American Eagle’s profits surge, but sales fall short of expectations

American Eagle reported gains in profitability but fell short of Wall Street expectations in its fiscal first-quarter sales. Despite this, the company saw a 6% increase in revenue compared to the previous year, setting a new record. However, shares dropped about 5% in extended trading on Wednesday.

Earnings per share came in at 34 cents, surpassing the 28 cents expected by analysts. Revenue reached $1.14 billion, slightly below the anticipated $1.15 billion. Net income for the quarter nearly quadrupled from the previous year, with American Eagle reporting $67.8 million compared to $18.5 million.

Looking ahead, the company expects full-year operating income to range from $445 million to $465 million, with revenue growth of 2% to 4%. Finance chief Mike Mathias expressed caution for the rest of the year due to upcoming challenges such as interest rate decisions and the presidential election.

American Eagle is implementing a new growth strategy, aiming for 3% to 5% sales growth annually over the next three years. The company is also focusing on improving its product assortment and store formats to better serve its customers. President and executive creative director Jennifer Foyle highlighted the success of the revamped store design, which has been well-received by customers.

Despite the challenges, American Eagle remains optimistic about its future prospects and is committed to driving growth and profitability in the coming years.