American Eagle Outfitters saw a particularly poor first quarter with earnings plunging 86 percent, and the company has said it will look to close 150 stores over the next three years.
The teen retailer released its first quarter financials Wednesday and interim CEO Jay Schottenstein, who was appointed to the temporary position in January, said the dismal results reflected weak sales and increased markdowns, but were in line with expectations.
“We are committed to improved profitability and are working hard to implement our plan to strengthen our brands, channels and operations. Specific actions underway include continuing to build strong omni-channel capabilities, rationalizing our store fleet, reducing expenses, growing international licensed stores, and most importantly, delivering great merchandise and customer experience across our brands. Our focus is on leveraging our strong brands and talented team in order to deliver long-term profitable growth and enhanced value for our shareholders,” Schottenstein said.
For the quarter ended May 3, 2014, earnings totaled $3.9 million, or $0.02 per diluted share, compared to $28 million, or $0.14 per diluted share in the same quarter last year.
American Eagle opened 11 new stores in the U.S., Mexico and China this year and closed 20, but following a review of its real estate, the company has decided to close an additional 150 stores in North America over the next three years. This year, the retailer will close 50 American Eagle stores and 20 of its Aerie locations.
Store closures have been rampant in retail, and particularly in the teen apparel sector. Abercrombie & Fitch, one of American Eagle’s chief competitors, has said it plans to close 180 stores by 2015 and Aeropostale said recently that it would shutter 125 of its P.S. from Aeropostale tween-focused stores.
American Eagle expects breakeven second quarter earnings based on a high single-digit decline in comparable sales. In the second quarter last year, earnings totaled $0.10 per diluted share.