Apparel Retailers Offer Revised Fourth Quarter Outlook

Weak December sales has caused three apparel retailers in the United States – American Eagle Outfitters Inc., Men’s Wearhouse Inc., and Hot Topic Inc., to declare revised earnings forecasts for their fourth quarter. Most of the other big retail chains would be declaring their December sales figures today.

At American Eagle, an apparel retailer catering to the teenage and young adults section and selling casual wear, sales figures were up 4.5% to $546.1 million, though there was a 2% reduction in same-store sales for the five weeks ended January 5. This was in stark contrast to the numbers given out one year earlier, when same-store sales were up by 16%.

A statement from American Eagle said this was because of “a challenging comparison with last year, and a difficult traffic environment, particularly in the weeks prior to Christmas.” Reduced sales were again the cause for revised fourth quarter estimates, at 64 to 65 cents per shared compared to the earlier forecast of 67 to 70 cents.

The revised estimate is also below the fourth quarter share value one year earlier of 66 cents. Trading at the NYSE at 4:00 p.m. saw American Eagle shares dip by six cents to end at $17.72. However, the share value picked up in after hours trading, ending at $18.26.

Without giving out detailed numbers, Neill Davis, the CFO of Men’s Wearhouse, said the low receipts were mostly because of low volumes sold at their stores in December last year. Saying the lowered figures were because of ‘substantially lower traffic’ at the men’s apparel retailer’s outlets, he forecast ‘continued weak traffic for January.’

Men’s Wearhouse said the revised numbers mean its fourth quarter earnings would be between 16 to 18 cents per share, way below its earlier forecast of 43 to 48 cents per share and also below the analysts’ estimates of 46 cents per share.

The revised estimates given out by Men’s Wearhouse also affected the numbers it had given out earlier for 2007, bringing the per share value down from the estimated $2.87 to $2.92 to a revised and lowered $2.60 to $2.62. Composite trading at the New York Stock Exchange at 4:00 p.m. saw shares of the retailer go up by 94 cents to $25.44, only to fall back in after hours trading to $22.24.

At Hot Topic too, the story was similar, with same-store sales falling by 6.2% to $123.1 million. While same-store sales of the Hot Topic brand fell 6.9 percent in December, same-store sales of the Torrid brand dipped by 0.9 percent. The dip in sales has caused the specialty retailer to revise fourth quarter earnings forecasts to between 25 and 29 cents per share, as against the earlier forecast of 29 to 33 cents.

Composite trading on Nasdaq at 4:00 p.m., however, saw share prices of Hot Topic to go up by 21 cents or 4.7 percent, ending at $4.68 and remaining steady even during after hours trading.