American Eagle Outfitters reports challenging Q1

For the first quarter, American Eagle Outfitters, Inc. reported a total net revenue increase of 20 million dollars or two percent to 1.055 billion dollars, with supply chain acquisitions contributing approximately three percentage points to revenue growth.

“The first quarter proved challenging, with demand well below our expectations, pressuring operating profit. Comparisons from an extraordinary spring last year driven by stimulus payments and pent-up customer demand, were compounded by rising inflation, higher gas prices and a stronger than anticipated pivot to other discretionary categories,” commented Jay Schottenstein, AEO’s executive chairman of the board and chief executive officer.

Highlights of American Eagle Outfitter's Q1 results

Aerie revenue of 322 million rose eight percent reflecting a 27 percent three-year revenue CAGR. American Eagle revenue of 686 million dollars declined 6 percent versus first quarter 2021 reflecting a negative two percent three-year revenue CAGR.

Consolidated store revenue increased two percent, while total digital revenue declined 6 percent. Compared to pre-pandemic first quarter 2019, store revenue increased 1 percent and digital revenue increased 48 percent.

Gross profit of 388 million dollars declined 11 percent in the first quarter and reflected a gross margin rate of 36.8 percent compared to 42.2 percent last year.

EPS of 16 cents includes an approximately three million dollars addback to net income of interest expense associated with the company’s convertible notes, in-line with the adoption of ASU 2020-06 this quarter.

For the second quarter, management expects top-line growth to trend similarly to the first quarter with a gross margin rate of approximately 33 percent.

Incorporating shifts in the macro environment, the company is lowering its outlook for the year. Management expects operating profit to be above 314 million dollars achieved in fiscal 2019, with total revenue up in the low single digits compared to fiscal 2021.