Northwest Arkansas Democrat-Gazette
Teen chains facing tests
Teen clothing chains Abercrombie & Fitch and American Eagle Outfitters have both enjoyed a solid start to the back-to-school shopping season, fueled by new looks in denim and a stronger economy.
But both companies’ shares swooned despite their second-quarter figures because investors worried about the challenges ahead.
Traditional teen retailers have seen shoppers buy more online and at fast-fashion retailers like Forever 21 and off-price stores like T.J. Maxx. But they’re also now confronting the resurgence of some department stores like Kohl’s and new fashions from discounters like Target.
American Eagle Outfitters posted better-than-expected sales and profits for the second quarter, but delivered a disappointing profit outlook for the current quarter on lower-than-expected sales for its Aerie lingerie label.
Abercrombie & Fitch delivered second-quarter sales that fell short of Wall Street estimates, hurt by its Hollister division selling out of its summer clothing too soon in an unusually hot season in Europe. Adjusted quarterly profit beat analysts’ expectations. But investors are worried that it’s more than a temporary weather issue.
“It’s still tough out there,” said Ken Perkins, president of Retail-Metrics LLC. “The teen consumer is somewhat fickle, but they’re also price-sensitive.”