Shares of American Eagle Outfitters Inc. AEO slipped 2.8%, since the company released its comparable store sales (comps) results for fourth-quarter fiscal 2016 to date, which mainly comprises holiday sales. Notably, comps remained flat year over year, bearing the brunt of a volatile holiday season – largely marked by intense promotional activities. Earlier, management had projected comps growth for the fourth quarter in a range of flat to low single-digits.
The company has been appearing bearish for quite some time now. American Eagle’s shares declined 3.7% in the last six months, underperforming the Zacks categorized Retail – Apparel/Shoe industry’s growth of 7.5%.
Nonetheless, management remains pleased with the company’s progress toward its targets for the quarter. The company particularly remains impressed with its solid Thanksgiving sales, which was backed by superb online sales across both brands, despite the sluggish mall traffic. The strong online performance at both American Eagle and Aerie brands was driven by efficient use of its omni-channel capabilities to enhance customer experience.
That said, management remains focused on its ongoing merchandise and operational strategies, which makes it confident of its prospects for 2017. Given the trends so far, the company reiterated its fourth-quarter fiscal 2016 earnings guidance of 37–39 cents per share, compared with 42 cents earned in the prior-year quarter. The Zacks Consensus Estimate is currently pegged at 39 cents per share.
American Eagle which is scheduled to announce its fourth-quarter fiscal 2016 results on Mar 1, 2017, currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Overall, the holiday period remained quite challenging, as retailers continued to feel the pinch of declining customer traffic at stores and malls, as online stores hogged the limelight. Retailers like Kohl's Corporation KSS and Macy’s, Inc. M fell prey to these industry hurdles, owing to which their holiday comps declined 2.1% each. This also compelled these bellwethers to slash their earnings outlook for fiscal 2016. Conversely, The Gap, Inc.’s GPS holiday comps rose 2%, fuelled by solid consumer response witnessed at its namesake and Old Navy brands.
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