* American Eagle says record sales volumes on Black Friday
* Holiday season matches expectations -American Eagle
* Aeropostale: "Challenging" first few weeks of November
* Aeropostale: "Cautious" for the rest of the quarter
* Aeropostale shares falls 6.5 percent after hours
By Nivedita Bhattacharjee
Nov 28 Teen clothing retailer American Eagle
Outfitters Inc said it got off to a strong start fo the
holiday selling season and raised its earnings forecast for the
year, while Aeropostale Inc's forecast showed it expects
a tougher season than its rival.
Aeropostale, which has been losing out to its rivals as it
sees inconsistent demand from its young clients, said the
environment in the teen apparel space is still heavily
promotional. Analysts have said, however, that on basic items
like sweaters and T-shirts, Aeropostale was cutting prices more
than the competition.
"While our performance over the Black Friday weekend was
encouraging, the environment during the first few weeks of
November was challenging," Aeropostale's Chief Executive Thomas
Johnson said in a statement.
The Black Friday weekend, which typically starts the day
after Thanksgiving, prompted high levels of competition among
all teen retailers, as they tried to get more shoppers into
their stores. American Eagle and Abercrombie & Fitch
were running discounts of 40 percent.
But Aeropostale had discounts of 50 percent to 70 percent.
American Eagle, meanwhile, said its margins rose because of
fewer promotions compared with the last year.
"Our holiday season and fourth quarter have started off
strongly and consistent with our expectations," said American
Eagle Chief Executive Officer Robert Hanson.
"Against strong double-digit sales gains last year, we drove
positive comparable sales and record sales volumes on Black
Friday and over the Wednesday-through-Sunday period," Hanson
said on a conference call with analysts.
KEEPING UP WITH FICKLE TEENS
American Eagle, which prices its clothes in between peers
Abercrombie & Fitch Co and Aeropostale Inc,
earned $78.6 million, or 39 cents per share, in the third
quarter ended Oct. 27, up from $52.4 million, or 27 cents per
share, a year ago. Sales rose 11 percent to $910 million, the
company said in results released on Wednesday before the start
of the U.S. stock market's regular trading session.
After the closing bell on Wednesday, Aeropostale posted a
slightly bigger quarterly profit - $24.9 million, or 31 cents a
share, compared with $24.1 million, or 30 cents a share, in the
year-ago period - but its forecast for the quarter fell short of
estimates. For the fourth quarter, it expects to earn between 36
cents and 41 cents a share on an adjusted basis. Analysts, on
average, were expecting the company to earn 54 cents a share, as
per Thomson Reuters I/B/ES.
Aeropostale's stock fell 6.5 percent in after-hours trading
from its New York Stock Exchange close at $14.12.
"American Eagle is ... essentially driving its business by
chasing products into where the demand exists," said Brian
Sozzi, chief equities analyst of NBG Productions.
"To us, this shows the American Eagle buying teams are on
the pulse of teen fashion preferences; to generate more than 10
percent comparable sales on this type of lean inventory is
impressive," he wrote in a note.
American Eagle now expects full-year earnings of between
$1.38 and $1.40 per share from continuing operations, up from
its previous forecast of $1.33 to $1.36.
Analysts, on average, were expecting earnings of $1.37 per
share for the year, according to Thomson Reuters I/B/E/S.
The company's initiatives to keep its fashion fresh
resonated with its teen clientele, leading to a 10 percent jump
in same-store sales in the quarter ended Oct. 27.
American Eagle shares jumped 7.1 percent on Wednesday to
close at $20.77 on the News York Stock Exchange - up $1.38 from
their close on Tuesday at $19.39.