1 Question American Eagle Outfitters Has to Answer Before I Cash Out
American Eagle Outfitters (NYSE: AEO) has been a standout player in the retail apparel market over the past year. Its stock price rallied more than 50% over the past 12 months, even as the pandemic shut down its stores, and it recently reinstated its dividend after suspending it in April.
The bulls believe AEO will gain more shoppers from bankrupt competitors, its Aerie lingerie and activewear brand will continue growing, its digital sales will remain robust, and its business will stabilize as more people are vaccinated. That outlook is rosy, but the bulls often overlook AEO's original weaknesses. Prior to the pandemic, AEO's comparable-store sales growth had been decelerating and its margins were declining.
Image source: Aerie.
Source Fool.com
