The retailer and the rapper produced a 25-piece collection composed of apparel, accessories and skate decks, launching on Aug. 10.

By Obi Anyanwu | Link to article

American Eagle is prepping kids for the back-to-school season by offering a collaboration collection with multiplatinum-selling hip-hop artist Lil Wayne.

AE x Young Money, launching on Aug. 10, is composed of 25 tie-dye and color-blocked pieces such as graphic T-shirts, shorts, hoodies, socks, boxers, hats and American Eagle’s Stacked jeans, ranging in price from $8 to $100. The collection includes skate decks, a nod to the rapper’s hobby.

“I know my fans wear and love the brand, so we came together to co-create a collection that blends my personality with American Eagle’s iconic style,” said Lil Wayne. “We designed the AE x Young Money collection with purpose and pride. Whether it’s my music or my style, I have always used both as an outlet for creativity and to live my truth — without apologies. American Eagle gets it. The brand celebrates individuality and to me that’s something I want to be a part of.”

The Grammy Award-winning rapper favors the tie-dye print pieces from the collection and the oversize hoodies. “I’ve been living in them on tour,” he said. “My pieces keep going missing, so I have to call American Eagle for more.”

Though the collection launches in just under a month, American Eagle is releasing on July 15 a sign-up link for fans to be notified when the collection is available, and will unveil it on July 30. The retailer is also rolling out the collection to all of its stores in addition to its web site.

“A lot of times when brands collaborate with someone, it’s limited distribution, but we want to celebrate all of our customers and Wayne,” said American Eagle global brand president Chad Kessler. “We’re sending the collection to all of the stores. You don’t have to have access to a major city to find it. We’re also launching it on our web site.”

Kessler said Lil Wayne “might not be the first person to come to mind” when discussing American Eagle, but the company reached out to him because his song “Uproar” from his latest album, “Tha Carter V,” has been very popular with the retailer’s Gen Z customers. The uptempo song produced by Swizz Beatz is being used as the soundtrack for the company’s fall marketing campaign.

“We just love his style, we love him as an individual and thought it’d be exciting to work with him,” added Kessler. “He wears a lot of stuff that we’re excited about for back-to-school. We found out on the shoot that a lot of people from his band wear American Eagle.”

This partnership is also fitting given American Eagle’s relationship with music. The company sponsored concert stages at Governor’s Ball in June, is sponsoring a stage at Lollapalooza again in August and has featured musicians in its campaigns. “Music is always a major part of young people and I think Gen Z is no different there,” said Kessler. “We’ve had musicians in our campaign, but this is our first time collaborating with a musician.”

In June 2018, American Eagle launched #AExME Artists, in a partnership with Universal Music Group and Brands, to highlight emerging music talents through a digital content series. The retailer also featured the Kendrick Lamar song “DNA” from his album “DAMN” for its Make Moves video. “Last year, we had a featured song and this year we thought we could take it to the next level with a product collaboration,” Kessler said.

The American Eagle fall campaign video, which was created by cinematographer Mathieu Plainfossé, features real dancers, skateboarders and young creatives dancing in the brand’s new denim styles, including Curvy, AirFlex and Stacked. The campaign is a continuation of its AExME platform that featured real teens and young adults who had styled themselves in the brand and, in the spring campaign, took their own photos as well.

“We filmed [the fall campaign] as a homecoming dance showing the great diversity of the cast with Uproar and Wayne performing live,” said Kessler. “We want to show optimistic kids having fun and moving in the jeans.”

“’Uproar’ is an anthem for self-expression,” said Lil Wayne. “The single is relatable because we’ve all been there — there’s no fluff. I’m just speaking the truth — I think that’s something the fans can get behind.”

The jeans are a push for fall, especially Curvy, which took one year to produce. The new fit will be available in high-rise jeggings and mom jeans, among other styles, and will be available in sizes 00 to 24. “We realized we didn’t have jeans for everybody up to size 20 online and size 16 in stores and our goal is to continue offering our customer the best fit possible,” Kessler said.

According to Kessler, American Eagle sold $1 billion worth of jeans in North America in 2018. In the first quarter, the company reported a 4 percent increase in comparable sales at American Eagle and a 14 percent increase at its Aerie division.

Celebrates Global Week of Inclusion: July 15 – 20

July 15-20 marks Special Olympics’ Global Week of Inclusion: a time to come together and celebrate ALL of our abilities. To honor the week, #AerieREAL Role Models Aly Raisman and Iskra joined us to welcome 7 Special Olympics athletes into the Aerie family for a full day of #AerieREAL. We spent a day in our photo studio with the athletes to capture their amazing spirits through a photoshoot and video.

disabilities and helps them discover new strengths and abilities, skills and success through the power of sports. Learn more about the organization here.

PITTSBURGH —  American Eagle Outfitters, Inc. (NYSE: AEO) announced plans to strengthen its market position in Japan, which includes a mutual termination of the license agreement with Eagle Retailing Corporation, a partnership of Aoyama Corporation and Nippon Steel Trading Company, established in 2010.

With over 30 American Eagle stores and a digital business in Japan, AEO is committed to continued growth in the Japanese market.  The company is exploring options for its future business model and is taking steps to reposition its distribution channels to best serve customers. This includes accelerating growth of our intimates brand, Aerie across Japan, investing in the American Eagle experience with its award-winning new store concept, while putting a greater emphasis on growing digital.  We will also explore new channels of distribution and evaluate opportunities for new concepts, including the sneaker consignment brand, Urban Necessities.  The Omotesando and Ikebukuro locations will close, as we look to better position our business for future success.

Andrew McLean, Executive Vice President and Chief Commercial Officer commented, “Japan is an incredibly important market and AEO is here to stay.  Within this exciting consumer fashion market, we’ve seen a strong appetite for American Eagle’s signature jeans and our brand platform of individual self-expression is perfect for the Japanese youth culture.   Aerie presents an exciting new growth opportunity by tapping into the underserved body positivity movement within Japan.   We thank our partners at Eagle Retailing for establishing a strong brand presence and we look forward to our next chapter of growth.”

AEO Facts:

• AEO is a highly profitably leading specialty retailer with consistent growth fueled by 17 consecutive quarters of positive comparable sales and $4 billion of annual revenues.
• The American Eagle brand is the #1 U.S. jeans brand for 15 to 25 year olds and continues to introduce exciting jeans innovation, including AirFlex and Ne(X)t Level Jeans.
• Aerie, a leading intimates brand, has emerged as one of the fastest growing new concepts with 18 straight quarters of double digit growth.

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. The company operates more than 1,000 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 24 countries.  For more information, please visit www.aeo-inc.com.

CONTACT:     

Olivia Messina

412-432-3300

LineMedia@ae.com

The Aerie team has been honored with the Glossy Award for Best Influencer Campaign – Fashion for the 2018 #AerieREAL Role Model Campaign! This award recognizes an influencer campaign that has successfully increased engagement and driven results for a fashion or luxury brand.

In celebration, the Aerie team accepted the award at a ceremony on June 12, 2019 at Chelsea Piers in NYC. Check out the full list of awardees here.

By Elizabeth Segram / Link to article

As I’ve reported before, American Eagle doesn’t shy away from throwing itself into politics: The 40-year-old brand has supported the Parkland students in their quest to curb gun violence, it has supported LGBTQ rights, and it has pushed the envelope when it comes to body inclusivity.Until now, much of this brand activism has come out of carefully studying its customers, who are currently Gen Z teens. But the brand has just created a new way to more formally incorporate the perspectives of young people into its corporate decision-making. It launched a council consisting of nine young people between the ages of 16 to their early twenties.

“We wanted to work with young people who are living out their values,” Kessler says. “We want them to get just as much value from the program as we are.”

American Eagle Outfitters does it again.

First-quarter results for fiscal year 2019 are in, with the company, which includes sister brand Aerie under the company umbrella, improving on both top and bottom lines.

“American Eagle and Aerie continue to leverage strong brand equity, compelling product and leading customer engagement across stores and digital,” Jay Schottenstein, American Eagle’s executive chairman and chief executive officer, said in a statement. “[American Eagle’s] ongoing market share gains are led by its dominant jeans business, and Aerie’s consistent double-digit growth has been fueled by the brand’s strong appeal to both existing and new customers. Looking ahead, we see significant runway for each of our brands. We are committed to improved profit flow through as we begin to lap our 2018 investments, to support continued earnings growth and attractive shareholder returns.”

Revenues for the three-month period ending May 4 rose 8 percent to $886 million, up from $823 million the same time last year. Net income also increased, from $39.9 million to $40.7 million. In addition, the company repurchased $20 million worth of shares during the quarter and had its 17th consecutive quarter of positive comp growth.

By brand, American Eagle’s comparable sales increased 4 percent, while Aerie’s comparable store sales jumped 14 percent. That’s on top of a 38 percent increase the same time last year. It’s also Aerie’s 18th consecutive quarter of double-digit comps.

The retailer has been on fire in recent years, benefiting from a thriving denim cycle as American fashion becomes increasingly casual — even in the workplace. Meanwhile, Aerie’s popularity continues to grow with its AerieReal campaign, which showcases un-airbrushed models.

Chad Kessler, global brand president of American Eagle, added that American Eagle has learned a lot from Aerie, a brand that is build on inclusivity.

“I think Aerie has been an inspiration to the whole sector,” Kessler told WWD. “What Jen [Foyle] and the Aerie team started with AerieReal in 2014 and showing, bravely showing unretouched models, really inspired anyone who was paying attention. And we’re so lucky at AE to have a front seat at the table, seeing what Aerie has accomplished.”

As a whole, the company surpassed $1 billion in sales during a single quarter last fall. Last quarter, as more and more retailers revealed store closures, Aerie said it would open between 60 and 75 more stores this year.

The 42-year-old company also celebrated its 25-year run on the public market in April, with executives like Schottenstein; Kessler; Foyle, Aerie global brand president, and Stacey McCormick, vice president of marketing at Aerie, along with AerieReal role model Iskra Lawrence, ringing the opening bell at the New York Stock Exchange. Later that night the AEO gang accepted the American Apparel and Footwear Association’s Retailer of the Year award.

American Eagle is continuing the momentum by expanding its bottoms business with additional sizes, as well as introducing the curvy jeans collection. The curvy line, available online starting today and in stores at the end of June, will range from sizes double zero to 20 and have a slightly new hip-to-waist ratio than other jeans.

In addition, Kessler said starting at the end of July, all American Eagle bottoms will be available in sizes double zero to 24 in every store. Previously, they were only available up to a size 16, size 20 in select stores.

“That’s a really exciting development around our brand platform of inclusivity,” Kessler said, adding that he thinks American Eagle has the potential to continue to grow its jeans business each quarter. “We’re really trying to make sure that American Eagle is famous for fit, inclusivity and for innovation. And I think this year we have really exciting deliverables on each of those pillars of our jeans business. I don’t think anyone makes a jean that fits better or provides better value or better quality than our jeans.”

Total Revenues Increase 8%, Comparable Sales Rise 6%

Strength Across Brands and Channels

$20 Million of Share Repurchases Completed

PITTSBURGH — (BUSINESS WIRE) — American Eagle Outfitters, Inc. (NYSE: AEO) today reported EPS of $0.23 for the quarter ended May 4, 2019, compared to $0.22 for the quarter ended May 5, 2018.  Excluding restructuring charges of $0.01, the company’s adjusted EPS increased 4% to $0.24, compared to adjusted EPS of $0.23 last year.

Jay Schottenstein, AEO’s Chairman and Chief Executive Officer commented, “2019 is off to a positive start and we are especially pleased to deliver first quarter sales and EPS growth ahead of our expectations.  American Eagle and Aerie continue to leverage strong brand equity, compelling product, and leading customer engagement across stores and digital, resulting in our 17th consecutive quarter of positive comparable sales.  AE’s ongoing market share gains are led by its dominant jeans business, and Aerie’s consistent double-digit growth has been fueled by the brand’s strong appeal to both existing and new customers.  Looking ahead, we see significant runway for each of our brands.  We are committed to improved profit flow through as we begin to lap our 2018 investments, to support continued earnings growth and attractive shareholder returns.”

Adjusted amounts are based on Non-GAAP results, as presented in the accompanying GAAP to Non-GAAP reconciliation.

First Quarter 2019 Results

• Total net revenue increased $63 million, or 8% to a record $886 million compared to $823 million last year.
• Consolidated comparable sales increased 6%, following a 9% comparable sales increase last year.
• By brand, American Eagle’s comparable sales increased 4%, following a 4% increase last year. Aerie’s comparable sales increased 14%, building on a 38% increase last year and marking the 18th consecutive quarter of double-digit comps.
• Gross profit rose 7% to $325 million from $304 million. The gross margin rate of 36.7% compared to 37.0% last year.  Rent leverage and improved product costs were offset by increases in markdowns and delivery expense.
• Selling, general and administrative expense of $231 million increased 50 basis points to 26.0% as a rate to revenue compared to 25.5% last year. Strategic investments in the stores organization, which began midway through 2018, led to increased compensation expense.  Advertising and professional services also contributed to the 10% increase from $210 million last year.
• Depreciation expense increased 7% to $45 million from $42 million last year and was flat as a rate to revenue at 5.1%.
• Operating income of $48 million, which included $1.5 million of restructuring charges, compared to $51 million last year. Adjusted operating income of $49 million declined 6% when compared to the adjusted $52 million figure last year.  The adjusted operating margin of 5.6% compared to 6.4% last year.
• Other income of $4 million primarily consisted of interest income, as well as foreign currency fluctuations.
• EPS of $0.23 compared to $0.22 last year. Excluding restructuring charges of $0.01, the company’s adjusted EPS increased 4% to $0.24, compared to adjusted EPS of $0.23 last year.

Restructuring Charges

In the first quarter of 2019, the company incurred restructuring charges primarily related to severance and closure costs for company-owned and operated stores in China, totaling $1.5 million, or approximately $0.01 per share. This compared to $1.6 million in charges in the first quarter of 2018, or approximately $0.01 per share, which primarily related to corporate severance.

Inventory

Total ending inventories at cost increased 13% to $456 million.  Ending inventory units were up 10%.  The increase compared to the prior year reflected strong demand and expanded collections for American Eagle jeans and new store growth for Aerie. Additionally, the company ended the quarter with 12 clearance stores, up from 5 stores last year, which also contributed to the increase in ending inventory.

Capital Expenditures

In the first quarter, capital expenditures totaled $37 million, primarily related to store remodeling projects and new openings, with the balance primarily in support of the digital business and corporate IT. We continue to expect annual capital expenditures to be in the range of $200 to $215 million.

Shareholder Returns, Cash and Investments

During the first quarter, the company returned $44 million to shareholders through cash dividends and share repurchases.  We paid cash dividends of $24 million and repurchased approximately 911,000 shares for $20 million.  At quarter-end, approximately 10.8 million shares remained under the current repurchase authorization.  As a result of strong free cash flow, we ended the first quarter with total cash and investments of $350 million compared to $310 million last year.

Store Information

During the quarter, the company opened 7 American Eagle stores and closed 5, ending with 936 American Eagle stores, including 151 Aerie side-by-side locations.  Additionally, the company opened 4 Aerie stand-alone stores, ending with 119 Aerie stand-alone stores.  Internationally, the company ended the quarter with 235 licensed stores compared to 217 last year.  For additional store information, see the accompanying table.

Second Quarter Outlook

Based on an anticipated comparable sales increase in the low single digits, management expects second quarter 2019 EPS to be approximately $0.30 to $0.32.  This guidance excludes potential asset impairment and restructuring charges.  Last year the company reported EPS of $0.34 for the second quarter.

Conference Call and Supplemental Financial Information

Today, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or 1-201-689-8562 (international) and provide the Conference ID 13689506 or go to http://investors.ae.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.

* * * *

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. The company operates more than 1,000 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 24 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 second quarter 2019 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 1A., Risk Factors, of the company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 and in any subsequently-filed Quarterly Reports on Form 10-Q filed 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 second quarter 2019 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 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 changes in global economic 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.

On a recent afternoon, college student Michele Jacobs walked into an American Eagle Outfitters store in Manhattan to buy some pieces from its Aerie lingerie line. And while she left with two bralettes, she also bought a jean skirt and a couple pair of shorts.

“I feel like it’s really hard to not spend money when I go in there,’’ said Jacobs, 19, a rising sophomore at Franklin & Marshall College in Pennsylvania. “The majority of my clothing is from American Eagle. All my jeans are from here.’’

In many ways, the success of American Eagle Outfitters Inc. doesn’t make sense. Most teen retailers have struggled to appeal to the newest crop of young shoppers while e-commerce sites have scattered their once loyal customers. It’s a situation that’s led Charlotte Russe and Aeropostale into bankruptcy and Abercrombie & Fitch Co. to close some flagships and shrink the footprint of its stores. Bloomberg News reported Tuesday that fast-fashion retailer Forever 21 Inc. was said to be exploring a debt restructuring to shore up its liquidity.

Yet American Eagle, which has been around for 42 years, has found solid footing. It’s consistently at or near the top of its peer group for revenue growth and digital sales. Teenage boys and girls continue to say it’s one of their favorite brands, according to Piper Jaffray’s semiannual survey. Investors will get a fresh look at how the company is doing Wednesday, when it reports quarterly earnings. The start of 2019 hasn’t been kind to the U.S. apparel industry.

American Eagle has declined about 4% this year, and while its shares are underperforming the benchmark S&P 500 Index, they are holding up better than most peers even amid renewed investor anxiety about the retail apparel industry in the U.S. Abercrombie is down about 15%, Urban Outfitters Inc. has dropped about 29%, and Guess? Inc. has lost about 21%.

Jeans Loyalty

Its popularity is partly fueled by Aerie, as well as its denim business, a space where the company has preserved its stature while others have faltered, said Oliver Chen, a retail analyst at Cowen. Jeans are well-priced and once consumers find the right fit, they’re pretty loyal to the brand, he said.

American Eagle jeans surpassed $1 billion in annual sales last year, according to Chad Kessler, the global brand president. And executives think there’s more for the taking. Chief Financial Officer Robert Madore said in March that Gap Inc.’s announcement it would close hundreds of stores provides a “huge opportunity.’’

“They’re working from a position of strength while others are not, and that’s helpful,’’ Chen said. “It’s not easy to adapt because teens want variety, so the new trend is no trend.’’

The first American Eagle store opened in 1977 in a mall in Michigan. It wasn’t until 1990 that the company created its private label products, which included men’s bootcut and worker jeans. Signature denim came a few years later.

In a fashion world still dominated by athleisure, competition among retailers to put shoppers back in jeans is heating up. Levi Strauss & Co. and Kontoor Brands Inc. went public this year, and J. Crew Group Inc. may do the same for its denim line Madewell by the end of this year.

Jeansmakers have made headway by making their pants as comfortable as leggings. American Eagle has stayed ahead of the curve by using stretch technology, distressed treatments and a wide range of sizes, including lengths, Chen said. Inside some stores, customers can personalize their jeans by adding back patches or paint.

‘Playing it Safe’

The retailer wasn’t always at the top of its game. Five years ago, it struggled to keep up with the pace of fast-fashion retailers like H&M and Forever 21. It announced plans in 2014 to close about 150 stores over three years, and both revenue and same-store sales declined for seven straight quarters.

“They were playing it safe to a degree,” said Gabriella Santaniello, founder of retail consulting firm A Line Partners. “But what we’re starting to see from them is that they’re really evolving their product.”

American Eagle is also trying out in-store concepts to keep current fans as they mature. The Manhattan location where Jacobs shopped, which is close to New York University, has a study area and washing machines and dryers under pink neon signs where students can do laundry for free. The catch: They can’t leave during the wash and dry cycles, which means some visitors stay in the store longer.

American Eagle is gaining cachet as a lingerie and swimsuit seller through Aerie, which it launched nationwide in 2006. Aerie has posted quarterly same-store sales growth in the double digits for a handful of years — often 20% or higher — consistently outpacing the American Eagle brand.

‘Game Changer’

Aerie also helps spread the company’s diversity message. It has aimed to be more inclusive of women of different shapes, sizes and backgrounds, a departure from the images traditionally promoted by rivals including Victoria’s Secret. Executives made the decision some years ago to not retouch photos of models in Aerie campaigns.

Emily Zabaleta, a 25-year-old digital designer, said she and her friends started buying Aerie because of the plus-sized model Iskra Lawrence, often featured in its advertising.

“Aerie is an absolute game changer,” said Zabaleta, who recently placed an online rush order for clothes to take on a cruise. “A lot of the times when I’m looking at these brands it’s ‘oh, how am I able to make myself look like that’ as opposed to ‘oh, I look like that and that could look good on me.’”

This spring, American Eagle began identifying young people — of different races, gender identities and body sizes — who are passionate about activism and have sizeable social-media followings. The company asked them to style themselves in American Eagle clothes and take their own photos, some of which now adorn walls of stores across the country.

Young Voices

The campaign resonated with customers, about half of whom belong to Gen Z, the group roughly between the ages of 7 and 22. The connection with young shoppers has also influenced the company’s leadership. Last year, when some survivors of the high school shooting in Parkland, Florida, appeared on the cover of Time magazine wearing American Eagle jeans, executives were so moved that they wanted to find a way to support the voices of more teenagers and young adults, Kessler, the brand president, said in an interview.

This spring, the retailer launched its AExME council with a group of young adults. They are paired with mentors and gather about once a month to discuss practices and products going forward. At a meeting at its Pittsburgh headquarters earlier this year, they made suggestions for the back-to-school collection, which the company plans to act on, Kessler said.

“It’s important for kids in this generation to know not all big companies are the same,” he said. “We are turning over a certain amount of control of the brand to this generation.”

— With assistance by Gillian Tan, Lauren Coleman-Lochner, and Eliza Ronalds-Hannon

Earlier this year, American Eagle Outfitters took a gamble that turned the heads of not only customers, but other marketers as well. Like many brands pursuing the fickle tastes of Gen Z shoppers, the mall-based apparel retailer had convened focus groups full of teens, eager to hear what they did and didn’t like. And like plenty of other youth brands, American Eagle was careful to cast actual youths in its advertising, too. But then, it took things a decisive step further by taking a gamble: It put the juveniles in charge of the entire marketing campaign—the concept, the clothes, the shoot, the script, everything.

“We turned the whole thing over to the kids,” said global brand president Chad Kessler. Young shoppers, he added, “want to support brands that support them and they feel like they have a voice in creating what the brand has been all about.”

Watching the spot—which consists of jerky, handheld footage of kids mugging for the iPhone camera, cracking up, speaking gibberish and occasionally uttering something surprisingly profound—you might not feel like you understand what the brand is all about. Which is the point. When it comes to speaking to an enormously fickle audience (one that plenty of brands have faltered in trying to capture), American Eagle has clearly found its formula, and the kids have paid them back for it.

At a time when brands like Gap, J.Crew and Guess shutter stores and attempt to redefine themselves, American Eagle has become a $3 billion brand. Its parent company, American Eagle Outfitters (which includes the popular intimate-apparel brand Aerie) has logged 16 straight quarters of positive comp sales as of Q4 2018. By itself, AE.com cranks north of $1 billion in annual sales.

One reason why American Eagle has gotten the youth thing right is that it’s had practice. The American Eagle story begins long before anyone ever heard of Gen Z—or even baby boomers. In 1904, a menswear store called Silverman’s opened in the Pittsburgh suburb of McKees Rocks. The store prospered, but by the mid-1970s, brothers Mark and Jerry Silverman decided to diversify. When it opened in 1977, American Eagle Outfitters sold casual clothes and sportswear aimed at young fellas who liked to spend time outdoors. The stores were popular—more popular, it turned out, than Silverman’s. By the end of the 1980s, the Silvermans had sold their stake to another apparel family, the Schottensteins, who made some strategic changes.

While American Eagle’s 1992 decision to switch to private label was a crucial step toward differentiation and controlling costs, it was a deal struck in 2000 that put it on the map with the youth of America. That year, the TV show Dawson’s Creek was two years into a successful run on the WB. As TV Guide later said, for teens coming of age in the late 1990s, “the show was a defining part of adolescence.” That meant not only the coming-of-age angst you’d expect, but also the look of it. Scrubbed, wholesome and cute, the cast members wore their chinos and button-down shirts with style—and soon, they were wearing clothes provided by American Eagle. By 2001, the hugely influential show would help drive American Eagle’s net income north of $105 million. (Soon, American Eagle was sending its clothes to the wardrobe department of MTV for Road Rules and to movie sets, too.)

Once American Eagle captured the youth market, it basically never let go of it. Its formula of quality clothes, moderate prices and friendly stores keeps Gen Z in brick and mortar. And by putting its corporate voice behind important issues such as diversity, mental health and LGBTQ awareness, the brand demonstrates that it’s philosophically in Gen Z’s corner, too.

“We try to reflect the customer and celebrate them for who they are,” Kessler said. “We want everyone to feel good in their own skin and express themselves with what we offer. That’s allowed us to stay relevant and current over the decades.”