American Eagle Outfitters (NYSE:AEO) nosedives on Q2 projections
On Tuesday, red was the color for retail stocks. To a certain extent, this was attributed to the trimmed guidance from American Eagle Outfitters (NYSE:AEO) after Monday’s closing bell. At last trading, the company stock was down 12.02%. This dive comes just a few weeks before the peak of the “back-to-school” shopping season. For retail, this is the 2nd busiest time of the year.
AEO had set its earnings per share guidance at 19-20 cents which it axed to 10 cents. The company blamed weaker-than-anticipated margins and sales. The company results are due on 20 August and the management said that the consolidated same-store sales dropped 7% against the plateaued y-o-y performance that was expected.
Robert Hanson, the AEO Chief Executive Officer said that that they are not at all happy with the Q2 results. These had been adversely affected by weak traffic and the dismal performance of the company’s women’s assortment segment. Warmer temperatures in the Q1 resulted in sluggish sales then. Now the concern is that the Q2 may not be any better for many apparel stores that are mall-based.
AEO did not have a good Q2 and the numbers from last year were against them. Those were considered to be the bellwether. The general mood amongst retailers is that if American Eagle Outfitters (NYSE:AEO) is having it so tough, things are not going to be any different for them.
Market dips too…
The company’s rivals, Aeropostale and Abercrombie, each dipped 5% even as AEO dropped by 14% in Tuesday’s trading. The uncertainty about the “back-to-school” season is piggy-backing the National Retail Federation’s projection that the average family will be spending 7.8% less than what they spent in 2012.
The general market feel is that though retailers are in get-set-go mode to deal with the back-to-school rush, the main concern that has now surfaced is whether consumers are really in the mood to splurge at the same levels that they did, last year.