American Eagle Outfitters Boosts Revenue Forecast Amid Steady Demand

American Eagle Outfitters has followed in the footsteps of its rival, Abercrombie & Fitch, by revising its annual revenue forecast upwards. This strategic move reflects the company’s confidence in sustained consumer demand for its fashionable wide-legged pants, stylish tops, and trendy accessories, despite the prevailing challenges of inflation.

While the company reported second-quarter revenue in line with expectations, its shares experienced a modest 3% decline in after-hours trading. Nevertheless, it’s important to note that the stock has demonstrated an impressive gain of over 45% in the current quarter.

This upward adjustment to the revenue forecast is significant, particularly at a time when numerous companies, including retail giant Macy’s, have adopted a cautious approach for the second half of the year due to the pressures on U.S. consumer spending stemming from higher prices and borrowing costs.

Analyst Rachel Wolff from Insider Intelligence commended American Eagle’s deliberate strategy of maintaining lower inventory levels. This approach has empowered the brand to swiftly respond to emerging fashion trends, resulting in increased sales and reduced reliance on extensive promotional activities.

During the quarter, inventories were managed efficiently, showing a 7% decrease compared to the previous year. Furthermore, American Eagle has proactively refreshed its offerings in categories such as fleece, activewear, and seasonal tops to broaden its appeal to a diverse customer base.

In August, the company reported a surge in demand, which began in late June and continued as it unveiled its early fall collection in July across its Aerie and American Eagle segments.

CEO Jay Schottenstein expressed optimism, stating, «It’s encouraging to see positive momentum continue into the third quarter, across brands and channels.»

Additionally, the company projects third-quarter revenue to grow within the low-single-digit range, a positive deviation from estimates forecasting a 0.9% decline, according to LSEG data.

While Aerie, renowned for its activewear, swimsuits, and bralettes, achieved a remarkable 2% quarterly sales increase, its namesake division experienced a modest 1% decline.

American Eagle Outfitters has now revised its annual revenue outlook to anticipate a low single-digit increase, marking a significant departure from its prior forecast of a flat to low-single-digit decline.

Furthermore, the company reported a profit of 25 cents per share, surpassing estimates that had projected earnings of 16 cents per share. This robust performance underscores American Eagle’s resilience and adaptability in a dynamic retail landscape.