American Eagle 3rd-quarter profit drops

The teen retailer added that November sales so far have been weak.

Profit for the third quarter ended Nov. 1 fell to $42.6 million, or 21 cents per share, from $99.4 million, or 45 cents per share, last year. Excluding a charge of 9 cents per share related to auction-rate securities, net income was 30 cents per share.

As previously reported, revenue rose 1 percent to $754 million from $744 million a year ago. Sales at stores open at least one year, a key retail metric known as same-store sales, fell 7 percent.

Analysts polled by Thomson Reuters, on average, expected a profit of 30 cents per share on revenue of $752.9 million.

American Eagle lowered its guidance earlier this month to 30 cents per share, due to weak sales during the quarter.

The company said November same-store sales are down 17 percent so far. American Eagle said it would give fourth-quarter guidance next week when it reports total same-store sales for the month.

Pittsburgh-based American Eagle also said it will lower planned capital spending to $110 million to $135 million, from a previous range of $150 million to $175 million.

The retailer has increasingly focused on value and promotions during the year in an effort to conserve market share against rivals such as Aeropostale Inc. The company said its priorities continue to be to "strengthen our businesses and preserve market share."

Auction-rate securities are investment instruments that resemble corporate debts, but interest rates are reset at regular auctions, some as frequently as once a week. The $330 billion market collapsed in February, leaving many companies with damaged securities that could not be sold.