Checking on sales at Aeropostale and Abercrombie & Fitch

Posted Nov 5th 2009 12:30PM by Mark Fightmaster
Filed under: Abercrombie and Fitch (ANF), American Eagle Outfitters (AEO)

Could we see a bit of a drop from American Eagle Outfitters (NYSE: AEO) today? The retailer announced that its October same-store sales fell 5%, when the Street expected an increase of 1.7%. This disparity certainly seems to suggest that we could see the stock fall in today's trading action. The equity may find a measure of support from its 10-week moving average, which has filled this role throughout the stock's calendar-year rally. There seems to be some long-term support from AEO's 10-, 20-, and 50-month moving averages; all of which are in the $15 -$17 region. If the stock is going to fall, this support could be crucial. A drop through this resistance could spell a stock slide.

Elsewhere, Abercrombie & Fitch (NYSE: ANF) (American Eagle Outfitter's tween retail cousin) reported that October same-store sales dropped 15%. Expectations called for a drop of 14.7%, so it seems that this morning's news may not surprise investors. Unlike AEO, ANF isn't fortunate enough to enjoy support from its long-term trendlines. The retailer's shares have crashed headlong into their 20-month moving average and have retreated to support from their 10-month trendline. Out of the 10 months in 2009, ANF has posted a decline just twice -- but this rally has come along without support from any trendlines. The 10-month moving average just recently stepped up as support, so this nascent support could find itself under stiff resistance following this morning's news.

On a larger scale, these same-store sales results may suggest that the retail sector is in a bit of trouble as we head into the holiday shopping season. With a recovery theoretically underway, one would imagine that sales at retailers may have been strong in the past month. I think it may be dangerous for the investors' fragile psyches for retailers to have demonstrated weakness. Let's see if any fears triggered by substandard same-store sales data can be calmed by other positive economic data.

Tags: Abercrombie Fitch, American Eagle Outfitters, inthenews, retail, retail data, same-store sales