American Eagle’s (NYSE:AEO) slogan is to “Live Your Life,” and now, its chief executive apparently wants to live elsewhere. The struggling retailer said in a statement Wednesday that CEO Robert Hanson is leaving the company, and Executive Chairman Jay Schottenstein will fill his shoes on an interim basis. Roger Markfield, vice chairman and executive creative director of American Eagle, is also now planning to postpone his retirement so as to help manage the company in the wake of Hanson’s departure.
Following American Eagle’s announcement, the company’s shares dropped more than 10 percent, sitting at $12.88 as of 11:15 a.m. Eastern on Thursday. American Eagle’s plunging stock price follows the 30 percent stock tumble that the stock suffered in 2013, and it will be interesting to see how the retailer can make amends. American Eagle will report fourth-quarter results on March 11, previously forecasting that earnings will be 26 cents per share. With its most recent announcement, however, the Pittsburgh-based company’s earnings could be even poorer than expected. On top of everything, American Eagle will need to find a new leader.
Simeon Siegel of Nomura Securities International said in a phone interview with Bloomberg that American Eagle’s decision to change its CEO now “is a very surprising move.” He added, “Having to focus on a new transition is another thing to worry about.”
American Eagle has been struggling to reignite success as an apparel retailer ever since teens and parents showed a flattened demand for its once-popular clothing. One of American Eagle’s biggest rivals, Abercrombie & Fitch (NYSE:ANF), has also suffered falling sales on account of dropping sales, but its stock price stood at $34.81 on Thursday, compared to American Eagle’s $12.88.
Despite the departure of its chief executive, Bloomberg reports that American Eagle still has experienced leaders at the top, and that is something analysts are now focusing their attention on. Dorothy Lakner, an analyst at Topeka Capital Markets, said in a phone interview with the news service, “It’s not as though there’s a void at the top,” which explains her buy rating on the shares. Aforementioned Nomura Securities analyst Siegel has a hold rating on the shares.