American Eagle Withdraws 2025 Guidance Amid Weak Q1 Performance

A customer enters an American Eagle store in Miami, Florida on April 4, 2025. American Eagle on Tuesday said it is writing off $75 million in spring and summer merchandise and withdrawing its full-year guidance as it contends with slow sales, steep discounting and an uncertain economy.

First Quarter Expectations and Sales Performance

The apparel retailer said it expects revenue in the first quarter, which ended in early May, to be around $1.1 billion, a decline of about 5% compared to the prior-year period. American Eagle anticipates comparable sales will drop 3%, led by an expected 4% decline at intimates brand Aerie. American Eagle previously expected first-quarter sales to be down by a mid-single-digit percentage and anticipated full-year sales would drop by a low single-digit percentage.

Impact on Shares and Financial Loss

Shares plunged more than 17% in extended trading. When it reported fiscal fourth-quarter results in March, American Eagle warned that the first quarter was off to a “slower than expected” start, due to weak demand and cold weather. Conditions evidently worsened as the quarter progressed, and the retailer turned to steep discounts to move inventory.

Operating Loss and Restructuring

As a result, American Eagle is expecting to see an operating loss of around $85 million and an adjusted operating loss, which cuts out one-time charges related to its restructuring, of about $68 million for the quarter. That loss reflects “higher than planned” discounting and a $75 million inventory charge related to a write-down of spring and summer merchandise, the company said.

CEO Statement and Future Plans

“We are clearly disappointed with our execution in the first quarter. Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory. As a result, we have taken an inventory write down on spring and summer goods,” said CEO Jay Schottenstein. “We have entered the second quarter in a better position, with inventory more aligned to sales trends,” he said. “Additionally, we are actively evaluating our forward plans. Our teams continue to work with urgency to strengthen product performance, while improving our buying principles.”

Withdrawal of Fiscal Guidance

The company added it is withdrawing its fiscal 2025 guidance “due to macro uncertainty and as management reviews forward plans in the context of first quarter results.” It is unclear if recent tariff policy changes had an effect on American Eagle. Some companies bought inventory earlier than usual to plan for higher duties, but American Eagle repeatedly said in March that it was in a solid inventory position and was able to go after trends as customer preferences shifted.

Conclusion

American Eagle’s financial struggles in the first quarter have led to a significant write-off of inventory and a withdrawal of its full-year guidance. The company’s CEO has expressed disappointment with the execution in the first quarter and has announced plans to strengthen product performance and improve buying principles. The future of American Eagle remains uncertain, and the company will need to work hard to regain its footing in the competitive apparel market.

FAQs

Q: What is the expected revenue for American Eagle in the first quarter?
A: The expected revenue for American Eagle in the first quarter is around $1.1 billion, a decline of about 5% compared to the prior-year period.
Q: What is the reason for the operating loss in the first quarter?
A: The operating loss in the first quarter is due to “higher than planned” discounting and a $75 million inventory charge related to a write-down of spring and summer merchandise.
Q: Is American Eagle withdrawing its fiscal 2025 guidance?
A: Yes, American Eagle is withdrawing its fiscal 2025 guidance due to macro uncertainty and as management reviews forward plans in the context of first quarter results.
Q: What is the impact of recent tariff policy changes on American Eagle?
A: It is unclear if recent tariff policy changes had an effect on American Eagle, as the company had previously stated that it was in a solid inventory position and was able to go after trends as customer preferences shifted.