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.
American Eagle Outfitters closed at $11.59 yesterday.