American Eagle Outfitters (NYSE: AEO) stock slid 6.4% through 10:50 a.m. ET Wednesday after preannouncing sales broadly in line with expectations, but warning of worse times to come.
Analysts are expecting AEO to report just under $1.1 billion in Q1 sales, and the company said last night it expects to hit that number — this time. Unfortunately, macroeconomic uncertainty prevented management from committing to hit its full-year numbers, and the company pulled its guidance for the rest of 2025.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Image source: Getty Images.
What American Eagle said
Assuming AEO hits its Q1 number, $1.1 billion in revenue would represent about a 5% year-over-year decline in sales at the retail clothier. Management broke the numbers down even further, anticipating a 3% decline in same-store sales, a 2% decline at the American Eagle brand, and Aerie down 4%.
Operating losses for the quarter could be as high as $85 million.
CEO Jay Schottenstein told investors he is “disappointed with our execution in the first quarter,” which was marred by “higher promotions” to clean out “excess inventory,” resulting in charges to earnings for inventory write-downs.
Is American Eagle stock a sell?
The good news is that recent developments in President Trump’s tariffs policy could lessen AEO’s troubles going forward. And Schottenstein said the company continues to “work with urgency” to repair its inventory problems.
The better news is that the stock is heading into these troubled waters in a decent position. Valued at less than 7x trailing earnings and less than 9x free cash flow, and paying a 3.9% dividend yield, AEO stock isn’t particularly expensive. If it can get through this current crisis and resume growing, it might turn out to be a good buy long term.
Should you invest $1,000 in American Eagle Outfitters right now?
Before you buy stock in American Eagle Outfitters, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Eagle Outfitters wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $613,951!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $796,353!*
Now, it’s worth noting Stock Advisor’s total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy.
