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American Eagle Outfitters, Inc.’s (AEO - Analyst Report) comparable-store sales (comps) grew at a slower pace for the fourth-quarter-to-date period ended January 8, 2013, dragging the share price down by 3.3% to close at $19.94 on Thursday.

Pittsburgh-based fashion retailer’s total sales increased 5% during the period. Including the company’s online business, total comps increased 5% versus a 13% growth reported during the comparable prior-year period. The company’s online business grew 24% year over year.

However, sans the online business, the company’s consolidated comps inched up 1% compared with a 12% increase reported in the year-ago period.

Despite soft sales, American Eagle did not deter from its shareholder friendly moves, and continues to buy back shares. It deployed $105 million during December 2012, towards repurchasing 5 million shares.

Concurrently, the company also maintained its fourth-quarter fiscal 2012 earnings outlook of 54 cents to 56 cents per share, reflecting a year-over-year growth of 38% to 44%. The company also reiterated its mid single-digit growth in comps.  The current Zacks Consensus Estimate for the quarter is pegged at 56 cents per share, which is at the higher end of company’s guidance range. Management believes that prudent inventory management, along with better merchandise assortments and balanced promotional activities are imparting strength to the stock.

American Eagle is now focusing more on cost-saving initiatives, merchandise assortments, addition of more compelling brands, managing inventory level much diligently and augmenting e-commerce business. Further, in order to focus more on the core business, while generating the best-possible return for shareholders, the company has exited its children’s brand – 77Kids.

American Eagle, a peer of Gap Inc. (GPS - Analyst Report), carries a Zacks Rank #2 (Buy) for the next 1-3 months. Moreover, we maintain our long-term ‘Outperform’ recommendation on the stock.

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