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Softline Sales Not Soft

NEW YORK CITY-A mid-March note from Lehman details a good near-term outlook for the likes of American Eagle and other softliners.

By Dees Stribling | Updated on March 22, 2005

NEW YORK CITY-A investor note issued Monday by Lehman Brothers on retail softlines says that cooler-than-normal weather in some parts of the country isn’t necessarily keeping people from softline purchases. American Eagle Outfiters, which has been scoring remarkably high comps in recent quarters, continues to grow briskly, with Abercrombe & Fitch and Children’s Place also doing well.

“Despite less favorable weather in the Mid-Atlantic and a cautious tone emanating from recent conferences, our mid-month store checks revealed a low promotional tone,” writes Lehman analyst Jeff Black. “That indicates a healthy environment and we think softline retailers are on track for solid March comps.”

The note predicts excellent March comps for American Eagle Outfitters, better in fact than analysts’ consensus (up 22% compared to up 16%). Any point within that span would represent fairly typical growth for the popular clothier, which saw comp growth of 28.6% in Q4 2004 and 24.9% in Q3 2004. “The teen space continues to be strong, driven by the preppy and bohemian trends (colorful polos and ethnic-inspired prints and embellishments),” says the note about American Eagle.

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