American Eagle loses 257 million dollars during lockdown

Like virtually every retailer across the globe, American Eagle took a hit during the coronavirus lockdown. The company has announced first quarter results, and they have lost 257 million dollars. Revenue for the period ending May 2 was 552 million dollars, down from 886 million dollars the same time last year. American Eagle owns both the American Eagle brand and intimates brand Aerie. Of the two brands, American Eagle took the worst hit with top-line sales falling 45 percent.

The sweet spot for American Eagle came from online sales of Aerie, but that wasn't enough to help the company's overall bottom line. The company's 257 million dollar loss was abysmal compared to their 40 million dollar profit last year.

“Store closures and aggressive inventory liquidation had a significant impact on our first quarter financials,” Jay Schottenstein, executive chairman of the board and chief executive officer of American Eagle Outfitters, 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.”

All of American Eagle's North American stores were closed to stop the spread of coronavirus. To help curb losses, the company furloughed stores associates, reduced capital spending, and drew down on its existing credit facility.

American Eagle has been focusing on its digital efforts, which have helped drive traffic to their e-commerce platforms and ameliorated any further loss of sales and profitability. American Eagle also used its store inventory to fulfill e-commerce orders, therefore reducing the inventory for stores that have reopened or will be reopening soon, preventing the need to offload with steep markdowns.

As of the first week of May, American Eagle reopened 43 stores. The company has put strong health and safety measures in place for sales associates and customers. They are expecting a strong rebound later in the year for back-to-school sales, which are typically strong for the retailer.

photo: via Business Wire