The star performer among teen apparel retailers, American Eagle Outfitters Inc. AEO witnessed the biggest stock decline in over five years, as the company’s shares descended 16.6% on Friday. The downfall came after the company reported lower-than-expected comparable store sales (comps) so far in the fourth quarter of fiscal 2015, which mainly comprises the holiday sales results.
Though the Pittsburgh-based company’s fourth-quarter comps to date grew 4%, the results were short of FactSet’s estimate of 4.9%. However, the company remains encouraged as the results lie close to its comps guidance of mid single-digit rate growth for the fourth quarter.
Management believes that the holiday season was solid, backed by strong sales results at both its brands. Further, the company is pleased with its online business, which delivered a strong performance, driven by efficient use of its omni-channel capabilities to enhance customer experience.
Given the trend so far, the company reiterated its earnings guidance of 40–42 cents per share compared with 36 cents earned in the prior-year quarter. Also, the company is encouraged with the progress made in 2015 and anticipates delivering annual EPS growth of nearly 70%. Looking ahead, the company expects to keep up this momentum in 2016.
This retailer of apparel and accessories, which carries a Zacks Rank #2 (Buy), is scheduled to announce its fourth-quarter fiscal 2015 results on Mar 2, 2016.
Though the picture for the holiday season is not clear yet, the sales data provided by a handful of retailers reveal that the key season this year was challenging. Retailers felt the pinch of declining customer traffic at stores and malls, as online stores stole the limelight. Moreover, retailers were forced to offer promotions as buyers were keen on availing discounts. This weighed on retailers’ pockets as profits declined.
Affected by the aforementioned factors, December comps for Rite Aid Corp. RAD and Zumiez Inc. ZUMZ declined 0.1% and 8.9%, respectively. However, comps for the Victoria’s Secret owner, L Brands Inc. LB rose 8%.
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