Abercrombie & Fitch's (ANF.N) and American Eagle Outfitters' (AEO.N) upbeat third-quarter results and annual forecasts were overshadowed by caution around holiday-quarter sales from several major retailers.
Apparel retailer Abercrombie & Fitch's shares, which have more than tripled this year, were down about 8%, while American Eagle slipped 17%.
Days ahead of the start of the busiest selling period of the year, retailers noted cautious spending by shoppers hit by sticky inflation and rising interest rates.
Electronics retailer Best Buy (BBY.N) posted a weak forecast, joining dull quarterly reports from Kohl's (KSS.N) and Lowe's (LOW.N).
"With so many retailers warning about falling demand for discretionary goods, investors may be skeptical about American Eagle's and Abercrombie's ability to maintain their upward trajectories," said Rachel Wolff, senior analyst at Insider Intelligence.
Still, fresh inventories have allowed ANF and American Eagle to pull back on discounts, which could help them buck broader pressure from shoppers cutting back spending on non-essentials such as apparel this holiday season.
Abercrombie's fourth-quarter forecast for net sales growth was largely in line with market expectations, with analysts at Citi Research calling the forecast "conservative".
Abercrombie expects holiday-quarter net sales growth to be up in the low double digits, compared with estimates of a growth of 11.6%, as per LSEG data.
Meanwhile, American Eagle lifted its annual sales target and forecast holiday-quarter sales above market expectations, helped by strength in its Aerie brand.
"While overall demand for discretionary merchandise remains soft, American Eagle's popularity with Gen Z and millennial shoppers is helping insulate it from a broader spending slowdown and avoid the fate of retailers like Target," Wolff said.
American Eagle expects fourth-quarter revenue to be up in the high single digits, compared with estimates of a rise of 3.64%.
