American Eagle Outfitters‘ stock took a serious hit, as shares plunged almost 15% on Wednesday. This downturn follows the apparel retailer’s decision to withdraw its full-year guidance, a move that has raised concerns among investors about the company’s financial health. The announcement comes as the company continues to face a challenging sales environment and high levels of inventory.
Jay Schottenstein, executive chairman and CEO of American Eagle Outfitters, was understandably frustrated. Product execution in the first quarter was well below our expectations. He criticized the company’s merchandising initiatives as underwhelming. Consequently, they’ve needed to boost markdowns and take inventory write-downs for spring and summer merchandise.
We are obviously frustrated with our performance execution in those first quarters. Merchandising strategies weren’t the catalyst behind the positive results we expected, resulting in increased promotions and elevated inventory,” said Schottenstein.
Canadian-American teen-fashion juggernaut American Eagle Outfitters has seen its shares tanking over 37% on the year. This concerning trend means the company is on track for its third down year in the last four. The apparel industry is facing a perfect storm of headwinds. American Eagle faces the same situation as other retailers who have withdrawn their full-year guidance in recent weeks.
In other market news, Bank of America cut its rating on UnitedHealth, which similarly withdrew its full-year guidance. While this particular downgrade didn’t affect American Eagle Outfitters directly, analysts are drawing comparisons between both companies’ situations.
At the same time, Goldman Sachs announced an encouraging development, with its stock rising for a fifth straight day in a row. Disney has seen a box office winning streak that has extended to six days. The financial climate continues to fluctuate, but all news is not uniformly bad for those companies that are finding success.
On Wednesday, the S&P 500 closed up 0.7%. At the same time, the Nasdaq Composite soared 1.6%, to log its fifth straight day of gains. The Dow Jones Industrial Average dropped 0.6%, weighed down mostly by the anchor effect of UnitedHealth.
In yet another big step, eToro has now officially priced its IPO shares at $52. This injects even more momentum into the current wave of public offerings that has seized much of the fintech world. In addition to SoFi, Chime — a San Francisco-based neobanking unicorn — has filed documents to list on the Nasdaq.
Goldman Sachs recognized that funded customers were up about 120,000 mom in April, to 25.9M funded actives. This impressive growth is indicative of a bullish mood among retail investors amidst a bear market in most other asset classes.
Even with ongoing pressure from tariffs and supply chain shifts, several analysts find cause for optimism in the overall market forecast. Mark Haefele of UBS stated that although uncertainty persists regarding trade agreements and tariffs, tech valuations remain attractive for investors.
“Increased costs from supply chain relocations could pose challenges to tech companies,” Haefele warned. At the same time, he added that the risk-reward landscape for high-quality AI names remains positive.
Investors are still very much in the game, despite the market’s ups and downs. BMO Capital Markets’ Brian Belski thinks the up bull market in U.S. stocks is far from over. First, he cites solid underlying demand for U.S. equities, fueled by the dollar’s status as the world’s favorite asset.
In response to this news, Belski said that our overall findings haven’t changed. We have a very, very strong conviction that this 25-year, ongoing, secular bull market in U.S. stocks is alive and incredibly well.
He further remarked on the resilience of U.S. stocks amid external pressures, stating, “Evidence? Look no further than the ferocity of the price recovery in U.S. stocks.”
American Eagle Outfitters is on the watch list of many analysts. The company is still working to right its recent waves and return investor confidence. The apparel retailer’s upcoming results will prove pivotal in shaping its future direction in a quickly evolving, competitive landscape.