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UPDATE 1-American Eagle Outfitters closing Martin+Osa
March 9, 2010 / 10:30 PM / 8 years ago

UPDATE 1-American Eagle Outfitters closing Martin+Osa

* Closing all 28 Martin+Osa stores and online business

* Closures substantially complete by end of Q2 of FY10

* Shares up 6.4 percent in afterhours trade

LOS ANGELES, March 9 (Reuters) - American Eagle Outfitters Inc (AEO.N) is closing all 28 of its Martin+Osa clothing stores and the chain’s online business after the concept failed to meet internal targets, the teen retailer said on Tuesday.

“The brand was not achieving performance levels that warrant further investment,” the company said in a statement.

Shares of American Eagle were up 6.4 percent in afterhours trade following the closure announcement.

The store closures are expected to be substantially complete by the end of the second quarter of fiscal 2010, at the end of July.

In fiscal 2009, Martin+Osa generated an after-tax loss of $44 million, including a non-cash impairment charge of $11 million, net of tax.

The company said it expects the related fiscal 2010 cash outflow, net of associated tax benefits, to be between $10 million to $40 million after taking account of pre-tax charges of $32 million to $77 million for lease-related, severance and other charges. In addition, the company expects around $29 million of non-cash, pre-tax impairment charges and inventory write-downs.

The retailer said it would focus its efforts and resources on the American Eagle family of brands including AE, aerie and 77kids, which have a greater potential of creating long-term shareholder value.

The company said it planned to book the charges over the first and second quarters of fiscal 2010.

Earlier this month, American Eagle reported February same-store sales rose 6 percent and it affirmed its fourth-quarter earnings outlook of 32 cents to 33 cents per share, excluding items. Analysts were expecting 33 cents per share.

Shares of American Eagle rose to $18.25 in extended trading from their $17.15 close in the regular session. (Reporting by Lisa Baertlein; Editing by Tim Dobbyn)

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