(Filed Under wholesale Lingerie News). Third quarter sales were up 21% at Aerie, a considerable achievement considering the brand was also up 21% in the same quarter last year. The lingerie division of American Eagle Outfitters (AEO), also noted it is about to open a pop-up store December 8 in SoHo in Manhattan.
Jen Foyle, global brand president of Aerie, reported success with the brand’s smaller, redesigned locations, stating in the conference call that “70 standalone stores are generating productivity at 50% above older formats. We are on track with our expansion plans and we will end the year with 10 to 15 new format stores. We plan to open 25 next year with at least a third of them in new markets.” She added that the SoHo “store will feature a complete brand experience. We’re thrilled to have a presence in New York and to build brand awareness for Aerie in such a great location.”
Year to date the lingerie division is up 25%, far better than its parent company, which is up only 4%. In the latest quarter AEO as a whole earned $75.8 million on sales of $940.6 million, compared to $74.1 million on sales of $919.1 million in the quarter ended October 31, 2015.
Foyle emphasized Aerie’s “momentum,” noting that the latest period marked “the sixth consecutive quarter with comps over 20%.” She added, “We saw strength across all channels and that continued to gain new customers, which rose 15% in the quarter. Traffic and transactions increased in standalone stores and online.”
“Quality of the sales metrics were favorable including a higher average unit retail and strong conversion. We achieved positive sales in bras, undies, and apparel. Bralettes and novelty fashion items continued to post strong results.”
Foyle continued: “Additionally, this fall, we had an incredible response to the launch of our new yoga inspired line, Chill. Play. Move. The collection exceeded our expectations. We are excited about our customers’ initial response and we will build on that line, expanding customer choices in the upcoming seasons.”
Reaffirming its commitment to add more stores, the company reported it had opened six new Aeries in the latest quarter. And Foyle said she plans “to open 25 standalone stores next year that will be slightly smaller than our current, the original, footprint which was an average of roughly 3,800 to 4,100 square feet. We are seeing really nice results from our smaller footprint and certainly, we are going to take advantage of that.”
Foyle said she plans to “gain market share,” in the lingerie arena, pointing out that today there are only “87 standalone” Aerie stores, “highly focused and concentrated in 11 states.” The executive declared, “we are not over-penetrated.” At the end of 2011, before AEO went through a company-wide campaign of store closings, there had been 158 Aerie locations in the U.S.
Most likely referring to Victoria’s Secret’s recent exits out of swimwear and certain apparel categories, AEO CEO Jay Schottenstein, offered his own strategy during the conference call. “On the Aerie side, we see a big opportunity. We know some of our competitors are giving up certain businesses that we think could be a particular opportunity for us and we will be kicking some of that off this coming spring. At the same time, we introduced this past season like the compression pants in Aerie that’s been very well received. So, we see there is plenty of categories that can be added to Aerie. And Jen and the team are working very hard on identifying what particular categories are to be added and maximizing the return right away on. We also believe that there is plenty of growth for Aerie; as far as the markets go, we have plenty of opportunity to grow there. At the same time, it is a developing business. There are categories that we don’t carry that we think in the future will be very good for the company.”
In the past, Aerie has given credit to bralettes as a major engine of growth for the brand. Now, with many other companies emphasizing the style, and prices falling, Foyle is still not ready to give up. “Regarding bralettes, I feel really good about the category. We really launched that category first; I think I said this on one of the last calls. And we sort of own that category. So, I feel really proud of that. That said,” she continued, “there is a whole runway here as far as the lightly line category and unlined categories that I think are going to be strong and will continue to be strong, because what’s nice about these categories is they really live by our DNA, AerieREAL. So, being a little bit more true to your body and your silhouette. That said, yes, competitors were highly promotional. And what I’d like to say on that is we held our own. We price pointed bralettes where we have been in the past and which is our ground.” — NM
The complete transcript of the conference call can be found here: http://seekingalpha.com/article/4027344-american-eagle-outfitters-aeo-ceo-jay-schottenstein-q3-2016-results-earnings-call-transcript?page=1
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