Those darn kids just aren't buying the way they used to.

American Eagle Outfitters ( AEOS) is just the latest in a long string of teen retailers to deliver bad news to investors. While the company met its second-quarter earnings and sales targets Thursday, the numbers weren't good: Earnings slid 34% as same-store sales fell 5.5%.

American Eagle shares held their ground Thursday, as the market posted a solid advance and big discount retailers such as Target ( TGT) continued to outperform. But the struggling teen retail sector, which only last year was full of strong performers, is increasingly facing an uphill climb. Solid growth in the group is becoming the exception rather than the rule.

"Our second-quarter performance was disappointing, and especially below our financial goals," said Roger Markfield, president and chief merchandising officer, in a conference call with investors.

The company, known as a poor man's Abercrombie & Fitch ( ANF) for its low-priced preppy duds, reported second-quarter net income of $10.1 million, or 14 cents per share, compared with net income of $15.3 million, or 21 cents per share, in the year-ago period. This matched analysts' expectations, according to Thomson Financial/First Call. Total sales rose 9.2% to $319.2 million.

Sales at the company's Canadian operation, the Bluenotes/Thriftys chain, also disappointed, declining to $18.8 million from $21.1 million in last year's second quarter.

American Eagle's poor quarter mirrors that at rival chains of late, and reflects both a shaky economy and a crowded marketplace of companies that cater to fickle teens. Rivals Hot Topic ( HOTT) and Wet Seal ( WTSLA) recently warned that earnings would fall far short of expectations, and The Gap ( GPS), which reports its quarterly earnings after the close of trading Thursday, has been in a two-year funk.

Warrendale, Pa.-based American Eagle, which last year was humming along and consistently reporting strong monthly sales reports, also had a bad first quarter, blaming higher markdowns and poor fashion for the downfall. On Thursday, executives stressed markdowns continue to be a problem. Indeed, margins were worse than analysts expected. The company's gross margins in the quarter were 34.4%, down from 36.9% last year. Some analysts had been expecting close to 36% for the quarter.

"With today's increasingly competitive environment, we have to be more nimble," Markfield said.

Compounding the problems specific to teen retailers has been the economy. A higher-than-expected drop in consumer confidence in July, combined with earnings warnings from a variety of retailers, have fanned fears of a double-dip recession.

Still, not all chains have stumbled, indicating consumers will still open their wallets when they find what they want. Urban Outfitters ( URBN), for example, which sells youth-oriented apparel, among many other items, reported a strong quarter Thursday. Its same-store sales were up 11%, and earnings beat analysts' estimates by 2 cents. The stock was rallying lately, up $2.45 at $27.74, and has more than doubled off last year's lows.

By contrast, American Eagle shares, which traded up lately 18 cents at $16.33, have plunged about 38% this year.

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