Another major retail brand has taken a big hit on Wednesday. American Eagle Outfitters (NYSE: AEO) saw its shares fall by a double-digit margin after a slow beginning to the back-to-school season as well as poor weather led to sales figures that were below expectations.
The company outright admitted that sales were disappointing, especially during the last two weeks of July which normally is where the back-to-school season for the retailer begins. At the same time, management added that August was its strongest month in the quarter and that the company still beat Wall Street’s estimates for gross revenue and profit.
“We had a number of wins and accomplishments in the second quarter, yet we were disappointed to report operating results below our expectations. We faced challenges largely stemming from underperformance in certain seasonal categories and a delayed start to back-to-school,” said American Eagle Outfitter CEO and Chairman Jay Schottenstein.
Total revenue increased by $76 million to $1.04 billion, an 8 percent increase from last year’s $965 million revenue. Gross profit went up by 8% to $383 million, while comparable sales fell by 1 percent. Overall, the figures weren’t as bad as one would expect looking at how much the company fell today. However, any sign of weakness in a retail company seems to be cause enough to worry, especially since so many other brands have been shutting down locations and laying off employees due to the ongoing “retail apocalypse” as it’s been referred to.
Most analysts covering the stock remain positive, although there is a growing cadre of neutral analysts who don’t particularly recommend the stock. A handful of experts have a “sell” rating, but they are still in the minority at the moment.
Shares of the American retailer fell by 12 percent over the course of the day, marking the worst single-day loss for the company in over two years. Like most other retailers, American Eagle Outfitters has been struggling as sales figures continue to fall. Over the past few months, the stock has fallen from its May highs at $24 per share down to $14.38 as of today, a 40.1 percent loss. Industry indexes such as the S&P Retail Select Industry Index, which monitors retailers across the country, also fell albeit by only 13.5 percent during the same time-frame. What is clear is that American Eagle Outfitters continues to be an underperformer in an already underperforming sector.
American Eagle Outfitters Company Profile
American Eagle Outfitters Inc is an apparel and accessory retailer with company stores throughout North America, China, Hong Kong, and the United Kingdom. The company leases all of its stores, and the vast majority of stores are in the United States. American Eagle also has an online business that ships worldwide. The company’s primary brand, American Eagle Outfitters, sells casual apparel and accessories that target 15- to 25-year-old men and women. Its Aerie brand sells intimates and personal-care products for women. Women’s items comprise the majority of the company’s sales. American Eagle designs its own merchandise and sources its production from third-party manufacturers that are mostly located outside of North America. – Warrior Trading News
