American Eagle Outfitters posted record first-quarter revenue of $1.2 billion on Thursday, beating analyst expectations, but American Eagle stock tumbled more than 10% in after-hours trading as the flagship brand's sales declined.
Compared with $1.09 billion in the same period last year, total net revenue climbed 10%, the company said. That beat analyst expectations of $1.19 billion, according to CNBC. Diluted earnings per share came in at $0.14, compared with a loss of $0.36 a year earlier. Analysts had expected $0.12 per share, according to CNBC.
The headline numbers masked a sharp divide between the company's two main brands. The American Eagle banner posted a 2% drop in comparable sales, while Aerie's intimates business delivered a 25% comparable sales surge. Wall Street had projected 3.1% growth for the American Eagle label and a 19.1% gain for Aerie, according to CNBC.
On a brand level, the American Eagle label generated $678.5 million, a 2% decline, while Aerie brought in $480.8 million, up sharply from $359.8 million in the year-ago period, the company said.
"While results at American Eagle were mixed, our teams are moving decisively to reignite the women's business and strengthen product execution and brand positioning," CEO Jay Schottenstein said in a statement.
On the analyst call, Jennifer Foyle, president and executive creative director, pointed to the women's bottoms category as the source of the brand's troubles, saying the assortment had missed on style and fit while leaving shoppers unable to find the items they were looking for. "We are not satisfied with where the business performed this quarter, especially in women's," Jennifer Foyle said, according to The Wall Street Journal.
Operating profit was $28 million, compared with an operating loss of $85 million a year earlier. Total comparable sales grew 8%, short of analyst expectations of 8.6%, according to CNBC.
Ending inventory reached $817 million, a 27% jump year over year, with unit counts 5% higher. Management attributed that build to two factors: the effect of higher tariffs and a favorable comparison against an inventory write-down recorded in the prior-year quarter.
Looking ahead, management guided for mid-to-high single-digit comparable sales growth in the second quarter, alongside operating income in a range of $45 million to $50 million. The company left its full-year outlook unchanged, targeting operating income of $390 million to $410 million. On the store fleet, 25 American Eagle locations are slated to shut in 2026, offset by 40 openings across the Aerie and Offline banners, according to WWD.