American Eagle to Close Stores in Glum Day for RetailersLauren Coleman-Lochner and Lindsey Rupp
American Eagle Outfitters Inc. announced plans to close an additional 150 stores after posting sluggish sales today, joining a cluster of North American retailers with lower-than-predicted results.
The teen-apparel chain, which is seeking a new chief executive officer, will close the locations over the next three years. Last quarter, sales at stores open at least a year declined 10 percent, worse than the 7.8 percent drop analysts had estimated. Shares of the Pittsburgh-based company fell 6.4 percent to $10.60 at the close in New York.
Retailers including PetSmart Inc., Target Corp. and Sears Canada Inc. also reported same-store sales declines today, underscoring the impact of a particularly cold winter and still-shaky consumer confidence. Not all companies are suffering: Tiffany & Co., the luxury-jewelry chain, beat profit estimates today and raised its annual forecast. At the lower end of the scale, though, it remains a tough environment for retailers, said Ken Perkins, president of research firm Retail Metrics Inc.
“They’re facing significant consumer headwinds,” said Perkins, whose firm is based in Swampscott, Massachusetts. “Most middle-income and lower-income consumers don’t have much discretionary money.”
PetSmart, the largest pet-store chain, cut its annual earnings forecast to $4.29 to $4.39 a share, down from a range of as much as $4.54. Comparable-store sales dropped 0.6 percent last quarter, missing the 1.5 percent gain that analysts had estimated. Its stock dropped 8.3 percent to $57.02, marking the biggest one-day decline in more than a year.
“We did not achieve our sales goals, which were impacted by a challenging and volatile consumer environment and a competitive market,” David Lenhardt, CEO of Phoenix-based PetSmart, said in a statement.
At Sears Canada, a department-store chain that’s majority-owned by Sears Holdings Corp., its quarterly net loss widened to C$75.2 million ($69 million), or 74 cents a share, from C$31.2 million, or 31 cents, a year earlier. Sales fell 11 percent to C$771.7 million.
The business’s struggles have prompted its U.S. parent to consider a sale or spinoff of its remaining 51 percent stake. Sears Holdings, run by hedge-fund manager Eddie Lampert, said last week that it will hire an investment bank to study options for the Canadian operation, which has a total market value of about $1.4 billion.
In the most recent quarter, a late spring took a toll on sales, Sears Canada CEO Douglas Campbell said today.
“Sales of spring merchandise were below last year, as winter-like weather was prevalent in most parts of the country well into the new season,” he said in a statement.
Even as shopping-mall traffic slows, consumers are spending money elsewhere, Perkins said. That includes big-ticket items such as cars, as well as mobile-phone and cable bills, he said. That diversion of funds is contributing to a slower recovery for the retail industry.
“Unfortunately, it doesn’t look like any sort of significant snapback or rebound that everybody was hoping for,” Perkins said.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Deutsche Bank's Bad News Gets Worse With $35 Billion Flub
- Wells Fargo's $1 Billion Pact Gives U.S. Power to Fire Managers
- Oil Erases Losses as Impact of Trump Tweet on High Price Fizzles
- The U.K. Just Went 55 Hours Without Using Coal for the First Time in History
- Why a Cashmere Sweater Can Cost $2,000 … or $30