Weak sales drive lowered Q2 outlook for American Eagle

Pittsburgh – American Eagle Outfitters is lowering its earnings outlook for the second quarter of fiscal 2013 due to what the retailer characterizes as weak sales and margins. The company now forecasts earnings per share (EPS) for the quarter of about $0.10, down significantly from $0.21 in the second quarter of last year.

Total net revenue decreased approximately 2% in the second quarter, while consolidated same-store sales, including AEO direct, decreased 7%. This compares to an 8% consolidated same-store sales increase last year. American Eagle CEO Robert Hanson said that despite second quarter issues the retailer is prepared for success in the near future.

“We are not at all happy with our second quarter results, which were impacted primarily by a disappointing performance of our AEO women’s assortment and weak traffic,” said Hanson. “Results were exacerbated by a highly promotional retail environment, which intensified over the course of July. Within this context, we increased the depth and breadth of markdowns; these actions have enabled us to achieve a clean inventory position moving into the third quarter.”

“We are encouraged to see strength in our direct business, which posted a low double-digit increase,” Hanson continued. “Other areas of continued performance included AEO men’s business, aerie, factory stores, and international markets, validating our strategic initiatives. Our efforts are keenly focused on strengthening our women’s’ business and ensuring our assortments are compelling, innovative and balanced across core, core fashion and fashion. The domestic retail environment remains challenging, however, we have a strong sense of urgency and believe we are focused on the right actions to regain traction, deliver strong returns and profitable growth.”

American Eagle will release full second quarter earnings on Aug. 21.


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