American Eagle Rises as Preliminary Earnings Beat Estimatesby
American Eagle Outfitters Inc. rose the most in almost a year after reporting preliminary third-quarter earnings that topped analysts’ estimates, helped by a lower dependence on discounts.
Profit in the quarter through October was about 34 cents a share, Pittsburgh-based American Eagle said Tuesday in a statement. That tops the company’s forecast of 28 cents to 31 cents and beats analysts’ 31-cent average projection. The retailer plans to provide full third-quarter results on Dec. 2.
American Eagle, which hasn’t had a permanent chief executive officer for almost two years, has boosted sales by adding on-trend denim and bohemian-chic styles while reducing its reliance on promotions and price cuts. In a move to keep distancing American Eagle from its discount-heavy peers, the retailer on Tuesday said it bought designer Todd Snyder’s Tailgate Clothing Co., which makes vintage-inspired collegiate sportswear, as well as his eponymous high-end menswear line for $11 million in cash and stock.
The shares climbed 7.9 percent, or $1.20, to $16.46 in New York trading, the biggest gain since Nov. 12. American Eagle has gained 19 percent this year. The shares now trade at about 18.3 times earnings, a 14 percent discount to the Standard & Poor’s Midcap 400 Index.
Also gaining after stronger-than-expected preliminary results was Limited Brands Inc., the owner of the Victoria’s Secret lingerie brand. Third-quarter earnings were 51 cents to 53 cents a share, the Columbus, Ohio-based company said Monday in a statement. That topped its forecast of as much as 45 cents and beat analysts’ 48-cent average projection. The shares rose 3 percent, or $2.93, to $99.38.