WWD: American Eagle Outfitters Anticipates Revenues to Top $1 Billion This Spring

The retailer will continue to invest in stores and product assortment.

By Kellie Ell | Link to article

American Eagle Outfitters is benefiting from consumers releasing their almost year’s worth of pent-up demand.

Shoppers are returning to the retailer — which counts American Eagle, AerieOffline by Aerie, Todd Snyder and Unsubscribed in its portfolio of brands — in increased numbers thanks to vaccine rollouts, stimulus checks, tax returns, warmer weather and relaxed COVID-19 restrictions. American Eagle Outfitters said Wednesday that it is now expecting current-quarter revenues to top $1 billion, a mid-teens increase, compared with 2019’s revenues, or the same period pre-pandemic.

“I do believe it is the perfect storm,” Jennifer Foyle, chief creative officer of American Eagle Outfitters, as well as Aerie global brand president, told WWD.

“The pull-back on promotions is definitely benefiting these results,” she added. “We learned that through the entire year of COVID-19, really thinking of our inventory positioning and how we want to maximize our [average unit retail] and sell less units. The most important thing we’re focused on is quality. The quality of our product; the quality of our sales; the quality of our service. And in doing so, I think we’re warranting a price that the customer still feels is a fair value. But they’re definitely seeing the difference in our quality.”

The company now expects operating income of about $120 million, compared with $48 million in 2019’s pre-pandemic first quarter, thanks to strength in the Aerie and Offline by Aerie brands, as well as American Eagle’s denim business.

“It’s not only the tailwinds [created by the pandemic], but we’ve got these brands that are in front of us that, I think, are well-positioned for growth,” Foyle said. “Strategic growth, really thinking about the bottom line.”

Jay Schottenstein, American Eagle Outfitters executive chairman and chief executive officer, added, “In light of the current environment, it’s truly gratifying to see customer optimism, strong demand across channels and loyal for our brands continue. I’m amazed by the incredible momentum of Aerie, which is consistently reaching new heights and exceeding our expectations. We are seeing great progress at American Eagle, with stronger merchandise, marketing and inventory management clearly demonstrating the power and true potential of our leading brand.

“Looking forward, I have never been more optimistic about our future than I am today,” he continued. “We remain disciplined and focused on delivering profit growth through our Real Power Real Growth value creation plan, with our sights set on achieving our 2023 financial targets and generating superior shareholder returns.”

American Eagle Outfitters previously laid out plans to hit $5.5 billion in total group revenues by 2023 ($2 billion at Aerie alone), $550 million in operating income and returning the American Eagle brand to profit growth over the next three years.

It will also continue to lean into customers’ needs, meeting them where they like to shop, Foyle said. And with COVID-19 restrictions easing around the U.S., and many locations finally reopening, that’s increasingly been in person.

“We are still being cautious about how many people we allow in the store, because we’re still in the throes of COVID-19,” she said. “But customers are excited about what they’re seeing in the stores when they do go back. It’s about the magic in the store: the music, the product, the color, the excitement. We’ve been focused on entertaining the customer.”

That includes ping pong tables in Offline stores and an art gallery vibe, complete with art for sale, in the Westport, Conn., Unsubscribed store.

“We really treat each store like it’s its own community,” Foyle explained. “They plan their own events. They used COVID-19 as a time to learn — with less customers — in doing things differently.

“Not every store is created equally,” she added. “The project I’m taking on right now is to right-size our fleet and make sure we’re offering the right products for each market. We feel bullish about opening up in the right markets.”

In fact, the company plans to open roughly 50 new stand-alone Aerie stores this year, in addition to 25 or 30 Offline stores — a mix of stand-alone, side-by-sides and shops-in-shop — and possibly a third or fourth Unsubscribed location.

Meanwhile, Foyle said a mixture of styles are trending for spring, including comfortable work-from-home attire, activewear and “flirtier silhouettes.”

“It’s interesting for me now that I sit over both brands that I can really assort the business to the roots of each brand’s DNA and make sure we’re maximizing each brand’s particular strength in their business and what they do best,” Foyle said. “I’m really proud of the assortment. It continues to improve month over month and I think the customer is responding to it.”

Shares of American Eagle Outfitters, which closed up 1.35 percent to $32.98 a piece, are up more than 285 percent year-over-year. The company will report quarterly earnings on May 26.