American Eagle Gambles on Inventory

American Eagle Outfitters (AEO) announced that they have taken the strategic step to increase inventories and always be in stock.

Big risks abound. Fashion is fickle. Consumer spending is fickle.

You invest valuable cash into inventory which sits around and does not turn as quickly. They are trying to increase margins. Can they report improved buying power with the increased inventory. Will they be stressed out and discount inventories to source cash and get the turns up.

Big risks. Not sure if the risk reward ratio is there.

Disclosure: No position in this stock