American Eagle Outfitters (NYSE:AEO) Q1 earnings were short of expectations and AEO stock is getting punished this morning, down more than 2%.
The retailer reported EPS of 14 cents for the quarter ended April 29, compared with 22 cents in the comparable period last year. Analysts had expected 17 cents. Sales were $762 million, up 2% from last year’s $749 million and above the average forecast of $741.7 million. Comp sales this quarter were 2% versus last year’s 6%.
“The first quarter results reflected mall traffic headwinds, especially early in the quarter, with improved trends over Easter and a strong digital business throughout,” said CEO Jay Schottenstein. “As we look ahead, we are taking the right steps to improve our results and adjust our business for today’s rapidly evolving retail environment. We are creating efficiencies across our organization, as we aim to continue capitalizing on the strength of our brands, product leadership and other competitive advantages. The six million shares repurchased this quarter reflects the company’s strong cash flow, healthy balance sheet and confidence in our brands and long-term strategic initiatives.”
AEO management offered guidance for Q2, anticipating comp store sales in the range of flat to a low single-digit decline. EPS is guided in the range of 15 cents to 17 cents, versus 23 cents in last year’s Q2.
InvestorPlace contributor Luke Lango earlier this week wrote that American Eagle Outfitters has been an underappreciated story amid the retail wreckage, now trading at a mere 10 times next year’s earnings estimates. He noted that SimilarWeb shows that ae.com is trending up in terms of online web traffic both domestically and globally, while Quantcast shows that ae.com traffic increased substantially year-over-year in recent months.
AEO stock was down 14% this year through yesterday’s market close. Rival retailer Abercrombie & Fitch Co. (NYSE:ANF) is up almost 13% in the same period.
