By Denny Jacob

American Eagle Outfitters shares decline 6.7% in premarket trading as investors weigh the company's ability to navigate a slower environment for consumer demand amid a broader pullback happening across the economy.

Shares were trading around $10.68. As of its Wednesday close, the stock was down about 50% over the prior year.

Analysts at Jefferies say American Eagle should see lower operating income as gross margins come under pressure due to soft demand trends. The clothing-and-accessories company behind the American Eagle and Aerie brands forecast margins to decline year over year both in the first quarter and for the year.

Jefferies analysts say they believe in the merchandising direction of the brands, but they also believe American Eagle "will not be immune from macro headwinds impacting the consumer, which could lead to softer top-line growth and pressure margins over the next twelve months."

American Eagle said business has been slower than expected in the first quarter, and those challenges may be amplified if prices for food and other staples limit how much consumers can spare for clothes and other discretionary items. Another factor in this backdrop is the threat that tariffs will bring in new complications for supply chains and raise prices across the board.

Chief Executive Jay Schottenstein said he is working on strengthening the top line and reducing expenses while navigating through an uncertain consumer and operating landscape.

Write to Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

March 13, 2025 08:54 ET (12:54 GMT)

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