Urban Outfitters, Inc. (URBN), Abercrombie & Fitch Co. (ANF), American Eagle Outfitters (AEO): Three Retailers Fighting Economic Woes

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Final comment

It is a tough time for the clothing retailing sector. From this peer group, the company that is best positioned is Urban Outfitters, Inc. (NASDAQ:URBN). Its strategy of betting on the direct-to-consumer channel has been successful and it has shown some firm financial figures regarding sales, net profit, and operating expenses, which indicate that the company is healthy and management’s strategy is on track.

The next one is American Eagle Outfitters (NYSE:AEO). The company had negative results last quarter, including declines in sales and operating income. But, the firm has a very strong balance sheet and has been controlling costs and improving its operating margin which are fundamental to weather the storm. If Abercrombie & Fitch Co. (NYSE:ANF) continues to exhibit weakness in its financial results and sales, American Eagle Outfitters (NYSE:AEO) could profit and increase market share in the competitive teen segment.

Finally, Abercrombie & Fitch Co. (NYSE:ANF) posted losses in the last quarter and will have to act quickly to reverse this. The company has already announced the closure of several stores and that it will try opening new ones in other geographies. The international diversification strategy is interesting because it could diversify risk from the U.S. economic downturn, but it will demand capital expenditure and could impact its financials heavily if it fails.

The article 3 Retailers Fighting Economic Woes originally appeared on Fool.com and is written by Vanina Egea.

Vanina Egea has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Vanina 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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