A little more than a month ago, Robert Hanson resigned as CEO of American Eagle Outfitters, following disappointing holiday sales, and caused shares to drop 10%. Shares dropped again, nearly 7% this time, following what the company called “highly disappointing” fourth-quarter results.
“While tough macro conditions have persisted in our retail sector, our merchandise and overall customer experience fell short of expectations,” said interim CEO Jay Schottenstein. “We’re taking steps to bring greater focus and excitement to our product offering and better engage our core customers. Our brands remain incredibly strong and I’m confident in our ability to execute the strategic plan and resume long-term profitable growth.”
Total net revenue for the quarter decreased 7% to $1 billion from $1.1 billion for the 14-week period last year. Consolidated comparable sales for the quarter decreased 7% over the same 13-week period last year. This follows a 4% comparable sales increase last year.
Gross profit fell 28% to $332 million and decreased 930 basis points to 31.9% as a rate to revenue. The decrease was primarily the result of increased promotional activity and the deleverage of rent on negative comparable sales.
Adjusted earnings per share fell to $0.27 compared to $0.55 last year, a 51% decrease.
The teen apparel retailer said that business conditions remain challenging, with severe winter weather contributing to weak demand. Based on a high single-digit decline in comparable sales, the company expects first quarter earnings per share to be flat compared to adjusted earnings per share of $0.18 last year. The guidance excludes potential asset impairment and restructuring charges.