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Earnings Watch: 5 Crummy Retail Stocks on Deck

Even beat-and-raise earnings won't change the thesis on these struggling retail stocks, which have more losses to come

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American Eagle Outfitters (AEO)

American Eagle AEO stock retail stocksAmerican Eagle Outfitters (AEO) releases results Wednesday before the bell, and the market expects more ugliness on the top and bottom lines.

Like most teen retailers, American Eagle and AEO stock never really recovered from the recession, proving that it’s not just lower-income folks who are struggling. AEO stock is down 18% for the year-to-date and a staggering 40% over the past 52 weeks.

If nothing else, at least AEO issued such a negative forecast that it should be able to beat it. Same-store sales are projected to decline in the high single-digits. Analysts, on average, forecast AEO to breakeven in the quarter, down from 18 cents a year ago. Sales are seen falling 4.5%.

Even without the harsh winter weather, American Eagle was getting hammered by macroeconomic factors and higher costs. True, AEO can do something about costs, but the weak recovery is out of its hands and that portends more weakness ahead.

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