The Estimize community has been optimistic in regard to American Eagle, calling for EPS of 42 cents and revenue expectations of $1.11 billion, 1 cent higher than Wall Street on the bottom line. However, our Select Consensus, which more heavily weights historically accurate analysts and recent estimates, is expecting a larger beat by 2 cents. Compared to the same period last year, this predicts as an 18 percent gain in earnings while sales are expected to grow 4 percent. On average American Eagle has consistently beat expectations, trumping the Estimize community in 92 percent of earnings reports.
That being said, neither label is in the clear yet. Both Abercrombie and American Eagle continue to lose market share to the rapidly emerging fast-fashion brands like H&M and Forever 21. These brands have become popular with teens for their fashion-forward styles at value prices. A branded polo at Abercrombie, its flagship product, will set you back $50 while a similar style at H&M retails between $15 and $20. Despite more modest pricing from the teen retailers in recent years, they still have trouble positioning themselves against discount and fast-fashion retailers