American Eagle Profits Fall

It has been a very bad earnings season with most fashion retailers in the teen fashion space getting beaten up and coming out with disappointing earnings. The latest to join the list is Pittsburg based American Eagle Outfitters whose profit fell 63% in the third quarter, to $9.03 million from $24.9 million in the year-ago period. Net revenue dropped to $854.3 million from $857.3 million. A similar weak outlook for the upcoming quarter has also been provided by the company’s major competitors including Aeropostale Inc and Abercrombie & Fitch Co.

“We managed the business better and were able to reduce markdown rates and control expenses,” said Jay Schottenstein, interim CEO. “Our ongoing priority to strengthen our business is reflected in the restructuring activities and efforts to drive a better customer experience through improved merchandising, customer engagement and building omni-channel capabilities.”

Sluggish mall traffic and increased online competition has seen American Eagle Outfitters struggle to stream in revenue growth over the last few quarters. The company is increasingly challenged by fashion fast competitors like Forever 21 and H & M who have been benefitting from the changing apparel preferences of US consumers as they look to more trendy clothes.