Teen apparel retailer American Eagle Outfitters’ (NYSE:AEO) stock crashed by roughly 11% on Thursday, after the disclosure of holiday sales results. While American Eagle reported impressive growth of 15% in its net holiday sales and 12% in its holiday comps, the apparent reason for the decline was the trimming of its Q4 earnings outlook from $0.40 – $0.44 per diluted share previously to $0.33 – $0.35 per diluted share. We believe the revised earnings outlook reflects a decline in its margins, which was a combination of both fiercely competitive teen apparel market and the company’s inventory hangover at the end of holidays. American Eagle competes with other specialty retailers such as Aeropostale (NYSE:ARO), Abercrombie & Fitch (NYSE:ANF), Gap Inc. (NYSE:GPS) and Urban Outfitters (NASDAQ:URBN) in teen apparel space.
Articles for American Eagle Outfitters Inc.
American Eagle Cuts Q4 Earnings Outlook, Sends Shares Crashing
Graph ItNEW!Friday, January 6th, 2012 by Trefis Team
Teen Apparel Retailers in 2011: Assessing the Threats & Opportunities Ahead
Graph ItNEW!Friday, January 6th, 2012 by Trefis Team
For teen apparel retailers, 2011 proved out to be a year full of nightmares. Starting with the jump in cotton prices to the economic slowdown in U.S. and Europe, different combinations of negative factors ensured that investors remain bearish on the teen apparel stocks throughout the year. Aeropostale (NYSE:ARO) was the biggest loser among these companies, losing nearly 40% of its stock value since January 2011 and was followed by Urban Outfitters (NASDAQ:URBN) and Gap Inc. (NYSE:GPS). Abercrombie & Fitch (NYSE:ANF) stood strong until November, when it got smacked after its European growth began showing signs of tapering, and finally ended the year 15% below its value in January 2011. American Eagle Outfitters (NYSE:AEO) was the only gainer among teen retailers in 2011, ending the year with a meager increase of 7%, thanks to a late surge after promising Q3 and holiday sales results.
Below we look at the major hurdles and silver lining for teen apparel retailers in 2011, and how prominently we expect each of these factors to impact teen retailers going ahead in 2012.
American Eagle Expands in the Middle East & Africa to Tap Demand for Western Brands
Graph ItNEW!Thursday, December 29th, 2011 by Trefis Team
Teen apparel retailer American Eagle Outfitters (NYSE:AEO) has announced the opening of stores in three new international markets – Morocco, Jordan and Egypt. Additionally, the company also opened its third store in Saudi Arabia, and has plans for a second store in Lebanon in early 2012. With the new stores, the company now operates in Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi Arabia, and the UAE through its franchise partner, M.H. Alshaya. The store openings have come at a time when teen-apparel market is fiercely competitive in domestic market, and we believe the growing store count in Middle-East to provide some respite to American Eagle, particularly when the company may face a margin crunch due to the scale of its promotions in holidays. American Eagle competes with other teen specialty retailers such as Abercrombie & Fitch (NYSE:ANF), Aeropostale (NYSE:ARO) and Gap Inc. (NYSE:GPS).
See our full analysis for American Eagle Outfitters
Growing Middle East business will help negate margin
In a bid to lure holiday shoppers, apparel retailers are giving huge promotions off its merchandise. The competition is even more fierce in teen apparel market, with each teen retailer trying to outsmart the other through more attractive promotions. While the growing promotions will help increase the sales comps, we expect the ongoing scale of promotions to take toll on retailers’ margins.
American Eagle is no different with the company offering 40% off its merchandise, which is quite high in comparison to its previous holiday discounts. Additionally, for this quarter the company started with an inventory of $572 million, a massive 40% growth compared to last year. High inventory level will ensure that the company’s AUC (average unit cost) remains high and that American Eagle takes more time to benefit from the cotton price decline. These factors could weigh on margins this quarter and in 2012; however international expansion to places like the Middle East could help offset these pressures by opening a new market for American Eagle.
Understand How a Company’s Products Impact its Stock Price at Trefis
The Holiday Spirit Travels Online For Teen Apparel Retailers
Graph ItNEW!Thursday, December 22nd, 2011 by Trefis Team
Online shoppers are bringing cheer to teen apparel stocks this holiday season. According to a recent report from comScore, holiday online shopping has increased by 15% this year vs. 2010. Apparel & accessories remains a high growth category in online shopping for the holidays, and we expect retailers such as Aeropostale (NYSE:ARO), American Eagle Outfitters (NYSE:AEO), Abercrombie & Fitch (NYSE:ANF), Gap Inc. (NYSE:GPS) and others to benefit from the increase in Internet sales.
Abercrombie, Gap Have the Lead on Facebook Engagement Among Teen Apparel Companies
Graph ItNEW!Wednesday, December 21st, 2011 by Trefis Team
If 2011 was all about the emergence of e-commerce and m-commerce (m for mobile) in the apparel industry, we could call 2012 the year of f-commerce for Facebook. Teen apparel companies like Abercrombie & Fitch (NYSE:ANF), American Eagle Outfitters (NYSE:ARO), Aeropostale (NYSE:ARO) and Gap Inc. (NYSE:GPS) are actively trying to engage and build brand loyalty with their target market on the site. As a proxy for these retailers online reach to customers, we take a look at some of the popular metrics below that Facebook provides such as total number of Likes and followers talking about the brand. On these metrics it looks like Abecrombie and Gap have the edge in online engagement via Facebook.
American Eagle Readies for Holiday Push After Encouraging Q3 Results
Graph ItNEW!Friday, December 16th, 2011 by Trefis Team
Teen specialty retailer American Eagle Outfitters (NYSE:AEO) reported earnings November 30th posting net sales increasing by 11% compared to that of last year. However the company continues to struggle with the higher input costs, which combined with the effect from increased promotions during the quarter, resulted in a decline of 4.5% in American Eagle’s gross margins. We believe the results have been promising, considering the fact that the company was able to post positive comps across all of its brands. Additionally the start of fourth quarter too has been promising, with the company reporting a strong business over the Thanksgiving weekend. American Eagle Outfitters competes with specialty retailers such as Aeropostale (NYSE:ARO), Abercrombie & Fitch (NYSE:ANF) and Gap Inc. (NYSE:GPS) in teen apparel space.
We have increased our price estimate for American Eagle’s stock to $17.75, which is roughly 25% ahead of current market price. The adjustments in our price estimate primarily reflects American Eagle’s net cash/debt position along with our improved outlook for next quarter sales.
Check out our complete analysis of American Eagle Outfitters
Improvement in comp sales across all brands a positive sign
One of the major highlights of third quarter’s result was an improvement in comp sales across all the major American Eagle Outfitters’ brands. The growth in its major brand American Eagle was driven by a strong performance in bottoms, particularly for women’s denims. Learning from its mistakes in 2010, the company invested smartly in its inventories this quarter to capitalize on traffic during peak periods. For its intimate apparel brand aerie, the launch of the Drew bra was the major growth driver this quarter.
Additionally the company continued its strong run in direct business. The company posted a strong growth of 21% in its direct business benefiting primarily from impact of online promotional campaigns. The company also strengthened its mobile business with the launch of AE mobile app along with providing the option of shopping with Google Wallet.
Increasing promotions and high costs weigh on margins
Though both the results and outlook on revenue side were encouraging, American Eagle continues to struggle with increasing promotions and high cotton prices. For this quarter, the company had to increase the depth of its promotions to attract the consumers in order to improve its comp sales, which eventually echoed through a decline in margins. Alongside high cotton prices remains a source of concern for American Eagle and also contributed to the margin decline.
For the next quarter we expect the margins to fall 3-4% below to that of Q4 last year as most of American Eagle’s holiday campaign was built around promotions. The apparel market continues to be highly promotional in nature and we expect the trend to continue for the Christmas holidays too.
American Eagle Outfitters Q3 Preview: What We’re Watching
Graph ItNEW!Tuesday, November 29th, 2011 by Trefis Team
Teen apparel retailer American Eagle Outfitters (NYSE:AEO) is scheduled to announce its Q3 earnings results on November 30th. Though American Eagle’s stock had gained nearly 8% after the business update on November 2nd which disclosed a net sales increase of 11% and a comp sale increase of 5%, the stock has been on a decline since then. The apparent reason behind the decline is the confusion in the market which built up after American Eagle failed to revise its earnings guidance this quarter accordingly to a solid increase in its sales. One of the probable reasons behind this can be a decline in gross margins, which has in turn culminated into a cautious outlook in the market for American Eagle’s stock. American Eagle Outfitters competes with the likes of Aeropostale (NYSE:ARO), Abercrombie & Fitch (NYSE:ANF) and Gap Inc. (NYSE:GPS) in the teen apparel space.
Shopping at American Eagle Gets Tech-Savvy with Google Wallet
Graph ItNEW!Tuesday, October 25th, 2011 by Trefis Team
American Eagle Outfitters (NYSE:AEO) recently announced the launch of the Google Wallet mobile shopping experience in selected American Eagle Outfitters, Aerie and 77kids stores in five major U.S. markets. Google Wallet is an Android app that enables shoppers to pay for merchandise, redeem discounts and earn loyalty points with a single tap of their phone at checkout.
We believe that this is a smart move by American Eagle as the company targets 15 to 25 year old girls and guys, an age group which represents a major chunk of total smartphone users in United States. American Eagle Outfitters together with Aeropostale (NYSE:ARO) and Abercombie & Fitch (NYSE:ANF) form the teen apparel triad in U.S.
American Eagle Preview: What We’re Watching on Wednesday
Graph ItNEW!Tuesday, August 23rd, 2011 by Trefis Team
With its primary competitor in the cheap teen retail segment Aeropostale (NYSE:ARO) in dire straits on the heels of a string of disappointing announcements, we are eager to hear what American Eagle Outfitters (NYSE:AEO) will say on Wednesday. The gross margins trend and sales outlook are two of the key metrics that will drive the stock’s performance. American Eagle, Aeropostale and Abercrombie & Fitch (NYSE:ANF) form the triad of teen apparel retail in America, and the shares of Abercrombie and Aeropostale are down around 20% in the last 3 months compared to nearly 40% for Aeropostale. With a limping economy that increasingly looks like it might enter a recession, the big question is how these retailers’ sales will fare in the second half of the 2011.
We have a $20 price estimate for American Eagle’s stock, which is well above the current market price.We will revise our estimates following earnings as we update our forecast.
American Eagle Outfitters (AEO) Could Shut 100 Stores by 2012
Graph ItNEW!Friday, June 3rd, 2011 by Trefis Team
American Eagle Outfitters (NYSE: AEO) is considering shutting close to 100 stores in the next two years in response to pressures to reduce overhead costs and given the difficulty the retailer is having. As AEO and competitors like Gap (NYSE:GPS), Abercrombie & Fitch (NYSE:ANF) and Aeropostale (NYSE:ARO) have reported Q1 results, we have witnessed varying degrees of success in revamping sales after the downturn.
American Eagle Outfitters Inc. : All Articles
- Week of 2012-01-01
- 01/06/12 American Eagle Cuts Q4 Earnings Outlook, Sends Shares Crashing
- 01/06/12 Teen Apparel Retailers in 2011: Assessing the Threats & Opportunities Ahead
- Week of 2011-12-25
- Week of 2011-12-18
- 12/22/11 The Holiday Spirit Travels Online For Teen Apparel Retailers
- 12/21/11 Abercrombie, Gap Have the Lead on Facebook Engagement Among Teen Apparel Companies
- Week of 2011-12-11
- Week of 2011-11-27
- Week of 2011-10-23
- Week of 2011-08-21
- Week of 2011-05-29
- 06/03/11 American Eagle Outfitters (AEO) Could Shut 100 Stores by 2012
- 05/31/11 Heightened Commodity Costs Pressure American Eagle
- Week of 2011-04-03
- 04/07/11 Trefis Morning Coffee – Google, Facebook, Comcast, and American Eagle
- 04/04/11 3 Key Trends For Ann Taylor
- Week of 2011-03-27
- 03/31/11 A&F Looking Abroad for Growth
- 03/29/11 Cotton Price Trends Look Good on Aeropostale
- Week of 2011-03-13
- Week of 2011-02-13
- Week of 2011-01-23
- Week of 2011-01-16
- Week of 2011-01-09
- Week of 2011-01-02
- 01/04/11 Positive Outlook for Aeropostale Despite Recent Sales Slowdown
- 01/03/11 American Eagle Lagging Competitors’ Growth, but Stock Remains Cheap
- Week of 2010-12-19
- Week of 2010-12-12
- Week of 2010-11-28
- 12/03/10 Gap Stores is What Amount of Gap Stock?
- 12/03/10 Is Victoria’s Secret the Key to Limited Brands Upside?
- 12/01/10 Strong Q4 Retail Trends Could Lift AEO
- Week of 2010-11-21
- Week of 2010-09-05
- Week of 2010-08-22
- 08/26/10 Direct Sales Boost Specialty Retail Stocks
- 08/24/10 Banana Republic Stores Can Drive Growth for Gap
- Week of 2010-08-15
- Week of 2010-08-08
- Week of 2010-08-01
- 08/06/10 Higher Ann Taylor Store Margins Boost ANN Stock
- 08/04/10 Slightly Lower Expectations for J.Crew’s Revenue per Square Foot
- 08/04/10 Limited Brands’ Stock Could Get Boost from Victoria’s Secret International Stores
- Week of 2010-07-25
- 07/29/10 Flat Margins for Aeropostale Stores Could Weaken ARO Stock
- 07/28/10 American Eagle’s Revenue per Square Foot Expected to Trend Up
- 07/26/10 Aeropostale’s Sales Could Slump as Economy Recovers
- Week of 2010-07-18
- Week of 2010-07-11
- 07/15/10 American Eagle’s aerie Brand Poised for Growth
- 07/12/10 Abercrombie’s Hollister Revenues Should Recover with U.S. Economy
- Week of 2010-07-04
- Week of 2010-06-27
- 07/02/10 American Eagle and Abercrombie & Fitch Compete for Younger Shoppers
- 06/28/10 Profit Margins Key to American Eagle’s Growth
- Week of 2010-06-20
- 06/23/10 Retail Competition Could Hurt Gap Stock
- 06/23/10 Anthropologie by Urban Outfitters Targets Affluent Women with Lifestyle Store Designs
- 06/22/10 Revenue per Square Foot Begins to Recover at Gap and Old Navy Stores
- Week of 2010-06-13
- 06/15/10 Aeropostale Expected to Outperform Peers: $55 Trefis Price Estimate
- 06/14/10 Lean Inventories and High Turnover Key for Urban Outfitters
- Week of 2010-06-06