American Eagle Tumbles as Earnings Trail Forecast

American Eagle Outfitters Inc. (AEO), a teen-apparel chain, tumbled the most in more than three years after saying second-quarter profit was less than it forecast amid disappointing sales of women’s clothing.

The shares slid 12 percent to $17.57 at the close in New York, the most since May 26, 2010. The company said yesterday earnings for its most recent quarter were as much as 52 percent lower than its forecast.

Preliminary same-store sales, including online transactions, fell 7 percent in the second quarter, compared with an 8 percent increase a year earlier, the company said. A “highly promotional retail environment” that intensified last month and weak customer traffic also affected the results, according to a statement.

“The teen customer is still very constrained,” Pamela Quintiliano, a New York-based analyst at SunTrust Banks Inc. (STI), said in a phone interview. “It’s going to be a very difficult back half of the year for all the teen retailers,” said Quintiliano, who has the equivalent of a hold rating on the shares.

Sales could be further affected as retailers begin stocking fall and back-to-school products, she said.

Earnings in the quarter ended Aug. 3 were about 10 cents a share, less than the forecast of 19 cents to 21 cents, the company said. Revenue decreased about 2 percent.

American Eagle broadened its markdowns to clear out excess inventory for a “clean” position in the third quarter, Chief Executive Officer Robert Hanson said in the statement.

“Our efforts are keenly focused on strengthening our women’s business and ensuring our assortments are compelling, innovative and balanced across core, core fashion and fashion,” Hanson said.

American Eagle will report full second-quarter results Aug. 21.

The shares had declined 14 percent this year, compared with a 19 percent gain in the Standard & Poor’s 500 Index.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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