(Reuters) -American Eagle Outfitters Inc on Wednesday missed Wall Street estimates for adjusted profit and said it would pause quarterly dividend as it fortifies its finances against a hit from inflation, sending its shares down 13% after market.
The company would also put a hiring freeze, reduce non-critical expenses and lower capital spending, Chief Executive Officer Jay Schottenstein said in an earnings call.
With the United States on the edge of a recession, and prices of food and everyday essentials exceptionally high, consumers are limiting expenditure on discretionary items such as apparel, hurting major U.S. retailers including Walmart Inc, Target Corp and Kohl’s. nL4N2ZZ3DW]
Aerie maker American Eagle, which continues to battle higher freight and labor costs, said its gross margins depleted in the quarter ended July 30, further pressured by steeper discounts and increased promotional activity to get rid of excess spring and summer goods.
The company’s net revenue came at $1.20 billion, compared with $1.19 billion a year earlier, in-line with analysts’ expectation, according to IBES data from Refinitiv.
Excluding items, American Eagle earned 4 cents per share, largely below estimates of 13 cents.
The company had paid shareholders a dividend of 18 cents in the previous quarter.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli)
