American Eagle not happy with quarter, shares sink
NEW YORK, United States - American Eagle Outfitters, which makes clothes for teenagers and young adults, said on Monday its second-quarter profit will likely be less than half of what Wall Street was expecting, citing weak sales and lower margins, sending its shares down 15 percent.
"We are not at all happy with our second quarter results," Chief Executive Robert Hanson said in a statement, adding that poor sales of women's items and weak traffic were largely to blame.
The teen retailer's sluggish sales come during a summer when fewer teenagers are working and earning extra cash.
According to an analysis of U.S. labor data by outplacement firm Challenger, Gray & Christmas, teen employment was up 361,000 in July, a figure 5.5 percent lower than it was in July 2012. In June, employment among teens grew by 779,000, down 9.2 percent from the year earlier period.
American Eagle said it now expects to earn about 10 cents per share, well below the average of 21 cents per share analysts were expecting, according to Thomson Reuters.
American Eagle's shares fell to $16.95 in after-hours trading. They closed at $19.97 on the New York Stock Exchange on Monday.
The results were exacerbated by a highly promotional retail environment which intensified through July, Hanson added. American Eagle responded with deeper and broader mark downs, which allowed it to have a clean inventory position moving into the third quarter, he said.
Second-quarter net fell about 2 percent while comparable sales fell 7 percent, the company said.
American Eagle said it plans to report its full second-quarter results on August 21. The company said it earned 21 cents per share from continuing operations in the year-ago quarter.
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