American Eagle Outfitters, Inc.

  • Overview

It was once a purveyor of outdoor gear, but American Eagle Outfitters now feathers its nest with jeans and polos. The mall-based retailer sells denim and other casual apparel and accessories (top categories include jeans, t-shirts, bras, and panties) aimed at young men and women ages 15-25. The chain operates more than 1,000 stores in all 50 US states, Puerto Rico, Canada, and now Mexico. It also has stores in about a dozen other countries operated under license. Direct sales come from the company's websites. Virtually all of the company's products bear its private-label brand names: American Eagle Outfitters and aerie. In 2012 the company sold its 77kids by american eagle business to Ezrani 2 Corp.

Geographic Reach

American Eagle ring's up 90% of its sales in the US. Canada, where the chain has more than 90 stores in nine provinces accounts for the rest. The chain has 45 stores, operated under license in about a dozen countries, including China, Hong Kong, Israel, Japan, Poland, Russia, and several cities in the Middle East. Its newest markets are Mexico and the Philippines. 

Financial Performance

Sales at American Eagle stores approached $3.5 billion in fiscal 2013 (ended January), a 10% increase versus the prior year. Net income rose 53% over the same period. The double-digit sales and profit gains were driven by a 9% jump in same-store sales, and a 25% increase in online sales. Women's apparel outperformed men's. Throughout the year, strong merchandise improvements led to comparable sales growth at both American Eagle Outfitters and aerie stores. Sales in the US climbed 10% in fiscal 2013 versus the prior year, while Canadian sales rose 11%. Indeed, fiscal 2013 was a record sales year for the chain, which has seen its sales growth accelerate in the past two annual comparisons after three years of relatively flat performance. Still, the company's net profit margin has not returned to pre-recession levels, logging about half of what it was in fiscal 2008.

Strategy

American Eagle's strategy includes expanding both domestically and internationally. After entering Mexico in early 2013, the company expects to open five more stores there this year as part of its plan to open about 50 new American Eagle Outfitters stores in North America, Mexico, and China. It also plans to remodel 45 to 55 existing shops.

The retailer is also working to further develop its existing brands to enable its flagship American Eagle Outfitters brand to gain more market share in key categories like denim, knit tops, fleece by reducing production times, and improving its store layout. With 77kids being sold, the company is also likely to redirect focus on its intimate apparel brand, aerie, which was launched in 2006. It is mainly aimed at teenage girls with a selection of intimates and personal care products. Competing with the PINK label by Victoria's Secret, aerie has about 150 standalone stores. The brand is also available online and in select AE stores. 

With the exception of aerie, American Eagle Outfitters hasn't had much luck launching new brands. Its MARTIN + OSA sportswear concept for older men and women (launched in 2006) was shutdown four years later. 77kids, introduced in 2008, was sold in mid-2013.

Divestitures

Terms of the 77kids sale to Ezrani 2 Corp., which is owned by Ezra Dabah, former CEO of another kids' clothing chain The Children's Place, were not disclosed. As a result of the sale, American Eagle recorded an after-tax loss of about $35 million, which is at the low end of a previously announced range of $35 million to $50 million. Introduced in 2008 as an online-only brand, 77kids grew to become available in more than 20 US stores. However, it had not been performing as well as American Eagle would have liked.

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American Eagle Outfitters, Inc.


77 Hot Metal St
Pittsburgh, PA 15203-2381
Phone: 1 (412) 432-3300
www.ae.com

STATS


  • Employer Type: Public
  • Stock Symbol: AEO,
  • Stock Exchange: , NYSE
  • Chairman and Interim CEO: Jay Schottenstein
  • Vice Chairman and Executive Creative Director: Roger Markfield
  • Chairman and Interim CEO: Jay Schottenstein

Major Office Locations

  • Pittsburgh, PA

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