American Eagle Outfitters: A Bird's Eye View Of Profit Margin Struggles And Future Outlook

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of American Eagle Outfitters, Inc. AEO, lowering the price target to $12 from $17 soon after quarterly results.
The company reported first-quarter results where revenues of $1.08 billion beat estimates of $1.07 billion, and EPS of 17 cents came in line with estimates.
However, higher markdowns and increased rent expenses from new store openings weighed on Q1, mentions the analyst.
American Eagles now anticipate full-year sales to be flat to down low single digits Y/Y, down from the prior guidance for sales to be flat to up low single digits.
While first-quarter results were largely in line with expectations, the analyst notes that the moderation of the outlook based on soft current sales trends is concerning.
Incorporating the first-quarter results and expectations of a slowdown in the business in the second quarter, the analyst now expects FY23 EPS to be $0.98, lower than $1.11 previously. For FY24 EPS estimate goes to $1.10 from $1.30 previously.
Management noted that the business's exposure to the mid-to-lower-income consumer could be an issue, but visibility is challenging following the moderation to the outlook, the analyst mentions.
Price Action: AEO shares are trading lower by 13.46% to $10.44 on the last check Thursday.

Analyst Calendar