American Eagle (NYSE: AEO) shares plummeted Thursday following the report of disappointing earnings. Amid the slow down of the company’s ecommerce business, second-quarter revenue fell short of analysts’ estimates. Shares fell 9% in early morning trading following the news.
According to management, back-to-school sales have also been pushed back, shifting out of the current quarter.
The retailer reported earnings of USD0.60 per share, compared to the expected USD0.55 a share. Nevertheless, revenue amounted to USD1.19 Billion, lower than analysts anticipated USD1.23 Billion.
“We are running our business with a laser focus on profitability through inventory and real-estate optimization initiatives and investments to enhance our supply chain,” said Jay Schottenstein, CEO of American Eagle. “Despite external challenges, I believe we are on path to achieve $600 million in operating income this year, well ahead of our previous target.”
As a means of increasing profitability throughout the summer, American Eagle cut back on promotions and restrained costs.
“We’ve learned that you can still move a lot of goods without discounting,” Schottenstein said in a phone interview. “Our stores are very productive.”
American Eagle did not offer a financial outlook for the approaching quarter or the year. Nevertheless, the company claims it is on track to reach its prior three-year goals. The retailer predicts revenue will hit USD5.5 Billion by fiscal 2023.
The company’s shares have risen 50% throughout the year and has a current market cap of USD5.04 Billion.