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Apparel chain

American Eagle Outfitters


defended the quality of its same-store sales, saying a skeptical analysis by a widely followed private accounting watchdog is flawed.

noted Tuesday that a report issued by the Center for Financial Research and Analysis took issue with how American Eagle calculated its same-store sales figures. A CFRA report last month called the figures "misleading," saying they would be weaker if they included sales at the company's Canadian stores.

But American Eagle executives, saying they're "disturbed" by those accusations, contended Tuesday that the CFRA comments are mistaken and that American Eagle's comparisons are appropriate. The execs say they plan to meet Wednesday with Howard Schilit, the head of CFRA, to discuss the matter. CFRA representatives hadn't returned several calls seeking comment as of 6 p.m. EST Tuesday.

In a letter dated Feb. 8 and given to

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by American Eagle, Laura Weil, the company's chief financial officer, wrote to Schilit: "I am particularly disturbed by the portrayal of our same store sales data as 'misleading.' This defamatory remark implies an intent on our part to either deceive the public, or that our data is incorrect, both of which are absolutely false."

American Eagle reported Feb. 6 that January same-store sales rose 6.2% from a year ago at U.S. stores. Weil acknowledges that figure would have been slightly lower been had sales from the Thrifty/Bluenotes, a Canadian chain owned by American Eagle, been included. But she says the company still would have handily beaten Wall Street's expectations for a 1.5% gain in same-store sales.

Moreover, Weil says, including the Canadian stores in the same-store sales comparison is inappropriate because American Eagle began selling its own merchandise in the stores only last February. A hedge fund analyst whose firm is short American Eagle has argued that because American Eagle acquired Thrifty/Bluenotes in December of 2000, the Canadian chain's sales data should have been included in January sales figures.

Another point of contention for American Eagle is CFRA's claim that American Eagle's earnings and revenues may have benefited from dealings with discounter

Value City


. Jay Schottenstein, American Eagle's chairman and chief executive, is also the chairman of Value City and a large shareholder in both companies.

American Eagle typically offloads marked down goods to Value City, a practice typical among retailers. Weil notes that the company has been selling less to Value City in recent periods; through the first three quarters of 2001, the company sold $4.2 million worth of goods to Value City, compared to $10 million in the year-ago period. And the Value City deals reduce American Eagle's cost of sales rather than adding to revenue, Weil says.

The transactions, however small, have garnered some attention on Wall Street because of investors' Enron-kindled interest in disclosure and fairness issues. But "there is absolutely no benefit to American Eagle because some of the selloff is to a related party," Weil says. "We sell to the highest bidder."