The US clothing group American Eagle Outfitters Inc. (AEO) has also felt the effects of the adverse conditions in recent months. The figures for the first quarter of 2022/23, which the company presented on Thursday evening, fell short of expectations. Because management then significantly lowered its profit forecast for the full year, the share price immediately fell by more than ten percent.
In the months of February to April, group sales reached a level of 1.06 billion US dollars (985.1 million euros). It was only two percent above the corresponding quarter of the previous year. In addition, the acquisition of logistics companies contributed three percentage points to sales development, the company explained. The label Aerie developed solidly, which was able to achieve an increase of eight percent to 321.7 million US dollars. The core American Eagle brand, on the other hand, had to accept a drop in sales of 6 percent to 685.6 million US dollars.
Higher freight costs, the integration of the new acquisitions and increased personnel expenses caused the result to slip. The operating profit fell by 69 percent to 41.9 million US dollars. Net income was $31.7 million, down 67 percent from the prior-year quarter.
In view of the disappointing numbers, the company revised its earnings forecast downwards: It now only expects an operating profit “above the $ 314 million achieved in the 2019/20 financial year”. Previously, management had targeted $550 to $600 million.
“The first quarter proved difficult as demand fell well short of expectations, dragging down operating profit,” CEO Jay Schottenstein said in a statement. “In retrospect, our plans at the beginning of the year were too optimistic.” Due to rising inflation and higher petrol prices, customers had changed their buying behavior “more than expected” and spent less on clothing, explained the CEO. According to Schottenstein, the company will now take “quick action” to adjust inventories and the cost base to the new circumstances and to be “better prepared for demand trends” in the second half of the year.