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What: Shares of American Eagle Outfitters (NYSE:AEO) were diving like a hawk again today, falling as much as 11%, and finishing down 8% after announcing that CEO Robert Hanson would be leaving the company.
So what: The nature of Hanson's departure was unclear, though the company said, "The board and Robert decided mutually that it was best to part ways at this time." American Eagle's recent results, along with teen retail peers Abercrombie & Fitch and Aeropostable, have been miserable, and American Eagle said earlier this month that it expects a 7% decline in same-store sales for the fourth quarter. The company appointed Jay Schottenstein, Executive Chairman of the Board, to serve as interim CEO as it begins its search for a permanent chief. Vice Chairman and Executive Creative Director Roger Markfield also agreed to delay his retirement to stay on in those roles.
Now what: American Eagles shares hit a new 52-week low on the news as Hanson was considered a Wall Street darling by many analysts, but I think the market may be misreading this. Though much of American Eagle's struggles have to do with industrywide forces and changing consumer tastes, a new leader is far from a bad thing for a company losing sales. Schottenstein had served for 10 years as CEO, so American Eagle figures to be in good hands with him at the helm. Management maintained its outlook from its fourth-quarter update two weeks ago, and investors should expect to learn about the leadership transition and any new direction planned for the company at its next earnings report on March 11.
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