Dallas, Texas 10/18/2013 (Financialstrend) – $2.64 billion market capitalized specialty apparel chain American Eagle Outfitters (NYSE:AEO) has created a buzz in the apparel market thanks to its deep mark downs and special discount offers. Apparel industry trade gurus are divided in their evaluation of this tactic. While some point out that marked down prices to clear out excessive inventory and create space on the racks for winter clothing is preferred in comparison to letting stock clog up warehouses, the other school of thought question the logic of selling products below cost price.
Trade magazines which tracked sales for September seem to bear out the facts. The specialty clothes retailers have recorded an impressive 3.2% growth in sales on a year on year basis.
But in what could be dire warning of the tough market conditions that apparel makers might face this holiday season, On October 11 GAP reported a slump in its same store sales during the first two weeks of October. With a federal government shut down in progress at that time, analysts had opined that customers have opted to wait and watch before embarking on shopping expeditions.
American Eagle Outfitters (NYSE:AEO) share holders would be a worried lot at this stage trying to figure out how would less well known brands manage to record decent sales figures when GAP was struggling to drum up sales. In what looked like a confirmation of their fears that retail sales of apparel had taken a hit due to federal budget impasse, on October 10, business magazines have quoted Mall-based retailers reporting a dip in month on month sales figures.
When trading began on October 17, shares of AEO were trading at $13.77 per share up 0.44% from the previous day close. Investors would be hoping that as the news of budget impasse blowing over for now, the sales should pick up soon for the apparel chains.