Will American Eagle Suffer the Same Fate as Aeropostale?
American Eagle Outfitters (AEO) Consumer Discretionary - Specialty Retail | Reports May 18, After Market Closes
Key Takeaways
The Estimize consensus is calling for earnings of 18 cents per share on $730.07, right in line with Wall Street on both the top and bottom line
American Eagle’s turnaround has been led by the wildly successful Aerie brand
Aeropostale’s recent move to file for bankruptcy might be a sign of things to come in the teen space
What are you expecting for AEO? Get your estimate in here!
Teen retailers may not be a thing of the past after all. During the fourth quarter both Abercrombie and American Eagle delivered robust turned back the clock with strong earnings and revenue growth. American Eagle kicks things off this week when they announce first quarter earnings this Wednesday, after the market closes. Early indications look as if the company will extend its current streak of growth.
The Estimize consensus is calling for earnings of 18 cents per share on $730.07 million in revenue, right in line with Wall Street on the top and bottom line. Per share estimates have come down 9% in the past 3 months but still project a 21% increase from a year earlier. Revenue on the other hand is forecasted to increase 5% over the same time frame. On average the stock is a positive mover during earning season. In the 3 days leading up to its report, shares typically increase 3%. This should help reconcile some of the losses that shareholders have been seeing lately. After a tough few years, American Eagle has finally started to turn things around. Last quarter saw strong growth across its key brands. Consolidated comparable sales grew 4% supported by a 26% increase in aerie brands and 3% growth in core AE products. Factory stores finally broke even, compared to a 9% contraction from Q4 2014. The company provided favorable guidance for the first quarter and fiscal year 2016. American Eagle portfolio of established brands should continue to reach its target customers, led by its Aerie Brand.
Unfortunately, American Eagle is not fully in the clear yet. The company still operates in a highly concentrated retail industry against Abercrombie, Gap and H&M. Aeropostale’s recent move to file for bankruptcy may also be a sign of things to come in the teen space. Meanwhile, American Eagle is overly dependent on outside suppliers, so any disruption in this process could have a devastating impact. Do you think AEO can beat estimates? There is still time to get your estimate in here!
Photo Credit: Mike Mozart