American Eagle Outfitters Says Consumers are Fearful and Cutting Spending

Key Takeaways

• American Eagle Outfitters said consumers are worried about the future, and gave weaker-than-expected guidance.
• The maker of fashion clothing for teens and young adults explained that tariffs, inflation, and government cuts are leading buyers to be more conservative.
• Fourth-quarter profit exceeded forecasts.

American Eagle Outfitters (AEO) shares fell Thursday, a day after the maker of fashion clothes for teens and young adults warned that consumers are pulling back on their spending because of concerns about the future.

The company behind American Eagle and Aerie brands predicted full-year revenue will fall by a low-single-digit percent, while analysts surveyed by Visible Alpha were looking for a 3% increase. AEO explained that the guidance "reflects near-term headwinds in the consumer and macroeconomic operating environment."

CEO Jay Schottenstein noted that the first quarter "is off to a slower start than expected, reflecting less robust demand and colder weather." Schottenstein added that while the company anticipates improvement as the spring season gets under way, "we are also taking proactive steps to strengthen the top-line, manage inventory and reduce expenses."

CEO Says Consumers 'Have the Fear of the Unknown'

Schottenstein said on the earnings call with analysts that consumers "have the fear of the unknown," according to a transcript provided by AlphaSense. He argued that it's not just tariffs and inflation, but you "see the government cutting people off. They don't know how that's going to affect them. They see programs being cut. They don't know how that's going to affect them. ... And when people don't know what they don't know, they get very conservative."

In the fourth quarter, AEO reported earnings per share (EPS) of $0.54, ahead of Visible Alpha forecasts, and revenue of $1.60 billion, in line with estimates.

Shares of American Eagle Outfitters slipped 1.5% to their lowest level since the spring of 2023.

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