US Markets
Tuesday, November 21st, 2023 3:03 pm EDT
Key Points
- American Eagle’s Stock Plummet: American Eagle’s stock experienced a significant decline of approximately 17% after the company issued a holiday forecast that failed to meet expectations. The forecast outlined high-single-digit sales growth for the holiday quarter, surpassing analysts’ expectations of 3.4% growth. However, the anticipated operating income of $105 million to $115 million fell mostly below the expected $114 million. The forecast was impacted by a projected 20% increase in selling and general administrative expenses.
- Fiscal Third Quarter Outperformance: Despite the disappointing holiday forecast, American Eagle outperformed in its fiscal third quarter. The reported earnings per share were 49 cents, exceeding the expected 48 cents, and revenue reached $1.3 billion, surpassing the expected $1.28 billion. The company’s net income for the quarter was $96.7 million, or 49 cents per share, compared to $81.3 million, or 42 cents per share, a year earlier. Sales for the quarter rose by about 5% to $1.3 billion. However, the gross margin during the quarter was 41.8%, slightly below the anticipated 42.1%.
- Revised Full-Year Projection and Industry Concerns: American Eagle revised its full-year projection, anticipating mid-single-digit revenue growth, up from the previous guidance of low single digits. The full-year operating income forecast was tightened to be in the range of $340 million to $350 million. Despite these adjustments aligning with analyst expectations, the overall performance failed to impress Wall Street. The lackluster performance at American Eagle mirrored a similar trend at rival Abercrombie & Fitch, both citing concerns about the upcoming holiday shopping season. Additionally, the article highlights a broader trend as retailers like Best Buy and Lowe’s also cut their forecasts, citing an unpredictable consumer and a continued slowdown in big-ticket purchases.
American Eagle’s shares experienced a significant drop of approximately 17% following a holiday forecast that failed to meet expectations. While the company anticipates high-single-digit sales growth for the holiday quarter, exceeding analysts’ expectations, its operating income forecast of $105 million to $115 million fell mostly below the expected $114 million. The forecast was impacted by an expected 20% increase in selling and general administrative expenses.
Despite outperforming expectations in its fiscal third quarter, with earnings per share at 49 cents (vs. an expected 48 cents) and revenue at $1.3 billion (vs. an expected $1.28 billion), the company’s outlook for the holiday season disappointed investors. The reported net income for the quarter was $96.7 million, or 49 cents per share, compared to $81.3 million, or 42 cents per share, a year earlier. Sales for the quarter rose 5% to $1.3 billion.
American Eagle’s gross margin for the quarter came in at 41.8%, slightly below the expected 42.1%. The company managed to achieve a 5% increase in sales despite a broader slowdown in the apparel industry. Rival Abercrombie & Fitch also reported lackluster earnings and forecasts on the same day.
For the full year, American Eagle revised its projection, anticipating mid-single-digit revenue growth, up from previous guidance of low single digits. The retailer tightened its forecast for full-year operating income, expecting it to be in the range of $340 million to $350 million. The holiday outlook, coupled with similar remarks from other retailers like Best Buy and Lowe’s, reflects concerns about tepid demand and uncertainties in consumer behavior during the crucial holiday shopping season.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/21/american-eagle-aeo-earnings-q3-2023.html
