Shares of American Eagle Outfitters dipped more than 10 percent in early trading after an analyst downgraded the stock, citing the "surprise" announcement that the company's president will leave early next year and concerns over the South Side teen retailer's back-to-school fashions.

Oppenheimer analyst Roxanne Meyer dropped her rating from "outperform" to "perform." American Eagle shares that closed Thursday at $15.80, were trading below $14 this morning.

After the markets closed yesterday, the company announced Susan P. McGalla, 43, would not renew her contract as president and chief merchandising officer. The contract expires in January.

"After 14 very rewarding years with American Eagle, I feel it's time to move on to new challenges," she said in the announcement.

Chief Executive Officer Jim O'Donnell will assume the responsibilities of president. A search will be conducted for a new chief merchandising officer.

The company said Ms. McGalla will spend the rest of her time with American Eagle focusing on its Martin + Osa venture, a struggling concept meant to give the retailer access to 28- to 40-year-old customers, and on a new venture targeting children, 77kids, that is scheduled to begin online sales in October.

The Oppenheimer report said Ms. McGalla's unexpected departure heightened concern that back-to-school fashions may be off trend. "Early denim for back-to-school is wide leg while other teen retailers feature skinny [jeans]," wrote Ms. Meyer, noting that denim accounts for 20 percent of the retailer's third-quarter sales.

The general economic environment just exacerbates the situation, the analyst said, predicting that American Eagle will have a tough time battling Aeropostale for market share.

American Eagle has had a challenging year so far, with sales in established stores looking weak and first quarter results hurt by markdowns. Officials have blamed both the economy and their own fashion issues, vowing to offer more trendy styles at value prices.