American Eagle's shares fell as much as 5 percent in trading after
Analysts said Hanson's departure was all the more surprising given
that last week he attended the ICR XChange investment conference for
retail, apparel, restaurant and general consumer industries.
"There did not appear to be any sign of impending change when
management openly interacted with investors last week," Piper
Jaffray analyst Stephanie Wissink said in an email.
Hanson's departure comes as the company and its rivals Aeropostale
Inc <ARO.N> and Abercrombie & Fitch <ANF.N> are facing intense
competition from "fast fashion" chains such as Sweden's H&M and
Inditex's <ITX.MC> Zara, whose trendier and cheaper clothes are
resonating with young shoppers.
However, under the leadership of Hanson, American Eagle has been
faring a little better than its peers as it targets a wider age
group with more fashionable clothing.
"... Now in addition to fighting for customers, teen retailers may
well find themselves fighting for talent," Nomura Equity Research
analyst Simeon Siegel wrote in a note.
"Without a clear successor, it is interesting to note that AEO will
be looking for a new CEO at the same time that ANF has begun its
search for brand presidents for its Hollister and A&F divisions."
American Eagle said Executive Chairman Jay Schottenstein would serve
as interim CEO. Schottenstein was previously the CEO of the company
between March 1992 and December 2002.
HOLIDAY SEASON WOES
Hanson, who joined American Eagle in January 2012 after 23 years at
Levi Strauss & Co, spearheaded a strong year for the company by
reducing markdowns and getting new product into stores faster.
At the time, analysts lauded American Eagle's product selection,
which they said resonated with teens.
However, by mid-2013 the company and its rivals Aeropostale and
Abercrombie & Fitch had started to see teen shoppers increasingly
shift to the trendier and cheaper merchandise sold at "fast fashion"
[to top of second column]
The string of weak results were making investors impatient.
In December, an Abercrombie & Fitch shareholder urged the company to
replace CEO Mike Jeffries, saying the company needed to chart a new
course after seven straight quarters of same-store sales declines.
However Abercrombie extended its CEO's contract by at least a year.
The shortened 2013 holiday season added to the woes of the three
retailers, forcing them to discount heavily to attract shoppers.
Earlier this month, American Eagle said comparable sales for the
fourth-quarter ended January 4 fell 7 percent, while total sales
fell 2 percent.
At that time, CEO Hanson had said traffic and sales through
Christmas week were on the low end of the company's expectations
and, coupled with the deep discounts, were putting pressure on
margins and earnings.
American Eagle on Wednesday reaffirmed its earnings forecast of 26
cents per share for the holiday season quarter.
The company also said Vice Chairman and Executive Creative Director
Roger Markfield would postpone his retirement and continue in his
The company's shares were down 4 percent at $13.77 in extended
trading. They had closed at $14.31 on the New York Stock Exchange on
(Editing by Savio D'Souza)
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