American Eagle Outfitters Earnings: What to Expect Tuesday

Retailers have struggled through a tough holiday season, and investors are bracing for the worst with American Eagle. Will their fears come true?

Mar 10, 2014 at 11:53AM

American Eagle Outfitters (NYSE:AEO) will release its quarterly report on Tuesday, and investors expect to see the impact of a tough holiday quarter on the teen retailer's earnings. Even though the damage likely won't be as bad as most expect from Aeropostale (NYSE:ARO), investors hope that American Eagle can produce the strong positive surprise that Abercrombie & Fitch (NYSE:ANF) gave its shareholders in its earnings report.

The teen-retail environment has become cutthroat from a competitive standpoint, as American Eagle, Abercrombie, Aeropostale, and a host of other players in the industry strive to earn the loyalty of teen shoppers. Yet recently, times have gotten even harder for the retail group, as the most recent holiday season included widespread promotional discounting and margin-crushing efforts to clear inventory even at much lower prices in some cases. What will the net effect of this trend be on American Eagle? Let's take an early look at what's been happening with American Eagle Outfitters over the past quarter and what we're likely to see in its report.


Stats on American Eagle Outfitters

Analyst EPS Estimate


Change From Year-Ago EPS


Full-Year 2013 Revenue Estimate

$1.04 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will American Eagle earnings bounce back?
In recent months, analysts have gotten much less optimistic about American Eagle Outfitters earnings, cutting January-quarter estimates by a dime per share and projections for the current fiscal year by about 15%. The stock has mirrored that bad news, falling 11% since early December.

We've already gotten a sense of how American Eagle's holiday quarter went, with the company having said in January that the key nine-week period ending January 4 showed a 7% decrease in same-store sales. The retailer also guided earnings to the lower end of its previously expected range, with comments about the highly promotional environment that mimic what Abercrombie, Aeropostale, and others have said about the holiday quarter.

But the departure of CEO Robert Hanson in January was even more troubling, as it came without much warning. For American Eagle, having to find new leadership is just another hurdle for the retailer to overcome, although it does potentially set the stage for a transformative change in strategy if the company wants to move in another direction. The grittier Urban Outfitters (NASDAQ:URBN) could provide one model to follow, as it managed to boost holiday sales by 6% on a 1% increase in comps on the strength of its more distinctive approach to merchandise selection and marketing.

One question American Eagle investors have is whether activist investors might take a bigger interest in the company. So far, rival Abercrombie has attracted a lot of activist attention, with criticism directed at Abercrombie CEO Mike Jeffries and an impending proxy battle from hedge fund Engaged Capital. American Eagle might learn some lessons from Abercrombie's experience, as both have struggled lately to connect with fashion-conscious shoppers.

Still, American Eagle is making efforts to boost sales. Its aerie Real campaign is designed to poke back at Abercrombie and some of the controversy it has seen lately, as the American Eagle lingerie division features un-airbrushed models of all sizes to market to "the real you." If American Eagle can capitalize on the flak that Abercrombie has taken about its lack of plus-size offerings, it could prove a useful differentiator in the competitive industry.

In the American Eagle earnings report, watch to see how the retailer is handling its leadership transition. Without a quick but constructive resolution to the leadership vacuum, American Eagle will have trouble keeping up in a rapidly changing competitive environment.

Find a prettier stock
Don't settle for a stock you're not sure about. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those rare stocks that could make you truly rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Click here to add American Eagle Outfitters to My Watchlist, where you can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers