American Eagle quarterly profit falls 6.4 percent

By Nicole Maestri

NEW YORK (Reuters) - American Eagle Outfitters Inc (AEO.N: Quote, Profile, Research, Stock Buzz) reported a 6.4 percent drop in quarterly profit on Wednesday, but shares of the teen retailer rose as the results met Wall Street expectations and it stuck by its forecast for the current period.

The mall-based chain, known for its colorful fashions for young men and women, said it would adjust to tough market conditions by cutting expenses and taking a more conservative approach to stocking inventory this year.

"In today's world, everyone wants to know what your inventories are," said retail analyst Jennifer Black of Jennifer Black & Associates.

That the company achieved a 21 percent operating profit margin on same-store sales that fell 2 percent in the quarter was "truly impressive," Black said.

On a conference call with analysts, Chief Merchandising Officer Susan McGalla said the retailer's No. 1 priority was improving its struggling women's business, a key driver of sales.

American Eagle shares, which through Tuesday had fallen about 17 percent this year, were up nearly 7 percent in late-morning trading.

Net income for the fourth quarter that ended February 2 fell to $140.5 million, or 66 cents per share, from $150.2 million, or 66 cents per share, a year earlier, when there were more shares outstanding.

The results met the analysts' average outlook, according to Reuters Estimates. Last week American Eagle said it expected to report earnings of 66 cents a share, up from its previous forecast of 64 cents to 65 cents.