American Eagle Outfitters (AEO.N) on Wednesday missed Wall Street estimates for quarterly revenue as sticky inflation hurt consumer demand for its apparel and accessories often sold at full price.
Shares of American Eagle fell 8% in trading after the bell as the company also maintained its fiscal 2024 forecasts.
Despite a 240 basis points jump in quarterly gross margin from lower product and transportation costs, the company is facing choppy demand as shoppers stretch their wallets to accommodate higher cost of living.
Meanwhile, its total ending inventory increased 9% to $681 million, with units up 10%, owing to higher end-of-season merchandise as the company works out a more profitable stock clearance strategy.
The retailer logged a 4% rise in store revenue during the quarter, while total digital revenue jumped 12%.
Sales grew across its brands, with comparable sales at its active wear brand, Aerie, up 6% and that at its namesake brand rising 7%.
American Eagle's results were in contrast to retail peers Abercrombie & Fitch (ANF.N) and Dick's Sporting Goods (DKS.N), both of which hiked their annual sales forecast earlier in the day, on resilient demand for trendy clothing and footwear.
The company's net revenue for the quarter ended May 4 rose 6% to $1.14 billion, compared with analysts' average estimate of a 6.4% rise to $1.15 billion, according to LSEG data.
First-quarter adjusted profit per share came in at 34 cents, compared to 28 cents analysts had expected.
American Eagle said it continues to expect fiscal 2024 operating income in the range of $445 million to $465 million and revenue to rise 2% to 4% from last year.
