Time will tell if the current ugliness in teen-oriented retail is
tied to economic issues or a more fundamental shift towards
value-oriented and fast-fashion retailers. As one of the established
leaders of the teen retailer space, American Eagle Outfitters (AEO) has a lot to lose if its the latter, and the company's sales are suffering amidst a highly promotional environment.
With
the surprising removal of its CEO about a month ago, American Eagle has
to find a new leader at a challenging time in the sector. The company's
brand identity, strong store footprint, and clean balance sheet work in
its favor, but there is an undeniable risk that the company will not
evolve with the times. My expectations for American Eagle's future
growth are quite low, and the Street is expecting very little from this
company, and I believe there is some appeal here for turnaround
investors.
Read more here:
American Eagle Offers Some Value, But Large Execution Risks
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