American Eagle Q2 Profit Slips 66% on Charges; Forecast Falls Short (AEO)

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Teen clothing retailer American Eagle Outfitters ( AEO ) on Wednesday said its second quarter profit plunged 66% from last year due to charges stemming from the closure of its underperforming Martin+Osa chain.

The Pittsburgh-based company reported second quarter net income of $9.7 million, or 5 cents per share, compared with $28.6 million, or 14 cents per share, in the year-ago period. Excluding one-time items, adjusted profit was 13 cents per share.

Net sales fell less than 1% from last year, to $651.5 million, while same-store sales fell 1%.


On average, Wall Street analysts expected a matching adjusted profit of 13 cents per share, albeit on higher revenue of $654.6 million.

Looking ahead, the company forecast third quarter profits to range from 23 cents to 26 cents per share, down from 32 cents per share last year. That estimate fell shy of analyst estimates of 27 cents for the third quarter.

American Eagle shares fell 24 cents, or -1.9%, in premarket trading Wednesday.

The Bottom Line
We had removed shares of AEO from our "recommended" list last Sept.29, when the stock was trading at $15.90. The company has a 3.52% dividend yield, based on last night's closing stock price of $12.49. The stock has technical support in the $10 price area. If the shares can firm up, we see overhead resistance around the $14 price level. We would remain on the sidelines for now.

American Eagle Outfitters ( AEO ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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