By Juveria Tabassum
(Reuters) -American Eagle Outfitters reduce its goal for annual comparable gross sales development on Wednesday, in indicators that attire demand might be erratic in the course of the essential vacation season, sending its shares down 14% in prolonged commerce.
Competition has heated up within the attire area as firms vie for frugal, discerning consumers with a deal with contemporary kinds and nifty advertising. Still, a vacation buying season marked by excessive promotions has compelled most retailers to be cautious about their expectations.
“Key promoting durations have seen a optimistic buyer response, but we stay cognizant of potential choppiness throughout non-peak durations,” mentioned American Eagle’s CEO Jay Schottenstein.
Retailer Target additionally mentioned it was seeing an elevated response to promotions this yr, with customers largely holding again purchases between massive low cost occasions.
American Eagle now expects annual comparable gross sales development of about 3%, down from its prior expectations for a roughly 4% rise, to mirror warning within the vacation quarter demand outlook.
The Aerie guardian’s targets are available in distinction to some attire firms, together with Gap and Abercrombie & Fitch, who’ve benefited from demand for his or her informal put on kinds.
“AEO manufacturers have been pretty profitable in getting Gen-Z’s consideration with seasonal campaigns and compelling promotions, however those self same efforts are including stress to their margins that would show unsustainable,” mentioned EMarketer analyst Sky Canaves.
Unusually hotter climate within the U.S. additionally hit attire gross sales in the course of the third quarter, whereas greater reductions weighed on margins for the corporate, which has tried to ramp up advertising in its activewear objects.
American Eagle reported quarterly income of $1.29 billion, in contrast with estimates of $1.30 billion, as per information compiled by LSEG.
The firm additionally recorded an $18 million impairment and restructuring cost because it seems to be to chop prices.
Excluding objects, American Eagle earned a revenue of 48 cents per share, forward of the 46 cents per share anticipated by analysts.
(Reporting by Juveria Tabassum; Editing by Alan Barona)
