Why American Eagle Outfitters Stock Plunged Today

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.

Image source: American Eagle Outfitters.

American Eagle CEO Jay Schottenstein stated:

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.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.