Shares fall as margin pressure and weak apparel demand weigh on outlook
American Eagle Outfitters AEO.N shares fall about 11% in premarket trade on Thursday after the firm reiterated its annual comparable sales forecast.
The apparel retailer expects persistent pressure on seasonal categories such as shorts, leading to increased clearance activity and a 14% rise in quarterly inventory costs.
It expects current-quarter gross margin to be flat year over year, with uneven apparel demand continuing as shoppers focus on essentials due to stubborn inflation.
Jefferies says strength at Aerie, the retailer's intimates and activewear brand, was not enough to outweigh continued headwinds.
AEO shares have dropped about 38% year to date, underperforming the S&P 500's .SPX rise of about 12%.
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