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What: Shares of teen-oriented apparel retailer American Eagle Outfitters sank 11% today after its first-quarter outlook disappointed Wall Street.
So what: The company's fourth-quarter profit spiked 85% on a solid revenue increase of 8.6%, but downbeat guidance for the current quarter is triggering concerns over slowing growth going forward. Management blamed the weak outlook on the sluggish economy and bad weather, but investors are likely more concerned that the American Eagle brand might be losing some of its appeal.
Now what: Management now sees first-quarter adjusted EPS of $0.16-$0.19, vs. Wall Street's view of $0.25. "We remain focused on our strategic plan aimed at fortifying our brands and processes and growing our business across North America," said CEO Robert Hanson. "Concurrently, we are laying the ground work for transformational global expansion, while continuing to drive strong returns to our shareholders." With the stock now well off its 52-week highs and trading at a forward P/E of 12, buying into that bullishness might not be a bad idea.
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The article Why American Eagle Shares Plunged originally appeared on Fool.com.
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