Teen apparel retailer American Eagle Outfitters Inc. reported a higher-than-expected rise in quarterly sales and profit as demand for its brands remained resilient in a grim retail environment. Comparable sales of the company's Aerie brand, which sells intimate apparel for women, jumped 32 percent in the first quarter, swiftly bypassing the 14.9 percent rise that analysts had predicted. The recent revenue report is particularly striking as similarly situated brands have struggled significantly in recent quarters under the weight of the market's fast fashion giants. Unlike its rivals, however, American Eagle has focused its efforts on a number of elements within its business to ensure it isn't left behind in the market of evolving young consumers.
American Eagle was founded in 1977, opening its first store in the Twelve Oaks Mall in Novi, Michigan and initially focusing on outdoor-sports apparel and equipment. It later recast itself as a clothing retailer with a collegiate flair and went public in 1994.
Unlike its struggling rivals, such as Aeropostale, which very recently filed for Chapter 11 bankruptcy, American Eagle has responded faster to changing fashion trends, thereby, slowly winning back young shoppers, who have flocked to fast-fashion companies, such as Forever 21, Zara and H&M. The Pittsburgh-based company, which has been closing stores and expanding digital operations as it built its way back from a near two-year sales slump, has also focused on boosting its margins by cutting down on promotions and keeping its inventory in check. The retailer also has been able to rely less on discounts (due to the existence of less unsold merchandise) while it jumps on emerging trends, something only its fast fashion counterparts have been successful in doing.
However, aside from purely business model-focus tactics, the retailer's garments are proving enticing for consumers. According to Bloomberg, "American Eagle is capitalizing on demand for its denim." Consumers "love our jeans,” Chad Kessler, global brand president for the company’s namesake brand, said during a conference call on Wednesday. “As we grow, the denim leadership we have in the United States, we fully anticipate having that type of leadership worldwide.”
Another source of growth: the company's Aerie brand. Strong apparel collection and marketing campaigns are driving more traffic and new customers to Aerie, said Jennifer Foyle, global brand president of Aerie. The company launched the Aerie Real campaign in 2014 - complete with ads that use photos of models that are not airbrushed - a move aimed to reaching millennials, in particular.
"We had a creative moment where the team got together, and we just said, 'really, what's happening today with millennials and the next generation?'" Foyle said last summer. "And we really felt like girls today are just more independent and stronger than ever. We just knew that it would really resonate with this generation." And she was right. "That category (Aerie), we posted positive double-digit, growth across major businesses including bras, undies, apparel," Foyle said on a post-earnings call.
And at least two new hires suggest that the retailer is only beginning to gain momentum. On Wednesday, the company announced that Kyle Andrew, a formed Kate Spade executive, will join as its chief marketing officer. This marks American Eagle's second big hire this month. In early May, the retailer announced it had hired Peter Z. Horvath as chief global commercial and administrative officer.