American Eagle Pulls 2025 Outlook On Sluggish Shopping Trends, Inventory Glut — Retail Brushes Off ‘Panic Selling’

American Eagle Outfitters (AEO) shares dropped over 13% in extended trading on Tuesday, after the fashion retailer withdrew its annual forecast and said it spent too much on promotions and built up excess inventory.

The company attributed the decision to sluggish consumer spending and certain strategic initiatives that did not deliver the desired results.

American Eagle also posted preliminary first-quarter results, with about $1.1 billion in sales expected. That would mark a 5% drop from last year.

Comparable sales are expected to be down about 3%.

Analysts polled by FactSet expect $1.08 billion sales in Q1 and comparable sales to drop 2.6%.

“We are clearly disappointed with our execution in the first quarter," CEO Jay Schottenstein said in a statement.

"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 complete quarterly results will be published on May 29.

The apparel and accessories retailer also guided for an operating loss of roughly $85 million in Q1, and an adjusted operating loss of approximately $68 million.

The loss reflects higher-than-planned promotional activity in the quarter and an inventory charge of roughly $75 million related to a write-down of spring and summer merchandise, the company said.

Schottenstein, however, said the company is better positioned in the ongoing quarter "with inventory more aligned to sales trends."

On Stocktwits, retail sentiment jumped to 'extremely bullish' from 'bearish' the previous day.

A user recommended buying the stock after what they said was "panic selling."

Through Tuesday’s close, American Eagle stock is down nearly 24% year to date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.