American Eagle Outfitters Inc. said Tuesday it has agreed to sell its struggling Bluenotes retail chain in Canada to Canadian retailer YM Inc. Terms of the deal, expected to close Dec. 5, were not disclosed. In 2000, American Eagle paid $74 million for the 109-store chain that caters to a 12-22-year-old demographic -- younger than the company's traditional 15-25-year-old target demographic. American Eagle will take a fourth-quarter loss of between 8 cents and 11 cents per share related to Bluenotes. "With the sale of Bluenotes, we can now devote our attention to expanding the AE brand in the U.S., Canada and worldwide," Chief Executive Jim O'Donnell said in a statement. American Eagle has 779 stores in the U.S. and Puerto Rico and 69 in Canada. The move also allows the Marshall Township, Allegheny County-based clothing retailer to focus on launching a new concept store some time next year, O'Donnell said. Steve Baumgarten, a retail analyst at Parker/Hunter Inc. in Pittsburgh, said the company made the right move in shedding Bluenotes. "Over the past four years, American Eagle unsuccessfully tried to reposition the Bluenotes brand," he said. "We feel that it would have been a distraction to the rollout of American Eagle's new store concept." Investors welcomed the news, sending shares up $1.36 to $43.60. Baumgarten said American Eagle is likely to target an older demographic for its new concept, bridging its current customers into their late 20s and 30s. "The market for a younger demographic is already very crowded. ... We believe the market for an older demographic is more fragmented and offers the company the best opportunity for long-term sales and profit growth," he said.

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