional activity and a $75 million inventory charge due to a write-down of spring and summer merchandise. The GAAP operating loss includes an additional $17 million charge, mainly for closing two fulfillment centers as part of a supply chain optimization initiative.

Executive Chairman and CEO Jay Schottenstein expressed disappointment with the first quarter execution, attributing the results to merchandising strategies that led to higher promotions and excess inventory. The company has since aligned its inventory more closely with sales trends and is reevaluating its forward plans.

American Eagle plans to release its final first quarter 2025 financial results after market close on May 29, 2025, followed by a conference call to discuss the details.

The preliminary financial results are subject to completion of the quarter-end closing process, which may lead to adjustments. These preliminary estimates have been prepared by management and have not been audited or reviewed by the company’s independent accountants.

This news is based on a press release statement from American Eagle Outfitters, Inc. The company has maintained dividend payments for 22 consecutive years, demonstrating long-term financial stability. For deeper insights into AEO’s valuation and future prospects, including additional ProTips and comprehensive analysis, visit InvestingPro.

In other recent news, American Eagle Outfitters Inc. has made several significant announcements. The company has initiated a $200 million Accelerated Share Repurchase (ASR) program in collaboration with Bank of America, N.A., repurchasing approximately 18.1 million shares. This move represents about 9.5% of the company’s fully diluted outstanding stock and is part of an existing authorization to buy back up to 68.5 million shares. This ASR program underscores American Eagle’s strong capital position and confidence in its long-term growth strategy, according to Executive Chairman and CEO Jay Schottenstein.

Additionally, American Eagle has extended its credit program partnership with Synchrony, a prominent consumer financial services company. This multi-year extension allows Synchrony to continue managing American Eagle’s Real Rewards credit card, offering rewards and discounts to enhance customer experience. In a separate development, Stephanie Pugliese has resigned from the Board of Directors to assume a CEO role at another company, effective April 1, 2025. The company has yet to announce a replacement for Pugliese on the board.

Furthermore, Jefferies analyst Corey Tarlowe has raised the price target for American Eagle shares from $104.00 to $113.00, maintaining a Hold rating. Tarlowe noted American Eagle’s strategic financial moves, including an equity forward agreement worth over $2 billion, which has bolstered the company’s financial position. Despite these positive strides, Tarlowe suggests that the company needs to secure several substantial regulatory victories to fully alleviate concerns surrounding its stock. These recent developments highlight American Eagle’s ongoing efforts to strengthen its financial standing and adapt to changing market dynamics.

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