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Investors Aren't Buying American Eagle's Excuses

By Mark Reeth and Taylor Muckerman - Mar 11, 2014 at 1:00PM

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American Eagle takes a hard hit on the market today after blaming the weather for its quarterly sales decline. But can it also blame the weather for the decline in full-year sales?

Shares of American Eagle Outfitters ( AEO 0.23% ) fell today after the company disappointed on its fourth-quarter earnings. The retailer reported sales that were down 7% for the quarter, citing the harsh winter weather as a cause, but sales for the full year were also down by 5%, which gave investors cause for concern that there was more than just the weather at play here.

On Tuesday's installment of Stock of the Day, host Mark Reeth and Motley Fool analyst Taylor Muckerman discuss what else may have pulled the company down. Taylor notes that other teen apparel retailers with a large presence in shopping malls, like Abercrombie & Fitch and Urban Outfitters, did not report the same weakness that American Eagle did, and says that American Eagle's CEO himself stated that the company did a poor job of attracting customers into its stores.

Furthermore, Taylor isn't a fan of the company's target market to begin with. The 15-to-25-year-old demographic can be a difficult one, since these customers often don't have their own money to spend. Taylor is far more interested in other retailers focusing on more high-end consumers now that the economy is in recovery.

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Stocks Mentioned

American Eagle Outfitters, Inc. Stock Quote
American Eagle Outfitters, Inc.
AEO
$26.32 (0.23%) $0.06
Abercrombie & Fitch Co. Stock Quote
Abercrombie & Fitch Co.
ANF
$34.93 (-1.08%) $0.38
Urban Outfitters, Inc. Stock Quote
Urban Outfitters, Inc.
URBN
$31.60 (0.16%) $0.05

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

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