Shares of American Eagle Outfitters (AEO) plunged 16% to 16-month lows Tuesday morning after the retailer startled Wall Street by projecting a big earnings miss due to a frosty reception to its women’s summer merchandise.

The gloomy preliminary results from American Eagle prompted a number of analysts to cut their price targets and earnings estimates on the stock, which was followed down by a slew of other retailers.

The retailer warned late Monday it expects to earn 10 cents a share in the second quarter, which is less than half the Street’s view of 21 cents. Same-store sales are now projected to tumble 7%, compared with management’s earlier call for flat sales.

“We are not happy at all with our second quarter results,” American Eagle CEO Robert Hanson said in a statement.

In addition to “disappointing” sales of women’s summer clothes, Hanson blamed “weak” traffic trends and a “highly promotional retail environment” that “exacerbated” the company’s results.

A number of analysts issued negative notes in response, including Citigroup (C) and Jefferies, which lowered their price targets to $17 from $21 and maintained neutral-equivalent ratings, according to StreetAccount. Jefferies cut its 2013 EPS target by 19.3% to $1.17

Goldman Sachs (GS) trimmed its price target to $21 from $23 and cut its EPS estimate in 2013 by 8.3% and 2014 by 7.9%. Analyst Lindsay Drucker Mann kept her "neutral" rating, but acknowledged there is "downside risk to this view" due to the company's "deteriorated run rate in 2Q." 

Mann also warned American Eagle’s outlook "sets a negative tone for teen retail."

With that in mind, shares of rival Aeropostale (ARO) slumped 6.22% to $14.02 Tuesday morning, trimming their 2013 gain to less than 8%. Also, Victoria’s Secret parent L Brands (LTD) dropped 1.68% to $56.50 and Urban Outfitters (URBN) retreated 3.30% to $42.25.

None of those declines were as severe as American Eagle’s 16.10% tumble to $16.74. Earlier the stock fell to $16.67, its lowest level since April 2012.

Looking ahead, Hanson said “the domestic retail environment remains challenging, however, we have a strong sense of urgency and believe we are focused on the right actions to regain traction, deliver strong results and profitable growth.”

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