American Eagle Outfitters lowers 2Q earnings guidance

American clothing and accessories retailer American Eagle Outfitters Inc (AEO) lowered its second-quarter earnings guidance, citing weaker than expected sales and margin results. The company revealed that its revenue decreased about 2% for the period, while same-store sales, including AEO Direct, fell 7% compared to an 8% increase in the year-earlier period.

“We are quite unhappy with our second quarter results, which were impacted primarily by a disappointing performance of our AEO women’s assortment and weak traffic. Results were exacerbated by a highly promotional retail environment, which intensified over the course of July. Within this context, we increased the depth and breadth of markdowns, which enabled us to achieve a clean inventory position moving into the third quarter,” says chief executive Robert Hanson.

AEO started this fiscal year with a drop in revenue and provided a cautious outlook for the rest of year. It has been operating in an intensely competitive environment marked by bargain-hunting consumers, deep promotions and the rise of fast-fashion peers such as H&M and Forever 21 Inc, among others.