Dividend.com: American Eagle Outfitters Soars

American Eagle Profit Plummets 50%, Still Beats View

Teen apparel retailer American Eagle Outfitters (AEO Quote) said Wednesday that its first-quarter profit eroded by nearly half when compared with the same period last year, hurt by pricing pressures caused by tight competition.

The Pittsburgh-based company reported first-quarter net income of $22 million, or 11 cents per share, down 50% from $43.9 million, or 21 cents per share, in the year-ago period. Excluding one-time benefits and charges, adjusted profit was 8 cents per share.

On average, Wall Street analysts predicted a profit of 7 cents per share, excluding items.

Overall revenue for the first quarter dropped by 4% to $612 million. On average, analysts expected $612.2 million.

American Eagle said that same-store sales fell by 10% in the quarter. Same-store sales are considered a key indicator of a retailer's health, since they measure the performance of stores open at least one year.

Looking ahead, the company said it expected second-quarter earnings between 12 cents and 15 cents per share, while analysts predict profit of 15 cents per share.

American Eagle shares rose 18 cents, or +1.2%, in morning trading Wednesday.

We removed shares of AEO from our "Recommended" list back on Sept. 29, when the stock was trading at $15.90. The company has a 2.70% dividend yield, based on last night's closing stock price of $14.48.

The stock has technical support in the $11-$12 price area. If the shares can firm up, we see overhead resistance around the $16-$17 price mark. We would remain on the sidelines for now.