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Is It Time to Buy Some Out-of-Favor Teen Retailers?

We think a number of high-quality teen retailers are undervalued.

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While economic uncertainties continue to cast dark clouds over the American consumer, the teen retail sector has been holding up better, on average, than some of the more discretionary retailers we cover. In this article, we review August sales results and discuss our outlook for teen retailers for the remainder of the year. We also highlight three stocks in the industry that are currently undervalued, in our view, and why we still like them despite these uncertain times.

Back-to-School Results
Teen retailers reported mixed but generally weak August same-store sales, or revenue at stores open for at least 12 months. August is a particularly important month for teen retailers because it includes the bulk of the back-to-school selling season. The decline in existing store productivity is worth monitoring, but it was not unexpected considering the overall slowdown in consumer spending and its negative effect on industrywide apparel sales.

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Brady Lemos does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.