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AMERICAN Eagle Outfitters forecast annual revenue below expectations on Wednesday, becoming the latest US apparel maker to signal a demand slowdown for clothing and accessories as well as a hit to margins from President Donald Trump’s tariffs on China.
Shares of the Aerie activewear brand maker fell 5 percent in extended trading.
Apparel makers and retailers, such as Walmart and Target, have struck cautious expectations for the year as an uncertain economy, burdened by Trump’s seesaw tariff announcements, has turned shoppers discerning on buying nonessential items.
“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” said CEO Jay Schottenstein.
In early March, Abercrombie & Fitch also flagged a weaker start to 2025.
American Eagle expects fiscal 2025 revenue to decline in the low-single-digit percentage range, while analysts were expecting a 2.97-percent rise to $5.49 billion, according to data compiled by LSEG.
The company sees annual operating income to be in the range of $360 million to $375 million, compared to $427 million in 2024.
CFO Michael Mathias noted on the post-earnings call that tariffs would have an adverse impact of $5 million to $10 million.
In March, Trump increased tariffs on all Chinese imports to 20 percent from the previous 10-percent levy, fur-ther fueling a trade war expected to raise prices of products in the United States.
“We’re also actively working to further diversify our supply chain to mitigate tariffs,” Mathias said.
He added the company is working to make imports from China in the single-digit percentage range toward the back half of this year, from the current high-teens percentage.
Its quarterly revenue fell 4.4 percent to $1.61 billion, compared to estimates of $1.60 billion. Profit per share of 54 cents came ahead of expectations of 50 cents.
“AEO represents yet another company posting a solid holiday quarter but opting to guide cautiously in light of the uncertainty in the market, echoing the general theme seen across retail earnings this cycle,” BMO Capital Markets analyst Simeon Siegel said.
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