American Eagle Outfitters Inc.’s business started off slowly this year, but chief executive officer Jay Schottenstein was hopeful that business would turn, saying in March that “we anticipate improvement as the spring season gets underway.” 

Those hopes were dashed on Tuesday when the company issued a profit warning for the first quarter and pulled its outlook for the year, citing “macro uncertainty.”

Investors reacted right away, trading shares of American Eagle Outfitters down 16.3 percent to $10.65 in after-market trading.

The company had already been looking for a low-single-digit revenue decline for 2025 — now the rest of the year is much murkier.

“We are clearly disappointed with our execution in the first quarter,” said Schottenstein, who is also executive chairman, in a statement. “Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory. As a result, we have taken an inventory write-down on spring and summer goods.” 

Revenues for the first quarter hit the company’s forecast for a midsingle-digit decline and fell about 5 percent to $1.1 billion. American Eagle’s comparable sales were down 2 percent, while Arie was off 4 percent. 

But those sales came at a high cost. 

The company forecast a net operating loss of about $85 million and an adjusted operating loss of around $68 million. 

That’s well below the $20 million to $25 million in operating income the retailer forecast, a miss the company attributed to “higher than planned promotional activity in the quarter and an inventory charge of roughly $75 million related to a write-down of spring and summer merchandise.”

The net operating loss also included $17 million in asset impairment and restructuring charges to close two fulfillment centers as part of an optimization effort. 

“We have entered the second quarter in a better position, with inventory more aligned to sales trends,” Schottenstein said. “Additionally, we are actively evaluating our forward plans. Our teams continue to work with urgency to strengthen product performance, while improving our buying principles.” 

American Eagle Outfitters will report its final first-quarter results on May 29 as publicly held retailers of all stripes reveal financials for the start of the year. 

It looks set to be a particularly fraught earnings season. Retailers and consumers have both been dealing with the ebbs and flows of President Trump’s trade war, which complicated the season with hairpin sourcing reversals and economic uncertainty. 

While Washington and Beijing ratcheted down the pressure this week — cutting tariffs on Chinese imports to 30 percent from 145 percent for 90 days — the geopolitical tensions are still working their way through the trading system. 

“Over the next 90 days, we expect an increase in imports, which could drive up ocean freight and transportation costs,” said Arun Sundaram, an analyst at CFRA. “This may lead to supply chain bottlenecks, though likely less severe than the 2021-2022 supply chain crisis…

“The key question is how much inflation relief this deal truly offers,” Sundaram said. “While the tariff rollback offers short-term benefits, 30 percent duties (which may rise again) and ongoing logistics risks could limit the impact. That said, the reprieve gives retailers and manufacturers more time to diversify supply chains and reduce reliance on China.”