Investors looking for clues yesterday on how the holidays will treat American Eagle Outfitters Inc. seemed uncertain whether to be disappointed by the South Side retailer's cautious outlook or reassured by its ability to manage through a difficult sales environment.

American Eagle shares dipped below the stock's 52-week low in early trading, then headed back up as the day progressed, ending at $21.22, slightly below the previous day's closing price.

A holiday outlook report from Standard & Poor's yesterday listed the retailer as one of several that are well-positioned for a dicey season. The National Retail Federation has been predicting the nation's retailers' overall sales will rise 4 percent over last year's holiday season, the slowest rate of growth in five years.

For the three-month period that will include Christmas, American Eagle is setting earnings guidance at 67 to 70 cents per share. Analysts were looking for an average of 70 cents per share, according to Thomson Financial Network.

"Keep in mind that it's early in the holiday season," said Joan Hilson, chief financial officer, during an earnings presentation yesterday. Management was pleased with results for the Thanksgiving weekend and said November sales in established stores were "slightly" positive.

Meanwhile, for the quarter that ended Nov. 3, the retailer met analysts' expectations but saw overall profits dip as a result of higher markdowns over the back-to-school season.

Net income for the fall quarter fell 2 percent to $99.4 million, down from $100.9 million during the same period last year. Earnings hit 45 cents per share vs. 44 cents last year.

Total sales rose 7 percent to $744.4 million compared with $696.3 million a year ago. The company said merchandise margins fell because of higher markdowns partially offset by lower product and transportation costs. "We navigated well through a challenging quarter," said Jim O'Donnell, chief executive officer.

American Eagle also updated investors on the various projects designed to help the company grow. Next year, the company plans to open additional stores in its namesake concept, as well as its growing intimates chain called aerie.

The spring and summer collections for Martin + Osa, a year-old chain targeting 25- to 40-year-olds, are seen as key to determining the future of that venture.

In addition, Mr. O'Donnell indicated he would be ready early next year to reveal details of a fourth store concept the company has been developing. Discussions also are ongoing with potential partners for an international expansion.