American Eagle Outfitters (AEO) expects sales to decrease in the first quarter as it conducts an inventory write down to align with demand trends.

For the quarter ended May 3, revenue is forecast to fall approximately 5 per cent to $1.1 billion, with comparable sales down about 3 per cent.

The American Eagle and Aerie brands are expected to record sales declines of 2 per cent and 4 per cent, respectively.

Management also expects an adjusted operating loss of approximately $68 million for the quarter.

According to AEO, the preliminary results reflect an inventory charge of roughly $75 million related to a write down of spring and summer merchandise, as well as higher-than-planned promotional activity.

The company has also withdrawn its full-year guidance due to macro uncertainty and as management reviews forward plans in the context of first-quarter results.

“We are clearly disappointed with our execution in the first quarter,” said Jay Schottenstein, executive chairman and CEO. “Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory.

“We have entered the second quarter in a better position, with inventory more aligned to sales trends. Our teams continue to work with urgency to strengthen product performance, while improving our buying principles,” he added.

The company will report its final first-quarter results at the end of this month.