Teen retailing is a fickle business where nothing lasts forever. American Eagle Outfitters (NYSE:AEO) knows this as well as any company, as the history of this name has included multiple periods of strong comps growth followed by multi-year funks and eventual recovery. As the company seems to be transitioning from funk to recovery, some key questions for investors relate to whether management can maintain the sales momentum, and whether it can couple that with solid margin improvements.
Coming Out Of The Funk, But At What Cost?
American Eagle certainly had a rough go of it lately, as the company misfired on its product assortments and lost momentum to other teen retail rivals like Aeropostale (NYSE:ARO), rue21 (Nasdaq:RUE), Buckle (NYSE:BKE) and most recently Hennes & Mauritz. Management didn't just surrender the field, though, and results have been improving steady - from negative 10% comps in 2008 to negative 4% in 2009, negative 1% in 2010 and recent positive comps.
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