American Eagle lowers forecast

It’s a rough time for many teen apparel retailers and the holiday season may not bring much relief.



American Eagle Outfitters Inc. on Wednesday issued a weaker than expected forecast for the fourth quarter as its CEO cited a “tough” retail environment. Its warnings issues similar statements from the likes of Abercrombie & Fitch and Gap.



But the news was not all bad for American Eagle. The retailer’s net profit for the third quarter rose to $75.76 million, or 41 cents per share, from $74.11 million, or 38 cents per share, a year earlier.



Net revenue rose 2.34% to $940.6 million, just missing analysts’ estimates. Same-store sales increased 2%, less than expected.



“I’m pleased that we continued to deliver strong results in a tough retail climate, with the third quarter reaching record sales and marking the 9th consecutive quarter of profit improvement,” said CEO Jay Schottenstein.



Looking ahead, the company said fourth quarter earnings should be in the range of 37 to 39 cents per share excluding potential asset impairment and restructuring charges. Analysts had been looking for 45 cents per share.



Commenting on the results, Neil Saunders, CEO of Conlumino, said that while American Eagle’s growth in the third quarter weakened to its slowest pace in over a year, its performance still represented a solid set of results for the chain.



“While the sales trajectory has become shallower, the margin position continues to improve,” he said. “Overall, we remain positive about AEO. Out of all the teen retailers it is best positioned to drive growth. However, in a turbulent market it is unrealistic to expect that the course it has set will all be plain sailing. In the current environment, there are likely to be some downs along with the ups.”