American Eagle Shares Slip 13% After Q1 Beat and 10%-15% Tariff Alert
AEO•American Eagle beat Q1 estimates with EPS of $0.14 versus $0.12 consensus on $1.20B revenue and saw 8% total comparable sales (Aerie +25%, American Eagle -2%), but shares plunged 13% after forecasting 10% tariffs on Q2 receipts rising to 15% in H2. The company guided Q2 operating income of $45M-$50M.
1. Q1 Results and Comparable Sales
American Eagle posted Q1 EPS of $0.14 on $1.20B revenue, surpassing $0.12 EPS and $1.18B revenue estimates. Total comparable sales rose 8%, driven by Aerie's 25% increase, while American Eagle brand comps declined 2%.
2. Tariff Assumptions Weigh on Shares
Management projected 10% tariffs on Q2 imports and 15% for H2, prompting a 13% share drop as investors priced in higher costs. Elevated short interest at 10.75% of float could moderate volatility.
3. Forward Guidance Points to Margin Pressure
For Q2, the company expects mid- to high-single-digit comp sales growth, a year-over-year gross margin decline, SG&A up mid-teens and operating income of $45-50M. Full-year guidance calls for mid-single-digit comp sales growth, gross margin expansion, SG&A up high-single digits and $390-410M in operating income.
