(Updated - September 7, 2022 4:17 PM EDT)

American Eagle Outfitters (NYSE: AEO) reported Q3 EPS of $0.04, $0.10 worse than the analyst estimate of $0.14. Revenue for the quarter came in at $1.2 billion versus the consensus estimate of $1.2 billion.

• Pausing quarterly cash dividend to provide additional financial flexibility

Outlook:

Quarter-to-date, demand trends remain difficult, with brand revenue down in the high-single digits following exceptional growth and a record Back-to-School season last year. Assuming current trends continue, the third quarter gross-margin rate would be in the mid-30s and fourth quarter in the low-30s. This reflects higher markdowns in anticipation of a more promotional retail environment and the company’s seasonal clearance cadence which is more weighted to the fourth quarter.

Management has expanded expense cuts with a focus on store payroll, corporate expense, professional services and advertising. These actions are now expected to drive $100 million in annualized expense reductions to plan, compared to our prior target of $60 million. This translates to SG&A dollars remaining relatively flat to last year in the second half, compared to prior guidance for low-to-mid-single digit growth.

For earnings history and earnings-related data on American Eagle Outfitters (AEO) click here.