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Aerie: by American Eagle

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Aerie: by American Eagle

Added: Jun 2010
Aerie: by American Eagle

Added: Jun 2010
Aerie: by American Eagle

Added: Jun 2010
Aerie: by American Eagle

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current news

Aerie’s Q2 Sales Jump 32% To $250 Million


Offline “Goals Sports Bra” and “High Waisted Legging.”
Offline “Goals Sports Bra” and “High Waisted Legging.”

(Filed Under wholesale Lingerie News). Aerie sales jumped 32% to $250 million in the quarter ended August 1, “despite the impact of stores closures as nearly 70% of the revenue” was generated online, according to Jay Schottenstein, CEO of parent company American Eagle Outfitters (AEO). Aerie’s orders placed on its e-commerce channels rose 113% in the period.

At the same time, in a direct contradiction to what some consider established wisdom, Aerie expanded its physical, stand-alone store count by 12, to total 160 by the end of the quarter. This is in step with its current theory that stores work in conjunction with the internet to build sales even among its youthful consumers. The company had previously announced it would open a total of 25 new Aerie locations by the end of the year.

(Aerie products are sold in a total of over 300 locations, including “side by side” stores, which are considered part of the America Eagle stores to which they are attached).

Almost a decade ago Aerie had adopted a near opposite strategy which concluded that it could close stores and gradually shift reliance to its website to build sales. Launched by AEO in 2006 with two shops, by the end of the fourth quarter of 2011 Aerie had 158 stand-alone locations. But over the next five years, it rapidly reduced the total by 42.4%, ending up by the end of the second quarter 2016 with just 91 physical stores.

Around that time, Jennifer Foyle, currently AEO’s EVP and Aerie’s global brand president, made the surprising announcement during a conference call (perhaps initiated by a belated piece of internal company research): “We know that 90% of our customers are acquired through brick and mortar stores.” As a result, the company abruptly shifted again, and rapidly began adding new stores.

During the conference call with analysts to discuss the current quarter, Schottenstein reported that Aerie’s “total customer acquisition increased 22% in the quarter, and more than doubled in the digital channel. We saw strength across categories as customers continue to embrace Aerie’s strong brand position, empowering messages and trend-right collections.”

AEO COO Michael Rempell added that “as we look to the future, fueling Aerie’s growth is a major priority. In 2019, Aerie generated almost $800 million in revenue, and it remains on pace to reach $1 billion in short order. We are confident that the ultimate potential is far greater than that. Even with our success in recent years, we still have significant whitespace in core areas like intimates, swim, and lounge. These categories represent a combined $40 billion addressable market.” And he reaffirmed the brand’s commitment to physical stores: “Aerie’s digital channel has consistently exceeded expectations. However, as we look to fuel Aerie’s growth, stores are also an important selling channel and customer touch point. We know that stores generate increased brand awareness, expand customer reach, and raise average spend in under penetrated markets.”

During the call, Schottenstein discussed the launch of Offline by Aerie, “our new activewear brand which leverages Aerie’s powerful platform, providing a fresh take on this exciting growth category.” The new brand is already offered in about one third of the Aerie locations, and the company will add two dedicated, stand-alone Offline stores this fall, the first opening in Nashville. He said the timing of the debut was “perfect, with rising demand for active apparel,” adding that Offline “builds on the strong results of Aerie’s leggings, sports bras, comfy tees and fleece. The early response has been absolutely terrific. I see significant runway for growth and we are very excited about the prospects.” COO Rempell pointed out that the new brand “offers even more growth potential within the $16 billion women’s active apparel market.”

Schottenstein also discussed the promotion of Foyle to chief creative officer,” to “lead the creative functions for both Aerie and American Eagle.” The hope is that she will somehow be able to duplicate her success with Aerie over the past few years. The new role will be in addition to her existing duties.

American Eagle as a whole, which sells a variety of apparel besides intimates, lost $13.8 million on sales of $883.5 million, compared to a profit of $65.0 million on sales of $1.041 billion in the quarter ended August 3, 2019.

During the conference call, Foyle emphasized that Aerie’s sales growth in the latest quarter did not come at the expense of margins. “In Aerie, we’ve been really highly focused on pulling back on promotions and getting paid for all the work we put into our product and we’ve seen obviously our margins accelerate and we’re going to continue to focus on that, going back on promotions and driving better quality value relationships.”

She also addressed conditions in the overall market and with her competition. “I love working for this company and working for Jay Schottenstein because he’s always coming from a position of strength. When people are closing, bankruptcies are happening, we’re opening up doors and I think that’s one of the most important things we can continue to focus on as we grow [the] AEO yield portfolio. There is weakness out there and there’s businesses to be taken. A lot of market share.”

“That said, we have a plan to get to $1 billion in Aerie. And I think there’s more acceleration to be had, based on the demand from the customer. And even in some of the categories that one wouldn’t expect. Swimwear had an exceptional run in Q2. Who would’ve thought. I don’t know who is wearing bikinis on Zoom meetings, but somebody is, because we regained that share and I’m certainly excited with that business.” — NM

The complete conference call can be found here: https://seekingalpha.com/article/4373291-american-eagle-outfitters-inc-aeo-ceo-jay-schottenstein-on-q2-2020-results-earnings-call?part=single


more wholesale Lingerie News >>

Published 09-14-2020 by Nick Monjo

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