Dec 3, 2015
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American Eagle says holiday season sales off to strong start

Dec 3, 2015

Teen apparel retailer American Eagle Outfitters Inc said its holiday season sales were off to a "solid start" and named Jay Schottenstein, who was heading the company on an interim basis, as its permanent chief executive.

The company said on Wednesday it expected same-stores sales to grow in the mid-single digits in the holiday quarter, compared with flat growth last year.

American Eagle

Analysts polled by research firm Consensus Metrix are expecting 3.9 percent growth for American Eagle's fourth quarter.

"The holiday season is off to a solid start, and we are optimistic as we look ahead," said Schottenstein, who previously served as the company's CEO for a decade, until he stepped down in 2002.

Clothing will be the leading product category for holiday purchases, retail industry research firm NPD Group said, adding that nearly half of the respondents polled planned to purchase it this holiday season. 

The Pittsburgh, Pennsylvania-based company also forecast adjusted earnings of about 40-42 cents per share for the fourth quarter, in-line with estimates, according to Thomson Reuters I/B/E/S.

In contrast, rival Aeropostale Inc expects same-store sales for the vital holiday quarter to decline by low- to mid-single digits.

The struggling mall-based retailer also forecast fourth-quarter adjusted net loss of 4-17 cents per share, well below analysts' average estimates a profit of 2 cents.

American Eagle, unlike rivals Aeropostale and Abercrombie & Fitch Co, has managed to win back shoppers by upgrading its merchandise to reflect trends such as festival- and bohemian-inspired dresses and tops, shirt dresses, and denim pencil skirts.

"It was a very strong quarter for AEO amid a disastrous quarter for most mall-based retailers," Nomura analyst Simeon Siegel said.

The company, which has also benefited from shifting away from once popular logo-centric clothing, said its net income jumped to $74.1 million, or 38 cents per share, in the third quarter ended Oct. 31, from $9 million, or 5 cents per share, a year earlier.

Analysts' on average had expected earnings of 34 cents per share.

"Lower levels of promotional activity have helped AEO to rebuild its profitability," said Neil Saunders, who heads research firm Conlumino.

Total net revenue rose 7.6 percent to $919.1 million, but still fell short of the $927.4 million that analysts were expecting.

American Eagle's shares were up about 2.7 percent at $16.24 in extended trading, while Aeropostale shares were down nearly 10 percent at 53 cents. 


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