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UPDATE 3 American Eagle sees strong holidays, Aeropostale wary

Aeropostale, which has been losing out to its rivals as it sees inconsistent demand from its young clients, said the environment in the teen apparel space is still heavily promotional. Analysts have said, however, that on basic items like sweaters and T-shirts, Aeropostale was cutting prices more than the competition.

The Black Friday weekend, which typically starts the day after Thanksgiving, prompted high levels of competition among all teen retailers, as they tried to get more shoppers into their stores. American Eagle and Abercrombie & Fitch were running discounts of 40 percent.

But Aeropostale had discounts of 50 percent to 70 percent.

American Eagle, meanwhile, said its margins rose because of fewer promotions compared with the last year.

Sales rose 11 percent to $910 million, the company said in results released on Wednesday before the start of the U. S. stock market's regular trading session.

After the closing bell on Wednesday, Aeropostale posted a slightly bigger quarterly profit - $24.9 million, or 31 cents a share, compared with $24.1 million, or 30 cents a share, in the year-ago period - but its forecast for the quarter fell short of estimates. For the fourth quarter, it expects to earn between 36 cents and 41 cents a share on an adjusted basis. Analysts, on average, were expecting the company to earn 54 cents a share, as per Thomson Reuters I/B/ES.

Aeropostale's stock fell 6.5 percent in after-hours trading from its New York Stock Exchange close at $14.12.

American Eagle now expects full-year earnings of between $1.38 and $1.40 per share from continuing operations, up from its previous forecast of $1.33 to $1.36.

Analysts, on average, were expecting earnings of $1.37 per share for the year, according to Thomson Reuters I/B/E/S.

The company's initiatives to keep its fashion fresh resonated with its teen clientele, leading to a 10 percent jump in same-store sales in the quarter ended Oct. 27.

American Eagle shares jumped 7.1 percent on Wednesday to close at $20.77 on the News York Stock Exchange - up $1.38 from their close on Tuesday at $19.39.


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