American Eagle Says Consumer is Slowing Down, Issues Weak Guidance

American eagle Warned Investors on Wednsday that consumers are spoiling and it’s seen a “slow” 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 Schottensetein 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 experiences. Uncertain Consumer and Operating Landscape, We will also remove focused on our long-term strategic priorities. ”

Shares Fell about 5% in Extended Trading.

The downbeat commentary, which came along with weight guidance for the current Quarter and Year ahead, is the latest warning sign that the consumer might be slowing as shoppers constable Concerns Around Tarifs.

Over the past couple of weeks, a string of other retailers, including bot strong companies and ones that tend to struggle, Issured weak guidance and cautious commentary about the currenomiconomic Conditions and warned 2025 might be a weaker than expected year for sales.

Beyond Its Outlook, American Eagle Issued Mixed Holiday Results and Comparable Sels 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. Similar to other retailers, American eagle benefited from an extra week in the year -go period, which has negatively skewed results.

Comparable sales, which will increase the effect of one less seling week, was up 3% during the Quarter, Ahead of Expectations of UP 2.1%, According to Streetaccount. Aerie, American Eagle’s Intimates and Activear Line, Drove The Company’s Growth during the Quarter With Comps Up 6%. Meanwhile, the company’s namesake banner saw comparable sales up 1%.

For the current Quarter, American Eagle is expecting to see a mid-single-diesgit decline in sales, while analysts expected revenue to increase 1.3%, according to lseg. For the full year, it is expecting sales to decline by a low single digit, compared with expectations of 3% growth, according to lseg.

On a call with analysts, Finance Chief Michael Mathias Said aerie sales are expected to be positive for the year but that growth will be offset by a steeper decline at the ameni banner.

Tarifs are also expected to weight on results, Mathias said. The company currently sources just under 20% of its products from China and is expecting a $ 5 million to $ 10 million to from the new duties in Fiscal 2025, which will also Afect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Affect Margin. At the moment, the company isn’t planning on passing the costs on to the consumer and is working to get its China exposure down to understand 10% by the end of the fixal year, Mathias Said.

Over the past year, American eagle has made significant strides in improving Profitability but have seen slower sales growth. In the three prior Quarters, It Missed Wall Street’s Sales Expectations, and on Wednsday, It Issued Revenue Numbers that were in line with analysts but deidn Bollywood.

During the Quarter, the company Acknowledged It Some Product Misses and Had certain items that was out of stock, which affected sales, but American eagle’s stores are also weeding The company still has a large mall footprint, and while there some some signs that Malls are seeing a resurgenceTraffic is still down significantly at us malls, which means fewer people are coming into the retailer’s stores. For example, online sales are expected to be positive without

To combat the effect of declining malls, Rival Abercrombie & Fitch has worked to move its stores to locations of malls of malls while American eagle haveen working to remodel its existing fleet. Currently, the company’s stores are on average 12 years old, and it’s work to get that down to set. In fiscal 2024, it remodified Around 56 stores, and in the year ahead, the company plans to remodel between 90 and 100 doors as part of its $ 300 million Capex Guidance.

In Prior Quarters, American eagle has said it’s against contending with an uncertain economy environment and a consumer that tends to only come out and shop during key momnts, but no aws range of oxhe range Are reporting similar dynamics as cracks in the economy spread.

In February, consumer confidence Saw the Biggest Drop Since 2021, job growth Slowed more than expected and unpretentious ticked up. These signs and the effect they’ve had on the markets have land to concerns that a recession could be coming, especially if president Donald Trump ‘S Trade War With Canada, Mexico and China Continues.

A Slowing Economy is bad news for any retailer but especially that that primarily sel discretionary Goods Such as New Clothes. During a call with analysts, schottenstein shared his thoughts on the consumer and said the Biggest Thing Affecting Shoppers is Uncertainty.

“They have the fear of the unknown, not just tariffs, not just just inflation. How that’s Gonna Affect Them, “said schottenstein. “They just don’t know how it’s gonna affect them… they get very conservative.”