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Why American Eagle Outfitters Stock Rose Today

By Rich Duprey – Updated Sep 30, 2020 at 4:27PM

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It may be much ado about nothing.

What happened

Shares of American Eagle Outfitters (AEO -2.03%) rose almost 6% on Wednesday after the clothing retailer announced it had appointed a new director to its board, bringing the total number to nine.

So what

Board appointments don't typically cause a stock to move, but Steven Davis is a former CEO of the Bob Evans restaurant chain and has served in various executive and management positions for several consumer-oriented brands, including Yum! Brands and Kraft General Foods. He is currently on the board of several others, including PPG Industries, Albertsons, and Marathon Petroleum.

Teens sitting on rocks

Image source: American Eagle Outfitters.

Now what

American Eagle will now have eight independent directors, and Davis' appointment will give the board additional diversity along with an individual who has significant experience with consumer brands and products.

But people tend to make more of a director's strengths than they're worth. Davis isn't involved in the day-to-day operations of the retailer, and though he can provide suggestions for a strategy to pursue, in the end investors would do well not to put too much stock in any appointment. 

American Eagle's fate will still be determined by its being able to understand consumer fashion choices (which isn't the same as running a restaurant), the overall retail environment, and whether shopping malls can continue to attract sufficient numbers of shoppers.

Rich Duprey 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.

Stocks Mentioned

American Eagle Outfitters Stock Quote
American Eagle Outfitters
AEO
$15.93 (-2.03%) $0.33

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