American Eagle misses quarterly sales estimates on cautious consumer spending

American Eagle Outfitters on Wednesday missed Wall Street estimates for quarterly revenue as sticky inflation hurt demand for its apparel and accessories often sold at full price.

Shares of American Eagle fell more than 8% in trading after the bell as the company also maintained its fiscal 2024 forecasts.

Despite a 240 basis point jump in quarterly gross margin from lower product and transportation costs, the company is facing choppy demand as shoppers stretch their wallets to accommodate higher cost of living.

Meanwhile, its total ending inventory increased 9% from last year to $681 million, owing to higher end-of-season merchandise as the company works out a more profitable stock clearance strategy.

“The company’s revenue miss is an indication that economic pressures are driving consumers to spend more carefully, particularly in discretionary categories like apparel,” said Rachel Wolff, an analyst at Emarketer.

American Eagle’s results lagged those of peers Abercrombie & Fitch and Dick’s Sporting Goods, both of which hiked their annual sales forecast earlier in the day on resilient demand for trendy clothing and footwear.

American Eagle said it continues to expect fiscal 2024 revenue to rise 2% to 4% from last year.

“It’s really more of a cautious guide for the back half of the year as we lap some of the better results that started with back to school last year,” the company’s executives said on a post-earnings call.

Still, an uptick in spring season shopping helped a 4% rise in store revenue during the quarter, with digital revenue growing 12%.

The company’s net revenue for the quarter ended May 4 rose 6% to $1.14 billion, a touch below analysts’ average estimate of a 6.4% rise to $1.15 billion, according to LSEG data.

First-quarter profit per share came in at 34 cents, compared to 28 cents analysts had expected.