The Pittsburgh-based teen retailer cut its second-quarter earnings guidance to approximately 10 cents a share compared to earnings from continuing operations of 21 cents a share a year earlier.
The company had previously expected the quarter's earnings to be between 19 cents and 21 cents a share, based on flat comparable sales.
The revised outlook is due to "weaker than expected sales and margin results," American Eagle said in a press release on Monday.Shares plunged 16.1% to $16.75 after the markets closed on the news. The company's total net revenue decreased approximately 2% for the quarter. It said, however, that overall comparable sales, which include its online platform, declined 7%. Second-quarter comparable sales are compared to the 13 weeks ended August 4, 2012. American Eagle's comparable sales rose 8% in the year-earlier period. "We are not at all happy with our second quarter results, which were impacted primarily by a disappointing performance of our AEO women's assortment and weak traffic," CEO Robert Hanson said in a statement. "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; these actions have enabled us to achieve a clean inventory position moving into the third quarter." That said, the company's direct business posted an increase in the "low double-digits," Hanson said. Other areas that also had better performance included its men's business, aerie, factory stores and international markets. "Our efforts are keenly focused on strengthening our women's business and ensuring our assortments are compelling, innovative and balanced across core, core fashion and fashion," Hanson said. "The domestic retail environment remains challenging, however, we have a strong sense of urgency and believe we are focused on the right actions to regain traction, deliver strong returns and profitable growth." American Eagle will release its full quarterly earnings report on Aug. 21, 2013. -- Written by Laurie Kulikowski in New York. Follow @LKulikowski To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com. >To submit a news tip, email: email@example.com.
Follow TheStreet on Twitter and become a fan on Facebook.