(Reuters) -American Eagle Outfitters raised its annual revenue forecast on Wednesday, betting on steady demand for its wide-legged pants, tops and accessories despite still-high inflation.

However, shares of the company fell more than 4% in extended trading, after it reported second-quarter revenue in line with market estimates.

The company has been stocking its shelves with newer styles in categories such as fleece, activewear and seasonal tops, as well as offering hefty discounts as part of a clearance sale, in a bid to get more shoppers to its stores.

In August, it said demand had picked up late in June and continued as the clothing retailer introduced its early fall collection in July across its Aerie and American Eagle segments.

"It's encouraging to see positive momentum continue into the third quarter, across brands and channels," said CEO Jay Schottenstein.

The company now expects annual revenue to rise in the low single digits, compared with its prior forecast for a flat- to low-single-digit decline. Analysts on average expect revenue to grow 0.3%, according to LSEG data.

American Eagle's net revenue rose to $1.20 billion for the second quarter.

The company reported a profit of 25 cents per share, higher than estimates of 16 cents.

(Reporting by Granth Vanaik in Bengaluru; Editing by Devika Syamnath)