Investopedia: American Eagle's Down But Not Out

Nothing lasts forever in retailing; anyone younger than 35 probably has no idea what a "blue light special" is and once-popular retailers like Montgomery Ward and Service Merchandise are long gone. Even on a less dramatic level, there is a definite cyclicality to the retail business - few companies can manage their merchandising without missteps for years at a time, and that has been especially true in teen retailing. 

That said, it seems like too many analysts and investors are counting American Eagle Outfitters (NYSE:AEO) out of the fight prematurely. True, the company's same-store sales are not good right now, but this retailer is far from a goner and new leadership could be the catalyst to a more significant turnaround. (For background reading, check out The 4 R's Of Retail Investing.)

American Eagle's Disappointing Start to the Fiscal Year 

There wasn't much good news for American Eagle to crow about this quarter. Revenue dropped 6% (and missed estimates by more than 4%) as comps fell a surprising 8%. Sales were especially weak in women's merchandise as comps here were down 10% (versus a 5% drop in men's). Online sales were not much help either, as sales rose just 3%. 

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