Finally, American Eagle Outfitters Inc. did what Wall Street wanted. Shares of the South Side teen retailer rose 6.1 percent Wednesday and closed at $18.20, after the company reported regaining sales momentum in its core brand even as it dumps a costly experiment in reaching an older customer.

The 28-store Martin + Osa clothing chain, launched in 2006, struggled to find a market, and many analysts ran out of patience long before Tuesday's official announcement that the business would close by this summer.

American Eagle produced a profit of $59.3 million, or 28 cents per share, in the important holiday quarter, following the $32.7 million, or 16 cents per share, reported for the dreary 2008 Christmas season. Excluding one-time costs, earnings per share would have been 33 cents in the most recent quarter, matching earlier guidance and analysts' expectations.

In a conference call with analysts Wednesday, company officials talked about how far they have to go in regaining ground lost during the past two years - particularly in terms of profit margins - as well as opportunities for generating sales growth now that they've given up on Martin + Osa.

The children's clothing line launched last year via the Web, 77kids, is promising, said CEO Jim O'Donnell, who detailed plans to open five bricks-and-mortar locations later this year. One will be at the Mall at Robinson, where a pop-up temporary store did well enough to stay open longer than originally planned.

"The reception from the consumer, I don't want to be too euphoric, but it was really quite good," said Mr. O'Donnell.

Growth for the company also could come through its intimates clothing chain, aerie, which is solid and will continue to expand this year, Mr. O'Donnell said.

International ventures are moving along, as well. An American Eagle store is scheduled to open next week in Dubai, followed closely by one in Kuwait. Both will be operated through a franchise agreement. The company also is looking at opportunities in Hong Kong and China.

If he had Martin + Osa to launch all over again, Mr. O'Donnell said he'd do it the way the retailer has entered the children's market. "I would have put it online first and monitored it accordingly."

The ambitious effort to reach the 25- to 40-year-old customer had numerous problems. Mr. O'Donnell said he learned that it is critical to have strong leadership and a creative team that clearly understands what the brand is meant to be. Martin + Osa had more than one president during its run, although results did start to improve last year. About 245 people were employed by the chain.

But officials said they'd bolstered the American Eagle brand's reputation as offering good value, in some cases by passing on cost-cutting savings to customers. This year, a goal will be to improve sales of merchandise such as tops, footwear and jewelry, which have higher profit margins than the popular denim that drives the business.

Sales for the quarter ended Jan. 30 rose 7 percent to $972 million compared with $905.7 million a year ago, and the company said profit margins improved as a result of offering fewer markdowns. Sales in stores open at least a year rose 5 percent.

Total sales for the fiscal year were almost flat at $2.990 billion vs. $2.989 billion the previous year.

For the year, American Eagle reported net income of $169 million, or 81 cents per share, down from $179 million, or 86 cents, a year earlier. Excluding one-time charges, earnings would have been 79 cents per share, 3 cents higher than analysts polled by Thomson Financial expected.

There was still grumbling from some quarters.

Brian Sozzi, an analyst with Wall Street Strategies, wanted to know why the decision to close Martin + Osa was so difficult. "We plan to inquire about the company's review process when it comes to brands being incubated," he wrote in an investment note.

Analysts at Jeffries & Co. cheered management's decision to cut off the brand but raised concerns about the profitability of aerie. And, their investment note said, overall margins should have been better.

Mr. O'Donnell also heard from analysts on the conference call who wanted to know what the retailer plans to do with a sizable pile of cash it is accumulating. They suggested raising the dividend or buying back shares. He responded that many things were under consideration but noted, as many companies have learned in the past 18 months, having cash on hand is not a bad thing.

"Money Q&A" and "Company Town" are featured exclusively at PG+, a members-only web site of the Pittsburgh Post-Gazette. Our introduction to PG+ gives you all the details.