American Eagle Outfitters Inc.
) reported disappointing fourth quarter and fiscal 2013 results,
wherein its top and bottom lines declined from the prior-year
numbers. Results were impacted by lower sales and weak
merchandise margins, partially offset by effective cost
management. Battered by the dismal results and harsh winter
weather, the company came up with a bleak outlook for the first
quarter of fiscal 2014.
AMER EAGLE OUTF (AEO): Free Stock Analysis
AMER APPAREL (APP): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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Since the announcement of the dismal earnings results on Mar 11,
2014, shares of this apparel and shoe retailer have slumped 5.6%
while it has lost 16.1% year-to-date. Alongside, the stock
reached a 52-week low of $12.35 on Mar 26, 2014, closing a penny
above at $12.36.
This Pittsburgh, PA-based company delivered fourth-quarter fiscal
2013 adjusted earnings of 27 cents per share, plunging 50.9% from
55 cents in the prior-year quarter. Fiscal 2013 adjusted earnings
came in at 74 cents per share, reflecting a 46.8% decline from
$1.39 earned in fiscal 2012. However, the company's earnings for
both periods beat the Zacks Consensus Estimate by a penny.
American Eagle's net sales declined 6.7% year over year to
$1,041.7 million in the fourth quarter and came below the Zacks
Consensus Estimate of $1,065.0 million. Full-year sales totaled
$3,305.8 million, down 4.9% year over year, while it came
marginally ahead of the Zacks Consensus Estimate of $3,302.0
Noticing challenging business conditions as the harsh winter
weather disrupts product demand, American Eagle projects earnings
per share for the first quarter of fiscal 2014 to break even
against about 18 cents earned in the first quarter of fiscal
2013. The guidance is based on the company's anticipation of high
single-digit decline in comparable sales. Moreover, the company
expects inventory at cost per foot at the end of first quarter
2014 to decline in the mid single-digits.
Additionally, the dismal year-end results and tepid first-quarter
guidance have caused the Zacks Consensus Estimate to fall
substantially over the last 30 days. The estimate for
first-quarter fiscal 2014 fell by 13 cents to break even, while
for fiscal 2014 and 2015, it fell 26.4% and 19.3% to 64 cents and
88 cents per share, respectively.
Moreover, the last traded price of this Zacks Rank #4 (Sell)
stock is 17.6% below the Zacks Consensus average analyst price
target of $15.00. The company has long-term projected earnings
per share (EPS) growth rate of 10.3%, relatively lower than the
peer group average of 15.4%. It currently trades at a forward P/E
of 19.3x, a 19.9% premium to the peer group average of 16.1x.
Not all apparel stocks are performing as poorly as American
Eagle. Other better-ranked stocks in the apparel space include
Michael Kors Holdings Limited
American Apparel Inc.
). Of these, Hanesbrands and Michael Kors hold a Zacks Rank #1
(Strong Buy) while American Apparel carries a Zacks Rank #2