American Eagle sees gross sales in weak mall visitors fall low single digits for the holiday quarter
A shopper wearing a protective mask walks past a sale sign inside an American Eagle Outfitters Inc. clothing store in Westfield San Francisco Center in San Francisco, California, United States on Thursday, June 18, 2020.
Michael Short | Bloomberg | Getty Images
American Eagle announced, ahead of a virtual meeting with investors Thursday, that fourth-quarter sales will decline in low single digits, driven by a decline in brick and mortar store sales due to weak mall traffic during the Covid pandemic.
This is below the estimates of analysts, which, according to Refinitiv, saw a decline of 0.14%.
The clothing retailer assumes that the momentum on the Internet will continue as digital sales for both brands will increase by double digits. Teenage lingerie brand Aerie is forecast to increase sales in the region of 20% in the fourth quarter, while American Eagle brand of the same name is forecasting a low double-digit decline in sales.
American Eagle shares fell roughly 2% in premarket trading. The stock is up about 54% over the past 12 months.
A number of mall retailers, including Nordstrom and Urban Outfitters, have reported poor Christmas sales for 2020 as many Americans stayed at home, shopped from the sofa, and bought fewer clothes and shoes for their closets. Retailers like American Eagle, who rely on clothing sales, have tried to fill their shelves with more comfortable garments like leggings and pajama sets that consumers wanted to wear more of during the pandemic.
“Compelling vacation products and marketing, combined with a disciplined approach to promotional activities, resulted in very strong margin results,” CEO Jay Schottenstein said in a statement. “I think we are well positioned on the way to 2021.”
The retailer is expected to announce its fourth quarter and fiscal 2020 results on March 3rd.
In a separate press release Thursday, American Eagle set longer-term financial targets aimed at growing the Aerie business to $ 2 billion as the company works on its eponymous banner to improve profits.
“Aerie has had some of the best gains in retail, so $ 2 billion seems like a reasonable target,” said Simeon Siegel, senior analyst at BMO Capital Markets, in an interview. “But it also seems that fair investors have been looking for more.”
The rapid growth of the Aerie brand, which sells everything from bras and underwear to swimsuits and sweatpants, makes them a much stronger competitor to L Brands’ Victoria’s Secret business, he added.
Overall, American Eagle aims for fiscal 2023 sales of $ 5.5 billion and operating income of $ 550 million. In the last reporting year, the company had sales of 4.31 billion US dollars.
Read the press releases here.