Martin + Osa is depressing American Eagle's bottom line as the concept stores, meant to appeal to 28- to 40-year-olds, lost its president late last year and American Eagle Chief Executive Jim O'Donnell was a bit non-committal about the stores' future at a recent industry gathering.

The stores are making progress, with design and production processes having improved, Mr. O'Donnell told attendees at an industry conference on Jan. 13. "It is also important that we continue to differentiate the Martin + Osa brand within the competitive landscape as well as create an emotional connection with the customers."

But Mr. O'Donnell implied the money-losing unit may not yet have achieved its goal, saying, "We are still evaluating our plans and we'll provide additional information...during our fourth quarter earnings call."

Sales at U.S. stores open at least a year rose 3 percent at Aeropostale, the U.S. teen retailer with more than 900 stores, trailing the 14 percent average of analysts' estimates compiled by Retail Metrics Inc. Comparable-store sales at American Eagle fell 5 percent, missing a 2 percent projected gain. Sales at Limited, the owner of the Victoria's Secret chain, dropped 4 percent, more than the 3.1 percent estimated decline.

October is a transitional month between the two largest selling seasons of the year: back-to-school and Christmas. U.S. retailers use the month to clear out fall merchandise and make room for holiday floor sets, according to Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics. "The teen apparel space was the biggest disappointment," Perkins said today in a telephone interview.

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Aeropostale, based in New York, fell $5.21, or 14 percent, to $32.82 at 11:29 a.m. in New York Stock Exchange composite trading. Pittsburgh-based American Eagle dropped $2.02, or 11 percent, to $15.84. Limited, of Columbus, Ohio, lost 8 cents to $17.70. Some department stores fared better than the specialty retailers. TJX Cos. and Ross Stores Inc., which both sell designer goods at discounted prices, reported sales gains. Chains including Saks Inc. and Nordstrom Inc. reported sales that topped estimates.

Net income fell to 14 cents a share from 29 cents a year earlier, the Pittsburgh-based company said today in a statement. The retailer said Aug. 6 that earnings would be 16 cents. Profit excluding a tax benefit was 12 cents a share. Analysts predicted 15 cents, the average of estimates compiled by Bloomberg.

Sales at stores open at least a year dropped 10 percent in the three months ended Aug. 1, the company reiterated. Aeropostale Inc., the mall-based teen retailer that sells clothes at low prices, reported last week that comparable-store sales advanced 12 percent in that period as young shoppers sought bargains.

M.H. Alshaya Co. in Kuwait, which indicates on its Web site that it already operates stores under brand names such as Justice, Claire's and H&M, is slated to open the first American Eagle franchise location in the Middle East in early 2010.

Meanwhile, the South Side retailer reported that it was starting to carry fashions teens will pay full price for again even though first-quarter profits were almost half those of the same period last year and the second quarter isn't likely to be much better.

The company posted net income of $22 million, or 11 cents per share, for the three months ended May 2. That compares with $43.9 million, or 21 cents, during the same period last year.

American and its regional affiliate, American Eagle, will cut daily round trips from the U.S. to 31 from 42 currently because of weaker demand for travel to Mexico. The cutbacks will start Friday and run through June 10.

Tim Smith, a spokesman for parent AMR Corp., said American would evaluate demand and its summer schedule to Mexico beyond June 10.

Smith said the company will continue to fly to all 14 Mexican destinations served by American and Eagle but less frequently.

This spring, spending by teenagers, a closely studied but rarely understood segment of the population, is off by 14 percent, a direct reflection of the economy, according to a report this month by the investment bank Piper Jaffray. And that is having a profound effect on an already unraveling mall culture, where deep discounters and stores known for heavy promotions are suddenly the popular destinations and aspirational brands are struggling to fit in.

Teenagers are noticing. "Labels are becoming less and less of a priority for people throughout my school," said Chelsea Orcutt, 17, a senior at the Mount Saint Mary Academy near Buffalo, where the Walden Galleria shopping center includes all of the above-mentioned stores, plus many more options for teenagers who favor a sunny West Coast surfer style or those who prefer a goth ensemble to highlight their black nail polish and lipstick. Ms. Orcutt, a bit less casual in her personal style, favors Macy's, Old Navy and American Eagle, which, she pointed out, keep teen budgets in mind.

"Labels and designer purses -- I'm not seeing them as frequently," said Ms. Orcutt, who had participated in a survey on teen spending for the Hearst Magazines network of Web sites and was approached to speak about the subject for this article. When asked why that might be, she replied, without hesitation, "because of the crisis."

During years of rampant consumerism, where teenagers shopped was often more closely tied to what was happening in the pages of US Weekly or InStyle than their families' financial circumstances. Empires like Abercrombie & Fitch were built on the premise that their products, even $80 jeans and $30 T-shirts with provocative graphics, would be perceived as luxury items if they were sold in the right way. But as teenagers' priorities rapidly shift away from brands they now perceive as too expensive, the pecking order of mall stores has changed.