American Eagle Stock Slumps as Earnings, Outlook Fall Short

Key Takeaways

Shares of American Eagle Outfitters ( AEO ) slumped Thursday morning after the clothing maker's third-quarter results and fourth-quarter outlook came in below what analysts had expected.

In results posted after the bell Wednesday, the owner of its namesake brand—among others such as Aerie—reported a year-over-year decline of roughly 1% to $1.29 billion in revenue and $80 million in net income , down nearly 20%. Analysts had expected $1.3 billion in revenue and $92.16 million in profits, according to estimates compiled by Visible Alpha.

American Eagle recorded a nearly $13 million restructuring charge on severance costs and the pending sale of its business in Hong Kong as the company shifts to a franchise model in the region. After adjusting for the charge, American Eagle's adjusted net income of $93 million came in above the $91.54 million analysts had expected.

American Eagle Entering Holiday Season 'Well Positioned,' CEO Says

Analysts had expected comparable store sales to grow by 3.2% in the quarter, but American Eagle's 3% growth came in slightly under.

CEO Jay Schottenstein said the retailer is entering the holiday shopping season "well positioned." He also noted that the company is prepared for "potential choppiness" at non-peak selling times like what it saw before Black Friday, and a likely slowdown in January after the holidays.

Looking ahead, American Eagle guided fourth-quarter comparable store sales in line with expectations up 1%, while a projected 4% decline in revenue was slightly larger than the 3.8% drop analysts had expected.

American Eagle shares were down 13.3% to $17.81, putting them down nearly 16% since the start of the year.

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