American Eagle Outfitters Inc, a popular apparel retailer, has found itself in a precarious situation due to the coronavirus pandemic. The company has withdrawn its full-year forecast and anticipates that its current-quarter results will be significantly impacted by store closures. As a result, the news sent shockwaves through the market, causing the company’s shares to plummet by 14% on Wednesday.
Even before nationwide store closures were announced in March, American Eagle had already been feeling the effects of a decline in customer traffic and decreasing demand. In response to these challenges, the company has implemented a range of measures to weather the storm. Among these measures are the suspension of the share buyback program, furloughing employees, deferring its first-quarter dividend payout, and raising $400 million in an effort to mitigate the effects of the pandemic.
Looking ahead, American Eagle remains uncertain about how quickly store traffic will rebound to pre-pandemic levels once stores are allowed to reopen. This uncertainty raises concerns about the company’s full-year sales and suggests that there may be further negative impacts to come. To counter some of these challenges, American Eagle plans to introduce a curb-side pick-up service, a strategy that has been successful for other non-essential retailers during these trying times.
The consequences of the pandemic have already taken a toll on American Eagle’s stock price, which has dropped by nearly 50% since the beginning of the year. On Wednesday, the company experienced another blow as its shares fell by as much as 15% to $7.10.
As American Eagle Outfitters grapples with the uncertainties brought about by the coronavirus outbreak, it serves as a microcosm of the wider retail industry. The impact of the global health crisis on the retail sector remains to be seen, and it is a challenge that all retailers must navigate in the coming months.