• American Eagle cut its full-year sales forecast and issued holiday guidance that came in below expectations.
• The apparel retailer saw strong demand during back-to-school but said consumers are pulling back between key moments.
• American Eagle's Aerie brand saw strong growth, with comparable sales up 5%, on top of 12% in the year-ago period.

American Eagle shares dropped about 13% in extended trading Wednesday after the company reported third-quarter earnings in which it issued weak holiday guidance and cut its full-year forecast. The company said it's contending with value-seeking consumers who are only willing to spend during key shopping moments. 

The apparel retailer narrowly missed Wall Street's expectations on the top line, but beat on the bottom line. 

Here's how American Eagle performed during its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: 48 cents adjusted vs. 46 cents expected
• Revenue: $1.29 billion vs. $1.30 billion expected

The company's reported net income for the three-month period that ended Nov. 2 was $80 million, or 41 cents per share, compared with $96.7 million, or 49 cents per share, a year earlier. Excluding one-time charges related to restructuring and impairment costs, American Eagle posted an adjusted profit of 48 cents per share. 

Sales dropped to $1.29 billion, down about 1% from $1.3 billion a year earlier. 

While it was narrow, Wednesday's miss is the third quarter in a row that American Eagle has not met Wall Street's sales targets.

In a statement, CEO Jay Schottenstein touted a "strong" back-to-school shopping season but said demand remains inconsistent between major shopping events. 

"We have entered the holiday season well positioned, with our leading brands offering high-quality merchandise, great gifts and an outstanding shopping experience across channels," Schottenstein said. "Key selling periods have seen a positive customer response, yet we remain cognizant of potential choppiness during non-peak periods." 

Consumers coming out for key shopping moments followed by sales sharply dropping off has been a consistent theme across the retail industry. Foot Locker cited a similar dynamic when reporting earnings earlier Wednesday, as did Dollar Tree.

For its holiday quarter, American Eagle is expecting comparable sales to be up around 1%, with total sales down about 4%, including an $85 million impact from having one less selling week and a later start to the holiday shopping season. The outlook is below the 2.2% comparable sales growth StreetAccount was looking for and the 1% sales decline LSEG had expected. 

As a result, American Eagle is now expecting comparable sales to grow by 3% for the full year, down from prior guidance of 4% growth and below StreetAccount's estimate of 4.1%. It's now expecting full-year sales to be up 1%, down from previous guidance of between 2% and 3% and below LSEG expectations of 2.5% growth. 

Similar to other retailers, American Eagle had taken a cautious approach to the back half of the year as it contended with uncertainty around the 2024 election and the overall macroeconomic environment. But unlike its competitors, it has kept that cautious tone.

Both Abercrombie & Fitch and Dick's Sporting Goods, which issued cautious outlooks earlier this year, reversed their previous mood when reporting earnings earlier this month. 

Despite the underwhelming outlook and sales miss, American Eagle is seeing strong demand for its Aerie brand. Third-quarter revenue for Aerie came in at an all-time high for the company, and comparable sales grew 5%, on top of 12% growth from the year-ago period.