Aug. 27 (Bloomberg) -- American Eagle Outfitters Inc., the U.S. retailer of clothing for 15- to 25-year-olds, said second- quarter profit dropped as teenagers and college students pared spending on its t-shirts and hooded sweatshirts.

Net income fell to 14 cents a share from 29 cents a year earlier, the Pittsburgh-based company said today in a statement. The retailer said Aug. 6 that earnings would be 16 cents. Profit excluding a tax benefit was 12 cents a share. Analysts predicted 15 cents, the average of estimates compiled by Bloomberg.

Sales at stores open at least a year dropped 10 percent in the three months ended Aug. 1, the company reiterated. Aeropostale Inc., the mall-based teen retailer that sells clothes at low prices, reported last week that comparable-store sales advanced 12 percent in that period as young shoppers sought bargains.

American Eagle fell 58 cents, or 4 percent, to $14 at 4:10 p.m. in New York Stock Exchange composite trading. The stock has risen 50 percent this year. Aeropostale has more than doubled over the same period.

American Eagle’s net income fell 52 percent to $28.6 million from $59.8 million, and included a foreign-currency loss of 2 cents a share.

Gross margin, the share of sales after subtracting the cost of good sold, narrowed to 37.8 percent from 42 percent a year earlier. Aeropostale’s gross margin widened to 36.6 percent from 33.4 percent in the period.

More Markdowns

The merchandise margin dropped 1.9 percentage point because of markdowns and rising promotional costs, American Eagle said.

Third-quarter profit including a 5-cent tax gain will fall to 22 cents to 25 cents a share from 30 cents a year earlier, the company said. Analysts predict earnings excluding some items of 24 cents a share.

Revenue declined 4.5 percent to $657.6 million, the retailer reiterated.

While business remained challenging during the second quarter, American Eagle’s redesigned denim collection and women’s clothes are selling well in the back-to-school season, Chief Executive Officer Jim O’Donnell said in the statement.

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: August 27, 2009 16:20 EDT