The retailers, known as the "3 A's," have long been popular for their cool basics like jeans, hoodies and t-shirts. But young shoppers are now less interested in their logo-centric clothes and more eager to shop for electronics or go to low-cost, fast-fashion chains like Zara, Forever 21 and H&M that offer greater variety more quickly.
"The teen retailers seem to be not in style or in vogue at this point in time for their target consumers," said Bryan Keane, portfolio manager of the Alpine Global Consumer Growth Fund. "That usually does not turn around quickly,"
American Eagle on Wednesday gave a weak forecast for the fall, sending its shares to their lowest levels in a year and a half. Chief Executive Robert Hanson told analysts the level of price slashing is unprecedented.
Aeropostale earlier this month said comparable sales fell 15 percent last quarter, and Wall Street analysts expect earnings per share to fall by more than two-thirds this year. The company was due to report full quarterly results on Thursday.
Abercrombie reported a 10 percent drop in same-store sales on Thursday, far worse than expected, and forecast a similar drop this quarter, which includes the back-to-school season.
(Read more: Abercrombie & Fitch same-store sales fall 10%)
One of the big problems the 3 A's face is a narrower clientele than that of H&M and Gap, which draw shoppers of all ages.
American Eagle gets about 80 percent of sales from its standard merchandise, and Hanson conceded that it has been tough to compete as his company tries to offer more fashion, more quickly.
"This team (young shoppers) wants to be fashionable but they don't want to spend a lot of money, and fast fashion works very well for that," said analyst Eric Beder of Brean Capital, who has a "sell" recommendation on Aeropostale.
For example, H&M sells V-neck men's t-shirts for as low as $5.95, while Aeropostale t-shirts on clearance on Wednesday were priced at $6.99.
The result has been constant pressure to discount. American Eagle's gross margin fell 3.6 percentage points last quarter to 33.8 percent of sales, well below the typical level of 40 percent.
"We believe youth spending has likely diverted to other categories," Abercrombie CEO Mike Jeffries told analysts on a conference call.
Aeropostale and American Eagle did not return messages seeking comment.
The competition has only grown more intense as government statistics show young shoppers have gradually directed more of their spending toward electronics and less on clothes.
GameStop, the world's largest retailer of video game products, posted results on Thursday that beat Wall Street estimates, thanks to higher mobile and digital game sales.
At the same time, teens are facing lower employment levels this year, according to Challenger, Gray & Christmas, and their parents are grappling with higher payroll taxes, gasoline prices and a slow job recovery.
On top of all that, the three chains are facing an ever more crowded field as international "fast-fashion" rivals are aggressively expanding in the United States.
H&M, a Swedish retailer, said its U.S. sales rose 10 percent in the first half of 2013, and it just launched a U.S. e-commerce site. It has 269 U.S. stores, after opening 40 last year.
Uniqlo, owned by Japan's Fast Retailing, is opening six more U.S. stores this fall with a goal of having 200 by 2020.
U.S. sales at Zara, owned by Spain's Inditex S.A., more than tripled between 2007 and 2012, according to Euromonitor International.
U.S. rivals are also stealing market share from the 3 A's. Forever 21's sales rose 82 percent in the period 2007-2012.
These new chains are bringing new products, such as Uniqlo long johns that warm up on touch, making it risky to offer the same-old, same-old.