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Why American Eagle Outfitters Outdid Its Peers

By Rhian Hunt – Jun 10, 2020 at 2:31PM

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A quick pivot to e-commerce helped it outperform the industry.

While some apparel and footwear companies saw their profits, revenues, and stock prices hammered deep into negative territory by the COVID-19 pandemic, a handful of others, including American Eagle Outfitters (AEO 1.03%) managed to outperform. American Eagle's resilience comes mostly from its online sales, which popped 33% during the first quarter of 2020, and rose even more once the coronavirus effectively shut down retail.

According to Zacks, American Eagle's e-commerce strength allowed its stock value to rise more than 30% between mid-March and now, outpacing the apparel sector's 20% rebound. Morgan Stanley analysis pointed out that the company's 77% digital sales growth in May continued at levels seen in April, suggesting the online boom is ongoing even after American Eagle started reopening its brick-and-mortar stores.

Upward moving arrows grow out of a business man's open hand.

Image source: Getty Images.

Other clothing and shoe sector companies focused on a vigorous online sales push have seen impressive, industry-leading gains during and after the worst of COVID-19. Skechers (SCX -1.97%) saw its share price jump 11% in May, 244% faster than the 4.5% in the S&P 500 over the same period. At the same time, its Q1 online retail sales soared by 70%, followed by scorching 250% growth in April.

Abercrombie & Fitch (ANF 2.06%) followed a similar trajectory, posting 32% stock value gains, leaving more modest sector growth in the dust. Its already strengthening digital sales accelerated more as COVID-19 struck, delivering $275 million in fiscal Q1 2020, then gaining even faster in April and May.

The data appears to suggest those apparel companies focusing on winning online purchases are those surpassing their competitors' performance and that of the market as a whole.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

American Eagle Outfitters Stock Quote
American Eagle Outfitters
AEO
$10.79 (1.03%) $0.11
Abercrombie & Fitch Stock Quote
Abercrombie & Fitch
ANF
$16.38 (2.06%) $0.33
L.S. Starrett Stock Quote
L.S. Starrett
SCX
$9.38 (-1.97%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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