To the delight of investors, American Eagle Outfitters Inc. yesterday said it was giving up trying to figure out how to operate the Bluenotes teen clothing stores it acquired four years ago and will dump the unit instead.

Shares of the hot Marshall retailer rose $1.36, or 3 percent, to $43.60 on news that it will sell the Canadian chain to a private company controlled by Michael Gold, a retail executive starting to make a career of working on problem cases.

American Eagle expects to recognize a fourth-quarter loss from discontinued operations of approximately 8 cents to 11 cents per share as a result of the sale.

Gold, who is expected to close on the purchase of the 109-store operation on Dec. 5, already owns Toronto-based YM Inc., which has its own stores under names such as Stitches and Urban Planet, and last year bought a chain called Suzy Shier. Two weeks ago, the struggling California mall retailer Wet Seal Inc. hired Gold as a consultant to help turn the company around.

American Eagle agreed to buy the Canadian retailer for $74 million in August 2000. Despite an extensive repositioning, the chain never did generate much growth.

Bluenotes sales hit $84.5 million in the fiscal year ended Jan. 31, but sales in stores open at least a year fell 7.7 percent. In the most recent quarter ended Oct. 30, same-store sales at American Eagle brand stores rose 24.9 percent while Bluenotes suffered a 0.9 percent drop.

American Eagle did gain a foothold in the Canadian market through the venture, now operating 69 stores north of the border under its own name.

Chief Executive Officer Jim O'Donnell said the Bluenotes sale would allow the company to focus on its core American Eagle brand as well as on development of an entirely new retail concept in the next few months that, if successful, will allow future growth.