American Eagle Outfitters Inc. lowered its full-year revenue projection as apparel demand slowed due to ongoing high inflation.
In the United States, higher rent and product prices affected consumer spending, lowering demand for luxuries as cash-strapped consumers focused on necessities like groceries.
In contrast to its previous projection of flat to up low-single digits, the company now anticipates annual revenue to be flat to down low-single digits.
Its competitor Abercrombie & Fitch Co., in contrast, increased its full-year sales prediction earlier, relying on its efforts to stock shelves with in-demand items and steady demand from its affluent customers.
While its eponymous segment reported a 2 per cent decline, American Eagle saw revenue for Aerie, a subsidiary that produces sportswear, swimwear and bralettes, grow 12 per cent in the first quarter. Aerie profited from consumers staying at home once the pandemic struck.
Benefiting from decreased transportation, compensation, and delivery costs, the corporation reported a quarterly gross margin rate of 38.2 per cent, up from 36.8 per cent a year earlier.
Major American corporations have been dealing with greater transportation and raw material expenses ever before the pandemic started, which has reduced profit margins in prior quarters.
However, the majority of retailers have found some solace in the gradual easing of such prices and lower clearance discounts.
According to Refinitiv data, American Eagle’s first-quarter sales increased by 2.5 per cent to US $ 1.08 billion, exceeding analysts’ average expectation of US $ 1.07 billion.