American Eagle Outfitters takes “a cautious view”: Q4 profit largely misses expectations
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"The retail climate, particularly in malls, is tough and the pace of traffic is choppy. We're therefore taking a cautious view," Chief Financial Officer Bob Madore said on a conference call.
American Eagle also forecast comparable sales to be flat or increase in the low single digits in the fourth quarter compared with a 4 percent rise in the year-earlier period.
The company forecast fourth-quarter adjusted profit of 37-39 cents per share, well below analysts' average estimate of 45 cents, according to Thomson Reuters I/B/E/S.
Following the weaker-than-expected forecast, the company’s shares tanked in morning trading Wednesday, dropping 15.1 percent to 16.06 dollars apiece.
On the upside, comparable sales of the company’s lingerie brand, American Eagle's Aerie, rose 21 percent in the third quarter to October, 29, easily surpassing the consensus estimate of a 17.4 percent rise, according to data by Consensus Metrix cited by Reuters.
"Aerie continues to post positive same-store sales. However, the American Eagle brand is so much larger and in that concept decelerates the (positive) impact on the comps," Simeon Siegel, retail analyst at Instinet Equity Research said.
American Eagle reported a smaller-than-expected 2 percent rise in quarterly comparable sales amid a "tough retail climate," falling short of the 2.9 percent rise expected by analysts following the company. In this regard, it’s worth highlighting that the fashion retailer pointed out that rival Aéropostale Inc.’s store closings and liquidation sales “clearly had an impact on traffic.” Same-store sales at American Eagle locations near the distressed retailer’s shops fell 2 percent to 4 percent from a year earlier, reports the ‘Wall Street Journal’.