American Eagle Outfitters Inc, a popular apparel retailer, has reported lower-than-expected quarterly revenue as its online business faced a slowdown. The decline in online sales can be attributed to the increasing number of people getting vaccinated and the subsequent easing of COVID-19 restrictions. This resulted in a significant drop of 12% in the company’s shares, causing concern among investors.

During the second quarter, American Eagle experienced a 5% decrease in digital sales compared to the same period last year. This decline can be attributed to customers shifting their shopping preferences towards physical stores instead of online platforms. The company also faced stiff competition from e-commerce giants such as Inc.

Similarly, other major retailers like Target Corp and Gap Inc have also reported a slowdown in their digital sales in their latest quarterly reports. However, despite the decline, the digital sales figures for these retailers still remain higher than the pre-pandemic levels.

Despite the setback in online sales, American Eagle witnessed a significant increase of 73% in consolidated revenue from its physical stores compared to the second quarter of last year. This growth can be attributed to the reopening of stores and the recovery of in-person shopping.

The company’s Aerie brand, which is well-known for its lingerie and loungewear, demonstrated a strong performance with a remarkable 34% rise in revenue, reaching $336 million. Additionally, the sales of American Eagle’s main label also experienced a substantial increase of 35%, amounting to $846 million.

In terms of total net revenue, American Eagle reported a 35% increase, reaching $1.19 billion. However, this figure fell short of the estimated $1.23 billion by Refinitiv-IBES. The lower revenue can be attributed to the significant decrease in demand for apparel due to temporary store closures during the height of the pandemic.

Despite the challenges faced in the online business, American Eagle outperformed expectations in terms of its earnings per share. Excluding certain items, the company managed to earn 60 cents per share, surpassing the estimated 55 cents. This positive performance can be attributed to the company’s successful strategy of selling more products at full prices.

Overall, American Eagle encountered challenges in its online sales, but witnessed substantial growth in its physical stores and Aerie brand. The decline in online sales aligns with the broader trend seen in the retail industry, where many retailers have experienced a slowdown in digital sales compared to the peak of the pandemic. Despite these challenges, American Eagle remained resilient and surpassed earnings expectations.

Useful links:
American Eagle Outfitters Official Website
American Eagle Outfitters News on Reuters