Shares of American Eagle Outfitters (AEO) - Get Report rose sharply Wednesday, despite a report from the clothes and accessories retailer showing a bigger-than-expected loss and lower-than-expected revenue for the quarter ended May 2.
The coronavirus pandemic hit the company hard, with stores closed and would-be buyers stuck at home. American Eagle expects to suspend its dividend for the remainder of the year. Nevertheless, shares were rising 15.2% to $11.85 on Wednesday morning.
The company reversed to a net loss of $257.2 million, or $1.54 a share, for the latest quarter from profit of $40.8 million, or 23 cents a share, in the year-earlier quarter.
Leaving out non-recurring items, such as impairment and restructuring charges, the adjusted loss per share registered was 84 cents, compared to adjusted EPS of $0.24 last year.
Analysts polled by FactSet loss expected an adjusted loss of 30 cents per share in the latest quarter.
Revenue plummeted 37.7% in the latest quarter to $551.7 million from $886.3 million a year ago. Analysts had forecast $636.6 million for the latest period.
“Store closures and aggressive inventory liquidation had a significant impact on our first quarter financials,” American Eagle CEO Jay Schottenstein said in a statement.
“Yet customer engagement remained high and digital demand accelerated, well-exceeding our expectations. Aerie’s performance was truly exceptional despite store closures.”
Digital revenue rose 9% in the latest quarter. And while the American Eagle brand’s revenue decreased 45%, following a 5% increase last year, Aerie’s revenue decreased only 2%, following a 28% increase last year.