American Eagle reported a comparable sales decline of 7% in the third quarter of fiscal 2008, despite net sales increasing 1% over the same period in 2007. Total revenue for the quarter was $754 million, but analysts had been $758.
American Eagle announced a 7% decline in same store sales for the month of July, as net sales also decreased, although less dramatically (>1%).
AEO was upgraded from "Underperform" to "Hold" by Needham & Co., sparking a jump in its share price.
AEO reported a 5% decrease in net sales and an even worse 11% decline in same store sales for the month of June, as shoppers turned away from higher-priced apparel retailers and towards department and discount stores.
American Eagle reported a 44% decline in net profit for the first quarter of fiscal 2008, for earnings per share of $0.21. However, analysts had been anticipating EPS of $0.19, and AEO's shares rose significantly as the company beat expectations.
Because of a broadening lack of demand and weakening economy, American Eagle stands to lose a fair portion of market value as consumers move away from higher-end apparel.
American Eagle Outfitters announced that it would be launching a children's brand in 2008 called 77kids (AEO was founded in 1977, hence the name). The concept will be first unveiled as an online store in 2008 which will be followed by physical store locations in 2009.
For the third quarter of fiscal 2007, AE reported that sales rose 7% to $744.4 million compared with the same quarter of FY06. However, operating margin for the quarter fell from 21.9% in 3Q FY06 to 20.3% this quarter.
The winter season is a tough time to invest in clothing companies
American Eagle's Earnings for the 2nd Quarter tops analysts targets, but the outlook on earnings for the 3rd Quarter fell below analysts expectations.
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