(Reuters) -American Eagle Outfitters cut its target for annual comparable sales growth on Wednesday, in signs that apparel demand could be erratic during the holiday shopping season, sending its shares down 13% in extended trade.
Competition has heated up in the apparel space as companies vie for shoppers who are being cautious about their non-essential spending, with a focus on fresh styles and nifty marketing.
While some apparel companies, including Gap and Abercrombie & Fitch, have benefited from demand for their popular casual wear styles, a holiday shopping season marked by discerning shoppers and high promotions has forced most retailers to be cautious about their expectations in the key sales period.
“Key selling periods have seen a positive customer response, yet we remain cognizant of potential choppiness during non-peak periods,” said CEO Jay Schottenstein.
The Aerie parent now expects annual comparable sales growth of about 3%, compared with prior expectations for a roughly 4% rise.
Unusually warmer weather in the U.S. also hit apparel sales during the third quarter, while higher discounts also weighed on margins for the company.
American Eagle (NYSE:) reported quarterly revenue of $1.29 billion, compared with estimates of $1.30 billion, as per data compiled by LSEG.
The company also recorded an $18 million impairment and restructuring charge as it looks to cut costs, and said it had changed its Hong Kong retail operation from company-owned to a licensed model.
Excluding items, the company earned a profit of 48 cents per share, ahead of the 46 cents expected by analysts.
