American Eagle Outfitters' Q2 Earnings Likely To Face Inflation Heat, Says Analyst

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  • Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of American Eagle Outfitters Inc AEO and lowered the price target to $15 (33% Upside) from $17.
  • Telsey moderated the estimates reflecting industry-wide challenges driven by persistent macro pressures weighing on both retailers and consumers.
  • In both Q2 and the back half of the year, the analyst anticipates a challenging environment for both the top line and margins due to current inflationary cost pressures on both the company and the customer.
  • Despite expectations for improved margins and profitability in H2 due to more balanced inventory levels and a lower cost base, the analyst views that visibility remains challenging.
  • The analyst estimates the gross margin to contract 930 bps to 32.8% against the consensus estimate of 33%.
  • As a result of the softer first-quarter sales, inventory levels were elevated heading into Q2, and increased promotional activity will impact gross margin.
  • The company will report Q2 earnings on September 7, 2022, after the market close.
  • Price Action: AEO shares are trading lower by 4.12% at $11.28 on the last check Wednesday.
  • Photo Via Wikimedia Commons
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