Of all the retail segments hard hit by the COVID-19 pandemic, clothing retailers may have it the worst. Besides the lost business, seasonal inventory also has to be replaced. Today's reported quarterly results from American Eagle Outfitters (NYSE:AEO) reflect those hardships, but also show signs of hope for the future.
Though revenue was down 38% versus the year-ago quarter, and losses were reported at $1.54 per share, online digital "ordered sales" increased 33%, with its Aerie brand shooting up 75%, for the quarter ending May 2, 2020. However, online reported revenue only increased 9%, due to "temporary delays in fulfillment." This also led to an increased inventory backlog, though the company said backlogs have come down since the peak in mid-April.
The company said it is clearing out spring and summer merchandise and preparing to bring in back-to-school collections in late July. It also continues to react to the pandemic by working to bolster liquidity. It previously had deferred its first-quarter dividend until 2021. Now American Eagle said it is suspending the second-quarter dividend, and "at this point does not anticipate declaring a dividend for the rest of this year." It also said it was reducing 2020 capital spending plans, and "prioritizing strategic customer-centric and supply chain investments."
Company chairman and CEO Jay Schottenstein said he considers store reopenings strong, and views "this moment as an inflection point to accelerate strategies to emerge stronger, leaner, and more agile to effectively win in a post-COVID-19 world."