What's Going On With American Eagle Outfitters Shares Today?

American Eagle Outfitters Inc AEO shares are trading lower by around 15% after it reported Q3 FY23 results.

Net revenue rose 5% Y/Y to $1.30 billion, beating the consensus of $1.28 billion. 

Store revenue was up 3% Y/Y, and digital revenue grew 10% Y/Y in the quarter.

Aerie segment revenue stood at $393 million, with reported and comparable sales up 12% Y/Y.

American Eagle segment revenue was up 2% Y/Y to $857 million, with comparable sales increasing 2% Y/Y in Q3.

Gross profit increased 13% Y/Y to $544 million with a gross margin expansion of 310 basis points Y/Y to 41.8%, driven by strong demand, lower product and freight expenses, and continued benefits from profit improvement work.

Operating income came in at $125 million, with a margin of 9.6% in Q3. EPS of $0.49 surpassing the consensus of $0.48.

Total ending inventory declined 4% to $769 million, with units declining 3%. 

As of October 28, cash and cash equivalents stood at $240.9 million.

Outlook: For FY23, AEO revised guidance for revenue to be up mid-single digits Y/Y from growth in low single digits Y/Y earlier. 

Also, the company now expects operating income of $340 million-$350 million, at the high end of prior guidance of $325 million-$350 million. 

The guidance revision reflects strengthened demand, continued profit improvement, and projected SG&A expense growth in low double digits.

For Q4, AEO sees revenue increase in high-single digits and operating income in the range of $105 million-$115 million. The revenue outlook includes a four-point positive contribution from the 53rd week.

"Looking ahead, we remain focused on advancing our long-term strategic priorities, as we seek to create consistent growth across our portfolio of brands and generate efficiencies for improved profit flow-through," said Jay Schottenstein, Executive Chairman of the Board of Directors and CEO.

Price Action: AEO shares are down 15.9% at $16.66 premarket on the last check Tuesday. 

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