American Eagle Outfitters

American Eagle Outfitters
Public
Traded as NYSE: AEO
Industry Retail
Founded 1977
Headquarters 77 Hot Metal Street Southside Works, Pittsburgh, Pennsylvania, United States
Number of locations
 929 American Eagle Outfitters
148 Aeries
Area served
 Worldwide
Key people
 Jay Schottenstein (Chairman and interim CEO)
Products Apparel, accessories, lingerie, personal care, footwear
Revenue Increase US$3.160 Billion (FY 2011)[1]
Decrease US$231.1 million (FY 2011)[1]
Increase US$151.7 million (FY 2011[1]
Total assets Increase US$1.951 billion (FY 2011)[1]
Total equity Increase US$1.417 billion (FY 2011)[1]
Number of employees
 39,600 (Jan 2012)[1]
Website American Eagle Outfitters

American Eagle Outfitters is an American clothing and accessories retailer, headquartered in the Southside Works Neighborhood of Pittsburgh, Pennsylvania. It was founded in 1977 by brothers Jerry and Mark Silverman as a subsidiary of Retail Ventures, Inc., a company which also owned and operated Silverman's Menswear. The Silvermans sold their ownership interests in 1991 to Jacob Price of Knoxville, TN.[2] American Eagle Outfitters is the parent company of Aerie and formerly of 77 kids.[1]

The brand targets 15- to 25-year-old males and females, with 911 American Eagle Outfitters stores and 158 Aerie stand-alone stores.[1] In 1977, the first American Eagle Outfitters store opened in Twelve Oaks Mall in Novi, Michigan.[3]

Some of the brand's more popular products are low-rise jeans, polo shirts, graphic T-shirts, henley shirts, boxers and briefs, outerwear, and swimwear.[4]

Development

American Eagle Outfitters, Green Oak Village Place
An American Eagle Outfitters store in the mall SM Aura Premier in Bonifacio Global City, Metro Manila, Philippines
American Eagle Jeans Worn by a Young Woman

American Eagle's beginning was with the Silverman family, which owned and operated Silvermans Menswear. By the mid-1970s two of the Silverman brothers—from the third generation of Silvermans in the family business—were running the family business. Jerry Silverman, was the president and CEO, while his brother Mark Silverman, served as executive vice-president and COO. The Silverman brothers were convinced they needed to diversify their product offerings in order to continue growing their company. They also recognized that the addition of new family owned chains would then enable them to operate more than one store in the same mall. Their first attempt was to open American Eagle Outfitters in 1977, positioning it as a proprietor of brand-name leisure apparel, footwear, as well as accessories for men and women, emphasizing merchandise suited for outdoor sports, such as hiking, mountain climbing, and camping.[5] Stores were set up in shopping malls and a catalog was established. The chain grew for much of the 1980s. In 1989, the owners decided to refocus their business on American Eagle Outfitters, selling their other retail chains. At that time, there were 137 American Eagle Outfitters stores including 37 in the United States.

Despite the plans for quick growth after the reorganization, American Eagle Outfitters opened only 16 new stores by 1991 and the company was losing money. At this point, the Schottensteins, who had been 50% owners of the chain since 1980, bought out the founding Silverman family's interest. This change in leadership resulted in American Eagle finding its present niche: casual clothing for men and women selling private label clothes. AE opened the first Canadian store in 2001.

When the company began trading on the NASDAQ stock exchange in the second quarter of 1994, it had 167 stores and a healthy cash flow. With the cash infusion from the IPO, the company opened more than 90 new stores within the next year. Several new executives joined the company in 1995 and '96, leading to another change in the target demographic. The company now wanted to reach more women and focus on people between the ages of 18 and 32. The strategy worked, and over the next five years, revenues quintupled to $1 billion by 2000.[2] As of January 28, 2012, American Eagle operated 911 American Eagle Outfitters stores, 158 aerie stand-alone stores and 21 77kids stores. The company also had 21 franchised stores operated by franchise partners in 10 countries.[1] On January 22, 2014, then-CEO Robert Hanson stepped down[6] and Jay Schottenstein became interim CEO.[7]

Finances and operations

On March 15, 2005, The company adjusted its accounting of rent expenses and construction allowances after the Securities and Exchange Commission noted that a number of companies had been improperly logging these items.[8] Due to "disappointing product execution in the women's category", American Eagle posted only a 3% gain in the 2013 second quarter profits and the stock price dropped.[9]

Corporate and headquarters

American Eagle Outfitters Headquarters

In mid-2007, American Eagle Outfitters moved its headquarters from Warrendale, Pennsylvania to a more urban location at the SouthSide Works complex in Pittsburgh. The cost of the buildings and adjacent property was approximately $21 million (excluding interior finishing and additional construction costs). The addresses of the buildings are "19 Hot Metal Street" and "77 Hot Metal Street", with the numbers symbolizing the first store opening in 1977. The facilities of the Southside Works Campus include a Private Garage, a Lab Store for each brand, Photo Studio and in-house Cafeteria. Other offices are located in NYC (Design and Production).[10]

Staffing partnership

In June 2008, the company signed an exclusive staffing agreement with JBCStyle. This agreement encompassed all of American Eagle Outfitters' freelance staffing needs in New York City as well as any outsourced permanent search. The company has opted to engage JBCStyle's sister Company Jonathan Beth Consultants to manage payroll for all corporate hourly employees. American Eagle Outfitters has renewed its agreement with JBCStyle for two subsequent years.

Franchise agreement

In June 2009, the company signed the franchisee agreement with M. H. Alshaya, one of the leading retailers of the Middle East.[11] The agreement will see the introduction of the first stores outside the North American market, with the first two opening in Dubai and Kuwait on March 16 and March 25, 2010, respectively and a store which opened on October 15, 2011 in Kaslik near Beirut, Lebanon, another store opening followed in June 2012 in Hamra Street, Beirut.

Stores and other brands

Items are placed on white wooden shelving, tables, or clothes racks. The clothes in high-volume stores are hung on wooden hangers, and lower-volume stores have basic black hangers. There are also usually sofas/chairs in the back of the store, usually along with a flat screen television. The floors are typically wood or concrete. The theme and displays change based on seasonal lines and promotions. Music is played at a quiet volume to cater to older people.

aerie

Aerie store in the SouthSide Works area of Pittsburgh.

In February 2006, American Eagle launched the aerie lingerie sub-brand, targeting the American 15- to 21-year-old female demographic segment.[12] In addition to lingerie such as a wide variety of bras and other undergarments, the aerie line also sells dormwear, active apparel, loungewear, accessories and sleepwear. What started as a sub-brand quickly became a standalone concept in its own right, featuring a complete fitness line, called aerie f.i.t. The aerie brand is sold in American Eagle Outfitters stores, on-line through the American Eagle Web site, and in stand-alone aerie retail stores. The first stand-alone aerie store opened in August 2006 in Greenville, South Carolina[13] and was followed by two more test stores later that year. As of December 2010, there are currently 147 stand-alone aerie stores in the United States and in Canada.[14]

Martin + Osa

The company's second stand-alone lifestyle concept, launched in 2006 and targeted men and women from 28 to 40 years of age.[15] It featured cashmere sweaters and casual clothing for an older target audience. They also sold products by Fred Perry, Ray-Ban, Adidas, Onitsuka Tiger, and HOBO International. In March 2010, management announced that all 28 Martin + Osa stores would be closed, after a failed attempt at success in retail markets, causing AEO, Inc. to lose up to $44 million.[16][17]

77kids

In October 2008, American Eagle released and launched 77kids, a line of clothing aimed at children from two to ten years of age.[18] Initially an on-line only concept, AEO opened its first 77kids store on July 15, 2010, in the The Mall at Robinson in Pittsburgh, PA,[19] and eight others followed that year. Expansion continued throughout FY2011. 77kids stores, meant to be a fun shopping experience for younger children, featured interactive games and activities throughout the stores that children could play with while shopping.

American Eagle Outfitters announced on May 15, 2012, that it would sell or close all 22 of the 77kids stores by the end of July 2012.[20] Robert Hanson, who became CEO in January 2012, said 77kids had a loss after taxes of roughly $24 million on sales of $40 million in the 2011 fiscal year. On August 3, 2012, American Eagle Outfitters completed the sale of its 77kids to Ezrani 2 Corp, a company formed by Ezra Dabah, the former Chairman and CEO of The Children's Place.[21] Ezrani renamed the stores to "Ruum" in 2013.[22]

International Expansion

American Eagle opened its first Canadian store in 2001, followed by a store in San Juan, Puerto Rico. In 2010, AEO opened stores in Kuwait, Riyadh, and Dubai. A store in Kaslik near Beirut, Lebanon, was opened on October 15, 2011. A store in Cairo, Egypt, opened in late 2011. In September 2011, two stores opened in Moscow, Russia. Its first store in Jordan opened in November 2011 in the brand-new Taj Mall. Its first store in Tokyo, Japan opened on April 18, 2012. The first store in Tel Aviv, Israel, opened in February 2012,[23] after the Israeli-based clothing retailer FOX signed a contract with AEO. Currently, there are also stores in Beijing, Shanghai, and Hong Kong, as well as in Warsaw, Poland.[24] American Eagle Outfitters opened its first store in the Philippines in March 2013.[25]

American Eagle is also opening stores in Mexico. The first opened in Mexico City at Fashion Mall Perisur on February 20, 2013 and at Centro Santa Fe On June. Another is scheduled to open in Guadalajara later in 2013 at Fashion Mall Galerías Guadalajara.[26] In 2014 the company financed the rescue and renovation of the Jardín Edith Sánchez Ramírez pocket park in Mexico City.

American Eagle is also set to expand to the United Kingdom in November 2014. It plans to open stores at Westfield London, Westfield Stratford City, and Bluewater.[27] The Westfield London store will open on 14 November 2014, the Westfield Stratford City store will open on 17 November 2014, and the Bluewater store will open 19 November 2014. [28]

New American Music Union

American Eagle was the primary sponsor of New American Music Union, a music festival at SouthSide Works in Pittsburgh on August 8 and 9, 2008.[29] The concert featured Gnarls Barkley, Spoon, The Raconteurs, and Bob Dylan and his band.[29] The festival, which had been planned as an annual event, did not return for a second year because American Eagle had moved away from using music as a marketing tool.[30]

Controversies

Strike

In 2004, textile and apparel workers union UNITE HERE launched the "American Vulture" back-to-school boycott of American Eagle[31] in protest of alleged workers' rights violations at the company's Canadian distribution contractor National Logistics Services (NLS). On the 2007 second-quarter conference call,[32] CEO James O'Donnell clarified the American Eagle's relationship with NLS and its effect on business. He explained,

“ We owned NLS with the acquisition of Braemar back in 2000, and we subsequently sold off NLS in 2006, and we are currently a customer of NLS... We have really no involvement at all with Unite Here and NLS. Our only involvement with NLS is basically as a customer, and there have been some allegations made, I think, to some of, to the public about it affecting our business. I can tell you right now it has not affected our business. ”

Abercrombie & Fitch lawsuits

Since 1999, Abercrombie & Fitch has sued American Eagle Outfitters at least three times for allegedly copying its designs and its advertisements. On all occasions, American Eagle prevailed in court under the statement that A&F cannot stop American Eagle from presenting similar designs, since such designs cannot be copyrighted in the United States. Nevertheless, American Eagle clothing designs have since trended away in appearance from Abercrombie & Fitch designs. The merchandise offered by American Eagle is considered to be "retro/vintage" cost-efficient clothing, whereas Abercrombie & Fitch merchandise has become an internationally known "near-luxury" line of clothing with "preppy", high-grade, and high-priced fashions, on the same level with that of companies such as the Polo Ralph Lauren company.[33] Judges have generally ruled that giving Abercrombie exclusive rights to market its clothing in a certain way "would be anti-competitive."[34]

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 "American Eagle Outfitters, Form 10-K, Annual Report, Filing Date Mar 15, 2012" (PDF). secdatabase.com. Retrieved Jan 5, 2013.
  2. ↑ 2.0 2.1 History of American Eagle Outfitters, Inc. – FundingUniverse. Fundinguniverse.com. Retrieved on 2013-07-23.
  3. ↑ [name=http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-history]
  4. ↑ http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzc4ODQ0fENoaWxkSUQ9Mzc4MTEwfFR5cGU9MQ==&t=1
  5. ↑ "American Eagle Company History".
  6. ↑ Karr, Arnold J. (22 January 2014). "Robert Hanson Exits American Eagle". WWD. Retrieved 22 January 2014.
  7. ↑ Zaccagnini, Kristen (22 January 2014). "American Eagle Outfitters Names Jay Schottenstein Interim CEO". Market Watch by the Wall Street Journal (reprinting BUSINESS WIRE). Retrieved 22 January 2014.
  8. ↑ "American Eagle to restate results".
  9. ↑ Young, Vicki M. (21 August 2013). "American Eagle Posts 3% Gain in Q2 Profits". WWD. Retrieved 21 August 2013.
  10. ↑ American Eagle Outfitters - Investor Relations - Press Release
  11. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date May 29, 2009". secdatabase.com. Retrieved Jan 6, 2013.
  12. ↑ Moin, David (26 Feb 2006). "American Eagle’s Strategy for ‘aerie’ Intimates". WWD.
  13. ↑ "American Eagle Outfitters Introduces New Line of Dormwear and intimates" (Press release). PRNewswire. 2006-08-17. Retrieved 2009-03-10.
  14. ↑ "American Eagle Outfitters - Investor Relations - Press Release". Phx.corporate-ir.net. Retrieved 2011-11-25.
  15. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date Oct 24, 2005" (PDF). secdatabase.com. Retrieved Jan 6, 2013.
  16. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date Mar 9, 2010" (PDF). secdatabase.com. Retrieved Jan 6, 2013.
  17. ↑ "American Eagle to open Martin + OSA store in Dallas". Dallas Business Journal. 2006-01-03.
  18. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date Nov 7, 2008" (PDF). secdatabase.com. Retrieved Jan 6, 2013.
  19. ↑ "77kids by american eagle Launches E-Commerce Web Site Offering "Kid Cool" Clothing and Accessories" (Press release). BusinessWire. 2008-10-23. Archived from the original on 2 December 2008. Retrieved 2008-11-28.
  20. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date May 24, 2012". secdatabase.com. Retrieved Jan 6, 2013.
  21. ↑ "American Eagle Outfitters, Form 8-K, Current Report, Filing Date Aug 9, 2012" (PDF). secdatabase.com. Retrieved Jan 6, 2013.
  22. ↑ "American Eagle's 77kids stores to reopen under Ruum American Kids Wear name this month".
  23. ↑ "American Eagle coming to Israel - Israel Business, Ynetnews". Ynetnews.com. 1995-06-20. Retrieved 2011-11-25.
  24. ↑ December 21, 2010 (2010-12-21). "American Eagle Taking Flight to Japan - Specialty Stores - Retail". WWD.com. Retrieved 2011-11-25.
  25. ↑ "American Eagle Outfitters opens first PH store". ABS-CBN News. Retrieved July 10, 2013.
  26. ↑ American Eagle en México: una posibilidad a corto plazo - Moda - Masaryk.tv | My Web Lifestyle. Masaryk.tv. Retrieved on 2013-07-23.
  27. ↑ Ruddick, Graham. "American Eagle confirms UK arrival". Telegraph. Telegraph. Retrieved 7 November 2014.
  28. ↑ "@AEO_UK". Twitter. American Eagle UK. Retrieved 7 November 2014.
  29. ↑ 29.0 29.1 Mervis, Scott (August 7, 2008). "Cast of American Eagle's New American Music Union festival set to soar on the South Side". Pittsburgh Post-Gazette.
  30. ↑ Mervis, Scott (December 31, 2009). "The year in (local) rock". Pittsburgh Post-Gazette.
  31. ↑ "www.americanvulture.org". www.americanvulture.org. Retrieved 2011-11-25.
  32. ↑ American Eagle Outfitters F2Q07 (Qtr End 8/4/07) Earnings Call Transcript - Seeking Alpha
  33. ↑ "American Eagle Wins Abercrombie & Fitch Lawsuit in U.S. Court of Appeals" (Press release). PR NewsWire. 2002-02-18. Archived from the original on 2 December 2008. Retrieved 2008-11-30.
  34. ↑ "Abercrombie's Lawsuit Against Rival Dismissed". Los Angeles Times. 1999-07-16. Archived from the original on 1 December 2008. Retrieved 2008-11-30.

External links