American Eagle Outfitters

The multi-brand specialty retailer American Eagle Outfitters, Inc. (also known as American Eagle) sells fashionable clothing and accessories for men and women under the American Eagle Outfitters brand and feminine hygiene products under the Aerie brand. It has been a staple of the fashion industry for more than 45 years, with millennials as their primary demographic. The company has locations in the United Kingdom, Hong Kong, China, Mexico, Canada, and the United States. It has its headquarters in Pittsburgh, Pennsylvania, and was established in 1977 by Jerry and Mark Silverman.

American Eagle was originally a brand owned by Retail Ventures, Inc., which also owned and operated Silverman’s menswear. By the middle of the 1970s, two of the Silverman brothers realized that they needed to expand their product lines in order to keep growing their business. As a result, American Eagle Outfitters was born. Mark Silverman was the executive vice president and COO, and Jerry Silverman was in charge of the company as president and CEO. In 1977, the first store opened in Novi, Michigan, positioning itself as a retailer of well-known leisure clothing, footwear, and accessories for men and women, focusing on products designed for outdoor activities (like camping, hiking, and mountain climbing).

The Silverman brothers made the decision to reorganize the company in 1989 by selling their other retail chains and concentrating solely on American Eagle Outfitters. However, the business’s growth following the reorganization slowed down by 1991, resulting in financial losses for the company. Since 1980, Schottenstein Stores Corp., which owned half of the chain, bought the company, creating the current market niche and beginning to sell AE private label clothing. The organization turned out to find true success and after four years disclosed its introduction with its underlying contribution of 2.3 million offers on NASDAQ under the “AEOS” image.

In 1995 and 1996, a number of new executives joined the company, resulting in another shift in the target demographic and the introduction of a signature denim line with a fit for everyone. With the launch of  “ae.com” in 1998, AE entered the digital age and became the official outfitter of  Dawson’s Creek, the most popular television show of the late 1990s. By the year 2000, AEO had entered the Canadian market and opened its first stores outside of the United States. In addition, it opened its New York Design Center in Manhattan, which continues to be the innovation headquarters of the company to this day. The adored American Eagle line of clothing is made and designed here.

The official launch of  American Eagle’s second brand, Aerie, occurred in 2006. Aerie lingerie began as a sub-brand for American women between the ages of 15 and 22. Its goal was to provide young women with a welcoming and secure environment where they could shop for bras, other undergarments, dorm wear, activewear, loungewear, accessories, and sleepwear that not only fit them well but also made them feel confident. The goal of both brands has always been to create and sell clothes that help young people feel cool and confident. What began as a sub-brand quickly evolved into a distinct concept on its own. In August 2006, the first standalone aerie store opened in Greenville, South Carolina. Later that year, two more test stores opened.

Cashmere sweaters and casual clothing for an older target audience were featured in the company’s second stand-alone lifestyle concept, Martin + Osa,  which debuted in 2006. It was aimed at men and women between the ages of 28 and 40. Additionally, it offered Fred Perry, Ray-Ban, Adidas, Onitsuka Tiger, and HOBO International products for sale. Following a failure in retail markets that resulted in AEO, Inc. incurring losses of up to $44 million, management made the announcement in March 2010 that all 28 Martin + Osa stores would be closing.

American Eagle introduced 77kids, a clothing line for children ages 2 to 10, in October 2008. American Eagle Outfitters opened its first 77kids store on July 15, 2010, in Pittsburgh’s The Mall at Robinson. Eight more stores followed in the same year. The company started out by selling only online. Throughout the fiscal year 2011, expansion continued. Children could play with interactive games and activities throughout 77kids stores, which were designed for younger children. Robert Hanson, who became CEO in January 2012, stated that 77kids had a loss after taxes of approximately $24 million on sales of $40 million in the 2011 fiscal year. American Eagle Outfitters made the announcement on May 15, 2012, that it would either sell or close all 22 77kids stores by the end of July 2012. The sale of American Eagle Outfitters’ 77 children to Ezrani 2 Corp, a company founded by Ezra Dabah, the former chairman and CEO of The Children’s Place, was completed on August 3, 2012. In 2013, Ezrani changed the store’s name to “Ruum.”

After being acquired for its signature label and brand that focuses on vintage-style collegiate apparel, Tailgate and Todd Snyder joined the AEO brand portfolio in 2016. American Eagle set its initial focus on the Big Ten and Southeastern Conference colleges in the hope of increasing its popularity among its intended audience of teenagers and college students.

On November 2, 2021, American Eagle Outfitters made the acquisition of Quiet Logistics for $350 million. On December 29, 2021, the acquisition was completed.

Jay Schottenstein was appointed interim CEO on January 22, 2014, when Robert Hanson, the company’s then-CEO, resigned. The company had 949 AEO brand stores, 97 stand-alone Aerie stores, and 67 Aerie stores that were located side-by-side in shopping malls, lifestyle centers, and street locations across the United States, Canada, Mexico, Hong Kong, China, the United Kingdom, and internationally as of January 30, 2016. In ten nations, the company had 21 franchised stores run by franchise partners.

AE’s capital structure does not include any debt and finances all its operations with equity. Between 2008 and 2009, American Eagle Outfitters reported that its total assets and liabilities had increased in value. The business suffered a decline in 2010 but recovered in 2012. The income statement also showed the same pattern.

According to AEO’s fiscal year 2021 results;

• The total net revenue increased by $1.3 billion, (or 33%, to $5.0 billion) compared to $3.8 billion in the fiscal year 2020.
• In addition to the 24% growth seen last year, the revenue of $1.4 billion increased 39% from the fiscal year 2020. After a decrease of 21% from the previous year, American Eagle’s revenue of $3.6 billion increased by 30% over the fiscal year 2020
• Gross profit of $2.0 billion rose 73% from $1.1 billion in fiscal 2020 and reflected a gross margin rate of 39.7% compared to 30.5% last year.
• Operating income of $591 million included approximately $90 million of elevated freight costs of which approximately $70 million was air freight specific to Vietnam factory closings. Approximately half of the freight costs are related to Aerie and the balance to the American Eagle brand.
• Reflecting migration back to stores, consolidated store revenue increased by 53%. Total digital revenue increased by 7%.
• Selling, general and administrative expenses decreased 160 basis points as a rate to sales versus the fiscal year 2020 due to strong revenue growth.
• EPS of $2.03. Adjusted EPS of $2.19 this year excludes $0.04 of store impairment, $0.04 of reorganization costs related to our EU license operation, other non-operating expenses, and $0.07 of non-cash interest expense on the company’s convertible notes.

Abercrombie and Fitch lawsuit.

At least three times since 1999, American Eagle Outfitters has been sued by Abercrombie & Fitch for allegedly copying its designs and advertisements. Due to the fact that similar designs cannot be copyrighted in the United States, American Eagle was able to prevail in court on every occasion. Despite this, American Eagle’s designs have since deviated from those of Abercrombie & Fitch in terms of appearance. While Abercrombie & Fitch has established itself as an internationally renowned “near-luxury” line of clothing with “preppy,” high-grade, and high-priced fashions comparable to that of Polo Ralph Lauren, American Eagle merchandise is regarded as cost-effective clothing that is “retro/vintage”. Generally, judges have said that it “would be anti-competitive” to give Abercrombie exclusive rights to market its clothing in a certain way.

In response to allegations of violations of workers’ rights at American Eagle’s Canadian distribution contractor, National Logistics Services (NLS), the textile and apparel workers’ union UNITE HERE initiated the “American Vulture” back-to-school boycott of American Eagle. CEO, James O’Donnell, clarified American Eagle’s relationship with NLS and its impact on the business on the conference call for the second quarter of 2007. He elaborated, “We owned NLS when we bought Braemar in 2000, sold NLS in 2006, and we are currently a customer of NLS… We have really no involvement at all with Unite Here and NLS”. We only deal with NLS as a customer, and I believe that some members of the public have been told that it has an impact on our business. Right now, I can assure you, it has not affected our business.”

Since the opening of its first store nearly 50 years ago, American Eagle has been a dominant player in the 15- to 25-year-old lifestyle retail market. Because of its mission to design casual, classic clothing that is inclusive, optimistic, and empowering, radiating confidence in the wearer, the company has remained at the top of its game.