American Eagle's stock took a hit this past week when its guidance lowered on its financials. The company said they expect profits will be $0.10 per share when they report on August 21. That's less than half of what Wall Street analysts were anticipating.
That sent American Eagle's shares down more than 15%. And, it took other teen retailers down. The markets reasoned that if American Eagle isn't selling as many clothes because teen employment is down, any other company dependent on teens should expect a tough time.
Sure enough, Aeropostale confirmed those suspicions on Thursday. It lowered guidance on its quarter's sales numbers. They expect their revenues to fall by 6% and from the previous year. And, more telling, the company's same-store sales will show a drop of 15%. In response, Aeropostale's stock is now down 9% this week.
A nervous market has taken down Abercrombie & Fitch and Urban Outfitters this week as well. Those two companies have seen their shares fall 5% since Monday.
Is this past week's earnings news the beginning of a trend, or are brighter days ahead? And, is there a buying opportunity here or should investors be wary?
We talk numbers with Eric Beder, Managing Director at Brean Capital. He covers retailers for the company, including Abercrombie & Fitch, Aeropostale, Urban Outfitters, and American Eagle. Looking at the technicals on one of these names is Jeff Tomasulo, Managing Partner at Belpointe.
To see Beder and Tomasulo analyze what's next in teen retailing, watch the video above.