Those of you who follow retail are likely not surprised that there have been mixed messages today from retailers, many of which reported September same-store sales. What with hurricanes Katrina and Rita and rising gas prices, one can assume that while some retailers might see their sales falter (investors should be wary of some of the headlines), stronger ones would persevere. A case in point seems to be American Eagle Outfitters
It's arguable that the teen demographic represents one that can be a little bit more resilient despite economic fears that grip their adult counterparts (although it's also arguable that parents ultimately hold the purse strings for many of these shoppers). However, today's retail same-store sales figures bode well for companies that target teens -- such as Abercrombie & Fitch
American Eagle Outfitters reported September same-store sales up 13%, exceeding Wall Street analysts' expectations of 10%. Total sales for the period increased a very healthy 21%. In this case, it wasn't an easy comparison to last year that helped American Eagle shine -- in September 2004, its same-store sales increased a whopping 23%.
It seems that American Eagle knows what its teen customers are looking for these days (as you might recall, American Eagle had some tough times back in 2003, when investors yearned for the turnaround the company has since executed). And, of course, retailers are always subject to changing styles and increasingly difficult comparisons.
Lately, American Eagle has been enjoying quite an upward trend. Recently, my Foolish colleague Stephen Simpson took a look at American Eagle's solid second-quarter results. And earlier this year, another fellow Fool, Nate Parmelee, pointed out that American Eagle sweetens the deal for investors by offering a dividend -- which is an element that certainly could make it easier for some investors to justify weathering the ups and downs inherent in fashion-oriented investing.
It seems a bit surprising, given American Eagle's success, that its shares don't even look that pricey at first glance (a P/E of 14 sounds downright cheap compared to some of its rivals). Given its success despite a time when many retailers seem to be suffering a period of malaise, now might be a good time to take a closer look at American Eagle.
Looking for stocks that are great bargains? Try a free trial to Motley Fool Inside Value , where Philip Durell pinpoints stocks many investors have overlooked, companies that are down but not out as a result of their inherent value.
Alyce Lomax does not own shares of any of the companies mentioned.