Sector Snap: American Eagle, Abercrombie upgraded

The Associated Press December 6, 2010, 12:44PM ET text size: TT

Sector Snap: American Eagle, Abercrombie upgraded





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NEW YORK



Teen retailers Abercrombie & Fitch Co. and American Eagle Outfitters Inc. may see their businesses improve next year, helped by better economic conditions and "favorable fashion trends, a Goldman Sachs analyst said Monday.



The analyst, Michelle Tan, raised both retailers' ratings, adding Abercrombie & Fitch to Goldman's "Conviction Buy" list from "Buy" and boosting American Eagle to "Buy" from "Neutral."



She said teen unemployment may be waning, with improvements seen in each of the past three months. More teens working could mean more money for retailers that target the demographic.



Tan also said in a client note that Pittsburgh-based American Eagle and Abercrombie & Fitch, which is based in New Albany, Ohio, could also capitalize if there is a shift to more classic, casual teen clothes.



"After 3.5 years where edgier trends like dresses and skinny jeans hurt Abercrombie & Fitch and American Eagle, we see early signs that the cycle may move back in their favor," she said.



Shares of Abercrombie & Fitch gained 15 cents to $56.30 in afternoon trading. The stock hit a 52-week high of $57.06 earlier in the session. American Eagle's stock climbed 23 cents to $16.01.

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I really agree this article's special point like 'cycle may move back in their favor'. Like this article's point out, dresses and skinny jeans hurt Abercrombie & Fitch and American Eagle. But as you know, many fashion people gradually have tired of hot trend (it always change very fluently).
So we must know this. Trend always change. So we must prepare and notice change cycle.