After more than 10 years at Aerie, Jennifer Foyle was promoted to chief creative officer at parent company AEO Inc. in September. Under her tenure, Aerie grew to be one of the shining lights of the company’s portfolio, growing revenues by more than 25% every year between 2015 and 2019. Now, Foyle said she’s applying the strategies she established at Aerie — focusing on the brand’s core DNA and keeping the product at the center of marketing — to the company at large.

Aerie’s revenue was about $310 million in 2015 but grew to more than $600 million by 2018. In 2020, revenue was nearly $1 billion and the company plans to double that in the next two years, making Aerie a $2 billion brand and inching it closer to the American Eagle brand which had $3.5 billion in revenue last year. In its most recent earnings call in late January, 14-year-old Aerie saw the largest growth — around 20% in sales — compared to the rest of the company. American Eagle is 44 years old.

At the time of her promotion in September, Jay Schottenstein, executive chairman and CEO of AEO Inc., said Foyle “has led Aerie to incredible success” and “brings passion, innovative thinking and an ability to infuse clear vision across product and marketing to create real connections with customers.”

Foyle said Aerie is in a strong enough position that she’s been able to focus on applying its winning strategies to the rest of the company. The company plans to grow its Aerie store fleet up to 550 stores in the next year and reduce its American Eagle store fleet by around 200 stores.

“I’ve been diverting a lot of my attention to American Eagle right now,” she said. “We have to optimize our store fleet and the story we want to tell around that [in marketing]. We have to figure out our product assortment, since product is at the center of everything. We have to have an achievable plan in place. And Aerie has a really strong foundation.”

She said her first order of business upon occupying her new position was to reposition the marketing team, and she moved quickly to appoint Craig Brommers, previously of Gap and Juul, to head of marketing at American Eagle in December. Foyle felt that American Eagle’s marketing had been underserving the product and that the brand had “stepped away from our DNA a little bit.”

New marketing efforts under Foyle have been experimental in form, investing more heavily in new channels like TikTok and linear TV, while keeping the actual content of the marketing focused on the product.

“Craig and Stacey [McCormick, svp of Aerie marketing] are working on all the these new ways to show up to market,” Foyle said. “And we’ve had an explosive presence on TikTok recently. We’ve been putting money into TikTok for a while now, but recent growth has tended toward more organic marketing, especially with Aerie [which saw 2 billion impressions in organic posts last year].”

Foyle’s path from Aerie to American Eagle is similar to her contemporary, Libby Wadle, the newly appointed CEO of J. Crew Group. As CEO of J.Crew’s subsidiary brand Madewell, Wadle grew the company to more than $600 million in annual revenue. She’s now applying her strategies to the entire company, where she’s been employed for 16 years. Under Wadle, Madewell reached more than a third the size of the 74-year-old J.Crew in less than five years; it was outperforming its parent company’s other brands by a significant margin. Wadle was unavailable for comment on this story.

Ultimately, Foyle said the only real difference between her work at Aerie and what she wants to do for American Eagle is scale. The same ideas apply: owning a single category — intimates for Aerie and denim for America Eagle — picking a core demographic and sticking to it (people ages 15-22 for both brands), and then finding the right ways to tell the brand story to that group.

“I’ve had close to 30 years experience in retail,” Foyle said. “Not just Aerie, but I was at Bloomingdale’s for 11 years, I ran women’s denim at Gap, I was at J.Crew for five years. Really, what I’ve learned is it’s all about less is more.”

Jen Foyle, Aerie global brand president and American Eagle Outfitters chief creative officer, shed some light on the brand’s expansion plans for Retail Brew.

By Halie Lesavage | Link to article

Two billion dollars. That’s the ambitious sales target Aerie yesterday told investors it’ll hit by 2023. Given recent performance, doubling its total revenue in three years looks doable.

• Sales at Aerie have grown by double digits for 24 consecutive quarters.
• Its share of the US intimates market grew to 6.7% in 2020 from less than 2% in 2015, per Euromonitor data.

To hit $2 billion…Aerie’s relying on much more than TikTok’s favorite leggings. Jen Foyle, Aerie global brand president and American Eagle Outfitters chief creative officer, told Retail Brew via email that it has big IRL expansion plans.

• “Aerie has meaningful runway to expand to large consumer markets where we currently have a limited presence,’” Foyle said. “Today, we operate 342 stores and expect our footprint to reach approximately 550 stores by 2023.”
• Those markets = regions west of the Mississippi, including large metro areas like Dallas, Houston, Los Angeles, and San Diego.

What about the competition? Aerie’s gained attention, and market share, in the intimates category through its emphasis on inclusivity. Now several upstart brands are also finding success with anti-supermodel approaches.

• One example is Parade, which launched in 2019 and sold 700,000 pairs of underwear in 2020.

Foyle told Retail Brew that Aerie’s “engaged and loyal customers” will make the difference. They embraced Aerie’s early empowerment messaging years ago, and they encouraged it to expand to athletic wear via its Offline collection in 2020.

• While 60% of Aerie’s sales came from intimates in 2015, only 31% originated there last year. Meanwhile, “soft apparel” grew from 21% to 33%, and athletic apparel increased from 5% to 20% of sales in the same period.
• Soon, Aerie plans to open more standalone Offline by Aerie stores to complement its online biz, Foyle said.

“A tale of two brands”

Dickensian references are a minor flex from former English majors and a cautionary sign from retail execs like American Eagle CFO Mike Mathias. While it’s the best of times at Aerie, it’s less so at parent brand American Eagle.

• The denim-focused retailer projected revenue overall and at its flagship brand to fall by single digits in Q4 2020.
• AEO’s huge fleet of mall stores hampered it in 2020. As a result, it plans to cut up to 250 stores from its roster of 880 over the next few years.

Bottom line: Aerie isn’t the first sister brand to outpace its originator’s growth—just look at Madewell and J.Crew or Old Navy and Gap. But if Aerie can meet its flashy goal while gaining share over competitors, it could be the first to sustain its breakout success long term.

The clothing retailer plans to break out results for its namesake and Aerie brands separately

Clothing retailer American Eagle Outfitters Inc. will start breaking out results for its namesake and Aerie brands separately as its businesses are growing at different speeds and investors seek additional insights.

Pittsburgh-based AEO said Thursday in a filing with regulators that it would disaggregate its American Eagle and Aerie operating segments, which in the past were presented as one.

Although this won’t affect the company’s consolidated financial statements, it will provide shareholders and analysts with more detailed information about the performance of the brands, said Mike Mathias, AEO’s chief financial officer, who took over the role in April.

“It’s time for us to be talking about [Aerie] and providing really specific details,” said Mr. Mathias.

Breaking out those results will highlight diverging trends within the company’s business, which has seen flat or negative revenue growth at American Eagle, but double-digit percentage increases at Aerie.

Aerie, which started out as a lingerie brand for young adults and later expanded into lifestyle-and home-wear, is forecast to report strong sales growth for the current fiscal quarter, AEO said in a release on Thursday. The company plans to publish its next financial results in early March.

“By disaggregating the segments, and presenting Aerie and American Eagle as stand-alone segments, analysts and investors alike are better able to understand margin contribution,” said Jen Redding, a senior analyst at Wedbush Securities Inc., a financial-services firm. “The brands are at different points in the life cycle, with Aerie a real growth story, versus the more mature American Eagle,” Ms. Redding said.

AEO’s overall revenue for the third quarter ended Oct. 31 declined 3% from the same period a year earlier to $1.03 billion, which the company attributed to pandemic-related declines in foot traffic in malls, where many of its American Eagle stores are located. Income declined to $58.1 million, down from $80.7 million a year before.

The company is looking to close about 200 to 250 American Eagle stores in the U.S. and Canada in the coming two to three years, Mr. Mathias said. It has about 880 American Eagle stores now.

The store count for Aerie, on the other hand, is set to go up by about 50 to a total of about 400 at the end of the year and more than 500 by 2023, Mr. Mathias said. “It’s a tale of two brands,” he said, adding that the company doesn’t expect in-store shopping to return to pre-pandemic levels.

Mr. Mathias said his role would be to help analyze various financial metrics and assess which locations to keep and which ones to shutter. “The goal is all about focusing on profitability and cash-flow generation,” he said.

As CFO, Mr. Mathias said he would work to try to hold on to as much revenue as possible from the stores earmarked for closure, redirecting those customers to the company’s online business or other store locations. AEO plans to reduce its head count, rent costs and other expenses as part of the real estate revamp, but it declined to provide specifics. It had about 46,000 employees as of Feb. 1, 2020, according to a filing.

Mr. Mathias said the company likely will take an impairment charge related to those measures.

AEO in recent months has been working with landlords to shorten store leases, and Mr. Mathias said he expects its overall rent costs will come down even as Aerie expands its footprint.

Analysts have been skeptical about whether the company will manage to increase profitability by reducing the number of American Eagle stores. “I have never seen a large store closure drive up profit,” said Simeon Siegel, a managing director at BMO Capital Markets, a financial-services firm.

You can’t be everything to everyone — at first, anyway.

In an investor meeting on Thursday morning, American Eagle Outfitters, Inc. executives heavily focused on a theory that’s so far proven true for the company and that it’s banking on for its future. As stated on a slide, “Category focus drives loyalty and creates brand opportunities.”

Though a common strategy, particularly among young direct-to-consumer brands, establishing dominance in a single product category as a gateway to growth is easier said than done. But, with its American Eagle and Aerie brands, AEO has the first step on-lock. With big revenue and profit goals for 2023, it’s now working toward a more balanced product focus. And, according to Jay Schottenstein, AEO CEO and executive chairman of the board, delivering speed, convenience and engagement will be key to retaining and engaging customers along the way.

On Thursday, AEO reported NPD data showing that, for the year ending on November 30, 2020, denim by its 44-year-old American Eagle brand was the top seller in the category among 15- to 25-year-olds in the U.S. In addition, American Eagle was the top men’s denim retailer for the same age group and the overall No. 1 women’s denim retailer, based on sales.

With its launch category of intimates, 15-year-old Aerie has been headed in the same direction, but at an accelerated clip. Last year, it was reported that Aerie was the second largest e-commerce lingerie retailer, based on sales, following Victoria’s Secret. But rather than focus on securing the top spot, it’s leaning into its other apparel categories and eying those it has yet to tackle.

A presentation slide called out Aerie’s opportunity, picturing its current $1 billion annual revenue as a small seed in the mega $123 billion women’s apparel market. Since 2015, as it’s built out other categories, Aerie’s intimates category has declined from 60% of its total sales to 31% in 2020. Meanwhile, “soft apparel” has grown from 21% to 31%, and activewear — via its Offline spinoff brand launched in July — increased from 5% to 20%. Activewear is a $16 billion market.

Jennifer Foyle, Aerie’s global brand president, who added AEO Inc. chief creative officer to her title in September, said in a call on Tuesday that American Eagle is following suit in building a lifestyle brand. “We want to take our product and really give it a facelift — particularly tops,” she said. “We have a huge [denim] franchise, and we really own that market. But the opportunity for the future is really to leverage outfitting.”

Doing so is the focus of one of “a few strategic key hires” Foyle has made since expanding her role. Renee Heim, who Foyle had previously worked with at J.Crew, was brought in to head up American Eagle’s women’s merchandising, overseeing all fashion categories, including tops and accessories. Craig Brommers, with experience at Gap and Abercrombie and Fitch, was brought on as CMO of all AEO brands.

While the company wants to catapult Aerie’s revenue — with a goal of more than doubling its 2019 results ($801 million) to $2 billion by 2023 — its focus for American Eagle is holding steady at $3.5 billion in annual revenue while increasing its profits. Company-wide, AEO is aiming to increase its operating margin from 7.3% in 2019 to 10% in 2023.

According to Foyle, AEO has honed in on increasing its AUR, or average selling price per item. “We’ve pulled back on our promotional activity, and we’ve seen no resistance,” she said. Currently, AEO is cash-flow positive and has more than $1 billion of available liquidity.

Ahead of Thursday’s meeting, American Eagle provided projections for the fourth quarter, scheduled to be reported on March 3. It expects its adjusted operating income to exceed $95 million, up from $77 million in the same period last year. Aerie is expected to see double-digit revenue growth, for the 25th consecutive quarter, nearing 30%. AEO’s total revenue is expected to decrease in the low single digits, owed to store closures and weak mall traffic.

“Due to Covid, we’ve learned to cope with inventory efficiencies and really leverage our better stores and some of our new omnichannel capabilities,” said Foyle. “But store traffic is down in the high double digits, on a daily basis.”

Annually, Aerie is averaging a 15% increase in customers and a 10% increase in their average annual spend, equating to 25% sales growth (CAGR). It currently has 8.5 million customers, but to date, its penetration among its target female consumers is low — for example, it’s less than 3% in most Southwest U.S. states. To reach more shoppers, it plans to increase its store fleet from 342 — including four Offline-branded stores — to 550 by 2023. Also by 2023, it aims to reach more than 50% of female online shoppers.

In the last year, AEO’s prioritized increasing its customer service options and omnichannel capabilities. Among other offerings, it now provides alternative payment options including Afterpay, store-to-door delivery and social commerce, plus same-day delivery and customer self-checkout through pilot programs. Its digital sales have seen consistent growth, with a compound annual growth rate of 22% since 2015. It estimates that $1.1 billion of $1.7 billion in 2020 digital revenue will be made via its app or mobile site.

TikTok has recently become a bigger driver to Aerie’s e-commerce site. In November, an organic post by influencer Hannah Schlenker (780, 000 followers) featuring a pair of Offline by Aerie Real Me high-waist crossover leggings drove 708,000 on-site searches — the style has since been restocked five times. In April, Aerie partnered with Charli D’Amelio for the #AerieREALPositivity TikTok challenge,  which generated more than 2 billion views on TikTok and an average increase of 855% in site traffic during the challenge, including 138,000 views of the #AerieREAL Life homepage in one day.

The value of dressing the nation’s leaders 

Several fashion brands had their day in the sun on Inauguration Day.

Images of the president, first lady and vice president wearing outfits by Ralph Lauren or Pyer Moss, among others, were amplified by the vast news outlets covering the ceremony, as well as the many social media users live-posting for their followers. According to Launchmetrics, a data research and analytics company for the fashion industry, the media impact value of each look topped $3.9 million within 24 hours of the event. MIV is derived by assigning a monetary value to each piece of marketing based on the voices, channels and markets involved.

Coverage of President Joe Biden wearing a Ralph Lauren suit on Inauguration Day had an MIV of $5 million, $4.8 million of which was pegged to online media and $284,000 of which was linked to social media. First Lady Jill Biden in Markarian, meanwhile, earned $5.8 million in MIV. But Vice President Kamala Harris’ choice designers received significantly more attention: Images of her wearing Christopher John Rogers (to the ceremony), Sergio Hudson (on Wednesday night) and Pyer Moss (on Tuesday night) had an MIV of $8.2 million , $7.2 million and $3.9 million, respectively.

“Christopher John Rogers garnered the most Media Impact Value from the inauguration ceremony not only because all eyes were on Madame Harris as she made history, but in large part due to the greater significance of having chosen a young, black, queer designer to embody this landmark moment,” said Alison Bringé, CMO at Launchmetrics. “To put it in perspective, when Christopher John Rogers showed his Spring 2020 collection at New York Fashion Week, the brand generated just over $1 million MIV, while yesterday’s events accumulated upward of 8-times that, in less than 24 hours.”

American Eagle Outfitters has had a good year.

While many competitors are struggling to stay afloat, the retailer, which counts the American Eagle and Aerie brands in its portfolio, has reached record heights. That includes passing more than $1 billion in revenues at intimates apparel and loungewear brand Aerie, launching the Offline and Unsubscribed brands, opening physical stores and plotting an international expansion. The stock price is up, too, about 59 percent, year-over-year.

“I think two things that really made us so successful was that we were really focused on developing the Aerie business, expanding the Aerie business and growing the Aerie business and taking advantage of this market time with the casual and with everyone staying home,” Jay Schottenstein, executive chairman of the board and chief executive officer of American Eagle Outfitters, told WWD in an exclusive interview. “And also, refining American Eagle Outfitters at the same time, with American Eagle stores and really pushing the denim in a really strong manner.”

Now the company is setting some new goals, such as hitting $5.5 billion in total group revenues by 2023 ($2 billion at Aerie alone), $550 million in operating income and returning American Eagle to profit growth over the next three years. The “Real Power. Real Growth” formula entails updating the retail fleet, growing the digital business and adding increased omnichannel functions, such as additional regional distribution centers and clienteling services.

“We currently have 880 stores between the U.S. and Canada. We see that getting down to somewhere between 600 and 700 over the next three years,” said Michael Rempell, executive vice president and chief operations officer of American Eagle Outfitters. “But we’re confident that we can transfer sales from closed stores into other stores or online, continue to acquire new customers and make the American Eagle brand more profitable over time.”

Jennifer Foyle, chief creative officer of American Eagle Outfitters and Aerie global brand president, added that store closures will be selective, with the intent of creating the best combination of brick-and-mortar locations and online in each market.

“We believe in the mall,” Foyle said. “We definitely think there’s going to be entertainment [in stores] in any form of fashion once we get through COVID-19.”

Meanwhile, the American Eagle store closures will make way for more Aerie and Offline stores — from 342 Aerie locations to about 550 by 2023, along with a handful of Offline stores in select markets.

In addition, the company’s digital channel continues to expand. This year alone it reached nearly $1.7 billion in sales, but Rempell said it will add about $400 million with increased omnichannel capabilities, such as same-day deliveries options from stores, apps that allow customers to check themselves out while still in stores and livestream virtual shopping this spring.

In the near term, the company is expecting operating income to exceed $95 million for the current quarter, excluding restructuring charges and other fees and potential impairment charges, compared with operating income of $77 million the same time last year.

The retailer also updated fourth-quarter guidance Thursday morning ahead of its planned Investor Day, with total company revenues for the quarter now expected to decline in the low single digits — due to declining mall traffic and store closures amid the pandemic — but improved margins and profitability (Aerie’s revenues up in the high 20-percentage range, American Eagle down in the low double-digit range), thanks to a robust holiday season with fewer promotions and double-digit growth in the digital channel.

“Aerie is growing at a tremendous rate. And the best part about Aerie is that we continue to see all categories of the business being really strong,” Foyle said. “We’re really going to try to stay on top of our game there. Certainly the price-value equation is one thing. We think our quality is best in show. But also, I think we show up differently. We test bodies; we test silhouettes. And we have the ability to chase incredibly well in both brands. And we’re strategic about that chase. We want to make sure it works in the store and works with our assortment well. We don’t just chase to chase. We’re chasing with conviction and a point of view.”

Rempell added that less promotional activity throughout the holiday season didn’t do much to deter shoppers.

“Demand stayed very strong,” he said. “We sold fewer units, but we sold them at much better margins than we had previously. And really the same thing for American Eagle. The people who came, came with an intention to buy. And our stores did an incredible job helping them to find what they want and converting traffic we did get into sales.”

Of course, in the world of specialty retail, the company had a few things going for it pre-pandemic that allowed it to thrive in the era of COVID-19, like innerwear and loungewear that are suited for the at-home lifestyle. In addition, the firm’s balance sheet allowed it to launch new brands while others retailers were grasping for a lifeline.

But Rempell said other things are at play, too. Such as setting up regional distribution centers that help better manage inventory and cut costs.

“What’s happened in previous seasons — and I think what’s happened in retail in general — is that retailers would push so much inventory out to their stores, and then they were shipping, and then a lot of that wasn’t being sold in the stores, so they were shipping it via e-commerce. And the cost of doing that, particularly of having many split shipments as a result of that, was getting very expensive,” Rempell explained. “So we took a different stance this year. We decided to set up these regional hubs, pull inventory out of stores and keep it in the hubs, replenishing stores faster. And rather than shipping e-commerce from all of our stores, we were trying to concentrate more of the e-commerce coming from these regional hubs, rather than our main distribution centers in Pennsylvania and Kansas.

“It’s kind of like Amazon,” he continued. “Amazon is constantly delivering stuff to you very quickly and usually from a location that’s very close to your home. That’s not really how fashion has traditionally been managed. And the reason is because fashion is less predictable.

“But we felt like we built a great team; we built a great capability and we wanted to prove we could do it with fashion.”

Foyle added that the pandemic taught her and her team to streamline customer relationships, sourcing, digital capabilities and product assortment for a more efficient business.

“We learned; we got better with age. It opened up a new form of selling culture,” she said.

“A lot of our competition is closing doors and shuddering. And I think this is an opportunity for American Eagle Outfitters to gain share. It’s just a huge win and I’m excited to really leverage that into the future.”

Aerie, the underwear brand run by American Eagle Outfitters, is continuing to pick up traction among a generation of young shoppers and says it will double sales to $2 billion by 2023, the company told investors on Thursday.

The growth is being fueled by fast-rising online sales, a push into middle America and a new line of athleisure clothing, as well as a marketing strategy that shuns the supermodel look of Victoria’s Secret in favor of more everyday women.

Aerie has been a bright spot for American Eagle Outfitters, a 44-year-old retailer still managing to find success at America’s malls. A key to that success: teenagers, who continue to call it one of their favorite brands, according to Piper Sandler’s semiannual survey.

The underwear brand has posted double-digit growth—often over 20%—every quarter for the last six years. It now lays claim to 6.7% of the women’s lingerie market in the U.S., up from less than 2% in 2015, according to research firm Euromonitor. Meanwhile, Victoria’s Secret has fallen out of favor with many shoppers, with its market share declining sharply from 32% to 21% in the last five years.

“Aerie is wildly successful,” says Cowen & Co. retail analyst Oliver Chen. “It has struck a chord with a new generation of shoppers.”

The success of the brand has helped offset recent challenges at the American Eagle brand, which reported double-digit declines in revenue last year. With more than 900 stores located inside malls, the chain popular for its denim-wear has been hit by temporary store closures and weak foot traffic during the pandemic. In September, it announced it would be closing as many as 50 stores by the end of the year and evaluating several hundred additional locations where its leases will soon be expiring. It had a tough holiday season and its revenue is expected to stay flat through 2023, the company said on Thursday. Aerie sales surged 34% in the quarter ending November 2.

The offshoot brand is known for a robust assortment of leggings, sweatshirts and other loungewear, in addition to bras and underwear, all of which have a “soft and cozy” feel, says Chen. It has benefited from a smaller store base and the shift to casual dress as people spend more time at home.

Much of Aerie’s success can be traced back to a decision executives made in 2014 to stop photoshopping images, a pioneering move in an industry long dominated by Victoria’s Secret, known for its sexualized images of airbrushed, scantily clad supermodels. Aerie has also featured real women with all kinds of body types in its marketing as part of its #AerieReal spokesperson program since 2016. Representing the brand are women like plus-size model Iskra Lawrence, gold medal Paralympian snowboarder Brenna Huckaby and poet Cleo Wade.

“We are the anti-supermodel,” said Jen Foyle, chief creative officer at American Eagle Outfitters and global brand president for Aerie, in an interview. “I have to say, it didn’t happen overnight. It was a tough act to follow,” she said, referring to Victoria’s Secret.

A raft of new entrants like ThirdLove, True & Co. and Parade have caught on, similarly opting to downplay sex appeal and instead champion the beauty and authenticity of real women in their marketing campaigns. CVS also followed Aerie in 2018 when it said it would clearly mark all beauty product images across its 8,000 stores as either altered or unaltered, prompting many of its brand partners to lay off the photoshopping.

Aerie is betting there is plenty of business for the taking. With its sights set on the $65 billion that American women spend each year on intimates, soft apparel, swim and activewear, it is embarking on a push to attract more customers in the middle of the country and on the West Coast. It already has a strong presence on the East Coast, where it is based. In July, it launched a new athleisure brand called Offline, which sells $55 leggings and $35 sports bras.

A key component of its marketing strategy: Get Gen Z customers talking about the brand on social media platforms like TikTok. In April, it asked TikTok teen star Charli D’Amelio (follower count: 106 million, and second on Forbes’ list of the site’s highest earners) and its network of #AerieREAL spokespeople to share three things they were grateful for. The campaign generated over two billion views on TikTok, as well as an 855% increase in traffic to the site. “We engage our community like there’s no tomorrow,” says Foyle.

Other times it gets lucky. In November, TikTok creator Hannah Schlenker (follower count: 750,000) posted a video of herself, unsolicited, dancing in a pair of high-waisted crossover leggings from Offline in November. It garnered more than 58 million views in two weeks, plus 708,000 searches for the legging on the Aerie site and an 185,000% increase in searches on Google. After selling out, the company quickly placed five new orders and offered to pay her for subsequent posts.

“My phone was lighting up,” said Foyle. “I had moms writing to me, asking if there was any chance I could get them that legging.”

01.21.21

Plan targets $5.5 billion in revenue; $550 million in operating income; and a 10% operating margin by 2023

Doubles Aerie revenue to $2 billion

Reignites American Eagle for profit growth

PITTSBURGH — (BUSINESS WIRE) – January 21, 2021 – American Eagle Outfitters, Inc. (NYSE: AEO) will today host a virtual investor meeting to present its “Real Power. Real Growth.” value creation plan and unveil its long-term financial outlook.  To achieve these goals, AEO has the following strategic priorities:

• Double Aerie to $2 billion in revenue;
• Reignite American Eagle for profit growth;

As part of the plan, the company will leverage customer-focused capabilities and continue to strengthen its ROI discipline, while building on the power of AEO’s people, culture and purpose.

“2020 demonstrated the strength of our organization, our brands and our capabilities – and we are emerging with momentum.  As the pace of change and innovation accelerated over the past year, I believe the environment is ripe with potential, and I see more opportunity for AEO than ever before.  Today, I am pleased to provide greater transparency to our leading brands, our strategies and our long-term financial targets, aimed at creating lasting value for shareholders,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.

Long-Term Financial Outlook

AEO targets revenue of approximately $5.5 billion and operating income of $550 million in fiscal 2023, with the operating margin expanding to 10%.  These targets exclude potential asset impairment and restructuring charges.

Aerie revenue is expected to grow at a mid-20%’s compound annual growth rate to approximately $2 billion, providing significant profit flow through.  American Eagle revenue is expected to remain roughly flat to fiscal 2019, at approximately $3.5 billion, with improved profitability.

This morning, AEO also filed a Form 8-K with the Securities and Exchange Commission (SEC) that provides greater transparency to American Eagle and Aerie’s historical financial performance.  Going forward, the Company has elected to disaggregate the results of its American Eagle brand and Aerie brand operating segments, which have historically been aggregated and presented as one reportable segment.

The virtual investor meeting will begin at 11am Eastern Time and feature presentations and a question-and-answer session with members of the company’s executive leadership team.  The event can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com.  A replay of the investor meeting will be archived and made available online on the company’s website.

# # #

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 25 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 for the fourth quarter 2020 and beyond 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.

CONTACT:

Olivia Messina

412-432-3300

LineMedia@ae.com

Sarah Gordon

SHADOW

Sgordon@weareshadow.com

Over $95 million in adjusted operating income expected, well above last year

Margin expansion from reduced promotions, greater full-priced selling

High 20%’s Aerie revenue growth and strong digital momentum driving results

01.21.21.

Pittsburgh — (BUSINESS WIRE) –American Eagle Outfitters (NYSE: AEO) today announced that the company expects fourth quarter 2020 adjusted operating income to exceed $95 million, excluding potential asset impairment and restructuring charges*. This compares to reported operating income of $0.5 million and adjusted operating income of $77 million last year. Anticipated adjusted operating income growth is driven by strong margins, reflecting reduced promotions, higher full-priced selling and well-received holiday product assortments.

Fourth quarter revenue is expected to decrease in the low single digits, due to store revenue declines from weak mall traffic, store closures and reduced hours related to the pandemic. The digital channel maintained strong momentum, with double-digit growth expected across brands. Aerie’s fourth quarter revenue is expected to increase in the high-20% range. American Eagle is expected to decline in the low double-digit range, as a result of its higher store penetration.

“I’m extremely proud of our performance during the fourth quarter, which demonstrated strong growth to last year and continued quarterly sequential improvement. Compelling holiday product and marketing, combined with a disciplined approach to promotional activity drove very strong margin results,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “Thanks to our talented, passionate and dedicated associates for making our success this year possible.”

In a separate press release issued this morning, AEO announced its “Real Power. Real Growth.” strategic plan and introduced long-term financial targets. The company will host a virtual investor meeting beginning at 11 am Eastern time, which can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com.

The company will release fourth quarter and fiscal 2020 results on March 3, 2021 and will host a conference call to review financial results on the same date.

###

 Non-GAAP Measures

* The Company uses non-GAAP operating income, a non-GAAP financial measure (“non-GAAP” or “adjusted”), to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions. This financial measure is not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and is 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 statement. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations.

Our fourth quarter 2020 operating income expectation represents non-GAAP operating income, excluding potential asset impairment and restructuring charges. A reconciliation of the projected non-GAAP operating income, which is a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliation without unreasonable effort, due to the uncertainty and inherent difficulty in predicting the occurrence and the financial impact of non-GAAP adjustments.

GAAP operating income may include the impact of such items as asset impairment and restructuring charges. Historically, the Company has excluded these items from non-GAAP operating income. The Company currently expects to exclude these items in future disclosures of non-GAAP operating income, and may also exclude other items that may arise (collectively, the “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non­ GAAP adjustments are inherently unpredictable as to if or when they may occur. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

For information regarding reconciliation of non-GAAP operating income to GAAP operating income for Fiscal 2019, please refer to Exhibit 99.4 of the Company’s Form 8-K filed with the Securities and Exchange Commission on January 21, 2021.

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 25 countries. For more information, please visit www.ae o-in c.co m.

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 fourth quarter 2020 results. 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 1 A., 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 10-0 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 for the fourth quarter 2020 and beyond 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.

CONTACT:

Olivia Messina 412-432-3300

LineMedia@ae.com

Giving back is part of our DNA. We are committed to showing the world that there’s REAL power in the optimism of youth by supporting causes that make a REAL difference. We believe that taking care of our associates and customers also means taking care of the communities where they live and work. Our AEO family and the AE and Aerie brands have come together with inspiration, passion and support to help those most in need in 2020. We are proud to share that during a challenging year for many, AEO, the AEO Foundation and the AE and Aerie brands led several successful charitable giving campaigns. Thank you to our associates and customers for increasing the impact of our giving and for helping us continue to build a better world.

PITTSBURGH–(BUSINESS WIRE)– American Eagle Outfitters (NYSE: AEO) will host a virtual investor meeting on Thursday, January 21, 2021. The company will issue a fourth quarter business update prior to the investor meeting.

The webcast event will begin at 11am Eastern Time and feature presentations and a question-and-answer session with members of the company’s executive leadership team. The event can be accessed in the Investor Relations section on AEO’s website, www.aeo-inc.com. A replay of the investor meeting will be archived and made available online on the company’s website.

# # #

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 26 countries. For more information, please visit www.aeo-inc.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210108005037/en/

Olivia Messina
412-432-3300
LineMedia@ae.com

Source: American Eagle Outfitters