American Eagle shares plunge 17% after it withdraws guidance, writes off $75 million in inventory

American Eagle Shares Plummet as Retailer Faces Economic Headwinds
A Shocking Drop in Stock Value
On May 13, 2025, American Eagle Outfitters, the iconic apparel retailer, sent shockwaves through Wall Street as its shares nosedived by 17% in after-hours trading. The Pittsburgh-based company, known for its trendy jeans and casual wear, announced a drastic withdrawal of its full-year financial guidance for 2025, citing "macro uncertainty" and disappointing first-quarter performance. Adding fuel to the fire, the retailer revealed a hefty $75 million inventory write-off tied to its spring and summer merchandise, signaling deeper challenges in an already turbulent retail landscape.
This dramatic turn of events has left investors rattled and analysts scrambling to unpack what went wrong. At Noyzy News, we dive into the details behind American Eagle’s stumble, explore the broader economic forces at play, and consider what this means for the retailer’s future.
Why Did American Eagle Pull the Plug on Its Forecast?
A Perfect Storm of Challenges
American Eagle’s decision to retract its 2025 guidance stems from a combination of internal missteps and external pressures. The company admitted that its first-quarter results fell short of expectations, with preliminary figures showing a 5% revenue drop to $1.1 billion. Comparable sales also took a hit, declining 2% for the American Eagle brand and 4% for its Aerie intimates line. These numbers paint a picture of a retailer struggling to connect with consumers in a highly competitive market.
The $75 million inventory write-off is a particularly stinging blow. This charge reflects the devaluation of spring and summer merchandise that failed to resonate with shoppers, forcing the company to slash prices through aggressive promotions. CEO Jay Schottenstein didn’t mince words, stating, “Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory.” This admission highlights a critical miscalculation in predicting consumer demand, leaving American Eagle with piles of unsold shorts, tees, and other seasonal staples.
Tariff Troubles and Economic Uncertainty
Beyond internal issues, American Eagle is grappling with broader economic headwinds. The retailer pointed to “macro uncertainty” as a key reason for abandoning its guidance, with much of the blame directed at looming tariffs. In March, company executives estimated that tariffs imposed by the Trump administration on Chinese imports could shave $5 million to $10 million off annual margins. These trade policies, combined with fluctuating consumer confidence, have created a murky outlook for retailers reliant on global supply chains.
The impact of tariffs isn’t unique to American Eagle. Other major players, including American Airlines and Apple, have recently cited tariff-related costs as significant hurdles. For American Eagle, the combination of higher import costs and sluggish demand has squeezed profitability, forcing the company to rethink its strategy in real time.
A Deeper Look at the Numbers
First-Quarter Woes
American Eagle’s preliminary first-quarter results reveal the extent of its struggles:

Revenue: Down 5% to $1.1 billion, aligning with earlier projections but signaling weakness.
Comparable Sales: A 3% overall decline, with American Eagle at -2% and Aerie at -4%.
Operating Loss: An adjusted operating loss of $68 million, far worse than the anticipated $20–25 million operating income.
Additional Charges: A $17 million restructuring charge tied to the closure of two fulfillment centers as part of a supply chain optimization effort.

These figures underscore the challenges of navigating a retail environment where consumers are tightening their wallets and competition is fierce.
Inventory Write-Offs: A Symptom of Bigger Issues
The $75 million inventory write-off is more than just a financial hit—it’s a red flag for operational inefficiencies. Retailers like American Eagle rely on precise inventory management to avoid overstocking or understocking. The massive write-down suggests that the company overestimated demand for its spring and summer collections, possibly due to misaligned trends or failure to adapt to shifting consumer preferences. Posts on X echoed this sentiment, with one user noting, “No one is buying shorts??? Yikes,” highlighting the disconnect between American Eagle’s offerings and market demand.
What’s Next for American Eagle?
Course Correction in Progress
Despite the grim news, American Eagle is taking steps to stabilize its operations. The company reported entering the second quarter with inventory levels better aligned with sales trends, a promising sign of improved forecasting. Additionally, the closure of two fulfillment centers is part of a broader effort to streamline its supply chain, potentially reducing costs in the long run.
Schottenstein emphasized that the company is “actively evaluating its forward plans,” suggesting a strategic overhaul may be on the horizon. This could involve rethinking merchandising, doubling down on digital channels, or exploring new markets to offset domestic challenges.
The Road Ahead
American Eagle’s full first-quarter results, set to be released on May 29, will provide further clarity on its path forward. Investors will be watching closely for signs of recovery, particularly in comparable sales and margin performance. Meanwhile, the retailer’s ability to navigate tariff pressures and restore consumer confidence will be critical to regaining its footing.
The Bigger Picture: Retail in a Tariff-Driven World
American Eagle’s woes are a microcosm of the challenges facing the retail sector in 2025. Tariffs, inflation, and shifting consumer behaviors are creating a perfect storm for companies reliant on discretionary spending. As seen with other retailers like Levi’s and VF Corporation, which have also flagged tariff concerns, the industry is at a crossroads. Those that adapt quickly—through agile inventory management, localized sourcing, or innovative marketing—will likely emerge stronger, while others risk being left behind.
Conclusion: A Wake-Up Call for American Eagle
American Eagle’s 17% stock plunge and $75 million inventory write-off serve as a stark reminder of the retail industry’s volatility. While the company’s missteps in merchandising and inventory planning played a significant role, external factors like tariffs and economic uncertainty have compounded its challenges. As American Eagle works to reset its strategy, the coming months will test its resilience and adaptability in a rapidly changing market.
At Noyzy News, we’ll continue to track this story, bringing you the latest updates on American Eagle and the broader retail landscape. Stay tuned for more insights into the trends shaping the world of business and beyond.
Sources: Reuters, CNBC, Benzinga, Investopedia, WWD, and posts on X.