Stifel Affirms American Eagle Outfitters (AEO) at 'Hold'; Turnaround Still 'Hazy'

Stifel comments on American Eagle Outfitters (NYSE: AEO) following Q2 results offered earlier Wednesday. The firm has AEO at Hold.

Analyst Richard Jaffe commented:

• Guidance In-Line with Consensus – Management is somewhat cautious regarding 3Q and has issued guidance in-line with our estimate and the Street. AEO’s 3Q EPS guidance is $0.17-$0.19 with a mid single digit comp decline. This is vs. a depressed $0.19 LY.

• Inventory In Good Shape – Excluding the change in ownership terms, ending inventory per square foot is down in the mid single digits, in-line with management’s guidance. Importantly clearance units are below LY’s levels, which should help limit gross margin pressure in the 3Q.

• Reiterate Hold - Looking forward, we believe visibility for the turnaround of the business is hazy. We believe there is uncertainty surrounding both the merchandise turnaround and the CEO search. Finding a qualified CEO replacement will take time (the search for ex-CEO Hanson took nearly a year) and once a replacement is found, impact by the new CEO will take time to materialize.

For an analyst ratings summary and ratings history on American Eagle Outfitters click here. For more ratings news on American Eagle Outfitters click here.

American Eagle Outfitters closed at $11.59 yesterday.

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