American Eagle Shares Drop 13% on Weak Holiday Guidance

American Eagle Shares Drop 13% on Weak Holiday Guidance

American Eagle’s shares fell 13% after the company issued weak holiday sales guidance and lowered its full-year forecast. Despite strong back-to-school demand, the retailer noted that shoppers are focusing on key sales events and pulling back during other periods.

In the fiscal third quarter, the company missed revenue expectations but exceeded profit forecasts:

Earnings per share: 48 cents (adjusted) vs. 46 cents expected

Revenue: $1.29 billion vs. $1.30 billion expected

Net income fell to $80 million (41 cents per share), down from $96.7 million (49 cents per share) a year ago. Sales dropped 1% compared to last year.

For the holiday quarter, American Eagle expects a 1% rise in comparable sales but a 4% decline in total sales, partly due to fewer selling weeks. Full-year sales growth has been revised down to 1% from an earlier 2%-3% projection.

On a positive note, the Aerie brand continues to perform well, with 5% comparable sales growth in the quarter, following 12% growth last year.