Pedestrians walk past an American Eagle Outfitters store in New York
Standpoint Research has downgraded American Eagle Outfitters to “hold” from “buy,” expressing concerns over the apparel retailer’s store count. Reuters

Shares of American Eagle Outfitters Inc (NYSE: AEO) are sinking this morning after Susquehanna Financial Group downgraded the stock’s rating to neutral, citing a sluggish December sales picture.

AEO shares were down about 4.80 percent as of 10:30 a.m. (EDT). The company’s stock has declined about 15.5 percent since closing at $17.16 per share on November 23.

Despite tight control of expenses and inventories, we feel a disappointing December will put American Eagle shares in a holding pattern with no meaningful catalyst to drive near-term appreciation, Susquehanna analysts said.

American Eagle has been seeking to upgrade margins and increase sales, but it has face stiff competition from rivals like Abercrombie & Fitch (NYSE: ANF) and Zumiez.

Analysts also indicated that the company’s promotions are cutting into margins and that “a majority of sweaters, a new category for aerie, have been hard-marked, offering discounts of as much as 55 percent.”

American Eagle shares have lost about 7 percent of their value since the company posted an in-line third-quarter profit. They closed at $15.22 on Friday on the New York Stock Exchange.

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