American Eagle Outfitters Shares Crash 12% On Weak Forecast

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November 30, 2016 8:19am NYSE:AEO

Clothing retailer American Eagle Outfitters (NYSE:AEO) early Wednesday posted mixed third quarter earnings and offered a very weak outlook for the fourth quarter, sending its shares plunging in early trading.

The Pittsburgh-based company reported Q3 net income of $0.41 per share, which match the consensus Wall Street estimate. Revenues rose 2.3% from last year to $940.6 million, missing analysts’ view of $941.51 million.

Consolidated comparable store sales rose 2% from the year-ago period, which was in-line with AEO’s guidance for low single digit growth. Wall Street expected higher comps of 2.8%. The company’s comparable sales growth is clearly decelerating, as it posted a massive 9% increase in comps in the third quarter of 2015.

Looking ahead, American Eagle forecast fourth quarter EPS to range from $0.37 to $0.39, which would badly miss Wall Street’s $0.46 view. AEO also expects comparable sales to be flat to up in the low single digits, which would also likely fall well short of analysts’ view for 3.5% growth.

The company commented via press release:

“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 Chief Executive Officer, Jay Schottenstein. “We are sharply focused on delivering the best innovation, consistent quality and outstanding value to our customers day-in and day-out. The holiday season is off to a solid start and our brands are well-positioned. We will continue to leverage our leading capabilities to maintain momentum and build on the progress we’ve made over the past few years.”

American Eagle shares fell $2.21 (-11.69%) to $16.70 in premarket trading Wednesday. Prior to today’s report, AEO had surged 22% year-to-date, nearly tripling the return of the S&P 500 index during the same period.


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