American Eagle Outfitters Inc. had already prepped Wall Street for a tough first quarter.
And while the numbers came in as expected — with sales decreases and operating losses — the retailer said it was aggressively buying back shares and that both American Eagle and Aerie were standing solid.
“The first quarter was a challenging period for our business,” said Jay Schottenstein, executive chairman and chief executive officer, in a statement. “While we are disappointed with the results, we are taking actions to better position the company and drive stronger performance in the upcoming quarters. Our brands remain resilient. The team is executing with urgency as we look to strengthen both the top line and profit flow-through.”
AEO’s first-quarter revenues fell 5 percent to $1.1 billion, with Aerie’s comparable sales down 4 percent and American Eagle’s comps down 2 percent.
Looks from American Eagle’s summer collection.
Courtesy of AE
Operating losses totaled $85 million, including $17 million in impairment and restructuring charges, mostly tied to a supply chain optimization project.
All of those results were in line with the profit warning AEO issued earlier this month.
Inventories were down 5 percent at the end of the quarter and the company said inventory for the season is now better synced up with sales trends.
Investors reacted strongly and sent shares of AEO down 7.3 percent to $10.37 in after-hours trading on Thursday.
The shares are down by more than 50 percent over the past year, but AEO thinks its stock is still a good bet.
In March, the retailer set up a $200 million accelerated stock buyback program, which at the time was enough to take about 9.5 percent of the company’s shares off the open market.
AEO said it is on track to complete that buyback program this quarter and that it has separately repurchased $31 million of its shares in open market trades.
This year, the company expects its capital expenditures to total about $275 million, down from the $300 million previously forecast. AEO pulled its annual profit forecast and the market is still not settled enough to set a new one. But the company did offer a peek at its forecast for the second quarter, which calls for operating income to range from $40 million to $45 million as sales fall 5 percent.