Archive

ShareThis Page
American Eagle’s seasonal sales plan just didn’t fly | TribLIVE.com
News

American Eagle’s seasonal sales plan just didn’t fly

High school student Mike Davis recently walked out of an American Eagle Outfitters store empty handed after finding nothing new to add to his wardrobe of bootcut jeans, cargo shorts, screen T’s and polo shirts.

“I pretty much had everything. That’s the problem,” said Davis, 17.

After disappointing back-to-school sales this year and several seasons of fashion missteps, Warrendale-based American Eagle Outfitters is struggling to stay in favor among 16- to 24-year-olds, who have gravitated to lower-priced stores for casual basics and skate-theme shops that teens hope will help them stand out from the crowd.

With most of its 727 stores in America based in malls, the retailer — which also operates 111 Bluenotes/Thriftys stores in Canada — reported a 10.4 percent decrease in sales for the month of August. September sales will be released Oct. 7.

“I think it would be fair to say we’ve been disappointed with our results thus far,” said American Eagle’s chief financial officer, Laura Weil. “We were very disappointed with our back-to-school performance, but with competition being so strong and the economy being relatively soft, you have to hit all cylinders.”

Despite its reputation as a classic American clothier with broad appeal, American Eagle failed to stock up this season on enough staples like hooded sweat shirts and graphic T-shirts, one analyst said. The company found fashion denim in different washes didn’t sell as well as standard five-pocket bootcut jeans. And company officials say the vintage-wear message simply wasn’t strong enough and failed to connect with the high school and college crowd.

“Everybody, including Wall Street, thought our merchandise was on track and fashion right and we were just very disappointed that the customer didn’t respond,” Weil said.

Sarah Masterson, 18, bought a cream angora sweater for $34.99 but says she and her friends all bypassed American Eagle T-shirts because they were too loose and frumpy.

“It wasn’t as edgy,” she said.

American Eagle said it should have leveraged its name brand by using more logos on T-shirts and hoodies though both Masterson and Davis said they valued style and comfort over brand. And although the retailer promotes affordable fashion — T-shirts start at $12.50 and jeans start at $29.50 — similar items can be found at Old Navy, Aeropostale and Hollister for slightly less. Abercrombie & Fitch owns Hollister.

“I think they’re going to have a lot of competition with Hollister. It’s more affordable than Abercrombie and they have clothes like American Eagle and Abercrombie,” said Masterson, who’s transferring to Indiana University of Pennsylvania to major in business.

For the past nine weeks, American Eagle has been trying to correct its problems by presenting a more streamlined image in stores in order to compete in the crowded teen retail segment.

Next month, American Eagle plans to introduce a line of colorful sweaters and knits alongside corduroy blazers, cargos and pants that the company hopes will fit in with the current trend of combining preppy fashions with a more utilitarian look.

Truckers caps may be a hot-selling item among men but denim remains a store staple and makes up 16 percent of sales, the most in the company’s 26-year history, said Judy Meehan, director of American Eagle’s investor relations.

Dawn Stoner, a specialty retailing analyst with Pacific Growth Equities, said when sales began to slide this year, the company made last-minute changes with untested styles that didn’t resonate with the collegiate crowd. She recommends concentrating on 20-year-olds.

“They have to settle down and focus on their customer profile and be unwavering and dedicated to that, not wavering between junior apparel and follow it up with more mature offering,” Stoner said.

American Eagle wasn’t the only teen retailer who lagged during the latest back-to-school sale season. Same-store sales at competitor Abercrombie & Fitch were down 11 percent.

And it doesn’t help that the current surf-and-skate trend is boosting sales at Pac Sun and Hot Topics, which carry popular third-party labels like O’Neill and Hurley, Stoner said. Those retailers have the advantage of changing merchandise according to trends faster than one-label shops like American Eagle, which has to design, manufacture and distribute its own line, Stoner said.

Despite American Eagle’s miscalculations, the company has a chance to bounce back this holiday season because it still has broad teen appeal, said Howard Tubin, an analyst with New York-based brokerage firm Cathay Financial.

Teens still see the cast of MTV’s “Road Rules” sport American Eagle apparel and the company is planning to open stores in Hawaii and Puerto Rico with a goal of 900 to 1,000 stores in North America.

“I do believe that the brand has meaning,” Tubin said. “I believe it’s a matter of tweaking the merchandise.”


TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.