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Ahead of the Bell: American Eagle Outfitters

January 23, 2014

NEW YORK (AP) American Eagle Outfitters Inc.'s stock is falling in premarket trading on Thursday after the teen retailer announced CEO Robert Hanson is leaving. The announcement on Wednesday came after a disappointing holiday sales season for the Pittsburgh -based company. Earlier this month American Eagle said total revenue for the nine-week period ended Jan. 4 fell 2 percent while revenue in stores open at least one year, a key retail metric, declined 7 percent. American Eagle named Executive Chairman Jay Schottenstein as interim CEO. Jefferies' analyst Randal Konik said in a client note that the announcement of Hanson's departure came as a surprise. The analyst said that he liked Hanson's work, saying he was instrumental in the 2012 turnaround at the company. But Konik said he's encouraged by senior management's commitment to stabilizing the business. The analyst said that investors probably won't react favorably to the announcement, but that it likely is the last of the bad news. "With fundamentals looking up from here, we would be aggressive buyers on any pull back in the stock," he wrote. Konik maintained a "Buy" rating and $19 price target. Eric Beder of Brean Capital said that he was disappointed Hanson is leaving American Eagle, saying he considered him the best and most well-balanced among CEOs for teen retailers that also include Aeropostale Inc. and Abercrombie & Fitch Co. Beder said American Eagle's reaffirmation its fourth-quarter outlook left him "somewhat relieved that current performance was not an issue." The analyst kept a "Buy" rating, but said that any shift away from the current business model back to "growth for growth's sake" would lead to a downgrade. Shares of American Eagle fell 76 cents , or 5.3 percent, to $13.55 in premarket trading about 1 hours before the market open.


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Source: Associated Press


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