American Eagle Outfitters is reimagining its post-pandemic landscape. But for now, reminders of the coronavirus are everywhere.
The retailer, which includes the American Eagle and Aerie brands, posted first-quarter results Wednesday before the bell, falling short on both the top and bottom lines.
For the three-month period ending May 2, revenues were $552 million, down from $886 million the same time last year. By brand, American Eagle suffered the most, with top-line sales falling 45 percent, following a 5 percent increase in 2019’s first quarter. Intimates brand Aerie decreased 2 percent, compared with a 28 percent jump the same time last year.
The company reported a loss of $257 million, compared with profits of more than $40 million last year.
“Store closures and aggressive inventory liquidation had a significant impact on our first-quarter financials,” Jay Schottenstein, executive chairman of the board and chief executive officer of American Eagle Outfitters, said in a statement. “Yet customer engagement remained high and digital demand accelerated, well-exceeding our expectations. Aerie’s performance was truly exceptional despite store closures.”
The stock, which closed up 4.04 percent to $10.29 a share Tuesday, fell more than 5 percent during Wednesday’s premarket trading. Year-over-year, shares are down 42.5 percent.
The store closures caused impairment charges of about $156 million during the quarter. To help curb losses, the company reduced capital spending, furloughed in-store associates and drew down on its existing credit facility.
The retailer also used its digital and social media platforms to stay connected to consumers. A virtual prom hosted by American Eagle in May attracted more than 17,500 people.
Schottenstein told WWD in May that the increased digital efforts helped fuel strong online sales in March and April. Digital demand during the quarter, measured by ordered sales, increased 33 percent during the three-month period — or 75 percent at Aerie and 15 percent at American Eagle.
In addition, the company was able to use inventory from about 200 of its stores during shutdown to fill e-commerce orders, which helps keep in-store inventory fresh when they eventually do reopen.
Still, the added digital demand wasn’t enough to offset losses and the retailer was eager to reopen its physical stores.
By the first week of May, the company had reopened about 43 stores in a handful of states with enhanced safety precautions, such as face masks, employee temperature checks, social distancing markers on floors and curbside pickups.
At the time, Andrew McLean, chief commercial officer of American Eagle Outfitters, said the company was planning to open about 600 of its 1,000 locations by the end of May.
“I’m very pleased to see stores reopening strong, supported by industry-leading health and sanitization measures to ensure safe and secure stores for our associates and customers,” Schottenstein said in Wednesday’s statement. “American Eagle and Aerie will be well-positioned for the back-to-school and fall seasons. We will offer compelling new collections and deliver the best customer experiences. AEO entered this crisis with a strong balance sheet and two of the most recognized, trusted and loved brands. Recent liquidity measures will protect our financial strength and enable us to continue to invest in our business, further solidifying our competitive position. We view this moment as an inflection point to accelerate strategies to emerge stronger, leaner, and more agile to effectively win in a post-COVID-19 world.”