American Eagle Reports Wider-Than-Expected Loss, Downbeat Forecast: Retail Bullish After Stock's Slide

American Eagle Outfitters (AEO) reported fiscal-first quarter results below Wall Street expectations on Thursday, dragging its shares down 7% in extended trading.

The apparel brand reported a loss of $0.36 per share, higher than the $0.25 per share loss analysts had expected, according to FactSet. In the year-ago quarter, the company earned $0.34 per share.

Revenue fell 4.4% to $1.09 billion, in line with expectations, and comparable sales were down 3%.

“The first quarter was a challenging period for our business,” CEO Jay Schottenstein said in a statement.

“While we are disappointed with the results, we are taking actions to better position the company and drive stronger performance in the upcoming quarters."

Earlier this month, the company published indicative numbers for the said quarter and withdrew its annual forecast.

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

In the quarter, American Eagle booked a $75 million charge related to a write-down of its spring and summer merchandise inventory.

The company expects a 5% decline in revenue in the current quarter, compared to the Street estimate of a 4% drop, and a 3% drop in comparable sales. 

On Stocktwits, the retail sentiment, however, shifted to 'extremely bullish' from 'neutral' the previous day.

A user indicated that the poor results were already priced in the shares, and the further drop is now an opportunity to buy the stock.

American Eagle shares are down 33% year to date.

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