American Eagle Outfitters Reports 5% Revenue Decline and $64.9 Million Net Loss

American Eagle Outfitters, Inc. reported a significant decline in financial performance for the 13 weeks ended May 3, 2025, with total net revenue decreasing by 5% to $1.09 billion compared to $1.14 billion in the same period last year. The company's operating loss was $85.2 million, a stark contrast to the operating income of $77.8 million recorded in the prior year. This resulted in a net loss of $64.9 million, or a loss of $0.36 per diluted share, compared to a net income of $67.8 million, or $0.34 per diluted share, in the previous year. The decline in revenue was attributed to lower average unit retail prices and increased promotional activity, which also led to a $75 million inventory write-down.

The company's gross profit fell by 31% to $322.4 million, representing a gross margin of 29.6%, down from 40.6% in the prior year. This decrease was primarily driven by a reduction in merchandise margin due to lower sales and heightened promotional efforts. Selling, general, and administrative expenses increased slightly to $338.8 million, accounting for 31.1% of net revenue, compared to 29.2% in the previous year. Additionally, American Eagle incurred $17.1 million in impairment and restructuring charges, marking a significant shift from the absence of such charges in the prior year.

Operationally, American Eagle Outfitters opened six new stores during the quarter, while closing two, resulting in a total of 1,176 stores at the end of the period. The company continues to focus on its omni-channel strategy, with merchandise available in over 30 countries through a global network of license partners. However, comparable sales for American Eagle and Aerie brands decreased by 2% and 4%, respectively, indicating challenges in driving customer engagement and sales growth.

Looking ahead, American Eagle plans to open approximately five to 15 American Eagle stores and 25 to 40 Aerie and OFFLINE stores during Fiscal 2025, alongside remodeling 90 to 100 existing locations. The company is also focused on reducing operating expenses and capital expenditures through a profit improvement program. Despite the current challenges, management remains optimistic about the potential for recovery, particularly during the back-to-school and holiday selling seasons, while acknowledging the ongoing impact of macroeconomic conditions and inflation on consumer spending.