American Eagle swings to a £204.39 million net loss in Q1 due to Coronavirus restrictions

American Eagle (NYSE: AEO) Outfitters released its quarterly financial results on Wednesday that showed its loss to have widened in the first quarter. The company attributed its downbeat performance to the Coronavirus pandemic that pushed its retail stores into temporarily shutting down. Learn more about profit and loss statement.

Shares of the company were reported about 10.5% down in premarket trading on Wednesday. At £9.40 per share, American Eagle is roughly 20% down year to date in the stock market after recovering from a low of £5.36 per share in the first week of April.

The U.S. retailer also suspended its full-year guidance last month citing a sharp decline in demand due to COVID-19 that has infected more than 1.8 million people in the United States and caused over 108,000 deaths.

American Eagle’s Aerie brand noted a 2% decline in its revenue in the first quarter as compared to a 28% increase in the same quarter last year. The American Eagle label, on the other hand, reported a much steeper 45% decline in revenue in the recent quarter.

American Eagle suspends dividend for the second quarter

In its announcement on Wednesday, Pittsburgh-headquartered company also suspended its dividend for Q2 and warned that the dividend will remain suspended for the rest of the year to shore up finances and cushion the economic blow from COVID-19. Here’s how the pandemic is changing shopping at large.

At £204.39 million that translates to £1.22 per share, American Eagle’s net loss came in significantly higher than £32.42 million profit (18.28 pence per share) that it recorded in the comparable quarter of last year. The loss, the retailer commented, was attributed to an impairment charge worth £124 million due to the health crisis that temporarily closed 272 of its nationwide retail stores.

American Eagle falls short of analysts’ estimates in Q1

Excluding non-recurring items, American Eagle said that it saw 66.75 pence of loss per share in the recent quarter. According to Refinitiv, experts had forecast the company to print 23.84 pence of loss per share in Q1.

In terms of total revenue, the clothing and accessories retailer registered an about 38% decline to £438.41 million in the quarter that ended on 2^nd May. Analysts had anticipated it to print £504.05 million in Q1.

American Eagle’s performance also remained downbeat in 2019 with an annual decline of more than 20%. At the time of writing, the retailer is valued at £1.56 billion and has a price to earnings ratio of 10.58.