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American Eagle Outfitters exceptional 2Q overshadowed by its outlook for this quarter

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PITTSBURGH — The fashion sense of teenagers is like a moving target, one often obscured by a haze and sometimes skulking behind a slammed door.

American Eagle Outfitters appeared to hit that target after tweaking its clothing design and same-store sales jumped 11 percent in the second quarter. The teen-focused retailer topped both the profit and revenue expectations of Wall Street.

Yet the company's expectations for the next quarter overshadowed all of its recent success and shares tumbled 8 percent amid a broad market sell-off Wednesday.

American Eagle projected mid-single digit increases in same-store sales for the current quarter. That is a key guide to a retailer's health because it strips away the volatility of newly opened or closed stores.

Investors didn't like what they heard about futures sales, particularly with stocks falling all over the place Tuesday.

The Pittsburgh company reported net income of $33.3 million, or 17 cents per share, which was 3 cents better than analysts had expected, according to a poll by Zacks Investment Research. It was well above the $5.8 million, or 3 cents per share, posted last year,

Revenue was $797.4 million, way better than the $762.4 million analyst had projected.

"Our customers have taken notice of improvements to our merchandise and overall customer experience," said the company's interim CEO Jay Schottenstein, in a press release.

Randal Konik, an analyst with Jefferies & Co., believes the companies guidance for this quarter appeared conservative and he raised his price target on the stock by a dollar, to $24.

For the current quarter ending in November, American Eagle expects its per-share earnings to range from 28 cents to 31 cents. Analysts expected earnings of 28 cents per share, according to FactSet.

Shares of the American Eagle Outfitters Inc. fell $1.38 to $16.89.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AEO at http://www.zacks.com/ap/AEO

Keywords: American Eagle Outfitters, Earnings Report

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