American Eagle Outfitters Inc. is riding high, as signs of pent-up demand from the pandemic begin to play out across the fashion industry.
The retailer — which includes the American Eagle, Aerie, Offline by Aerie, Todd Snyder and Unsubscribed brands — revealed quarterly earnings Wednesday after the market closed, improving on top-line revenues at the AE and Aerie brands, while surpassing more than $1 billion in total company revenues during the first quarter.
Activewear brand Offline by Aerie was launched during the pandemic.
Courtesy Photo
Perhaps most impressive was innerwear brand Aerie, where sales nearly doubled, year-over-year. Last quarter, the brand exceeded more than $1 billion in annual revenues. Now the company is setting its sights on the $2 billion mark in the next three years.
“This brand is amazing. We’re going to hit that $2 billion mark prior to 2023, that’s for sure,” Jennifer Foyle, chief creative officer of American Eagle Outfitters and global brand president of Aerie, told WWD. (Jay Schottenstein, executive chairman and chief executive officer of American Eagle Outfitters, said it might be as soon as the next 12 months.)
“We keep on accelerating and we keep on delivering more to our customers, because they’re asking for more,” Foyle said.
Swimwear had its best quarter ever at Aerie, according to Jennifer Foyle, chief creative officer of American Eagle Outfitters and global brand president of Aerie.
Courtesy Photo
That includes things like bras, underwear, leggings and swimwear, all of which were strong during the quarter. “Really all of our business is fired,” she said. “Every category in Aerie has double-digit comps, if not triple digits. Swim had its best year ever and we’re not even in spring break yet. What an incredible category to be a business in. And launching [Offline] during the pandemic, I think, really gave us a competitive advantage.”
She’s talking about the activewear boom that shows no signs of slowing.
But it’s not just Aerie. Foyle said the American Eagle and Unsubscribed brands also “shined” during the quarter, beating expectations. At American Eagle, denim, fleece, graphics and dresses were trending.
“We’re going to be playing into those categories even more so as we continue through the season, leveraging it into back-to-school,” she said. “That’s our job: to surprise and delight our customers. And from the momentum that we’ve seen, the first-quarter momentum, the opportunity in American Eagle to outfit and dress him and her from head to toe is endless.
“And of course we can’t talk about this without talking about our incredible product,” Foyle continued. “I think the product just gets better with age. And in doing so, when we focus on quality and product, we’re able to pull back our promotions.”
That helps explain why total company revenues increased 17 percent to $1.03 billion during the three-month period ending May 1, compared with more than $886 million in 2019’s pre-pandemic first quarter, or nearly $552 million last year.
By brand, American Eagle’s revenues were nearly $728 million, up from $724 million in 2019, or $390 million in 2020. Aerie’s revenues were more than $297 million during the quarter, up from $157 million in 2019, and nearly $155 million in 2020.
Total company digital sales also surged during the quarter, up 57 percent, compared with 2019. Broken down, that’s a 158 percent increase at Aerie and 20 percent bump at American Eagle.
The company logged $95.4 million in profits during the quarter as a result, up from $40.7 million in 2019’s first quarter, and a loss of $257 million last year in the middle of the pandemic.
And Schottenstein added, when speaking to WWD, “We’re still in the pandemic. We’re not over it. But we’re very optimistic. Things are getting better. More people are getting the vaccine. Hopefully when it comes to back-to-school, the students will all be vaccinated.”
As for the most recent results, Schottenstein pointed out that excluding Canada — where stores were closed during the quarter because of government lockdowns — U.S.-based American Eagle stores comped positive during the quarter, compared with 2019’s pre-pandemic backdrop.
“Which is a good story, because a lot of people are talking about when their stores are going to start comping positive compared to 2019 and we did it in the first quarter,” he said.
While U.S. store traffic increased, total North American store traffic was flat in the first quarter, compared to 2019, thanks to COVID-19 related traffic pressures and store closures in Canada.
The retailer ended the quarter with 1,074 stores, including 13 new Aerie units, one new Offline and one new Unsubscribed store, which opened during the quarter. Schottenstein said there’s also talk of opening several Todd Snyder stores around the country in 2022.
“[Stores] will always be relevant,” he said. “How? They’ll evolve. Everything evolves. Stores aren’t going to die. How do you establish new brands in the future without people seeing it first, to really understand it? The objective is to make sure that American Eagle is in the best locations in the country and the most productive locations.”
Foyle added that when the company enters a new market, they see a halo effect, or increased digital penetration in the same area.
“Then we really get that omni shopper,” she explained. “That’s a really nice recipe and one that gives us a lot of confidence to test and scale.”
As for the company’s store mask policy as vaccines continue to roll out around the nation, the CEO said it will likely be based on an honor system for those who have been vaccinated.
“The way it’s looking right now — this is not finalized, but it probably will be the policy — is that if you’re vaccinated, and the science says if you’re vaccinated you can’t spread it and you can’t get it, those associates will have the option to whether wear a mask or not wear a mask. Those associates that are not vaccinated will have to wear a mask,” Schottenstein explained. “And then to the customers, when they come in we’ll say, if you’re not vaccinated please wear a mask.”
American Eagle Outfitters did not provide guidance for the year, but ended the quarter with $792 million in cash and short-term investments and nearly $330 million in long-term debt.
Shares of American Eagle Outfitters, which closed up 5.74 percent to $35.17 apiece Wednesday, are up nearly 247 percent.
By: kellieaell
