Shares of American Eagle Outfitters (AEO) plummeted in pre-market trading after the company issued weak guidance. The clothing and accessories retailer expects its comparable sales for the holiday quarter (fourth quarter) to rise by around 1%, while total sales are anticipated to decline by about 4%. This drop in revenue reflects an $85 million impact from having one less selling week and a delayed start to the holiday shopping season. Notably, the outlook falls short of analysts’ forecast of 2.2% growth in comparable sales.
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AEO Lowers FY24 Forecast
Consequently, the retailer now forecasts comparable sales growth of 3% for FY24, down from its earlier guidance of 4%. Additionally, American Eagle expects FY24 sales to increase by only 1%, compared to its prior forecast of growth in the range of 2% to 3%.
AEO Reports Disappointing Q3 Results
The retailer reported adjusted earnings of $0.48 per share, falling short of consensus estimates of $0.59 per share.
Furthermore, the company’s revenue declined 1% year-over-year to $1.3 billion in the third quarter. This was below Street estimates of $1.66 billion.
Is AEO a Good Stock to Buy?
Analysts remain sidelined about AEO stock, with a Hold consensus rating based on one Buy, two Holds, and one Sell. Over the past year, AEO has increased by more than 8%, and the average AEO price target of $21.50 implies an upside potential of 4.7% from current levels. These analyst ratings are likely to change following AEO’s results today.
