Reduces footfall leads to American Eagle Outfitters (NYSE:AEO) freefall
The footfalls at American Eagle Outfitters (NYSE:AEO) are not as resonant as they used to be and the teen retailer is bracing itself for a massive profit dip in the current quarter even as it has been grappling with tough competition. The company’s guidance that runs right through Oct was way below analyst expectations and shares sipped almost 10% on Wednesday.
The AEO stock dropped 9.89% in Wednesday’s trading session. The opening price of the shares was $14.65 which touched an intraday high of $15.33 and closed at $14.76. More than 14.35 shares were traded on Wednesday and the average volume of shares traded over a 30 day period was 3.20 Million. The company has a market cap of $2.86 billion.
Competition and sales dip
About the company’s dreary Q2 results, Robert Hanson, the AEO Chief Executive Officer said that the product execution in the women’s segment was disappointing and that the company faced a lot of competition in the retail landscape. This bunched with the trickle of customers means that the Q3 at the moment also looks no better.
AEO is the latest big retailer to post dismal quarterly results. Chain stores such as Walmart. Macy’s Saks and Kohl’s have also been wielding the axe on their full-year forecasts citing a dip in consumer spending. On Wednesday, Target also joined the troops and warned about cautious consumers. The company said that its EPS would stand at the low end of its guidance.
Q3 outlook cut
For the 3 August ended quarter, American Eagle’s net income increased by 3% to $19.6M or 10 cents/share. There was a 2% dip in revenue to $727.3M. AEO had pre-announced its results around 2 weeks ago. Revenue at its established stores that were open for a minimum of one year and from its ecommerce platforms dipped 7%. For the Q3, the company is projecting profit to be in the range of 14 cents-16 cents.