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American Eagle Store At Fashion Valley In San Diego
(Kevin Carter/Getty Images)

Gen Z retailer American Eagle sinks on frosty spring outlook

Shares of the OG teen retailer have seen their value slashed in half over the past year.

Nia Warfield

American Eagle shares tumbled as much as 9% on Thursday morning before clawing back some losses after the teen retailer served up a less-than-trendy outlook for the year.

The company, which reported earnings after the bell Wednesday, posted diluted earnings per share of $0.54, beating FactSet estimates of $0.51. Revenue landed at $1.60 billion — right on target but slightly below last year’s haul. Meanwhile, comparable sales (excluding last year’s extra week) climbed 3%, easily topping forecasts of 2.1%.

While the retailer posted record-breaking December sales, it was Aerie that carried the squad. The popular intimates brand soared to record revenue of $539 million with 6% comp sales growth for the fourth quarter, outshining the American Eagle brand, which eked out just 1% growth.

But spring may be off to a chilly beginning. CEO Jay Schottenstein warned that the current quarter is “off to a slower start than expected” as demand cools and winter lingers. Looking ahead, American Eagle expects a single-digits dip in sales, with gross margins also trending lower year over year. For the full year, its expected operating income of $360 million to $375 million came in shy of the Street’s estimate for $380 million. This marks yet another retailer that managed to exceed earnings estimates in the fourth quarter but is disappointing analysts with its view on what’s coming next.

Investors haven’t warmed up to the stock, either — American Eagle shares have lost more than half their value over the past year.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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