American Eagle Outfitters CEO outlines sales strategy
American Eagle Outfitters Inc.'s new CEO on Wednesday gave the first hints of his plan to boost flat sales and reverse "significant" profit-margin erosion, while promising a more detailed strategy later.
"We must especially turn fashion items faster," said Robert L. Hanson, who has 24 years of retail experience and has been with American Eagle for a month, after the South Side-based retailer of teen clothing reported lower profit for the three months ended Jan. 28.
Adding that he has a "bias toward lean inventory," Hanson said the company will increase marketing and work to accelerate online sales.
American Eagle plans to open 15 stores this year, primarily in outlet centers, close 20 to 30 others and remodel 100 locations, Hanson said. The retailer has 62 AE Off Campus stores in outlet centers, fewer than competitors, he said.
And this fall, fashion items meant to sell out quickly will appear in AE stores alongside well-stocked jeans, T-shirts and other basics that made AE the top teen clothing brand, Hanson said.
The retailer said yesterday that it might close some of its aerie brand intimates and loungewear stores that are underperforming. The aerie chain delivered mixed results for the holidays.
American Eagle said it took a $21 million charge for the latest quarter, primarily tied to weak results from 50 of its 158 aerie stores in the United States and Canada. The charge amounted to 7 cents a share, figuring into the company's 41 percent profit drop from a year earlier.
Net income for the latest period totaled $51.28 million, or 26 cents a share, down from $87 million, or 44 cents, reported a year ago. Sales were up 14 percent to $1.04 billion. Higher fourth-quarter sales came on markdowns needed to drive traffic, but that reduced profit.
Shares closed yesterday at $15.54, up 91.5 cents.
Hanson called aerie a great brand that's profitable overall.
"We're stepping back and looking at the opportunity to drive the growth of aerie in a thoughtful manner, moving forward," said the former global brand president for Levi Strauss Co. during a conference call.
Chief Financial Officer Joan Holstein Hilson said the company is talking with landlords and evaluating several underperfoming stores for possible closing.
The company did not name specific locations. In Western Pennsylvania, aerie stores are at Ross Park Mall, the Mall at Robinson, South Hills Village and the SouthSide Works.
Comparable brand sales for aerie were up 6 percent for the fourth quarter, compared with 10 percent for the company's AE brand. Customers bought underwear, but clothing in the stores had less appeal, the company said.
"The intimates category at aerie continues to perform well," and that's the core of the business, retail analyst Jennifer Black of Jennifer Black & Associates in Lake Oswego, Ore., said in a report. "The apparel side of the business has not done well but is targeted for improvement, creating an opportunity."
The aerie brand debuted in 2006, and items also are sold in AE stores.
For the full year, American Eagle's profit rose to $151.7 million, or 77 cents a share, up 7.9 percent from $140.65 million, or 70 cents, in 2010. Sales climbed 6 percent to $3.16 billion.
Show commenting policy
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.