Teen retailers slump as analyst warns of last gasp from bankrupt Aeropostale

Apparel retailers American Eagle Outfitters (AEO) and Abercrombie & Fitch (ANF) slipped Monday after Oppenheimer highlighted potential pressure over the holiday season due to inventory clearing by bankrupt competitor Aeropostale. AGGRESSIVE AEROPOSTALE PROMOTIONS: Oppenheimer analyst Anna Andreeva said in a late Sunday research note that Aeropostale's "roller-coaster" bankruptcy, which saw the struggling brand sold to an investor group led by Authentic Brands last month, could spell trouble for other teen retailers this holiday season. Andreeva explained that the number of Aeropostale stores staying open has more than doubled to 505 at the latest count as more landlords extend easy lease terms. Just 120 more Aeropostale locations are now slated to shut their doors after a previous round of summer closures, and the analyst sees those stores staying open through Christmas to dump inventory, potentially generating "additional pain" for the teen space with aggressive promotions. Looking beyond that last gasp, Andreeva also analyzed the overlap between the Aeropostale closures and the existing store presences of Abercrombie & Fitch and American Eagle, concluding that Aero's focus on closing lower-tier mall locations while staying put in upper-income areas will lead to higher overlap with Abercrombie and less overlap with American Eagle. PRICE ACTION: Shares of American Eagle ended the day down 4.87% to $16.80, while Abercrombie & Fitch fell 1.46% to $15.52.