More Squawk From Jim Cramer: American Eagle Outfitters (AEO) Gets 'Apparel Right’
NEW YORK (TheStreet) -- American Eagle Outfitters (AEO) - Get Report stock is rallying 16.58% to $15.61 in late morning trading on Thursday after the retailer reported strong financial results for the fiscal 2016 first quarter.
"Who is getting apparel right? American Eagle Outfitters," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning.
After yesterday's market close, the company delivered earnings of 22 cents per share on revenue of $749 million for the latest quarter. Analysts were expecting earnings of 18 cents per share and revenue of $731 million.
"American Eagle is the new winner," Cramer observed, adding that "someone knows how to sell in the mall and its American Eagle."
Many retailers have struggled to survive in the apparel sector, including American Eagle competitor Aeropostale that filed for bankruptcy earlier this month.
Cramer said American Eagle was the survivor and now the company is thriving.
He told viewers that Urban Outfitters (URBN), which also had a good quarter, pointed out that the real problem in the apparel sector was overcapacity.
During the retailer's conference call, Urban Outfitters CEO Richard Hayne said that the domestic retail industry has 10 times more retail space than needed.
"Hence the problem with retailers," Cramer noted, adding that the entire retail industry has to shrink because there's just too many stores.
"We are over-stored in this country and as long as we have so many stores, we are not going to do well," Cramer explained in the video, above.
Separately, American Eagle Outfitters has a "buy" rating and a letter grade of B at TheStreet Ratings because of the company's impressive record of earnings per share growth, compelling growth in net income, revenue growth, attractive valuation levels and expanding profit margins.
You can view the full analysis from the report here: AEO
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
