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American Eagle warns of earnings hit due to higher freight costs -Breaking

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© Reuters. View of American Eagle Outfitters in Arlington, Virginia. U.S.A, June 1, 2021. REUTERS/Erin Scott

(Reuters) – American Eagle Outfitters (NYSE:) Inc stated that it expected its earnings to fall in the first half 2022 as federal stimulus benefits fade and freight costs rise. This caused the apparel chain’s stock price drop of 10%.

According to Aerie, the parent company of Aerie said Wednesday that it used more expensive air freight during last year’s second half in order to avoid factory closings in Asia.

Over several months, the U.S. retail sector has struggled with skyrocketing freight prices. The major logistic operators expect high freight rate levels, congestion and tight capacity to remain well into 2022.

These concerns also led Abercrombie & Fitch Co to warn of weaker margins in 2022 earlier in the day.

Jay Schottenstein stated in a statement that the macro environment continues to be challenging. However, American Eagle will make meaningful progress in 2022 as compared with previous years.

American Eagle expected that the company’s earnings would decrease in the first quarter, and recover in half two.

Company said that it is pleased with spring collection performance, thanks to earlier deliveries. This will allow the company to stock its shelves adequately.

American Eagle’s fourth-quarter adjusted operating income was $92 million, with $60 million of higher air freight cost. It previously forecast an operating profit of $90 to $100 million.

Refinitiv’s IBES data shows that total revenue rose 17% to $1.51 Billion, consistent with Wall Street forecasts.

American Eagle’s nameake division saw an 11% increase, and its Aerie division, which is a pandemic beneficiary, experienced a 27% rise.

The adjusted earnings per share were 35 cents

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