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How American Eagle Outfitters outperformed its peers during the pandemic thanks to ‘distribution nodes,’ body positivity, and TikTok


american eagle outfitters

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The past year has been a tough one for the apparel industry, but American Eagle Outfitters Inc. is standing out from the pack. 

As the COVID-19 pandemic has upended the retail industry and sent more shoppers online, American Eagle Outfitters has leaned into its social media savvy and strong brand messaging, accelerated its plans to speed up its supply chain, and reevaluated its store base.

It has also managed to grow revenue for Aerie, its intimates, and activewear brand, in the last two quarters despite the impact of the pandemic. 

The teen-centric clothing company said during a presentation at its investor meeting on January 21 that it expects total fourth-quarter revenue to be down in the low single digits compared to the same quarter last year. In the third quarter of 2020, which ended October 31, net revenue decreased 3% to $1.03 billion. 

Normally a decrease in revenue, even a small one, is not something to celebrate. But these are not normal times — the global fashion industry saw an estimated 30% decline in revenue year-over-year in 2020, according to a McKinsey report written in partnership with the publication Business of Fashion.

Meanwhile, Aerie’s revenue is expected to be up in the high 20% range for the fourth quarter. That level of growth is exceedingly rare in a sector that has been battered by store closures and guest capacity limits during the pandemic. Even in the first quarter of 2020, during which the brand’s stores were largely closed due to the pandemic, Aerie’s revenue decreased only 2%. 

The company also unveiled its plans to effectively double Aerie’s sales and grow it into a $2 billion brand. Aerie has been a large part of American Eagle Outfitters’ recent success. It has a strong brand based in a message of self-empowerment that resonates with young consumers. 

But both of American Eagle Outfitters’ brands happen to focus on clothing that is casual and comfortable, which as a category has done less poorly than other parts of the apparel sector during the pandemic. According to data from The NPD Group, total apparel sales fell about 19% in 2020, but sales of sweatpants grew 17%, sleepwear grew 6%, and sports bras grew 10%.  

The company has jumpstarted its digital capabilities as well. American Eagle Outfitters’ e-commerce business grew to almost $1.7 billion in sales in 2020 and the company made adjustments to its supply chain and distribution strategies that have allowed it to be more efficient with its inventory and rely less on promotions.  

Social media prowess and a brand that resonates with teens

While Aerie’s skyrocketing growth has been a leading topic in conversations about American Eagle Outfitters for a while, the company’s namesake brand still has a lot of cachet on its own, analysts say. 

“I wouldn’t underestimate the power of the American Eagle brand,” UBS analyst Jay Sole said. “The American Eagle brand is one of the most powerful teen-focused brands in the country.” 

Sole said the firm’s research has indicated that American Eagle has strong global potential as well. Founded …read more

Source:: Business Insider

      

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