* Says expects 1st-qtr earnings/share $0.00 vs est $0.13
* Fourth-qtr comparable store sales decline 7 pct
* Shares fall as much as 7 pct
By Maria Ajit Thomas
March 11 Teen apparel retailer American Eagle
Outfitters Inc forecast current-quarter earnings below
analysts' estimates as it struggles to attract shoppers amid
intense competition from "fast fashion" chains.
American Eagle shares fell as much as 7 percent in morning
trading on the New York Stock Exchange.
"Business has remained highly competitive and sales trends
have been choppy so far this year," Chief Financial and
Administrative Officer Mary Boland said on a post-earnings call.
"Though we were encouraged by what we saw in the first few
weeks of January, sales deteriorated and negative trends
continued into the first quarter."
Analysts had in the past lauded American Eagle's product
selection and had expected it to do better than other teen
apparel retailers because of its stronger brand relevance.
However, a 7 percent decline in the company's fourth-quarter
comparable store sales and a weak forecast for the first quarter
suggest that it continues to lose out to more nimble rivals.
American Eagle and other teen apparel retailers such as
Abercrombie & Fitch Co and Aeropostale Inc have
seen sales slump in recent quarters.
Younger shoppers have shifted to chains such as Sweden's
Hennes & Mauritz and Spain-based Inditex SA's
Zara, which offer trendier and cheaper clothes.
American Eagle's rival Urban Outfitters Inc
reported lower-than-expected quarterly sales on Monday,
primarily due to fashion missteps at its eponymous brand.
The company, known for its Anthropologie and Free People
brands, said it was working to improve the quality of products
at the Urban Outfitters brand and to re-focus on the core 18-28
American Eagle on Tuesday also ackowledged that it needed to
innovate and improve its merchandise.
"Speed to market and fluid fashion flows remain a priority
to drive the customer experience," Executive Creative Director
Roger Markfield said.
To set itself apart from rivals, American Eagle said it
plans to drive its accessories and outerwear categories and to
be innovative with distinct finishes, fabrics and washes.
Piper Jaffray analyst Stephanie Wissink said the company's
strategic direction on a longer-term basis remains in flux
without a permanenet CEO in place.
American Eagle's chief executive of two years, Robert
Hanson, left in a surprise move in January.
GROSS MARGINS SLUMP
A shorter 2013 holiday shopping season and the extreme cold
weather in parts of the United States have also added to teen
retailers' woes, forcing them to resort to heavy discounting to
draw in customers.
American Eagle's gross profit margin, excluding certain
asset write-offs, fell to 31.9 percent from 41.2 percent in the
fourth quarter ended Feb. 1.
The company said it expects to break even on a per-share
basis in the first quarter. The forecast excludes potential
asset impairment and restructuring charges.
Analysts on average were expecting a profit of 13 cents per
share, according to Thomson Reuters I/B/E/S.
The company also forecast a high-single-digit percentage
decline in comparable store sales for the first quarter.
American Eagle's fourth-quarter net income declined to $10.5
million, or 5 cents per share, from $94.8 million, or 47 cents
per share, a year earlier.
On an adjusted basis, the company earned 27 cents per share,
above the average analyst estimate of 26 cents per share.
Total revenue fell 7 percent to $1.04 billion, slightly
above analysts' expectations of $1.03 billion.
American Eagle shares were down 5.6 percent at $13.42. They
have fallen about 33 percent in the year up to Monday's close.
Urban Outfitters' shares fell as much as 6 percent to $35.20
on the Nasdaq.