Shares of American Eagle Outfitters Inc (NYSE: AEO) are sinking this morning after Susquehanna Financial Group downgraded the stock’s rating to neutral, citing a sluggish December sales picture.
AEO shares were down about 4.80 percent as of 10:30 a.m. (EDT). The company’s stock has declined about 15.5 percent since closing at $17.16 per share on November 23.
Despite tight control of expenses and inventories, we feel a disappointing December will put American Eagle shares in a holding pattern with no meaningful catalyst to drive near-term appreciation, Susquehanna analysts said.
American Eagle has been seeking to upgrade margins and increase sales, but it has face stiff competition from rivals like Abercrombie & Fitch (NYSE: ANF) and Zumiez.
Analysts also indicated that the company’s promotions are cutting into margins and that “a majority of sweaters, a new category for aerie, have been hard-marked, offering discounts of as much as 55 percent.”
American Eagle shares have lost about 7 percent of their value since the company posted an in-line third-quarter profit. They closed at $15.22 on Friday on the New York Stock Exchange.