Due to weak sales, heavy discounts, and an uncertain economy, American Eagle announced on Tuesday that it is writing down $75 million in spring and summer products and rescinding its full-year projection.
According to the clothing store, it anticipates revenue for the first quarter, which concluded in early May, to be about $1.1 billion, a 5% decrease from the same period last year. American Eagle predicts a 3% reduction in comparable sales, with intimates brand Aerie seeing a 4% decline. A mid-single-digit percentage decline in first-quarter sales and a low single-digit percentage decline in full-year sales were the previous expectations of American Eagle.
When it released its fiscal fourth-quarter results in March, American Eagle cautioned that the first quarter was off to a “slower than expected” start because of poor demand and chilly weather. The store used high discounts to shift goods as the quarter went on since conditions clearly deteriorated.
Consequently, American Eagle anticipates an operational loss of about $85 million and an adjusted operating loss of approximately $68 million for the quarter, which eliminates one-time expenses associated with its reorganisation. According to the firm, the loss is the result of “higher than planned” discounting and a $75 million inventory charge associated with a write-down of spring and summer products.
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