What happened
Shares of American Eagle Outfitters stock jumped more than 6% in early trading Wednesday before settling down to about a 4% gain as of 2:50 p.m. EST. The stock price movement comes in response to AE’s third-quarter 2020 earnings report, which was released after close of trading Tuesday evening.
In this report, AE reported earning $0.35 per share pro forma, which was ahead of analyst estimates, on sales of $1.03 billion, which met expectations.
So what
Earnings when calculated according to generally accepted accounting principles came in at $0.32, down roughly 33% from the $0.48 per share earned in last year’s Q3, and sales declined 3%. But even so, CEO Jay Schottenstein said the results “exceeded our expectations” — and Wall Street’s as well.
Sales at the company’s flagship American Eagle stores declined 11% year over year, largely tied to “mall traffic declines related to COVID-19,” but sales at AE’s Aerie lingerie business grew 34% year over year, and digital sales grew 29%.
Now what
American Eagle did not provide guidance for what to expect in the fourth quarter, or for the year as a whole, but analysts are optimistic that things are continuing to improve at the clothing chain. Street forecasts envision sales declining only 1% this current quarter (much better than the expected 13% decline for the year), although profits will probably sink further — down another 14% in Q4 — and AE is expected to end up booking a loss for the year.
