For American Eagle Outfitters (NYSE:AEO), the company is gearing up for international expansion. The company will take over its six licensee stores in China and add more of its own stores in the nation. American Eagle also hired the person that helped Guess? expand in China to do the same. The company also announced it would open its first store in Mexico. Mexico is growing rapidly and there’s strong demand for American retailers. American Eagle will also expand in the Philippines. The largest retailer in the Philippines, Suyen, will franchise American Eagle stores there. As the company expands into these fast-growing markets, look for the top and bottom lines to improve.
Going forward with Guess?, the focus is on returning to its roots with a focus on new designs for its denim jeans. The new designs will be in the fall product line and will be seen in the company’s ever-present ad campaigns. The company is in the process of hiring a new COO and CFO, and that will help once those positions are filled.
The problem I have with Guess? is that the company is still in turnaround mode and is forecasting weak sales. Guess? has a lot of exposure to Europe and is dealing with the overall weakness across the euro zone. Furthermore, with the executive management roles still not filled, it will take some time for a complete turnaround.
The best bet in the retail sector for jeans remains The Buckle, Inc. (NYSE:BKE). Sales are increasing and the company still has plenty of room for expansion in the U.S. American Eagle Outfitters remains attractive due to its moves overseas that will boost growth. Guess? is in the midst of a turnaround and investors should be patient and look for evidence of sales increasing and see how the new fall collection fares. Once a new COO and CFO are appointed, that will give the company some stability, but it will take time for the executives to get settled into their new roles. For now, I would stick with Buckle followed by American Eagle Outfitters.
The article Buckle Up for a Good Ride With This Company originally appeared on Fool.com and is written by Mark Yagalla.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Guess? and The Buckle. The Motley Fool owns shares of Guess? and The Buckle. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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