What happened

Shares of American Eagle Outfitters (NYSE:AEO) lost 14.7% on Wednesday after the clothing and accessories retailer announced disappointing first-quarter 2017 results.

So what

Quarterly revenue increased 1.7% year over year to $761.8 million, including 2% growth in consolidated comparable sales. That translated to adjusted net income of $28.7 million, or $0.16 per share, down from adjusted earnings of $0.22 per share in the same year-ago period. These results were mixed relative to expectations; analysts' consensus estimates predicted higher adjusted earnings of $0.17 per share on lower revenue of $741.7 million -- though investors should also keep in mind American Eagle bolstered its per-share earnings by repurchasing 6 million shares during the quarter for $22 million.

AEO Jeans storefront

Image source: American Eagle Outfitters.

American Eagle CEO Jay Schottenstein stated:

The first quarter results reflected mall traffic headwinds, especially early in the quarter, with improved trends over Easter and a strong digital business throughout. As we look ahead, we are taking the right steps to improve our results and adjust our business for today's rapidly evolving retail environment. We are creating efficiencies across our organization, as we aim to continue capitalizing on the strength of our brands, product leadership and other competitive advantages. 

Now what

For the current quarter, American Eagle expects comparable-store sales in the range of flat to a low-single-digit percent decline from last year's second quarter. That should result in second-quarter adjusted earnings per share of $0.15 to $0.17 -- or significantly below the $0.23 per share investors were expecting.

American Eagle might well be making the right moves to successfully weather this tough retail environment, but given its mixed first-quarter results and disappointing earnings outlook, it's no surprise to see investors putting American Eagle shares back on the rack today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.