Market Overview

American Eagle Outfitters Tumbles After Earnings

Shares of American Eagle Outfitters (NYSE: AEO) sank on Wednesday, shedding over 11%. The company reported disappointing earnings before the opening bell.

For the fourth quarter, American Eagle posted earnings per share of $0.55 -- more than the $0.56 estimate, on revenue of $1.12 billion, which was inline with what analysts had been anticipating. American Eagle also raised its dividend, boosting it to $0.125 per share from $0.11, and announced a 20 million share repurchase program.

However, guidance for the first quarter was exceptionally poor. American Eagle expects to post earnings in the $0.15-0.19 range, far below the $0.25 estimate that the Street had been looking for.

On its earnings call, American Eagle noted that early spring mall traffic wasn't “as robust as we like.”

Is American Eagle's trouble firm-specific, or a sign of slowing consumption throughout the U.S.? Other retail stocks were little changed Wednesday. Abercrombie & Fitch (NYSE: ANF) shares were largely unchanged, while shares of Gap (NYSE: GPS) rallied nearly 1%.

In February, a leaked memo from a Walmart (NYSE: WMT) executive asked, “Where are all the customers? And where's their money?” The combination of rising payroll taxes and higher gas prices could be weighing on consumer spending.

Investors interested in the sector should look ahead to next Wednesday for the release of monthly retail sales data. Economists currently anticipate a gain of 0.3%.

Shares of American Eagle traded near $20 on Wednesday.

Posted-In: Earnings News Guidance Dividends Buybacks Intraday Update Movers Trading Ideas Best of Benzinga

 

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