American Eagle Outfitters, Inc. Appoints Steven A. Davis to its Board of Directors
PITTSBURGH — (BUSINESS WIRE) — American Eagle Outfitters, Inc. (NYSE: AEO) today announced the appointment of Steven A. Davis to the company’s board of directors as an independent director, effective October 1, 2020. This appointment expands the company’s board to nine directors, including eight independents and builds on the board’s expertise and diversity.
Steven is the former Chairman and Chief Executive Officer of Bob Evans Farms, bringing more than 30 years of experience leading iconic consumer brands. He previously served in a variety of executive and management roles with YUM! Brands and Kraft General Foods, where he led the successful launch of new products and marketing campaigns for longstanding American brands. Steven’s background provides significant capabilities across marketing and branding, strategy, finance and corporate development.
“Steven’s deep consumer knowledge, marketing expertise, and track record of scaling growth brands complements our strategic priorities and will be a tremendous asset as we accelerate AEO’s growth initiatives. His passion for building strong communities and cultures through diversity of people and his commitment to giving back perfectly align with our corporate values. I am thrilled Steven is joining our board and look forward to benefitting from his wealth of experience and unique perspective,” said Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer of American Eagle Outfitters, Inc.
Steven serves on numerous community and professional organizations and sits on several corporate boards, including PPG Industries, Albertsons Companies and Marathon Petroleum Corporation. He previously served on the Boards of Centurylink, Walgreens Boots Alliance and the Sonic Corporation. Steven is active in the nonprofit sector and currently serves on the International Board of the Juvenile Diabetes Research Foundation. He previously served on the board of directors of JobsOhio, Ohio’s private nonprofit corporation leading job creation and economic development. Additionally, Steven served on the James Cancer Hospital Foundation Board at The Ohio State University. In 2014, he received The Lifetime Achievement Award from the University of Wisconsin at Milwaukee.
Over the course of his career, Steven has been a leader and strong advocate for lnclusivity and Diversity. In 2014, he was the recipient of the Pioneer of Diversity award in partnership with the Columbus Ohio NAACP branch. Under his leadership, Bob Evans Farms was recognized consistently by the 2020 Women on Boards Organization for achieving 20% female representation on its board of directors.
Each year, from 2005 to 2015, Black Enterprise Magazine named Davis as one of the 75 Most Powerful Black Men in American Business. Steven holds a Master of Business Administration in marketing and finance from the University of Chicago and a Bachelor of Science in business administration from the University of Wisconsin at Milwaukee.
For more information about AEO’s board of directors, please visit www.aeo-inc.com.
WWD EXCLUSIVE: Steven A. Davis Joins American Eagle Outfitters’ Board
The addition of Davis brings the total headcount to nine, including three women.
The retailer revealed Tuesday that Steven A. Davis will join the company’s board as an independent director, effective Oct. 1.
“Steven’s deep consumer knowledge, marketing expertise and track record of scaling growth brands complements our strategic priorities and will be a tremendous asset as we accelerate AEO’s growth initiatives,” said Jay Schottenstein, American Eagle Outfitters’ executive chairman and chief executive officer. “His passion for building strong communities and cultures through diversity of people and his commitment to giving back perfectly align with our corporate values. I am thrilled Steven is joining our board and look forward to benefiting from his wealth of experience and unique perspective.”
Davis’ résumé includes stints at Yum Brands and Kraft General Foods, as well as the former post of chairman and ceo of Bob Evans Farms, a consumer products food company. He has been on a number of boards throughout his three-decade career, including companies such as PPG Industries, Albertsons Cos. and Marathon Petroleum Corp.
“It’s an honor and a privilege to serve on the board of one of the premier American retail companies,” Davis said. “For many years, I’ve been impressed with AEO’s industry-leading brands, which are rooted in inclusivity and authenticity. I look forward to contributing to AEO and the exceptional growth opportunities that lie ahead.”
Meanwhile, American Eagle Outfitters, which includes the American Eagle, Aerie and Todd Synder brands under the greater company umbrella, continues to expand, even during the pandemic. In late June, the retailer launched its fourth brand, a single-store concept focusing on slow retail in East Hampton, N.Y., called Unsubscribed. Then in July, Aerie launched Offline by Aerie, the intimates apparel brand’s take on activewear and an attempt to tap into the growing performance wear and ath-leisure markets.
Fast Company: Why American Eagle is the Last Mall Brand Standing
In the midst of the pandemic, AEO has opened stores and launched new brands. What’s the secret to its success?
When COVID-19 arrived in the United States, the fashion industry took a major hit. In April, clothing sales fell by 79%, the largest drop on record. By the end of the year, revenues are expected to drop by a third, equal to $640 billion in losses. Iconic retailers, from Brooks Brothers to Lord & Taylor, have declared bankruptcy. And yet, in the midst of this bleak landscape, there’s a bright spot: American Eagle Outfitters, the four-decades-old teen retailer that owns American Eagle and Aerie.
At a time when many retailers are hemorrhaging money and closing stores, Aerie saw a 32% rise in revenue and is on track to open 70 new stores this year. The company also launched two new brands during the pandemic, Offline and Unsubscribed. AEO hasn’t been completely immune to the economic crisis: It saw an overall 15% decline in revenue, largely because all of its stores had to shutter during the lockdowns. But Jay Schottenstein, chairman and CEO, believes that the company can weather the storm and possibly even come out stronger on the other side of this crisis.
How did AEO become one of the last successful mall brands in America? The answer seems to be the company’s single-minded commitment to its target customer: Gen Z, the oldest of whom are now in their midtwenties. AEO has invested heavily in focus groups, consumer research, and even an in-house council made up of teens and twentysomethings who help with the corporate decision-making. All of this has given the company a clear sense of this generation’s values, aesthetics, and shopping preferences. “We’re gathering feedback from customers at every step,” Schottenstein says. “We’re reading comments on social, we’re getting feedback in stores.”
A Generation Obsessed With Comfort
So what does Gen Z want from a fashion brand? The answer is important, not just for AEO, but for the rest of the industry, as its spending power is set to increase by 70% by 2025, making its members key to the global economic recovery. Jennifer Foyle, AEO’s chief creative officer, says the company’s research points to one clear reality: Today’s young people want comfort, and she means that in every sense of the word. “They want their clothes to be soft and comfortable, but they also want marketing campaigns to make them feel comfortable in their own skin,” she says. “This is now at the forefront of everything we do.”
In many ways, the pandemic didn’t create a new desire for comfort; it just deepened a trend that was already in motion. Since the 1960s, each new generation has wanted to wear more casual clothing than the one before it, transitioning from suits to jeans to athleisure. AEO saw this trend coming about a decade ago with millennial consumers and started focusing on comfort at every level. American Eagle’s jeans have so much stretch, they can feel like sweatpants. Aerie began as an intimates brand, focused on making the most comfortable bras and undies on the market, but quickly expanded into loungewear, which it found that customers were increasingly wearing out of the home.
This clothing assortment turned out to be ideal for the pandemic, when people around the world began sheltering in place and their wardrobes shifted. In April, the sale of sweatpants in the U.S. went up by 80%, and AEO was ready to meet this demand. AEO was already selling a lot of sweats, hoodies, and leggings, but in February, as COVID-19 loomed, Foyle says the company began ordering more of these items. “We got early reads on the crisis because we have factory partners in Asia,” she says. “We moved fast. We did not wait.”
And in July, the company released Offline, a new brand focused on activewear that had been in the works for nine months. (For now, the brand is housed within Aerie, but going forward, Foyle says, it will be a stand-alone brand with its own stores in Nashville and New Jersey.)
Foyle says AEO also works hard to create branding and marketing that makes customers feel comfortable in an emotional sense. She believes that for Gen Z, physical comfort is connected to a deeper sense of well-being and ease. “Our customer wants to feel like herself when she’s wearing our clothes,” Foyle says. This aligns with research from McKinsey showing that Gen Z tends to see consumption as a manifestation of individual identity and is drawn to brands that celebrate diversity and authenticity. To that end, back in 2014 Foyle spearheaded a campaign called Aerie Real, which focused on body positivity and inclusivity. The brand began using a wide array of real women as models, going beyond race and body size to include trans women and differently abled women. And it banned photoshopping.
The “come to you” strategy
While AEO’s products were a good fit for pandemic life, the company still had to think creatively about how to reach customers. For one thing, it has 1,095 stores across the country, all of which had to shut down early in the pandemic. Foyle says that AEO had been investing more in e-commerce and social media, but when the crisis hit, these channels became crucial.
The company poured marketing dollars into online spaces like TikTok, in what Foyle calls a “come to you” strategy. For instance, Aerie partnered with Charli D’Amelio, TikTok’s most popular user with more than 80 million followers, to launch a “positivity challenge” in which she invited users to share things they were grateful for in quarantine. “We knew our customers were on their phone more and engaging in social more,” Foyle says. “We decided that we’re going to be where our customer is at, serving them with products they want to wear.”
All of these efforts drove customers to shop online. In the second quarter, AEO saw a 74% increase in revenue through digital channels across all brands. Foyle knows some segment of customers may increasingly shop online even after the pandemic, which might mean closing less-profitable stores. American Eagle already has plans to close 45 stores.
But at the same time, she believes strongly that brick-and-mortar retail isn’t dead, it’s just evolving. While many suburban malls have been dying for some time, she sees opportunities to expand into shopping streets in smaller towns and into outdoor lifestyle centers, which are increasingly popular. “We just need to be very smart about our real estate strategy,” she says. “It’s about being in the best locations and the best new markets. It’s about innovating the in-store experience.”
The future of AEO
Unsubscribed, AEO’s newest brand, is an experiment that will allow the company to explore creative in-store experiences. It launched with a single boutique in East Hampton, New York, and doesn’t even have an e-commerce presence for the time being. Its clothes are more expensive than AEO’s other brands, with outfits ranging from $40 to $550. And while American Eagle and Aerie focus on delivering affordable, trendy styles to customers quickly, Unsubscribed is focused on creating smaller collections of classic, durable garments, designed to be worn season after season. The brand is designed to appeal to an older, slightly wealthier clientele. “It’s an entirely different business model,” Foyle says. “It’s teaching us a lot.”
In many ways, Unsubscribed is a way of thinking about what Gen Z consumers may want in the next decade, when they have more disposable income. AEO is betting that big-box mall stores won’t be as compelling as intimate neighborhood boutiques and that they’ll care about sustainability and buying fewer, better clothes. “It’s a conceptual project,” Foyle says. “We’re asking ourselves: What is our customer going to be thinking about down the road?”
Unsubscribed may or may not become a model that other AEO brands will follow. But the very fact that the company is able to think ahead is noteworthy at a time when most retailers are treading water. Foyle believes that fashion companies that are able to survive the crisis will find themselves with new opportunities on the other side of it. “We think that fashion is going to be better than ever,” she says. “People are going to want to go back to stores and reconnect with their friends. We’re so ready for it.”
AEO Celebrates Latinx Heritage Month: Priscilla, Selling Team Leader
From September 15 through October 15, AEO is celebrating Latinx Heritage Month – a time to recognize the important contributions of U.S. citizens whose ancestors immigrated from Spain, Mexico, the Caribbean and Central and South America. Throughout the month, AEO is highlighting our Latinx associates by celebrating, sharing and learning about their traditions and cultures!
Name: Priscilla
Role: Selling Team Leader
Latinx Heritage: Costa Rican
Tell us about your role at AEO:
Selling Team Leaders are the Store Team Leader’s “go-to” in developing and implementing the business strategy and leading the daily operations of the store. We coach and train our teams into high-performing sellers who consistently provide an unforgettable guest experience!
Why are you proud to be Costa Rican?
A big part of Costa Rican culture is spending time with family. Every year around Christmas, we get together at my abuela’s house to make tamales. Someone has their own job scooping the peas, rice, pork, peppers, carrots, etc. It’s like an assembly line and we end up making about 200 that we share with friends and family!
What’s so special about the Costa Rican culture?
The Costa Rican saying is “pura vida”, which literally translates to pure life or full of life. Costa Ricans are definitely people who are easy going and optimistic. I love visiting because everyone says to each other “pura vida” – whether to say hello, goodbye, or thank you. It’s a nice reminder to be kind to one another.
THE AEO REAL Jewish Connection celebrates Rosh Hashanah!
Last week, the AEO REAL Jewish Associate Connection came together to observe Rosh Hashanah, a celebration of the start of the Jewish New Year.
On Thursday, associates met outside the Pittsburgh Headquarters on the banks of the Monongahela River to lead Tashlich – a tradition where bread is cast into flowing water in hopes of starting the New Year with a clean slate. The ceremony included the sounding of the shofar, a cleaned out ram’s horn and symbol of Rosh Hashanah, to raise noise in celebration!
On Friday, associates joined together via WebEx to participate in another Rosh Hashanah tradition- dipping apples in honey. This tradition signifies the hope for a sweet and fruitful year ahead.
A few associates shared their thoughts on the establishment of this new AEO Connection and what it was like to celebrate this holiday for the first time with other AEO associates:
“To me, being Jewish is something that makes me feel special. The fact that I can be special and different at AEO while still being a part of the greater AEO Inc. family is just amazing. What makes me feel even more inclusive is that we are gaining traction with both Jewish associates and NON-Jewish associates joining in on the events. Celebrating the differences is what will bring us all together in the end!”
“I love to hear that people want to learn about the religions/traditions they are not familiar with. I think intolerance is rooted in the fear of the unknown. I hope that the more we understand each other, the more accepting and open minded we will become. This is a step in the right direction of a very long road.”
-Frederique, Channel Manager – Central Pricing
It’s National Voter Registration Day! Are You Registered to Vote?
Happy National Voter Registration Day! Did you know that a significant majority of voters wait until one week before the deadline to register? Make sure your voice is heard on Election Day and register here today.
AEO is proud to partner with HeadCount to encourage voter registration and turnout in the 2020 election. Below are a few ways that AEO is encouraging customers and associates to get involved and foster voter participation!
Volunteer to “Text Out the Vote”
HeadCount is encouraging voter registration by sending more than 2 million text messages to young voters in battleground states, through a new peer-to-peer texting campaign. This nationwide volunteer effort is an exciting opportunity to reach new voters and those with a low propensity to register to vote in the upcoming election. Interested in volunteering for “Text Out the Vote”? Sign up here.
Purchase a Limited Edition AE or Aerie HeadCount Tee
Show your support and inspire others to register to vote in this limited-edition American Eagle tee designed by AE customers! 100% of the purchase price will benefit HeadCount. Real Rewards customers can purchase this tee for just $15!
For more information on the 2020 election or to encourage others to get involved, head over to the AEO Vote 2020 Action Center. The action center is a one-stop-shop to register to vote, request an absentee ballot, sign up for election reminders and learn about ways to make a difference.
Let your voice be heard! #ThisIsOurTime
AEO Celebrates Latinx Heritage Month: Rolando, Sr. Director- Real Estate
From September 15 through October 15, AEO is celebrating Latinx Heritage Month – a time to recognize the important contributions of U.S. citizens whose ancestors immigrated from Spain, Mexico, the Caribbean and Central and South America. Throughout the month, AEO is highlighting our Latinx associates by celebrating, sharing and learning about their traditions and cultures!
Name: Rolando
Role: Sr. Director – Real Estate, Chicago, IL
Latinx Heritage: Mexico
Tell us about your role and why you love working at AEO:
I currently manage the real estate strategy for our company owned stores on the west coast, a portion of Midwest and Mexico. Real Estate has always been a passion for me. What makes AEO unique relative to other companies is the culture of valuing employee input. It’s a refreshing blend between corporate structure and entrepreneurship. I feel like my opinion matters!
Where did you or your family emigrate from?
My parents both migrated from a small town in northern Mexico called Zaragoza. My grandfather worked for the railroad and laid tracks, initially living in Texas and eventually settling in Chicago. My mom tells stories of working in the cotton fields of the south in order to help support the family when she was young. In fact, my grandmother used to exchange recipes with the African Americans who lived in the same neighborhood. My immediate family stayed in Chicago, while my extended family settled back into Texas. Apparently they couldn’t get used to the cold weather!
What does Latinx Heritage Month mean to you?
It’s a reminder of how culturally diverse our country is. The diverse cultures are a huge reason why I love living in Chicago. Each background has a story to tell and a contribution to our country. Secondly, Latinx Heritage Month pays tribute to and celebrates the diverse cultures of Latin America and honors the extensive contributions made by Latin American Citizens, whose ancestry traces back to Spain, Mexico, the Caribbean and Central and South America. September is picked since many Latin American countries gained their independence from Spain that month.
Do you have a notable Latino or Hispanic figure you admire and why?
Roberto Clemente. I grew up in the Chicago Barrio of Little Village (La Villita) and I’m a firm believer in “never forget where you came from.” Not only was Roberto a hall of fame inductee, he was equally recognized for his charitable contributions which ultimately took his life in a plane crash while delivering aid to those in need.
What is so special about your culture?
No one has a choice of their family or where they originate. I’m proud that the Hispanic culture has a strong sense of family, hard work and faith. Oh yeah – and the best food on the freaking planet!!!! Think of it, you can make a taco out of almost anything! Also, any day is a good day to throw on some good latin tunes and celebrate.
Roberto Clemente courtesy of NBC News
AEO Mexico Opens New Office
AEO is proud to annouce the opening of a newly redesigned corporate office in Mexico City! Located in the Juarez Neighborhood, the office is between the historic center of Mexico City and the Chapultepec Park area, which is one of Mexico’s main commercial districts and its financial center. The new office is a LEED Platinum (Leadership in Energy and Environmental Design) sustainable building.
The office overlooks two of the most important streets in Mexico, Paseo de la Reforma, the most emblematic avenue in the city, and Insurgentes Avenue, the 5th longest avenue in the world. The office was designed by our AEO team with inspiration from the BE YOU and Aerie Market store designs, and includes lab stores for both brands.
More than 60 associates across Marketing, Buying, Field Leadership, Store Operations, Visual, Construction/Maintenance, Human Resources, Finance, Logistic/Compliance, Brand Management LATAM, Technology and Global Asset Protection will be based in this office. Take a look at some photos of the new digs below!
From September 15 through October 15, AEO is celebrating Latinx Heritage Month – a time to recognize the important contributions of U.S. citizens whose ancestors immigrated from Spain, Mexico, the Caribbean and Central and South America. Throughout the month, AEO is highlighting our Latinx associates by celebrating, sharing and learning about their traditions and cultures!
Name: Dalisse
Role: Sr. Coordinator Fabric R&D, New York Design Office
Latinx Heritage: Dominican
Tell us about your role at AEO:
I work in Fabric Research & Development for Men’s Woven Shirts & Men’s & Women’s Outerwear which is at the very beginning of the product cycle. I collaborate with the designers on fabric concept ideas they want for every season. I help source fabric by reaching out to our fabric mills and attending trade shows to look out for the latest trends.
Trabajo en Investigación y Desarrollo de Tejidos para Camisas Tejidas para Hombres y chaquetas de abrigos para Hombres y Mujeres, que es el comienzo del ciclo del producto. Colaboro con los diseñadores en las ideas de conceptos de telas que desean para cada temporada. Ayudo a obtenerlas comunicándome con nuestras fábricas de telas y asistiendo a ferias comerciales para estar al tanto de las últimas tendencias de tela.
Why do you love working at AEO?
I love working for AEO because I really like what I do. My team and coworkers are like family and the work environment is great. That’s why I have been with the company for more than 9 years!
Me encanta trabajar para AEO porque me gusta lo que hago. Mi equipo y mis compañeros son como familia, y el ambiente de trabajo también es bueno. Por eso es que llevo más de 9 años aqui.
Where did you or your family immigrate from?
My parents immigrated from the Dominican Republic. My Dad arrived to the US in the mid 70’s and my Mom in the early 80’s. I was born and raised in Astoria Queens, NY.
Mis padres imigraron de la Republica Dominicana. Mi papa llegó a los Estados Unidos en mediados de los años 70’s y mi mama a principios de los años 80’s. Yo nací y crecí en Astoria Queens, Nueva York.
Why are you proud to be Dominican?
I’m proud to be a Dominican Latina because I feel like I have the best of both worlds. I was taught to speak Spanish first and while I learned English, I also taught my mom how to speak English, which is an aspect of being bilingual. I grew up surrounded by things that represented the Dominican Republic and it made me love it even more. My Dad always decorated the apartment with things that reminded him of his country, even if it looked like we lived in a museum at times. My parents made sure I visited the island every summer to know where my family came from. Like many others, my parents left their country in hopes of better opportunities in the United States. My siblings and I try hard to honor them & make them proud since they sacrificed so much to give us more than they had growing up.
Estoy orgullosa de ser una Dominicana latina porque siento que tengo lo mejor de ambos mundos. Me enseñaron a hablar español primero y, mientras aprendía inglés, también le enseñé a mi mamá a hablar inglés, lo cual es una gran parte de ser bilingüe. Crecí siempre rodeada de cosas que representaban la República Dominicana y eso me hizo amarlo aún más. Mi papá siempre decoraba el apartamento con cosas que le recordaban a su país, incluso si a veces parecía que vivíamos en un museo. Mis padres se aseguraron de que visitara la isla todos los veranos para saber de dónde venía mi familia. Como muchos otros, mis padres dejaron su país con la esperanza de mejores oportunidades en los Estados Unidos. Mis hermanos y yo nos esforzamos por honrarlos y hacerlos sentir orgullosos, ya que sacrificaron mucho para darnos más de lo que tenían cuando eran pequeños.
WWD: American Eagle Outfitters Logs More Quarterly Losses, but Aerie Continues to Stand Out
Ceo Jay Schottenstein reflects on fashion, the future of retail and plans for Aerie’s Jennifer Foyle to work with the AE brand.
The company, parent to the American Eagle, Aerie, Todd Synder and Unsubscribed brands, posted quarterly results Wednesday before the bell, falling short on both top and bottom lines, but still beating analyst expectations for the three-month period ending Aug. 1.
Total company revenues fell 15 percent to $884 million, down from more than $1 billion the year before. The retailer said the declines were largely a result of store closures during the quarters. Revenues in the year-ago period also included $40 million from Japanese license royalties.
By brand, American Eagle revenues declined 26 percent during the quarter, while Aerie’s sales surged 32 percent. Meanwhile, revenues in the company’s e-commerce business grew 74 percent, or 47 percent at American Eagle and 142 percent at Aerie. App downloads also increased during the quarter, by 45 percent.
Still, the company lost $13.7 million during the quarter, compared with profits of nearly $65 million the same time last year. That’s on top of the company’s $257 million loss the quarter before that.
“In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business — a true testament to the agility, talent and commitment of our team,” Jay Schottenstein, executive chairman of the board and chief executive officer of American Eagle Outfitters, said in a statement. “Aerie was simply outstanding, fueled by strong demand, with revenue rising 32 percent and record margins, demonstrating the power of the brand and signaling the vast opportunity ahead. Across brands, digital sales accelerated and we successfully reopened stores during the quarter.”
The retailer closed all of its stores mid-March to prevent the spread of the coronavirus. Stores did not begin reopening until May. As of Wednesday, the company said approximately 90 percent of stores have reopened.
But even amid the pandemic, American Eagle Outfitters has been in expansion mode. The retailer launched e-commerce businesses across Asia, including Japan, Hong Kong, Australia, Malaysia, Taiwan and Singapore, in addition to a shopping site in Mexico during the quarter.
“We will continue to focus on expansion in important international markets where we see significant opportunity for growth,” Michael Rempell, chief operating officer of American Eagle Outfitters, said on Wednesday morning’s conference call with analysts.
“We had a five-year plan to get [Aerie] to a billion dollars and we’re pretty much on that plan to get there by the end of the year,” Foyle said on the call. “So amidst this pandemic and all of the crisis that we’ve seen out there, the teams rolled up their sleeves and drove a strategy that we positioned five years ago. Obviously, the product assortment in Aerie, as you know, is actually adjacent to what’s going on out there.
“There’s more acceleration to be had based on the demand from customers, even in some of the categories that one would not expect,” Foyle continued. “Swimwear had an exceptional run in Q2. Who would have thought? I don’t know who’s wearing bikinis on Zoom meetings, but somebody is because we regained that share and I’m certainly excited with that business.
“This portfolio, with AE rooted in denim and Aerie rooted in intimates and Offline rooted in leggings, we have a sizable opportunity to gain market share,” Foyle told WWD. “There’s so much talk about soft dressing and as you know, Aerie really dominates in that category. Our biggest opportunity in AE is to really bring back the market in tops and go after tops.”
American Eagle’s tops assortment may continue to face headwinds, but Chad Kessler, American Eagle’s global brand president, pointed out that the AE jeans business grew double digits online during the quarter.
“We’re not walking away from a lot of great short-term opportunities in soft dressing, comfortable dressing, but it is nice to see success in our jeans business,” Kessler said on the call.
Meanwhile, the company continues to evaluate its retail fleet with plans to close between 40 and 50 stores Stateside this year while continuing to grow the digital business.
“We always close around 40 stores a year, so this is nothing new; this is normal,” Schottenstein told WWD. “What we’re doing now, we’re looking to see how to optimize our opportunities. We think, if anything, with what’s going on in the retail industry, with all the consolidations and all the bankruptcies and all the closing, we think in the long run there will be great expansion, whether it be mall based, whether it be regional centers, whether it be street locations in certain neighborhoods, college campuses. It’s going to be a great opportunity to get our message out there and get our stores out there. And there may be different ways of doing different types of stores. So, we’re looking at all the alternatives out there for us and we’re looking at all the opportunities.”
One of those opportunities will be opening two new standalone Offline by Aerie stores this fall — one in Nashville, Tenn., and one in New Jersey — with the possibility of additional locations in the future.
“Brick-and-mortar is not going anywhere,” Schottenstein said. “People are social animals. People like to go out. People like to shop. And that’s not going away. What it will come down to will be the experiences that we give the customer in the future. Right now, the experience you have to give them is security and safety. People want to feel they’re shopping in a very safe environment. But as time goes on…and we beat this COVID-19 crisis and people get more comfortable, people will shop, whether they shop in a mall, they shop at street locations, it’s going to be the experiences you give them when they come.
“And also, the ease of being able to shop in between the different channels,” Schottenstein continued. “Our goal would be to bring more of the digital experience into the store and more of the store experience into the digital, so it becomes one seamless thing.”
Mike Mathias, chief financial officer of American Eagle Outfitters, added on the call that the retailer has nearly 250 store leases set to expire this year, with about the same amount set to expire in 2021. In addition, the average lease term is less than three-and-a-half years. “Flexible lease portfolios will allow us to quickly exit locations that no longer make sense,” Mathias said.
Total inventory costs fell 21 percent to $421 million during the most recent quarter. American Eagle Outfitters ended the quarter with $899 million in cash and equivalents and nearly $517 million in long-term debt.
“Aerie was the clear brand standout… indicating that the growth is clearly being well managed,” Kate Fitzsimons, an analyst at RBC Capital Markets, wrote in a note. “Bottom line, we see [second-quarter] results as indicative that the AEO team is navigating COVID-19 headwinds well.”
Shares of American Eagle Outfitters, which closed up 1.63 percent to $13.41 a piece on Wednesday, are down 22.5 percent year-over-year.
The company is not offering forward-looking guidance, but anticipates a return of fashion mixed with comfort post-COVID-19.
“I think we’re going to have the Roaring Twenties again,” Schottenstein told WWD. “If you look at the history, the [Spanish flu] pandemic took place in 1918, 1919. And after that they had the Roaring Twenties. And I think part of the reason for the Roaring Twenties is people went through those two years of hell where they were separated in their community. And then things went back [to more normal] and it exploded. People went out and enjoyed themselves. There were several years of real enjoyment there. I think what will happen [in the future] is, people will go out and people will want to get dressed up again.”
“It’s going to create a fashion frenzy,” Foyle added. “When we come out of this pandemic that fashion is going to be so in demand. I’m already seeing it happening. I think girls and young boys are going to want to go out and they’re going to want to look good. And I think it’s going to be our job to deliver in all three brands, what [shoppers] are looking for.”
