By Angela Chen And Chelsey Dulaney 

American Eagle Outfitters Inc. on Wednesday reported its first quarter of revenue growth in two years, as the company's new line of one-size-fits-all clothes helped to separate the apparel retailer in the competitive teen market.

In comparison, rival Abercrombie & Fitch Co. posted a 14% drop in sales in its holiday quarter and said it expects challenges to persist throughout the first half of the year. The company has been dealing with its own sales slump and is searching for a new top executive.

Longtime retailers of teen apparel have struggled in recent quarters as their key demographic increasingly began to favor cheaper, unmarked clothes, such as those sold at fast-fashion stores like Hennes & Mauritz AB and Forever 21 Inc.

American Eagle on Wednesday credited the company's "Don't Ask Why" collection in part for its 3% increase in revenue. The retailer called the collection a cost-effective "testing lab" that helps the retailer spot trends and increase demand.

By experimenting with new fabrics, washes and styles in the one-size-fits-all collection, it can gauge which styles are gaining favor and then add these styles to the regular collection. American Eagle said this process was a key part of turning around the company's tops business, which was one of the best-performing segments in the past quarter.

In general, American Eagle has seen sales grow on demand for such items such as blanket scarves and knit tops. The company's "improved merchandise" also allowed it to scale back promotions.

American Eagle has been working to revamp its business after losing market share. The company in May unveiled plans to shutter 150 North American stores over the next three years and is evaluating another 300 stores that have leases expiring over the period.

Shares of American Eagle surged as much as 10% Wednesday and set a new 52-week high of $16.36.

Abercrombie, meanwhile, is phasing out its logos in the U.S.--as logo-branded fashion falls out of fashion with teens--while adding more patterns and items like sequined tops for women.

The company said Wednesday that it expects the logo phaseout to weigh on first-half results and currency headwinds to hurt the company all year. Abercrombie didn't provide specific sales or earnings guidance, citing a lack of visibility.

In December, the company announced that controversial Chief Executive Mike Jeffries was leaving the company after more than 20 years. Mr. Jeffries crafted Abercrombie's sex-tinged image and built it into a powerhouse.

Wednesday, the company said the search for a new leader continues and that the company is considering internal and external candidates.

Abercrombie also highlighted the depth of the changes the retailer is considering to revive its flagging image. The company put its corporate jet on the market last quarter, is retraining its employees and is considering changes to make its notoriously dim-lit, music-blasting stores more friendly.

"We're changing the content of the music. We're looking at different levels of music," said Christos Angelides, president of the Abercrombie brand. "We're looking at the darkness. We're looking at the way we lay the product out, whether it should be hanging or flat-folded so we're leaving no stone unturned."

Shares of Abercrombie fell as much as 15% Wednesday and hit a six-year low of $20.37.

Abercrombie reported a profit for its January quarter of $44.4 million, or 63 cents a share, down from a profit of $66.1 million, or 85 cents a share, a year earlier. Revenue fell to $1.12 billion.

American Eagle, meanwhile, said it earnings rose to $61.6 million, or 32 cents a share, from $10.5 million, or 5 cents a share, a year earlier. Revenue increased to $1.07 billion.

For the current quarter, American Eagle guided for per-share earnings between nine cents and 12 cents in the current quarter, above the seven cents that analysts had forecast. The retailer's estimate includes a negative impact of 2 cents a share from continued shipping delays at West Coast ports, which the company expects to be resolved this summer.

American Eagle also said there was no update on its search for a permanent chief executive, and that Jay Schottenstein would continue leading the company in the interim. Former CEO Robert Hanson departed in January 2014.

Write to Angela Chen at angela.chen@dowjones.com and Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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