Traffic Drop Hurts American Eagle Outfitters in 2Q

Fewer customers are shopping at American Eagle Outfitters, and the teen retailer expects a big drop in profit in the current quarter as it deals with tough competition.

The Pittsburgh company’s outlook for its fiscal third quarter, which runs through October, was also well below Wall Street’s view. Shares fell nearly 10 percent Wednesday.

“Our second-quarter results reflected disappointing product execution in women’s. Additionally, we faced a highly promotional and competitive retail landscape and a decline in traffic, which have continued into the third quarter,” said American Eagle CEO Robert Hanson in a statement.

American Eagle Outfitters Inc. is the latest retailer to post disappointing results. Chains including Wal-Mart, Kohl’s, Macy’s and Saks have recently cut their outlook for the year, raising worries about consumer spending. And Target Corp. on Wednesday sounded the latest warning on cautious consumers. It said its earnings per share this year would come in at the low end of its guidance.

For the quarter that ended Aug. 3, American Eagle’s net income rose 3 percent to $19.6 million, or 10 cents per share. Revenue fell 2 percent to $727.3 million. The company had preannounced its second-quarter results two weeks ago.

Revenue at established stores open at least a year and from the company’s websites dropped 7 percent. This figure is a key indicator of a retailer’s health, because it excludes results from stores recently opened or closed.

For the third quarter, the chain expects profit of 14 cents to 16 cents per share. Analysts predicted 35 cents per share. It’s also a steep fall from its earnings per share from continuing operations of 41 cents in last year’s quarter.

American Eagle runs more than 1,000 stores in North America. It also has merchandise available at 59 international franchise stores in 12 countries.

The stock declined $1.62, or 9.9 percent, to close at $14.76. Shares have lost 28 percent this year.