American Eagle sales dropped during Christmas shopping season
After a strong start to the Christmas shopping season over Thanksgiving weekend, sales at clothing retailer American Eagle Outfitters Inc. fizzled through December.
Those weak sales led American Eagle and several other retail chains to slash profit forecasts in their fiscal fourth quarters, which include the critical holiday shopping season when stores can make up to 40 percent of their annual sales.
The holiday season was challenging because many Americans still were contending with the effects of a shaky economic recovery. Weather was an issue, as snowstorms across the country kept some shoppers home. And the season was six days shorter, which meant less time for people to shop.
Retailers discounted early and often to get shoppers into stores. In fact, it was common to see sales of 50 percent off a store's entire stock of clothes during the final days of the season. It appears that the discounts got people to spend — sales for November and December rose a better-than-expected 2.7 percent to $265.9 billion, according to data tracker ShopperTrak. But the deep price cuts ate away at retailers' profits.
South Side-based American Eagle said on Thursday that revenue for the nine weeks ended Jan. 4 dropped 2 percent to $882 million, compared with $904 million for the nine weeks ended Dec. 29, 2012.
Results comparing stores open at least a year were even worse, dropping 7 percent.
“Following a solid Thanksgiving weekend, traffic and sales through Christmas week were on the low end of our expectations and the retail environment was highly promotional, pressuring margins,” CEO Robert Hanson said in a statement in which the company warned investors that its fourth-quarter profit would be at the bottom end of its previous guidance.
American Eagle expects its fourth-quarter net income to be 26 cents a share, excluding one-time charges. In the same period last year, American Eagle reported adjusted net income of 55 cents a share. The company will report financial results for the fourth quarter on March 11.
On Wall Street, the company's shares closed at $15.34, up 31 cents a share.
Bed Bath & Beyond Inc., a Union, N.J., company that owns Cost Plus World Market and Bed Bath & Beyond, this week lowered its earnings forecast for the fiscal fourth quarter and full year that ends early after its third-quarter results missed analysts' expectations. And Pier 1 Imports Inc., a Fort Worth, Texas-based chain that sells home decor, on Thursday downgraded its earnings forecast for the fiscal fourth quarter and full year, citing a disappointing December.
All told, Ken Perkins, president of RetailMetrics LLC, a research firm, said fourth-quarter earnings growth for the 120 stores he tracks are expected to be up 1.2 percent, the weakest performance since the 6.7 percent drop seen in the second quarter of 2009 when the economy was just coming out of the recession.
“This was a holiday season that most stores would like to forget,” he said.
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or email@example.com. The Associated Press contributed.