This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Teen Angst: Stay Away From These Retail Stocks

NEW YORK ( TheStreet) -- Teen retailers are among the most volatile stocks in the sector following same-store sales results.

While there was some bright spots in the space, overall teen retailers remain a risky investment heading into the holiday season.


Aeropostale (ARO - Get Report) significantly boosted its third-quarter guidance, sending shares surging more than 18%, but this could just be a case of under-promise and over-deliver.

Sales and margins came in better than management's very conservative guidance, leading the company to raise its profit outlook to 27 cents to 28 cents per share for the October-ended quarter from a prior projection of 9 to 15 cents.

But while gross margins for the quarter were better than management originally anticipated. Stifel Nicolaus analyst Richard Jaffe expects margins will likely decrease 1,000 basis points from last year due to additional markdowns, which were necessary to clear merchandise.

"We believe that the teens' interest in their 'uniform' -- the hoodies, graphic tee and jeans -- has waned," Jaffe wrote in a note. "Fast fashion for girls and authentic lifestyle and extreme sport brands for guys have taken a more important role in the teen's wardrobe."

Aeropostale, which was one of the biggest winners amid the recession as the low-cost leader, is now being challenged.

"Aeropostale and its competitors are fighting for market share, with price as the primary weapon. However, the more expensively prices competitors have an advantage; greater room to discount. Aeropostale, as the low-cost provider, must cut prices to a margin-eroding level, just to keep up," Jaffe wrote.
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AEO $14.51 1.11%
ANF $25.05 0.80%
ARO $0.04 -12.50%
AAPL $92.72 -0.56%
FB $119.49 1.43%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs