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American Eagle Outfitters 2026 Q1 Earnings Misses Targets as Net Income Declines 195.8%
Generated by AI AgentAinvest Earnings Report Digest
Friday, May 30, 2025 1:59 am ET2min read
American Eagle Outfitters (AEO) reported its fiscal 2026 Q1 earnings on May 29th, 2025. The company faced a challenging quarter, missing expectations with a significant decline in revenue and net income. The withdrawal of full-year guidance underscores the impact of macroeconomic uncertainties and inventory management issues. Despite these setbacks, is focusing on operational improvements, with plans to align inventory with sales trends and drive growth in upcoming quarters. Investors are advised to remain cautious as the company navigates an uncertain market environment.
Revenue
In the first quarter of fiscal 2026, reported a total revenue of $1.09 billion, reflecting a 4.7% decrease from $1.14 billion in the same quarter of the previous year. The American Eagle segment contributed $693.87 million, whereas Aerie generated $359.79 million. Other revenue amounted to $43.97 million, and intersegment eliminations accounted for $-8.02 million, culminating in the total net revenue figure.
Earnings/Net Income
American Eagle Outfitters reported a loss of $0.36 per share in 2026 Q1, a sharp contrast to the profit of $0.34 per share in 2025 Q1. The company faced a net loss of $64.90 million compared to a net income of $67.75 million in the previous year. The EPS results indicate a poor performance for the quarter.
Price Action
The stock price of American Eagle Outfitters has edged down 1.50% during the latest trading day, has climbed 5.08% during the most recent full trading week, and has edged up 1.27% month-to-date.
Post-Earnings Price Action Review
The strategy of buying AEO shares following a revenue miss and holding them for 30 days has proven ineffective, yielding a backtested return of -23.35%. This strategy carried substantial risk, reflected in a Sharpe ratio of -0.10 and a maximum drawdown of -76.82%. This performance significantly underperformed against benchmarks by 107.22%. The poor returns highlight the volatility and risks associated with investing in AEO during periods of revenue shortfall, suggesting that investors should be cautious when employing this strategy.
CEO Commentary
Jay Schottenstein, Executive Chairman and Chief Executive Officer, expressed disappointment in American Eagle Outfitters' first-quarter performance, citing a $68 million adjusted operating loss impacted by a $75 million inventory write-down. He noted that American Eagle comps declined 2% and Aerie comps fell 4%, attributing challenges to both macroeconomic conditions and execution failures, particularly in product offerings. Schottenstein emphasized the company's commitment to improving operations and aligning inventory with sales trends, highlighting ongoing efforts to strengthen the supply chain and mitigate tariff impacts. He remains optimistic about the brand's potential and is focused on driving growth and delivering shareholder value.
Guidance
American Eagle Outfitters has paused full-year guidance but expects second-quarter revenue to decline by approximately 5% and comparable sales to decrease by about 3%. The operating income is anticipated to range between $40 million and $45 million. Gross margin is projected to decrease compared to the previous year due to higher markdowns and costs associated with a decline in comparable sales. Capital expenditures for the year are estimated at approximately $275 million, with a focus on preserving cash while investing in long-term growth initiatives.
Additional News
American Eagle Outfitters has recently announced a $200 million accelerated share repurchase program, expected to be completed in the second quarter. This program aims to buy back approximately 18.1 million shares, representing about 9.5% of the company's fully diluted outstanding stock, reflecting the company's confidence in its long-term prospects. Additionally, AEO plans to reduce its sourcing exposure to China to under 10% this year, addressing tariff impacts. The company has also engaged in open-market share repurchases totaling $31 million as part of its strategy to enhance shareholder value amidst challenging market conditions.
Revenue
In the first quarter of fiscal 2026, reported a total revenue of $1.09 billion, reflecting a 4.7% decrease from $1.14 billion in the same quarter of the previous year. The American Eagle segment contributed $693.87 million, whereas Aerie generated $359.79 million. Other revenue amounted to $43.97 million, and intersegment eliminations accounted for $-8.02 million, culminating in the total net revenue figure.
Earnings/Net Income
American Eagle Outfitters reported a loss of $0.36 per share in 2026 Q1, a sharp contrast to the profit of $0.34 per share in 2025 Q1. The company faced a net loss of $64.90 million compared to a net income of $67.75 million in the previous year. The EPS results indicate a poor performance for the quarter.
Price Action
The stock price of American Eagle Outfitters has edged down 1.50% during the latest trading day, has climbed 5.08% during the most recent full trading week, and has edged up 1.27% month-to-date.
Post-Earnings Price Action Review
The strategy of buying AEO shares following a revenue miss and holding them for 30 days has proven ineffective, yielding a backtested return of -23.35%. This strategy carried substantial risk, reflected in a Sharpe ratio of -0.10 and a maximum drawdown of -76.82%. This performance significantly underperformed against benchmarks by 107.22%. The poor returns highlight the volatility and risks associated with investing in AEO during periods of revenue shortfall, suggesting that investors should be cautious when employing this strategy.
CEO Commentary
Jay Schottenstein, Executive Chairman and Chief Executive Officer, expressed disappointment in American Eagle Outfitters' first-quarter performance, citing a $68 million adjusted operating loss impacted by a $75 million inventory write-down. He noted that American Eagle comps declined 2% and Aerie comps fell 4%, attributing challenges to both macroeconomic conditions and execution failures, particularly in product offerings. Schottenstein emphasized the company's commitment to improving operations and aligning inventory with sales trends, highlighting ongoing efforts to strengthen the supply chain and mitigate tariff impacts. He remains optimistic about the brand's potential and is focused on driving growth and delivering shareholder value.
Guidance
American Eagle Outfitters has paused full-year guidance but expects second-quarter revenue to decline by approximately 5% and comparable sales to decrease by about 3%. The operating income is anticipated to range between $40 million and $45 million. Gross margin is projected to decrease compared to the previous year due to higher markdowns and costs associated with a decline in comparable sales. Capital expenditures for the year are estimated at approximately $275 million, with a focus on preserving cash while investing in long-term growth initiatives.
Additional News
American Eagle Outfitters has recently announced a $200 million accelerated share repurchase program, expected to be completed in the second quarter. This program aims to buy back approximately 18.1 million shares, representing about 9.5% of the company's fully diluted outstanding stock, reflecting the company's confidence in its long-term prospects. Additionally, AEO plans to reduce its sourcing exposure to China to under 10% this year, addressing tariff impacts. The company has also engaged in open-market share repurchases totaling $31 million as part of its strategy to enhance shareholder value amidst challenging market conditions.
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