According to Jefferies, American Eagle Outfitters could be in trouble in the future. Analyst Randal J. Konik downgraded the retailer to a no buy rating. The analyst finds the stock underperforms during a possible downturn and leads to a slowdown in consumer spending. He also lowered his price target to $16 from $18. The new target lies just below where the American Eagle closed on Tuesday. “Clothing/footwear has typically been a low performer from the start to the end of the recession and has generally recovered with total spending. On average, over the past eight recessions, clothing/ footwear doesn’t grow until the quarter nearing the end of the recession,” Konik wrote in a note Wednesday. He also cut his sales growth outlook for 2023, expecting revenue to be flat this year. That is below the consensus calling for a 3% expansion. Konik added that at 14 times forward earnings, the stock is trading at a premium to its three- and five-year average valuation. Shares of American Eagle are up more than 14% in 2023. They are also up 64% since the end of September. Shares are down 1.8% in the previous marketing session. AEO YTD Mountain AEO in 2023 Jefferies has also downgraded other apparel companies to not buy, AKA Brands, Torrid Holdings and Lulu’s Fashion Lounge, due to exposure to a decline in demand. Konik reiterated its buy ratings for footwear brands Nike, Foot Locker and Boot Barn, citing higher expected resilience in the footwear sector. “While our analysis of spending for the PCE category combines footwear sales with apparel, we believe footwear will be more resilient. Footwear typically has a change cycle. shorter position than clothing, which we believe will strengthen sales resilience.In the footwear sector, we prefer BOOT, FL and NKE,” the analyst wrote. —Michael Bloom of CNBC contributed to this report.