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Teen clothing chains avoid recession's bite

American Eagle Outfitters, which has increasingly focused on value, has struggled with slumping sales. The retailer said yesterday fourth-quarter profit tumbled 77 percent. American Eagle Outfitters, which has increasingly focused on value, has struggled with slumping sales. The retailer said yesterday fourth-quarter profit tumbled 77 percent. (Jin Lee/ Bloomberg News)
Associated Press / March 12, 2009
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NEW YORK - Two chains that sell clothing for teenagers are saying "whatevs" to the recession.

The Buckle Inc. yesterday reported its fourth-quarter profit rose 18 percent and sales soared 21 percent as shoppers snapped up its trendy jeans and accessories. Hot Topic Inc.'s profit rose 19 percent and sales rose 8 percent to $238 million in results also released yesterday.

Teens can be notoriously fickle, but success seemed to come at the lower end of the price spectrum, as long as teens dig the fashion: American Eagle Outfitters Inc., which has increasingly focused on value but struggled to hone its fashion message, and Abercrombie & Fitch Co., which has kept price points high while its competitors aggressively discount, have seen slumping sales.

The Buckle and Hot Topic, which focus on feeding teens' every fashion craving, performed much better than the rest of the dour retail sector.

"We can't stress enough the importance of offering new or improving fashion to customers in the current environment," said RBC Capital Markets analyst Howard Tubin. "As we walk the malls and listen to companies report sales and earnings, it's clear that where there is exciting merchandise, there is outperformance on a relative basis."

Not hampered by mortgage payments or other monthly bills, teens are free to spend the money they are given or earn on whatever they choose.

Hot Topic, whose results beat analyst expectations, offers music- and movie-related merchandise along with jeans and other apparel. It said accessories and women's novelty T-shirts were among the best sellers.

American Eagle, which also reported its earnings yesterday, said unplanned markdowns during the weak holiday season helped send its fourth-quarter profit tumbling 77 percent.

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