By channel, AEO store sales increased 2%, partially offsetting a digital revenue decline of 6%. Compared to pre-pandemic first quarter 2019, store revenue increased 1% and digital revenue increased 48%, said the company.

“The first quarter proved challenging, with demand well below our expectations, pressuring operating profit. Comparisons from an extraordinary spring last year driven by stimulus payments and pent-up customer demand, were compounded by rising inflation, higher gas prices and a stronger than anticipated pivot to other discretionary categories,” said Jay Schottenstein, AEO’s executive chairman of the board and chief executive officer.

“Aerie remains on a remarkable trajectory with revenue more than doubling and profit expanding over five-fold versus first quarter 2019. Greater focus in our assortment and real-estate footprint at AE continue to drive efficiencies in the business. We are committed to maintaining and building on these structural improvements and right-setting the business to deliver improved profitability in the second half.”

With a mixed sales result, AEO said net income for the quarter plummeted to $31.7 million, from $95.5 million in the prior-year quarter.

“In hindsight, our plans entering the year were too optimistic. We are taking swift measures to adjust our inventory and expense base with a firm goal of entering the second half better aligned with demand trends,” added Schottenstein.

​Incorporating shifts in the macro environment, the company said it is lowering its outlook for the year. AEO now expects operating profit to be above $314 million achieved in fiscal 2019, with total revenue up in the low single digits compared to fiscal 2021.