American Eagle Outfitters joined the chorus of retailers reporting sales growth for the most recent fiscal quarter, but it provided a cloudy outlook for 2025 because of concerns about the state of the U.S. consumer. In the fourth quarter of fiscal year 2024, the company’s comparable sales rose by 3 percent, down from an 8 percent increase a year prior. Operating income rose slightly to $142 million, reflecting an operating margin of 8.9 percent.
Sales were driven by record revenue growth from American Eagle’s Aerie brand, which saw a 6 percent increase in comparable sales. Meanwhile, comparable sales growth for the American Eagle Outfitters brand lagged significantly, with only a 1 percent increase.
Jay Schottenstein, CEO of American Eagle Outfitters, attributed the rise in sales and operating income to the company’s progress in executing what he termed its “powering profitable growth plan.”
“[The year] 2024 demonstrated significant progress on our Powering Profitable Growth Plan,” he said in a statement issued following the release of the financial results. “The team delivered strong operating profit growth with positive momentum across our brands and channels, as well as disciplined expense management and operating efficiencies.”
The second pillar involves executing the plan with financial discipline in a manner structured to deliver consistent profit growth and shareholder returns.
The third pillar involves optimizing operations: leveraging best-in-class operating capabilities to fuel a roadmap for growth and profit.
The company’s management expects its growth plan to deliver annual operating income expansion in the mid-to-high teens, with 3 percent to 5 percent annual revenue growth over the next three years and an approximate 10 percent operating margin.
However, management’s guidance for the rest of the year was cautious because of an uncertain consumer spending environment.
“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” Schottenstein said.
“While we anticipate improvement as the Spring season gets underway, we are also taking proactive steps to strengthen the top line, manage inventory, and reduce expenses. As we navigate through an uncertain consumer and operating landscape, we will also remain focused on our long-term strategic priorities.”
Wall Street remains focused on the word “uncertainty” rather than the promise of the American Eagles Outfitters’ growth plan, which sent the company’s shares 4.1 percent lower on March 13. Over the past five years, the company’s shares have gained just 9 percent, trailing the S&P 500 Index, which gained 104 percent over the same period.
“With the American Eagle brand’s slow growth, it seems that many shoppers are tightening their belts and being more careful about where they spend their money,” Georgios Koimisis, economics and finance associate professor at Manhattan University, told The Epoch Times via email. “This overall decline in revenue, partly due to fewer selling days and a tough retail calendar, reinforces the idea that consumers are more selective and may be reducing discretionary spending during uncertainty.
“On the other hand, the stronger performance of the Aerie brand suggests that some consumers are still willing to invest in products they perceive as higher quality or more aligned with current trends. This indicates a shift in consumer behavior where they might prioritize spending on brands or items that offer better value or meet their lifestyle needs, even if they are cutting back in other areas.”
Koimisis said he sees the market becoming more segmented as consumers become more selective and spending slows down. “This spending behavior could encourage retailers to adjust their strategies by emphasizing quality, value, and targeted promotions to meet consumer expectations better,” he said.
