As a tough retail climate pushed the teen apparel retailer to offer deep discounts.

By Reuters
May 17, 2017

American Eagle Outfitters reported a first-quarter profit that narrowly missed Wall Street estimates as a tough retail climate pushed the teen apparel retailer to offer deep discounts and bear excess shipping costs on online orders.

Shares of the company fell nearly 6.3% to $12.15 before the bell on Wednesday.

The company’s gross margins in the first quarter ended April 29 declined by 2.7% to 36.5%, while its inventory increased 9% to $364 million.

Net income fell to $25.24 million, or 14 cents per share, in the quarter, from $40.48 million, or 22 cents per share, a year earlier.

The company said it incurred $5.4 million pre-tax restructuring charges for severance and related charges in the quarter.

Excluding certain items, the company earned 16 cents per share in the quarter, missing analysts’ average estimate of 17 cents, according to Thomson Reuters I/B/E/S.

The company also said it expected its current-quarter comparable sales to be in the range of flat to down in low single digit percentage.

American Eagle aeo , however, reported a surprise 2% rise in quarterly comparable-store sales as strong demand for its Aerie line of lingerie lifted the company’s sales amid a tough retail climate.

Analysts on average had forecast a 0.7% decline, according to research firm Consensus Metrix.

Net revenue rose 1.66% to $761.83 million, beating analysts’ average estimate of $741.7 million, according to Thomson Reuters I/B/E/S.

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