American Eagle Outfitters reports bigger-than-expected loss, forecasts downbeat revenue

(Reuters) -American Eagle Outfitters forecast second-quarter revenue below estimates after reporting a wider-than-expected quarterly loss on Thursday, due to rising input costs and sluggish demand.

Shares of the company, which withdrew its fiscal 2025 forecasts earlier this month amid tariff uncertainty, fell about 8% after the bell.

Consumers grappling with financial constraints are avoiding non-essential purchases, including apparel and accessories, which in turn has hurt demand for clothing brands such as American Eagle Outfitters.

Comparable sales in the company's American Eagle brand declined 2%, while those for its Aerie brand dropped 4%, compared to a year ago.

Meanwhile, fears of a surge in product prices, sparked by U.S. President Trump's unpredictable tariff shifts, have rattled businesses and consumers worldwide.

Peer Abercrombie & Fitch, however, reported an upbeat quarter, driven by robust demand for its Hollister brand among younger shoppers.

American Eagle Outfitters now expects second-quarter revenue to decline by 5%, compared with analysts' estimates of a 4.04% drop, according to data compiled by LSEG.

Total inventory as of the quarter ended May 3 fell 5% to $645 million, with unit numbers also down 5%.

The owner of the Aerie brand, which took a $75 million inventory charge on its spring and summer collection, saw further margin pressure from increased in-season discounts and advertising expenses.

Its quarterly gross margin dropped to 29.6% from 40.6% a year ago.

The company reported a quarterly adjusted loss of 29 cents per share, versus analysts' estimates of a loss of 22 cents per share.

Its quarterly net revenue declined 4.7% to $1.09 billion, from a year ago. Analysts estimated a drop of 4.34% to $1.09 billion.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Mohammed Safi Shamsi)

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