Teen Retailers on Upswing

Teen apparel retailers American Eagle Outfitters Inc. (Pittsburgh) and Aeropostale Inc. (New York) are reporting better-than-expected fourth quarter 2014 profits, due in large part to a busy holiday shopping season. The companies also report improved margins due to fewer discounts.

Once one of the strongest segments of the retail sector, teen apparel has suffered in recent years as teens have spent more money on electronics and made fewer mall visits. Retailers cut inventories over the Christmas season, according to Reuters, thereby avoiding the need to move excess product with heavy discounting. Retailers instead made larger investments in their online businesses in the fourth quarter.

“While promotional intensity in apparel category continues to persist, strong inventory control is helping retailers preserve their gross margin,” Cowen and Co. (New York) analyst Oliver Chen told Reuters.