American Eagle pulls financial guidance amid economic uncertainty

In the United States, American Eagle Outfitters announced a significant strategic shift by withdrawing its financial outlook for 2025, a decision prompted by ongoing macroeconomic uncertainties. This announcement was made on Tuesday, May 14, 2025, ahead of the company's expected first-quarter revenue results. The retailer anticipates that revenue for this quarter will decline by 5%, exceeding the $1 billion mark, alongside a projected 3% drop in same-store sales, which are crucial for assessing the retail sector's health. The company's leadership expressed dissatisfaction with recent performance, particularly regarding merchandising strategies that fell short of expectations. As a direct consequence, American Eagle is facing an anticipated operating loss estimated at $68 million for the first quarter, largely attributed to a $75 million inventory write-down linked to poor sales in spring and summer merchandise. The CEO, Jay Schottenstein, noted the necessity of addressing excess inventory through increased promotional activities, indicating that inventory levels had been misaligned with consumer demand. This development aligns with a larger trend among various companies withdrawing their financial projections amid the current economic climate, exacerbated by trade tensions that have escalated uncertainty over import costs. Notably, consumer behavior is also shifting, with indications that Americans are becoming more cautious in their spending habits. These challenges are anticipated to affect American Eagle's strategies moving forward, with the expectation of aggressive cuts in inventory plans for the latter half of the year and an increased focus on cost management to navigate these difficulties. Despite these challenges, Schottenstein remains optimistic about the company’s positioning for the second quarter. He emphasized that inventory is becoming more aligned with sales trends, believing that improved buying principles could foster better product performance. Financial analysts, including Paul Lejuez from Citi Investment Research, caution, however, that American Eagle may struggle to find a clear path amid the prevailing economic headwinds, particularly with pressures from tariffs and promotional costs complicating the operational landscape.