American Eagle Withdraws 2025 Guidance After Disappointing Q1

American Eagle Outfitters has withdrawn its full-year 2025 financial guidance following a worse-than-expected first quarter performance, the company announced Tuesday. The retailer expects to report an adjusted operating loss of approximately $100 million for the first quarter, including a significant inventory write-down of about $75 million related to spring and summer merchandise, according to CNBC. Shares of the company plunged more than 16% in after-hours trading following the announcement.

The disappointing results mark a significant setback for the clothing retailer, which had previously forecast a low-single-digit revenue decline for fiscal year 2025. American Eagle cited “macro uncertainty” as a factor in its decision to withdraw guidance, noting that management is reviewing forward plans in light of the first quarter results, which fell far short of expectations.

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First Quarter Performance Details

The preliminary results revealed that American Eagle’s first quarter revenue declined approximately 5% compared to the same period last year, reaching about $1.1 billion. Comparable sales for the American Eagle brand fell 2%, while Aerie experienced a steeper 4% drop, according to Women’s Wear Daily. These results reflect a significant deterioration from the fourth quarter of 2024, when the company had shown some signs of stability.

CEO Jay Schottenstein expressed clear disappointment with the company’s performance, stating: “We are clearly disappointed with our execution in the first quarter. Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory. As a result, we have taken an inventory write-down on spring and summer goods.”

The inventory charge reflects the company’s decision to mark down excess seasonal merchandise, a move that significantly impacted profitability for the quarter. In addition to the $75 million inventory write-down, American Eagle also recorded $17 million in asset impairment and restructuring charges, primarily related to closing two fulfillment centers as part of its supply chain network optimization project.

External Factors and Retail Environment

The retailer’s struggles come amid a challenging economic environment for the retail sector. Ongoing geopolitical tensions, including President Trump’s trade war with China, have complicated the operating landscape for many retailers, introducing sourcing uncertainties and economic volatility, as noted by industry analysts.

While Washington and Beijing recently reached an agreement to reduce tariffs on Chinese imports from 145% to 30% for a 90-day period, the effects of these trade tensions continue to ripple through the retail supply chain. Analysts expect these developments could drive up ocean freight and transportation costs in the coming months as importers rush to bring in goods during the temporary tariff reduction.

American Eagle is not alone in facing these challenges. Several other retailers have recently issued weak guidance and cautious commentary about current macroeconomic conditions, warning that 2025 might be a weaker than expected year for consumer spending across the sector.

Strategic Response

In response to these challenges, American Eagle has initiated several strategic actions. The company is closing two fulfillment centers as part of a broader supply chain optimization effort, which management hopes will improve operational efficiency and reduce costs moving forward.

The retailer is also working to reduce its exposure to Chinese manufacturing. Earlier this year, the company reported that it sourced just under 20% of its products from China and was working to reduce that percentage to under 10% by the end of the fiscal year to mitigate tariff impacts.

Additionally, management indicated it is taking “proactive steps to strengthen the top-line, manage inventory and reduce expenses” as it navigates through what it characterizes as “an uncertain consumer and operating landscape.” These efforts align with the company’s previously stated goals of improving profitability, even as sales growth has remained elusive.

Looking Forward

American Eagle plans to report its final first quarter 2025 financial results on May 29, when the company will likely provide more details about its performance and strategic direction. Investors and analysts will be looking for clarity on whether the first quarter issues were primarily execution-related or if they reflect deeper structural challenges facing the retailer.

The withdrawn guidance creates significant uncertainty around American Eagle’s financial prospects for the remainder of 2025. Prior to this announcement, analysts had been expecting the company to maintain its profitability improvement trajectory despite modest sales declines. Those expectations will likely be revised downward following this announcement.

As American Eagle works to address its inventory challenges and adapt to changing consumer preferences, it joins a growing list of retailers struggling to navigate the complex economic and trade environment of 2025. The company’s ability to successfully execute its strategic initiatives will be critical to regaining investor confidence in the months ahead.

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