American Eagle (AEO) Income Q4 2024

American eagle On Wednesday, investors warned that consumers withdraw the expenses and it has seen a “slower start” to the year as expected.

“The first quarter of 2025 is a slower start than expected and reflects less robust demand and colder weather,” said CEO Jay Schottenstein in a press release. “While we expect an improvement in the course, we also take proactive steps to strengthen the top line, manage the inventory and reduce expenses. If we navigate through an unsafe consumer and company landscape, we will also focus on our long-term strategic priorities.”

The stocks fell by about 5%in extended trade.

The dilapidated comment, which was accompanied by weak instructions for the current quarter and year, is the latest warning sign that the consumer may become slower, since buyers deal with persistent inflation and concerns about tariffs.

In the past few weeks, a number of other retailers, including both strong companies and those that have to deal with, have published weak guidelines and careful comments about the current macroeconomic conditions and warned that 2025 will be a weaker year for sales.

Apart from his view, American Eagle has published mixed holiday results and comparable sales that exceed expectations. In the fourth quarter of the financial year, the clothing company did compared to what Wall Street expected, based on a survey of LSEG analysts:

• Win each share: 54 cents expected compared to 50 cents
• Revenue: 1.60 billion US dollars are expected compared to $ 1.60 billion

The company's net profit for the three -month period, which ended on February 1, was USD 104 million or 54 cents per share compared to USD 6.31 million or 3 cents per share in the previous year.

Sales decreased to 1.60 billion US dollars, which is slightly due to a previous year in the previous year. Similar to other retailers, American Eagle benefited from an additional week in the previous year that distorted the results negatively.

Comparable sales that did not sell the effect of one week less, according to StreetCcount, rose by 3% in the quarter before the expectations of 2.1% have increased to 2.1%. Aerie, American Eagle's intimate and activewear line, drove the company's growth by 6%in the quarter. In the meantime, the company's namesake recorded 1%comparable by 1%.

American Eagle expects a decline in sales with medium -sized places for the current quarter, while the analysts would increase by 1.3%according to the LSEG. For the whole year, sales expect a low number to decrease by a low digit compared to the expectations of 3% growth.

When calling with analysts, CFO Michael Mathias said that the sale of aerie will be positive for the year, but this growth is compensated for by a steeper decline in the American Eagle banners.

Mathias said that the tariffs weigh up the results. The company currently receives almost 20% of its products from China and expects a goal of 5 to 10 million US dollars from the new tasks in the 2025 financial year, which will also influence the American Eagle gross margin. At the moment, the company is not planning to pass these costs to the consumer and works at the end of the financial year, said Mathias.

Last year, American Eagle made considerable progress in improving profitability, but recorded more slow sales growth. In the three earlier quarters, it missed Wall Street's sales expectations and published income on Wednesday that corresponded to the forecasts of the analysts, but did not exceeded them, but did not exceeded them.

During the quarter, the company admitted that it had some product efforts and certain objects that were not in stock that influenced sales, but also weigh the business of American Eagle on its results. The company still has a large footprint of the shopping center, and although there are some signals that shopping centers see a revival, traffic in the US shopping centers has still decreased significantly, which means that fewer people come into the retailers' stores. For example, online sales are expected to be positive in the first quarter, while sales sales are expected to become steeper than a medium-sized digit.

In order to combat the effects of decreasing shopping centers, the rival rival Abercrombie & Fitch has worked on laying its shops at places outside of shopping centers, while American Eagle worked to convert its existing fleet. Currently, the company's business is on average 12 years old and it is working to get this to seven. In the 2024 financial year, it was converted around 56 shops, and in the coming year the company plans to convert between 90 and 100 doors as part of its 300 million dollar -Capex instructions.

In earlier quarters, American Eagle has announced that with an uncertain economic environment and a consumer who only comes out and shopping in the most important moments, it usually buys, but now a wide range of other retailers report similarly than the spread of the economy.

In February, the confidence of the consumer has recorded the greatest decline since 2021, the growth of employment slowed down more than expected and unemployment ticked. These signals and the effects they had on the markets have stated that a recession could come, especially if President Donald Trump's trade war continues with Canada, Mexico and China.

A slow economy is bad news for every retailer, especially for those who mainly sell discretionary goods like new clothes. During a call with analysts, Schottenstein shared his thoughts about the consumer and said that the greatest thing that affects buyers was the uncertainty.

“You are afraid of the unknown, not just about customs duties, not only in inflation. You see that the government cuts people. They do not know how it will work. “You just don't know how it will affect you … you will be very conservative.”