(Reuters) - Teen apparel retailers American Eagle Outfitters Inc (N:AEO) and Aeropostale Inc (N:ARO) said business in the holiday shopping quarter was better than they had expected as margins improved due to fewer discounts.
Makers of teen apparel, one of the weakest retail sectors, were expected to have a tough holiday season as shoppers cut spending on discretionary items and paid fewer visits to malls.
Most apparel makers cut inventories ahead of the holiday season to avoid discounting heavily and to maintain margins.
American Eagle raised its fourth-quarter profit forecast on Thursday to 32-34 cents per share from 30-33 cents.
Aeropostale said it still expected to report a quarterly loss, but less than it had forecast. The company estimated a net loss of 25-31 cents per share, compared with the 37-44 cents it had expected earlier.
Aeropostale's shares were up 19 percent at $2.69 in early trading on the New York Stock Exchange, while American Eagle's shares were down 1.3 percent at $14.44.
Plummeting gasoline prices are expected to have sparked a long-awaited jump in spending in late December as consumers took advantage of savings at the pump.
Fall in Aeropostale's same-store sales slowed to 9 percent in the nine weeks ended Jan. 3 from 15 percent a year earlier, while the drop in American Eagle's comparable sales slowed to 2 percent from 7 percent.