Investors aren't buying American Eagle's excuses
The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
The company reported sales that were down 7 percent for the quarter, citing the harsh winter weather as a cause. But sales for the full year were also down by 5 percent, which gave investors cause for concern that there was more than just the cold weather at play here.
On Tuesday's installment of Stock of the Day, host Mark Reeth and Motley Fool analyst Taylor Muckerman discuss what else may have pulled the company down.
Taylor notes that other teen apparel retailers with a large presence in shopping malls, such as Abercrombie & Fitch (ANF) and Urban Outfitters (URBN), did not report the same weakness that American Eagle did, and says that American Eagle's CEO himself stated that the company did a poor job of attracting customers into their stores.
Further, Taylor isn't a fan of the company's target market to begin with. The 15- to 25-year-old demographic can be a difficult one since they often don't have their own money to spend. Taylor is far more interested in other retailers focusing on more high-end consumers now that the economy is in recovery.
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