(Reuters) - American Eagle Outfitters Inc said on Thursday it would close potentially hundreds of stores over the next few years, while the coronavirus crisis forced the apparel retailer to forecast holiday-quarter revenue below estimates.
Mall traffic dwindled toward the end of last year as COVID-19 cases surged, bruising sales of retailers which were hoping for a strong recovery in the crucial holiday shopping season.
Still, American Eagle Chief Executive Officer Jay Schottenstein said he was optimistic that the roll-out of new vaccines against the virus would help the company open up stores to more people over the next few months.
The retailer’s shares slipped premarket but rose about 3% in afternoon trading as it forecast a fourth-quarter revenue increase in the high-20% range for the Aerie lingerie brand, which is not as heavily reliant on physical stores.
Aerie’s revenue is expected to double to $2 billion in 2023, compared with 2019, leading American Eagle to target revenues of $5.5 billion in 2023, versus $4.31 billion in 2019.
However, the company forecast fourth-quarter revenue to fall by low single-digits, compared with analysts’ estimates of a 0.14% dip, according to IBES data from Refinitiv. Revenue for its flagship brand is expected to decline in the low double-digit range.
The company plans to bring down its American Eagle U.S. and Canada store count to about 600 to 700 in the next few years, compared with about 880 currently.
Reporting by Uday Sampath in Bengaluru; Editing by Uttaresh.V, Maju Samuel and Devika Syamnath
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