By Anuja Bharat Mistry
Sept 9 (Reuters) – American Eagle Outfitters on Wednesday reiterated its annual comparable sales forecast, as the apparel maker sees persistent pressure on seasonal categories in its namesake brand amid choppy discretionary spending.
Shares of the company, which said it expects current-quarter gross margin to be flat from a year earlier, fell about 10% in extended trading.
Demand for apparel has remained uneven as stubborn inflation and macroeconomic uncertainty prompt shoppers to focus on value and essentials such as gas and groceries and wait for promotions before buying clothing and accessories.
American Eagle, like peers such as Gap, has been navigating challenges including weakness in certain seasonal categories in the last few months.
“We have seen a little pressure on seasonal ideas in American Eagle,” said Jennifer Foyle, executive creative director at American Eagle and Aerie, adding that the company continues to see some of that pressure going into the third quarter and is working on right-sizing inventory.
For the quarter ended August 1, inventory cost was up 14% from a year ago, including the impact of incremental tariffs. The company said it plans to continue rebalancing inventory across brands and categories throughout the year.
The broader apparel sector has seen mixed demand patterns, with some retailers struggling to anticipate shifting fashion trends and changing customer preferences.
The inventory issues and promotional activity in the third quarter for American Eagle are primarily concentrated in some seasonal businesses, especially shorts, Foyle said, adding that “there is some fashion that we need to ensure that we’re clearing.”
“American Eagle continues to struggle as our experts have pointed out a less-clear brand voice and merchandising strategies … AE falls behind the likes of Levi’s and Abercrombie,” said Patrick Ricciardi, analyst at Third Bridge.
The company, which maintained its fiscal 2026 comparable sales forecast for the second time this year, expects it to be up mid-single digits.
American Eagle’s quarterly revenue of $1.38 billion edged past analysts’ estimates of $1.37 billion, according to data compiled by LSEG.
It raised annual operating income target after including the impact of $196 million in tariff refunds received during the second quarter.
(Reporting by Anuja Bharat Mistry and Shania S Thomas in Bengaluru; Editing by Tasim Zahid)
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