American Eagle Outfitters Inc (NYSE:AEO) stock fell 2.83% (As on March 13, 11:48:39 AM UTC-4, Source: Google Finance) after the company reported fourth quarter earnings that beat analyst estimates, but the company provided weak guidance for the first quarter of 2025. Comparable sales increased 3% YoY, with the Aerie brand growing 6% and American Eagle up 1%. However, American Eagle warned of a slower start to the first quarter of 2025, citing weaker consumer demand and colder weather. Gross profit of $599 million. Gross margin of 37.3% reflected higher freight and product costs, offset by lower markdowns. BOW costs were roughly neutral. Selling, general and administrative expense of $402 million decreased 6% and leveraged 40 basis points. The improved rate was due to lower compensation, including incentive costs, partially offset by increased advertising. Operating income rose slightly to $142 million, reflecting an operating margin of 8.9%. This included an approximately $20 million adverse impact from one less selling week and the retail calendar shift. Total ending inventory decreased 1% to $637 million. Inventory is healthy and well positioned for the Spring season. Capital expenditures totaled $65 million in the fourth quarter and $223 million for fiscal year 2024.

AEO in the fourth quarter of FY24 has reported the adjusted earnings per share of 54 cents, beating the analysts’ estimates for the adjusted earnings per share of 51 cents. The company had reported the adjusted revenue decline of 4 percent to $1.6 billion in the fourth quarter of FY24, which is inline with the analysts’ estimates for revenue of $1.6 billion. This included approximately $85 million of adverse impact from one less selling week and the retail calendar shift.

Additionally, the company’s board authorized an additional 50 million shares for repurchase, bringing the total available to 68.5 million through February 2029. American Eagle repurchased 9.5 million shares for $191 million in fiscal 2024.

The company expects revenue to decline in the mid-single digits for Q1, with operating income projected between $20 million to $25 million. Looking ahead to fiscal 2025, American Eagle projects a low-single digit revenue decline and operating income between $360 million to $375 million, reflecting near-term headwinds in the consumer environment. The company expects 2025 capital expenditures to be approximately $300 million. This includes a one-time $40 million cost of relocating to a new Manhattan office, which provides more favorable lease terms.