American Eagle Slumps After Sluggish Sales Renew Apparel Pessimism
(Bloomberg) -- American Eagle Outfitters Inc. fell the most in more than two years after posting worse-than-expected same-store sales for the second quarter, signaling even its investments in denim and lingerie can’t fend off a wider malaise in the struggling apparel sector.
- Same-store sales, a crucial metric in retail, rose 2% companywide in the retailer’s most recent quarter, missing estimates from analysts, according to Consensus Metrix.
- American Eagle becomes the latest U.S. apparel retailer reporting a challenging quarter. “We were disappointed to report operating results below our expectations,” Chief Executive Officer Jay Schottenstein said in a statement. He blamed the quarter’s results on underperformance in some seasonal categories and a delayed start to the back-to-school season.
- On paper, performance was lifted by license royalties from a third-party operator in Japan. “Without the royalty income, there is no denying that AEO’s underlying performance has deteriorated,” said Neil Saunders, managing director of GlobalData Retail.
- Still, there were some bright spots. Aerie, the company’s booming lingerie and swimwear line, continued to post double-digit same-store sales growth. Comparable sales at the popular unit grew 16%, largely offsetting the 1% decline in the retailer’s namesake brand.
- The retailer, which only gives guidance one quarter into the future, said it’s already getting better out there -- sales started to tick up at the start of the third quarter. It said it anticipates this quarter’s same-store sales will increase in the low-to-mid single digits.
- The shares fell as much as 14% in New York, the biggest intraday slide since May 2017. They had declined 16% this year through Tuesday’s close.
- For more details on the report, click here.
- For the company statement, click here.
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