There’s an interesting dynamic surrounding American Eagle Outfitters. The merchandise is aimed at trendy — and often fickle — young consumers, while its ownership includes some of Wall Street’s fattest cats. Approximately 95 percent of the company’s stock is held by institutional investors ranging from investment management firm BlackRock to mutual fund operator Vanguard Group.
“American Eagle is intensely focused on developing its omnichannel platform to reach customers in every possible way,” notes Zack’s Research. “The company has been enhancing its digital portals besides investing in store fleet. As a result, both store and digital channels reported solid sales in fourth-quarter fiscal 2018.” Digital business contributed 31 percent to net revenues, giving the company its 16th straight quarter of double-digit ecommerce growth, according to Zack’s.
Both American Eagle and Aerie stores reported positive in-store comps last year, and this year the company intends to open 10-15 American Eagle units and 35-40 freestanding Aerie stores.
One thing that is apparently not in the works is a spinoff of lingerie brand Aerie into its own chain. “Maybe one day, but not today,” says CFO Bob Madore. Nodding toward Gap Inc.’s decision to spin off Old Navy as a separate company, Madore concedes, “You’d have to think about it in light of the other announcements that have come out fairly recently.” Aerie currently has a retail presence in only 17 states. “There’s a lot of white space out there for them to continue to grow, in addition to growing other product categories,” Madore says. “It’s not the right time for us.”
Aerie has been the growth engine for American Eagle while taking market share from Victoria’s Secret. In the final quarter of 2018, Aerie’s sales soared 23 percent, while parent American Eagle’s increased only 3 percent.