So Far So Good For American Eagle Outfitters This Year

Checks indicate American Eagle Outfitters AEO is on track to achieving comparable sales slightly above the consensus estimate of 3 percent, BlueFin Research Partners’ Rebecca Duval said in a report. She maintained a Market Outperform rating on the company, with a price target of $22.

For the past couple of year, American Eagle Outfitters has “implemented an improved merchandising strategy, stepped up its product and got inventory under control,” resulting in fewer markdowns as well as gross margin expansion, Duval noted.

American Eagle Outfitters’ performance was strong in FY 2015, when the company not only outperformed other teen retailers, but was also among the best performing specialty merchants.

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Performance In FY 2016

There have been investor concerns around whether the company would be able to continue executing and achieving and comp growth in FY16. “So far, this worry seems to have been quelled for the most part as AEO has either met or exceeded expectations for the 1H:16,” Duval wrote.

Although American Eagle Outfitters is operating against a backdrop of poor traffic trends, the company has been able to “buck the trend” and acquire consumers who are still spending on apparel. Channel checks indicate that American Eagle Outfitters is pleased with the FYQ3 sales trends, especially over the last five weeks, the analyst stated.

“At this point in the quarter, we think comparable sales are trending slightly above consensus estimate of up 3%,” Duval commented.

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