AEO ICON Finalist: Val, Sr. Program Manager, Supply Chain Strategy
Each year, AEO honors one associate who has achieved significant accomplishments, personifies our values and who has left an indelible impact on our company and people. Over the next several weeks we will spotlight the top three finalists for the 2020 AEO ICON.
In March 2020 nearly all retailers were faced with uncertainty as a result of store closures and shipping disruption due to the COVID-19 pandemic. While the level of change to overcome such an industry disruption would normally take 1-2 years, to course correct, AEO knew it had 5 months to answer this challenge to be ready for peak volumes. The Supply Chain team had a powerful response to this challenge, largely due to the swift action by AEO ICON nominee and Sr. Program Manager – Supply Chain Strategy, Val.
Val quickly pivoted to deploy necessary initiatives to help keep the AEO supply chain moving. First, she facilitated the strategy, execution and launch of four fulfillment hubs that closed the capacity gap created by the surge in online demand as a result of the pandemic, allowing AEO to deliver a strong 2020 holiday season for our customers. Val also led the charge in navigating pandemic shipping challenges by negotiating carrier contracts that ultimately resulted in AEO obtaining the necessary capacity to support peak business!
No matter what it took, Val’s willingness and dedication to our supply chain and AEO knew no boundaries in 2020. Congrats on your nomination for AEO ICON, Val!
AEO Women’s History Month Spotlight: Ta Jané, Sr. Product Manager
March is Women’s History Month – a time where we celebrate and acknowledge the vital contributions of women throughout history. In honor of this month, we are spotlighting a few AEO women to share their stories of professional growth, challenges and accomplishments.
Tech-guru, innovator, opportunity-seeker, wife, mother… those are just a few words to describe Ta Jané (or TaJ, as many of her AEO family call her!), Sr. Product Manager at AEO, Inc. TaJ attended Georgetown University, majoring in International Business and Marketing and following graduation was recruited to join AEO as an intern. Fast forward nearly 8 years, TaJ’s journey at AEO lead her into the complex world of tech where today she supports the digital product teams in delivering a best-in-class experience for American Eagle and Aerie customers!
What does a Product Manager do?
I manage the customer experience on the American Eagle and Aerie website – that is the time a person arrives to the site to the time when product is added to their bag. My team ensures our customer is having the best experience possible shopping our site – from the buttons they are pushing to the filters they use to find product. Our goal is to make the online shopping experience as intuitive and engaging as possible for our customer!
How did you land in this role?
I actually started as an AEO intern out of college and transitioned to the AEO Teammate Program! I initially was part of the Merchandising team, but always had a passion for the digital side of the business. I eventually joined the site merchandising team. I worked on the U.S. site for a time and also helped stand up the UK/EU site as well. Eventually, I joined the Product team!
Wow! You have grown in your role so quickly, what is the secret to your success?
I truly believe if you have a willingness to learn, you can pretty much learn anything here at AEO! I am constantly learning on the job and reaching for what I call “island projects”—or side hustles outside of my normal job description. I love to learn about new things, and I think that curiosity has been so valuable for me.
You’re on the steering committee of the AEO REAL Parents Network. How many kiddos do you have and how has parenthood impacted your work life?
I currently have an 8-year-old stepson, a 2-year-old son and a baby on the way! One of the best things parenting has taught me is to not take everything so seriously. A lot of times we identify ourselves by our work. We get so emotionally invested in our careers and struggle to break away. Having a child has taught me to separate my identity and my work. I truly see the bigger picture and I realize I can do things I didn’t think I could do before. I make it a priority to log off at 5 every day to spend time with my kids because that is what’s important.
What woman/women have inspired you in life?
I have been inspired by so many women. My mother and grandmother – they are so incredibly focused and strong, and they’ve always had this “can-do” attitude. They’ve taught me there is no roadblock that is insurmountable. They’ve taught me that rejection is not the end, it’s just a redirection to “what’s next?”
I also have so much admiration for Susan Eshleman, AEO VP of Product Management. She is always so supportive, she leads with understanding and she is always present for her team. She has been such a great role model for me personally and professionally.
As a woman, how have you been challenged in your professional life?
I am a woman in the tech industry—an industry that has largely been male dominated. There have certainly been times where I have felt the pressure to show that I deserve to be here as much as anyone else. That’s why it’s so important to continue to drive females into STEM roles!
What advice do you have for young women starting their careers?
My biggest piece of advice is “just do it!” Do you want to apply for a role, but maybe you’re not totally qualified? Just do it! You want to enter a field you have no experience in? Do it! Don’t disqualify yourself. There are recruiters for a reason, let them tell you no. Get your resume on the desk!
Why do you love AEO?
The people, of course! I love how creative and insightful people are.
I also love the opportunity. Every opportunity I’ve gone after hasn’t always come to me, but I am always empowered to seek them out. The well has never come up dry for me at AEO. If there was something I was passionate about, my leaders always have my back and I love that about this company!
Each year, AEO honors one associate who has achieved significant accomplishments, personifies our values and who has left an indelible impact on our company and people. Over the next several weeks we will spotlight the top three finalists for the 2020 AEO ICON.
Meet Carlos, Sr. Director of Finance for AEO’s Mexico operations. Carlos was chosen as a 2020 AEO ICON finalist for exemplifying AEO’s core values of People, Integrity, Passion, Innovation and Teamwork.
Under his leadership in 2020, the Mexico team developed strategies to become a multichannel market, consolidated existing channels and launched new ones with an aggressive business development mindset, while also remaining a key business partner for AEO’s Latin America international licensed markets.
Carlos has been a true ICON in supporting AEO goals and priorities. Last year, he prioritized the health and safety of his team throughout the pandemic by supporting the transition to flexible/work from home for corporate associates and re-creating and adapting the International Store Re-opening Playbook for store teams. He drove business results by focusing on strong margin growth, reducing spend when possible and targeting strategic investments. Lastly, he was a key leader in launching the new localized Mexico website in record time and with outstanding results!
With Carlos’ leadership, the Mexico team had a very successful year!
“It’s a genuine pleasure to work with Carlos – his focus, dedication, openness, sense of team & humility makes him an exemplary colleague, leader and undoubtedly an ideal candidate for this year’s Premio al #ICONO AEO.” – Carlos’ Nominating Committee
Congrats, Carlos!
Aerie’s Journey to $1B: #AerieREAL Power of Positivity
Over the next several weeks, to celebrate Aerie’s incredible milestone of reaching $1B in sales, we’ll be sharing stories about the history and evolution of one of the fastest growing lifestyle brands in retail today! From boybrief undies on a single table in AE stores, to the #AerieREAL movement and the launch of OFFL/NE and Unsubscribed—Aerie has unleashed the power of positivity and inclusivity, encouraging customers around the world to love their real selves!
The Power of REAL
When Jen Foyle, Chief Creative Officer AEO Inc. & Aerie Global Brand President, joined the company in 2010, she brought passion, innovation and the creative spark to lead the team that has made Aerie one of the fastest growing lifestyle brands in the market.
The magic moment came in 2014. After nearly a decade of success, the Aerie team knew their mission of positivity and self-love could be so much more. Aerie was developing amazing product and there was an overwhelming excitement to grow the brand. That’s when the Aerie team challenged themselves: “What else can we do for our customers?”
The creative teams came up with a revolutionary idea of capturing real, unretouched beauty in what we know now as the #AerieREAL campaign.
Featuring models of all sizes in Photoshop-free photos, Aerie marketed the latest collection of bras, undies and apparel, all while demonstrating that the real you is the best you.
“The purpose of ‘#AerieREAL’ was to let our customers know that there is no reason to retouch beauty, while giving young women of all shapes and sizes the chance to discover amazing styles that work best for them,” said JenFoyle. “We wanted to help empower women to be confident in themselves and in their bodies.”
The #AerieREAL campaign was an important turning point in the evolution of the brand, which always celebrated its customers’ unique spirit and optimism. By challenging the traditional standards of beauty, Aerie sparked a conversation with their customers about loving your real self. The campaign grew into a mission that continues today.
The creative teams came up with a revolutionary idea of capturing real, unretouched beauty in what we know now as the #AerieREAL campaign.
Featuring models of all sizes in Photoshop-free photos, Aerie marketed the latest collection of bras, undies and apparel, all while demonstrating that the real you is the best you.
“The purpose of ‘#AerieREAL’ was to let our customers know that there is no reason to retouch beauty, while giving young women of all shapes and sizes the chance to discover amazing styles that work best for them,” said JenFoyle. “We wanted to help empower women to be confident in themselves and in their bodies.”
The #AerieREAL campaign was an important turning point in the evolution of the brand, which always celebrated its customers’ unique spirit and optimism. By challenging the traditional standards of beauty, Aerie sparked a conversation with their customers about loving your real self. The campaign grew into a mission that continues today.
It wasn’t just all media praise, either. After launching #AerieReal, sales grew 20 percent in fiscal year 2015 . Customers were moved by the campaign, and wanted to shop a brand where they felt the marketing and the clothes represented them.
Aerie became a celebration of authenticity and being your REAL self, away from the traditional, sleek, sexy and risqué models that the intimate industry often highlighted.
“We definitely had a creative moment where the team got together, and we just said, ‘Really, what’s happening today with millennials and the next generation?’” Jen told Business Insider. “And we really felt like girls today are just more independent and stronger than ever. We just knew that it would really resonate with this generation.”
REAL Growth
Aerie’s growth has been nothing short of spectacular since the launch of #AerieREAL.
Over the past seven years, Aerie has nurtured #AerieREAL into a worldwide movement that has touched the lives of millions of women and girls. From #AerieREAL Role Models, the #AerieREAL Changemakers, to the #AerieREAL Life Blog—being REAL is part of Aerie’s DNA.
Vogue: TikTok Made Me Buy It: Aerie’s Viral Leggings, Finally
Like so many others last November, I came across a viral TikTok video on my “For You” page of a young woman, Hannah Schlenker, nonchalantly dancing to Justin Bieber’s song “Drummer Boy” in her kitchen. To my surprise, the video’s virality did not owe to her why-bother dance style—it’s as though she was marking the choreography instead of committing to it full on and she even jokingly captioned the clip, “Yes queen give us nothing.” It turned out that the video’s popularity was, in fact, because of her blue Aerie leggings. Dubbed the Real Me High Waisted Crossover Legging, the pants are made in a lightweight 88% nylon, 12% elastane blend that serves as a second skin and, per the website, when worn, it “feels like the real you!” On Schlenker, the legging’s v-shaped waistband was incredibly flattering to her waist (for the record, it is very small, irrespective of the leggings) and the world took note.
Within a week of the TikTok, Aerie’s Crossover Leggings sold out across the country and incited a new crop of videos in which women with different body types put the leggings to the test in TikToks of their own, showing off the garment’s flattering prowess. And so the cycle continued: the leggings restocked, flew off the shelves, and the waitlist kept growing. “We have sold out over six times and have collected over 156K emails from customers asking to be on the ‘notify me’ list,” says Jennifer Foyle, the chief creative officer at AEO Inc. and global brand president at Aerie.
The hype wasn’t over by the time I got my hands on a pair of simple black crossover leggings in February. I didn’t immediately cave to the craze after first seeing Schlenker’s video, but countless crossover-legging-TikToks later, the familiarity principle—humans develop a preference for things which they see often—ultimately got the best of me and I, too, bought the leggings. And I was not alone; “our community is anxiously awaiting the newest collection of tie-dye patterns that releases on March 18,” Foyle adds.
Leggings are a closet staple that, while polarizing (opposers claim the pants are too revealing and have even launched campaigns against them), have had a comeback amidst the pandemic: they’re simple, chic, comfortable, and they pair well with an oversized button-up. Plus, as yoga pants-adjacent, they serve as a reminder to get in a workout. I hadn’t bought any new leggings that I’d wear outside of the gym in years, so I figured if I were to try any new pair, it should be Aerie’s.
After slipping on the leggings, I immediately understood the allure. The v-shaped waistband does indeed offer a flattering cut (although my waist did not have as much of a dramatic cinching as I had hoped) and the fabric is more comfortable and lightweight than I had anticipated. I’ve worn these leggings for workouts and long walks, but I’ve mostly enjoyed wearing them on days spent working at home where “real pants” are not on the menu. I’d call them the perfect all-purpose legging.
AEO Women’s History Month Spotlight: Sunny, SVP- Head of AE & Aerie Stores
March is Women’s History Month – a time where we celebrate and acknowledge the vital contributions of women throughout history. In honor of this month, we are spotlighting a few AEO women to share their stories of professional growth, challenges and accomplishments.
What does the AE & Aerie Head of Stores do day in and day out?
Every day, when I look at the business -good or bad- I’m always looking for a pattern. Pattern finding allows me to identify areas where I need to take action and I do that in partnership with my team and the customer. I also spend a lot of time with store and merchant teams and do my best to influence everyone to understand the customer. How can we continue to be better for our customers and associates so we can create the ultimate experience for both?
How has the COVID-19 pandemic affected the way you work?
Normally, I’m always on the road visiting stores, so this year has really challenged all of us to work differently. We have been able to replace what used to be in-store visits with virtual visits. Even though I’m not able to physically be in stores the way I used to, the experience is almost identical. We follow the same format where we cover business, customer and product insights and we turn opportunities into actionable items. It really is the silver lining to the way we’ve had to shift our way of work. One day, I virtually went from Montreal all the way to LA!
How did you enter retail and grow your career?
I got into retail because my parents put me to work! They owned a retail business, so at age 16 my weekends were spent working there. In college, I started working at Macy’s as a part time women’s shoe stock associate. Within two weeks, I saw the commission the sales team were making and I knew I wanted in! My Department Manager gave me 4 hours on the sales floor as a test and I nailed it! The rest of my college experience, I sold women’s shoes for commission. I loved feeling empowered to make my own money and that experience showed I could do great things for myself.
What challenges have you overcome in your career?
I’ve had challenges in every role, but I’ve always grown from them. When I was 22, I started my very first role as a Sales Manager at Macy’s running designer handbags. My entire team were career sales professionals who were much older than me. It was a challenge coming into a role where I had to find a way to inspire and lead people who were already experts. I made it a priority to learn from them before I even approached leading them or telling them what to do. I still do this today. No matter what title someone has, they are my business partner and I know I can learn from them.
How do you find balance?
I take a holistic approach to my work life and personal life and don’t really separate the two. However, I live by the motto “less is more,” and I’m dedicated to the 80/20 rule (20 percent of what’s most important drives 80 percent of the outcome.) I try not to get stuck on unproductive work and I focus on progress over perfection. Always stay moving!
What advice would you give to young professional women who want to grow a successful career?
Find a career that you absolutely love. I LOVE what I do so it never really feels like a “job.” Second, find purpose in your work. I feel here at AEO, I get to show young people their limitless potential through how we develop them. Oftentimes, a person doesn’t know their true potential and needs a leader or mentor to show them what’s possible.
What women/woman has inspired you or still inspires you?
There are so many women who have inspired me and mentored me throughout my career, but at the end of the day it’s my mom. She has so much optimism in life and always sees goodness in people. She grounds me every time.
Any final words of wisdom?
I want every person to feel what I feel- optimism for life. Challenge yourself to ongoing movement. Even if you’re scared, take one damn step! Try – don’t get stuck. With the willingness to move, you have the ability create transformational change.
Aerie’s Journey to $1 Billion – Early History
Over the next several weeks, to celebrate Aerie’s incredible milestone of reaching $1B in sales, we’ll be sharing stories about the history and evolution of one of the fastest growing lifestyle brands in retail today! From boybrief undies on a single table in AE stores, to the #AerieREAL movement and the launch of OFFL/NE and Unsubscribed—Aerie has unleashed the power of positivity and inclusivity, encouraging customers around the world to love their real selves!
It All Started with A Boybrief
In 1998, in an effort to bring new and exciting categories into the already successful American Eagle business, AEO set its sights on intimates. In the middle of an AE store, was a table featuring the AE Intimates boybrief along with a shelf cami, and PJs. Customers LOVED it! Fueled by brand loyalty for AE’s popular jeans, customers were excited for more products to incorporate into their day-to-day lives. There was customer demand for simple and playful cotton undies, and the team jumped at the chance to corner the market. The initial launch team continued to grow the collection and design new products, realizing there was a more exciting and bigger future for intimates at AEO.
Ross Park Mall Intimates Expansion
Named the Ross Park Intimates Expansion project, the team rolled up their sleeves and got to work planning to test the launch of a new intimates sub-brand targeted to women between the ages of 15-25 in early 2006. The Ross Park Mall store, in the AEO HQ city of Pittsburgh, PA, was the brand’s first side-by-side location and after countless hours spent ideating on names, logos, and colors—the team landed on the name Aerie. Aerie means a large nest of birds of prey… like an eagle!
The brand was light, airy and free. The Aerie customer wanted to be comfortable but also trend right. She wanted to look great while feeling good about herself. There was white space in the market for comfy cotton undies for the real girl, who wanted to feel confident but not overly sexy. Aerie wanted to be that solution for her. “There was a lot of optimism around the brand,” said Stacey McCormick, SVP Marketing – Aerie. “100% of our AE female customers wanted Aerie.” After a year’s worth of product development, Aerie was ready to become a household name.
Check out the original brand spot below!
Ross Park Mall Intimates Expansion
Named the Ross Park Intimates Expansion project, the team rolled up their sleeves and got to work planning to test the launch of a new intimates sub-brand targeted to women between the ages of 15-25 in early 2006. The Ross Park Mall store, in the AEO HQ city of Pittsburgh, PA, was the brand’s first side-by-side location and after countless hours spent ideating on names, logos, and colors—the team landed on the name Aerie. Aerie means a large nest of birds of prey… like an eagle!
The brand was light, airy and free. The Aerie customer wanted to be comfortable but also trend right. She wanted to look great while feeling good about herself. There was white space in the market for comfy cotton undies for the real girl, who wanted to feel confident but not overly sexy. Aerie wanted to be that solution for her. “There was a lot of optimism around the brand,” said Stacey McCormick, SVP Marketing – Aerie. “100% of our AE female customers wanted Aerie.” After a year’s worth of product development, Aerie was ready to become a household name.
After the success of the Ross Park Intimates Expansion, Aerie opened its first standalone in the latter half of 2006 at the Haywood Mall in Greenville, South Carolina, followed by two more stores a few months later at River Chase Mall in Birmingham, Alabama and Woodfield Mall in Schaumburg, Illinois. Aerie saw incredible success with stores growing nationwide, further creating the comfortable and casual style that American Eagle had established since 1977. Together, Aerie and American Eagle offered stylish, reliable and well-made products as well as the best retail experience for customers on the market. Aerie customers loved the casual dressing room space, and that there were clothes in store for them whether they wanted to sleep, workout or hangout. It was the perfect store everyone.
Through the growth and development of the brand, Aerie always put the customer first. They built, developed and revolutionized their products by going straight to the stores and hearing first-hand what the customers wanted. At launch, the store only had three bras. Hearing directly from the customer that she wanted more, the team quickly saw an opportunity for growth to be best in bras. In 2009, the team saw an untapped market for wireless bras—leading the way in bralettes, a comfier and more casual option to the traditional wired bra. This was a game changing moment for Aerie and set the brand apart in the market.
During this time, Aerie’s iconic boybrief had customers arriving in droves to purchase this fan favorite. Its comfortability made it the perfect undie. It was casual, soft and perfect for our everyday customer who wanted cute products that were made with her in mind. “It all started with a small table of boybrief undies in the American Eagle store. This was our first loyalty item and its popularity truly led to the creation of the Aerie brand,” said Jen Foyle, Chief Creative Officer, AEO Inc., and Aerie Global Brand President. “We’ve sold over 130 million pairs of the undie and we’re so excited about our current relaunch with updated details.”
WWD: Aerie Surpasses $1 Billion in Revenues; More Offline by Aerie Stores Coming
Meanwhile, the retailer expects current quarter revenues to grow, compared with the first quarters of 2019 and 2020.
The results mark the brand’s 25th consecutive quarter of double-digit growth, with digital sales surging 75 percent during the quarter and comparable sales up 29 percent year-over-over. Activewear was Aerie’s highest growth category, driven by the success of Offline by Aerie, followed by intimate apparel, which grew at a double-digit rate with strength in bras and underwear thanks to last year’s work-from-home lifestyle.
But even as COVID-19 vaccines continue to roll out nationwide and mask and social distancing mandates start to ease in some parts of the U.S. — and more and more consumers feel comfortable attending large-scale gatherings — Jennifer Foyle, chief creative officer of American Eagle Outfitters and global brand president of Aerie, said she’s not worried about the future of the brand known for its fashionable loungewear.
“I’m really excited about that challenge,” Foyle told WWD in an exclusive interview. “We are definitely seeing signs [of demand for more occasion wear]. There’s definitely a jeans shift, for sure. And there’s always tops that need to go with that on the AE side. And the way I’m looking [at Aerie] is, how does Aerie support that [shift] with our foundations and our great intimates business? Which is the core to everything we do.
“This business is not going away,” she added. “Leggings are here to stay.”
In fact, Aerie continues to gain traction thanks to its body positivity messaging and pledge not to airbrush models. As of December 2020, the brand had 4 percent share in the women’s U.S. intimate apparel market, according to market research firm The NPD Group.
“We always just stay in our lane,” Foyle said. “We just hit our billion-dollar mark. I could not be more thrilled. Our goal now is to get to $2 billion and that is increasing our intimates category, both undies and bras. Certainly, pulsing on our new category Offline, which includes sports bras.”
“We’ve had a lot of brainstorm sessions, really trying to get at the DNA of this brand,” she added. “We’re just really digging into how we show up, like we do with Aerie. At Aerie we do not airbrush and it’s a body positivity brand. So how do we leverage that for Offline and what are some of the white spaces? I always look to the white space and what we do that others aren’t doing. I think we have some really great ideas to continue doing.”
The company opened its first stand-alone Offline by Aerie store in the Nashville, Tenn., area in the fall and now plans to open between 25 and 30 Offline by Aerie stores this year, a mix of stand-alone, side-by-sides and shops-within-shops — that’s in addition to roughly 50 stand-alone Aerie stores as the retailer continues to optimize its fleet. The next Offline location, a shops-in-shop inside an Aerie store in Greenwich, Conn., is coming this spring.
“We’re testing different formats to see what really resonates as we continue to grow and expand this business,” Foyle said. “And we have this beautiful halo effect when we enter a new market. We see [sales] play out online as well.”
Meanwhile, American Eagle’s jeans business continues to grow with a variety of silhouettes and technology offering new ways to shop. Last month, the brand launched an augmented reality jeans shopping guide with Snapchat, tapping “Outer Banks” stars Chase Stokes and Madison Bailey for the campaign.
“After an unprecedented year, we ended 2020 on a positive note, with fourth-quarter adjusted operating income up 38 percent, driven by strong margins across all brands,” Schottenstein said in an earnings release Wednesday. “I’m very proud of the entire organization — our teams executed exceptionally well. We ended the year in a healthy cash position and took bold actions to ensure AEO is well positioned for future success, including steps to right-size and strengthen our store fleet, while also continuing to fuel our robust digital platform.
“We entered 2021 with momentum and, as reviewed in our January investor meeting, we see significant opportunity to drive Aerie’s growth and deliver strong profit margins in the coming years,” Schottenstein continued. “The fourth-quarter results reflect progress on our ‘Real Power. Real Growth’ plan and provide confidence in our value creation opportunity and multiyear financial targets.”
Total revenues for the three-month period ending Jan. 30, were $1.29 billion, compared with $1.31 billion during 2019’s fourth quarter. Decreased mall traffic and store closures amid the pandemic caused the quarter’s 1 percent decline in comparable sales. Store sales fell 20 percent, while digital sales increased 35 percent, year-over-year.
For the first time, the retailer also revealed individual sales figures at its two biggest brands. Total revenues for American Eagle decreased 9 percent to $943 million, with comparable sales down 8 percent. American Eagle’s e-commerce sales (similar to Aerie) were a bright spot for the brand, with digital sales growing 20 percent during the quarter, year-over-year. At Aerie, total revenues increased 25 percent to $337 million during the quarter, year-over-year.
The company logged $3.5 million in profits for the quarter, compared with $4.76 million in profits during 2019’s fourth quarter.
For the year, total company revenues were $3.75 billion, down from more than $4.3 billion a year earlier, also largely due to store closures and reduced store traffic amid lockdowns. The retailer lost $209 million for the full year, compared with gains of more than $191 million in 2019.
Capital expenditures were $35 million for the fourth quarter and $128 million for the full year. The retailer expects capital expenditures to be in the range of $250 million and $275 million for the 2021 fiscal year, prioritizing customer-facing and supply chain investments.
As of Jan. 30, the retailer had a store fleet of 1,078 locations, or 901 American Eagle, 175 Aerie, 179 AE and Aerie side-by-sides and two Todd Snyder units. The firm closed more than 50 American Eagle stores in 2020.
American Eagle Outfitters ended the quarter with $850 million in cash and cash equivalents and $325 million in long-term debt.
The company is not offering annual guidance, but expects 2021’s first quarter to surpass both 2020 and 2019’s first quarters in terms of sales.
“There were definitely some interesting hurdles in February, where Valentine’s fell on the long weekend, the President’s [Day] weekend,” Foyle said. “There was just a little bit of some shift in the calendar that I think were some headwinds. [But], we pulled back some major promotions in February. So, so far so good. I’m pleased [with the current quarter].
“And from what I see, kids are still planning on going on spring break,” Foyle said. “Maybe it’s slightly different, but I really believe it will be a perfect storm, particularly when those stimulus checks go out; tax returns are going out as well and the milder weather, more schools are opening. And certainly the comfort with the vaccine.”
Shares of American Eagle Outfitters, which closed up 1.27 percent on Wednesday to $25.43 a piece, are up about 97.5 percent, year-over-year.
American Eagle Outfitters Reports Fourth Quarter Results
Aerie revenue up 25%, comp sales up 29%
Digital revenue increased 35%, with Aerie up 75% and AE up 20%
Gross margin expanded 300 basis points, due to higher full-priced sales and reduced promotions
Strong liquidity — reinstating quarterly cash dividend at $0.1375 per share
PITTSBURGH — (BUSINESS WIRE) – American Eagle Outfitters, Inc. (NYSE: AEO) today reported GAAP operating income of $4 million for the quarter ended January 30, 2021, compared to $0.5 million for the quarter ended February 1, 2020. Adjusted operating income of $106 million compared to $77 million in last year’s fourth quarter. The adjusted operating income growth to last year primarily reflected gross margin expansion from higher full-priced sales and lower promotions.
Fourth quarter GAAP EPS of $0.02 compared to $0.03 last year. Adjusted fourth quarter EPS of $0.39 this year compared to $0.37 last year.
Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer commented, “After an unprecedented year, we ended 2020 on a positive note, with fourth quarter adjusted operating income up 38%, driven by strong margins across brands. I’m very proud of the entire organization – our teams executed exceptionally well. We ended the year in a healthy cash position and took bold actions to ensure AEO is well positioned for future success, including steps to right-size and strengthen our store fleet, while also continuing to fuel our robust digital platform.”
“We entered 2021 with momentum, and as reviewed at our January investor meeting, we see significant opportunity to drive Aerie’s growth and deliver strong profit margins in the coming years. The fourth quarter results reflect progress on our Real Power. Real Growth. plan and provide confidence in our value creation opportunity and multi-year financial targets.”
Adjusted amounts represent Non-GAAP results, as described in the accompanying GAAP to Non-GAAP reconciliations.
Fourth Quarter 2020 Results
Total net revenue decreased $22 million, or 2% to $1.29 billion, compared to $1.31 billion last year. Comparable sales declined 1%. The change in revenue reflected strong online sales, as well as mall traffic declines and store closures related to COVID-19.
Aerie revenue increased 25% to $337 million and comparable sales increased 29%. American Eagle revenue decreased 9% to $943 million and comparable sales declined 8%.
AEO’s digital revenue increased 35% and store revenue declined 20%. Aerie digital revenue rose 75% and AE increased 20%.
Gross profit of $440 million rose 8% from $408 million last year. Gross margin of 34.0% expanded from 31.0% last year. The increase reflected significantly higher merchandise margins across brands, primarily due to higher full-priced sales, lower promotions and inventory optimization initiatives. Lower rent expense also benefited the gross margin. This was partly offset by higher delivery and distribution center costs, due to increased digital mix and higher shipment costs, as well as increased performance-based incentive compensation.
Selling, general and administrative expense of $292 million increased $5 million from $287 million last year, reflecting higher performance-based incentive compensation, partly offset by reductions in store payroll.
Depreciation and amortization expense of $42 million decreased $2 million from $44 million last year, due to asset impairments taken in recent quarters, as well as lower capital spending.
Operating income of $4 million compared to $0.5 million last year. Adjusted operating income of $106 million this year excluded $103 million of impairment and COVID-19 related charges and compared to adjusted operating income of $77 million last year, which excluded $76 million of impairment and restructuring charges. Adjusted operating margin of 8.2% expanded from 5.8% last year, reflecting higher full-priced sales and lower promotions.
Aerie’s operating income increased 17% to $13 million. Adjusted Aerie operating income increased 52% to $48 million and excluded the impact of impairment charges. American Eagle operating income increased 29% to $92 million. Adjusted American Eagle operating income increased 29% to $145 million and excluded the impact of impairment charges.
Average diluted shares outstanding of 197 million compared to 168 million last year. The increase primarily reflected 26 million shares of unrealized dilution associated with the company’s convertible notes.
EPS of $0.02 compared to EPS of $0.03 last year. Adjusted EPS of $0.39 this year excluded $0.36 of impairment charges and expenses related to COVID-19 protocols and $0.01 of non-cash interest expense on the company’s convertible notes. Adjusted EPS of $0.37 last year excluded $0.34 of impairment and restructuring charges.
Impairment, Restructuring and COVID-19 Related Charges
In the fourth quarter of 2020, the company incurred $103 million in pre-tax impairment and COVID-19 related charges. Approximately $96 million of the pre-tax charges related to the non-cash impairment of 59 stores and the remaining $7 million reflected incremental expenses related to COVID-19 protocols.
In the fourth quarter of 2019, the company incurred pre-tax impairment, restructuring and related charges of approximately $76 million. Approximately $65 million of the pre-tax charges related to the non-cash impairment of 20 stores and the remainder primarily reflected severance and other costs.
Inventory
Total ending inventory at cost decreased $41 million or 9% to $405 million. The decline reflected a 21% reduction in American Eagle, due to inventory optimization initiatives and lower clearance levels. Aerie’s inventory increased 10% to support strong demand.
Capital Expenditures
In the fourth quarter of 2020, capital expenditures totaled $35 million. For the full year, capital expenditures were $128 million. For fiscal 2021, the company expects capital expenditures to be in the range of $250 to $275 million, prioritizing strategic customer-facing and supply chain investments.
Cash Flow and Balance Sheet
The company generated $213 million in operating cash flow during the fourth quarter and $202 million for the full year. The company ended the period with total cash and short-term investments of $850 million, an increase from $417 million last year. The quarter-end cash balance included $406 million in proceeds from the April 2020 convertible notes offering.
Quarterly Cash Dividend and Share Repurchase Program
Given its strong balance sheet and liquidity position, AEO’s board of directors has approved reinstating its quarterly cash dividend at $0.1375 per share. The dividend was declared on March 2, 2021 and is payable on March 26, 2021 to stockholders of record at the close of business on March 12, 2021. The company has also unsuspended its share repurchase program.
Conference Call and Supplemental Financial Information
Today, management will host a conference call and real time webcast at 4:30 p.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8563 or go to http://www.aeo-inc.com to access the webcast and audio replay. Additionally, a financial results presentation is posted on the company’s website.
Non-GAAP Measures
This press release includes information on non-GAAP financial measures (“non-GAAP” or “adjusted”), including earnings per share information and the consolidated results of operations excluding non-GAAP items. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies. Management believes that this non-GAAP information is useful for an alternate presentation of the company’s performance, when reviewed in conjunction with the company’s GAAP financial statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations.
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About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. Our purpose is to show the world that there’s REAL power in the optimism of youth. The company operates stores in the United States, Canada, Mexico, and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 28 countries. For more information, please visit www.aeo-inc.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including our long-term financial outlook. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company’s control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “potential,” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and in our Quarterly Reports on Form 10-Q for the fiscal quarters ended May 2, 2020, August 1, 2020, and October 31, 2020, and in any other filings that we may make with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company’s financial performance and could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the negative impacts of the COVID-19 pandemic and related operational disruptions; the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.
Today, on Zero Discrimination Day, American Eagle Outfitters Inc. is proud to announce its partnership with Open to All to advance diversity, equity and inclusion initiatives.
Open to All is a non-profit nondiscrimination campaign that believes everyone should be welcome regardless of race, ethnicity, national origin, sex, sexual orientation, gender identity and expression, immigration status, religion or disability.
“At AEO we know that every action we take—big or small—can have a huge impact. By pledging our support to Open to All, we affirm our commitment to being a company where customers and associates feel accepted, respected and empowered to be themselves,” said Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer, AEO Inc. “This is another step forward in AEO’s journey in helping to build a better world for future generations.”
AEO is honored to continue this partnership in 2021 as a corporate sponsor and is committed to maintaining a welcoming and safe environment for all people – including employees, visitors, customers, vendors and clients – and to not discriminate against any individuals or deny them goods or services based on any of these characteristics.
Last March, AEO signed the Open to All pledge to combat racial disparities and discrimination as a result of the COVID-19 pandemic. This pledge encouraged businesses and corporations to work to combat racial disparities and denounce anti- Asian American and Pacific Islander racism in their communities.
In light of the recent wave of violent acts against Asians in America, AEO Chief Inclusion & Diversity Officer, Terry Roberts shared an open letter to associates highlighting AEO’s commitment to stand in solidarity with the Asian and Asian American community and to reiterate AEO’s commitment in ending racism and discrimination.
