Shares of young adult apparel retailer American Eagle Outfitters (NYSE:AEO) jumped 5.1% in the morning session after the company announced a collaboration with NFL star tight end Travis Kelce.
American Eagle Outfitters Inc (NYSE:AEO) shares are trading higher Wednesday after the company announced a collaboration with NFL star tight end Travis Kelce.
Shares of young adult apparel retailer American Eagle Outfitters (NYSE:AEO) fell 3.5% in the morning session after Bank of America downgraded the apparel maker to 'Underperform' from 'Neutral'. The downgrade came from Bank of America analyst Christopher Nardone, who also trimmed the firm's price target on the stock to $10 from $11. The bank cited concerns over the impact of higher tariffs and slowing sales at the company's activewear brand, Aerie. In line with this outlook, Bank of America reduced its earnings per share (EPS) estimates for American Eagle for fiscal years 2025 and 2026 by 8% and 30%, respectively. The firm noted that it foresees a "longer path to more normalized earnings in the current environment" for the apparel maker.
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A number of stocks fell in the afternoon session after a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.
A number of stocks jumped in the afternoon session after markets continued to rally amid growing investor optimism for a Federal Reserve interest rate cut in September. This optimism was spurred by a recent Consumer Price Index (CPI) report that did not show runaway inflation, increasing the perceived probability of a rate cut to over 90%. Lower interest rates are generally seen as a positive for the economy as they reduce borrowing costs for consumers, which can stimulate spending on non-essential goods. Consequently, investors bid up shares in the apparel, home furnishings, and automotive retail industries in anticipation of stronger consumer demand.
The financial markets are currently riding a wave of optimism, largely fueled by the anticipation of an interest rate cut by the Federal Reserve. This bullish sentiment, which has seen major stock indexes like the S&P 500 (SPX), Nasdaq (IXIC), and Dow Jones Industrial Average (DJIA) reach new record
Shares of young adult apparel retailer American Eagle Outfitters (NYSE:AEO) fell 3.1% in the morning session after new data revealed a significant drop in in-store foot traffic, raising concerns that a controversial ad campaign is failing to drive sales. Data from retail analytics firm pass_by showed that for the week ending August 9, in-store visits to American Eagle fell 8.96% year-over-year. This followed a 3.9% decrease in the prior week, marking the largest two-week decline in store traffic in over a year. While the campaign, featuring actress Sydney Sweeney, generated significant online buzz and increased web traffic, it has not translated into higher sales or market share, which has remained relatively flat. Analysts had previously cautioned that the social media attention was not reflected in Google search trends for the company's products, and the new foot traffic data appears to validate those concerns.
Retailers are adapting their business models as technology changes how people shop. Still, secular trends are working against their favor as e-commerce continues to take share from brick and mortars.
This puts retail stocks in a tough spot, and over the past six months, the industry has pulled back by 2%. This drop was disheartening since the S&P 500 gained 5.7%.
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices.
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