American Eagle Outfitters (AEO) Could Be The Beneficiary In This Month’s Apparel Buying Activity

The clothing chain American Eagle Outfitters Inc. (AEO) was up 1.38% to $19.15 in the closing session of Friday.

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The company has recently released weaker third quarter results, posting declining income and revenues year on year. But the weakened results remained better than the forecast as well as Wall Street estimates which made the stock price to add 3.51% over the past 5 sessions while that has risen by more than 30% since the beginning of the year.

The third-quarter revenues of American Eagle Outfitters decreased 3 percent year-on-year to $1.03 billion compared to a quarter ago sales growth of 15%.  Many of the company’s stores were open again in the summer, but sales in the largest stores dropped by 11 percent year-on-year due to decreased foot traffic in shopping centers. Some of the losses, however, were offset by solid Aerie brand sales and e-Commerce. In the past year these segments of American Eagle Outfitters added 34 percent and 29 percent respectively.

Earnings from American Eagle Outfitters were $0.35 per share, higher than the expectations of Wall Street. GAAP earnings decreased to $0.32 per share year-on-year by 33 percent.

Traditionally, the fourth quarter in the US is characterized by high buying activity, but due to the second wave of the COVID-19 pandemic, this year may vary from previous years. The company is not committed to project the effect of this factor, so it does not have a forecast for the fourth quarter and the year as a whole. Wall Street analysts however are generally positive about the US apparel sales rebound and consider American Eagle Outfitters to be one of the possible beneficiaries.

Today the company has more than 930 branded American Eagle Outfitters stores and more than 330 branded Aerie stores. American Eagle Outfitters Inc. (AEO) is one of the most popular brands among teenagers: in the Piper Jaffray survey, the company was ranked second (after Nike).