Here’s Why American Eagle Outfitters Shares Are Plunging

by MR Magazine Staff

American Eagle Outfitters might not have the Midas Touch among teen retailers after all. Shares plunged as much as 15% on Wednesday after giving a weak holiday-quarter sales forecast that disappointed Wall Street and suggested the chain is barely more immune than rivals like Gap Inc and Abercrombie & Fitch to young shoppers’ shift away from specialty apparel chains and shopping at malls. “The retail climate, particularly in malls, is tough and the pace of traffic is choppy. We’re therefore taking a cautious view,” CFO Bob Madore said on a conference call with Wall Street analysts. American Eagle has outperformed Abercrombie, Gap, and Aéropostale, which recently emerged from bankruptcy protection as a smaller chain, for several years now. But its forecast for comparable sales to be flat or increase by a modest, low-single-digit percentage in the fourth quarter was not good enough for investors. The company has gotten kudos for its denim assortment and lower reliance on discounting than rivals. But markdowns at American Eagle were up last quarter. And that is likely to continue, analysts said. See more at Fortune.