Photo: American Eagle

American Eagle Outfitters Inc's tepid profit forecast for the year overshadowed a bigger quarterly profit that came on higher sales from a new line of clothes.

The retailer, whose prices are between those of high-end rival Abercrombie & Fitch Co more affordable Aeropostale Inc, said on Wednesday it would earn between $1.16 and $1.22 a share in the year after adjusting for losses from its 77kids unit.

Analysts, on average, expected earnings of $1.18 per share, according to Thomson Reuters I/B/E/S.

Its shares traded down 2.5 percent at $19.30 before the markets opened. They closed at $19.79 Tuesday on the New York Stock Exchange.

The first quarter is typically clearance season as retailers try to unload unsold items from the holidays.

This year, however, many clothing retailers sold closer to full price as wardrobes were updated for spring break and an early summer.

American Eagle said earlier this month that first-quarter sales rose 18 percent to $719 million.

For the first quarter ended April 28, it earned $39.7 million, or 20 cents a share, compared with $28.3 million, or 14 cents a share, in the same period last year.

American Eagle has been sprucing up its merchandise and supply system under new Chief Executive Robert Hanson so it can change its clothing lines faster and keep up with its young clientele.

Hanson also decided to shut the underperforming 77kids and look for a new chief financial officer for the company -- moves praised by analysts.

Abercrombie and Aeropostale saw sales rise 10 and six percentages respectively, on lower profits.