American Eagle has announced a $75 million inventory write-down tied to unsold spring and summer merchandise and has withdrawn its full-year guidance for fiscal 2025. The decision comes as the company struggles with sluggish sales, increased discounting, and ongoing macroeconomic uncertainty. For the first quarter, which ended in early May, the retailer expects revenue of approximately $1.1 billion, marking a decline of about 5% compared to the same period last year. Comparable sales are projected to decrease by 3%, with the Aerie brand anticipated to see a 4% decline. Previously, American Eagle had forecast a mid-single-digit drop in first-quarter sales and a low single-digit decline for the full year.
The company’s share price fell sharply, dropping over 17% in after-hours trading. This downturn follows earlier warnings issued in March when the company reported a sluggish start to the fiscal year, citing cold weather and weak consumer demand. These conditions appear to have worsened through the quarter, prompting American Eagle to rely on significant markdowns to clear excess inventory. The company now forecasts an operating loss of about $85 million for the quarter, and an adjusted operating loss—excluding restructuring-related charges—of approximately $68 million.
CEO Jay Schottenstein acknowledged the disappointing performance, attributing it to merchandising strategies that failed to meet expectations. The resulting high levels of promotion and unsold goods ultimately led to the substantial inventory charge. He added that the company has entered the second quarter with a more balanced inventory that aligns more closely with sales trends. Leadership is now reassessing forward plans, and teams are working to enhance product performance and refine purchasing decisions.
American Eagle has also opted to retract its fiscal 2025 outlook, citing both macroeconomic volatility and the need to reevaluate strategies following the first quarter’s results. While other companies have adjusted inventory schedules in anticipation of potential tariff increases, American Eagle had stated earlier this year that it was in a strong inventory position and capable of responding to evolving customer preferences. However, the company did experience early inventory gaps, especially within Aerie, which remains a core growth focus.
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