American Eagle CEO outlines plan for expansion nationwide
American Eagle Outfitters CEO Robert Hanson said store expansion nationwide and improved mobile online shopping are his top goals for the youth-oriented clothing retailer.
Hanson, who took over in January as South Side-based American Eagle Outfitters Inc.'s top executive, outlined long-term goals on Tuesday, including opening new stores in the Midwest and West and closing lower performing locations. He wants to place the retailer's Aerie intimates and AE brand stores side-by-side when possible. Another priority is adding technology to make mobile online shopping a “flagship” store experience, he said.
The retailer, which expects to report sales this year of $3.44 billion, has more than 1,000 stores in North America and plans to open five stores in Mexico in 2013. Online shopping is about 14 percent of the total.
“We are a company that skews to the East Coast,” Hanson said in an investor presentation, but “we have an opportunity to address a number of underpenetrated markets from the middle of the country to the West Coast.”
Hanson, a former Levi's executive, discussed sharpening the company's AE clothing and accessories brand, which is known especially for denim, knits, shorts and color, for a “bull's-eye, target 20-year-old” customer.
He wants to turn over merchandise at a faster rate — expanding advertising on social networks and stressing value while marking down fewer items.
The company's stock closed at $21.22, down 83 cents.
BMO Capital Markets analyst John Morris said the drop likely was because the company repeated, rather than raised, expectations for third-quarter results to be reported after Thanksgiving, and the “backdrop of a weak market.”
Hanson said the company is “pleased” with results in the latest three-month period, which is tracking close to the company's guidance previously stated at 37 to 38 cents a share.
“The update meeting was positive with no bad news,” Morris wrote in a note to investors, adding the per-share price drop is a buying opportunity.
Hanson said about 80 more outlet stores with lower-priced items could be added to the 73 AEO Factory Stores open now. Locations in the Pittsburgh area include Tanger Outlet Center in South Strabane and the Galleria at Pittsburgh Mills in Tarentum.
The AE fleet of stores has a strong presence in regional malls, with all but 21 stores profitable, but the brand is under-represented in higher-end malls and urban locations, he said.
In New York City, for example, “We're not in the Upper East Side or Upper West Side or down on Wall Street.”
American Eagle, with 13 Western Pennsylvania AE stores and four Aerie locations, is “not under pressure to close stores,” he said. But 20 to 30 lower performing stores a year could be culled from the total count, replaced by new, more promising locations, he said. In recent years, the company's annual sales have hung around the $3 billion range, said Mary Boland, who joined the company in July as chief financial officer. While 2012 sales are projected at $3.44 billion, “clearly we have opportunities” for improvement, with about a 7 to 9 percent growth rate.
E-commerce is about 14 percent of total revenue but, “We see a path to get that closer to 20 percent,” Boland said.
Hanson said shopping experience at the AE flagship stores “will be mobile and tablet driven,” adding to online shopping available on more traditional computing devices.
Onetime co-CEO Roger Markfield, now the company's vice chairman and executive creative director, will retire in early 2014, Hanson said. That will allow a transition time in which AEO will make sure it has the merchandising and market team it needs for growth.
The company soon will announce a new chief talent and culture officer.
“Outside of our brand, our talent is our most important asset,” he said.
Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or firstname.lastname@example.org.
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.
- Dow Chemical, Olin in $5B cash-and-stock deal
- Players respect coach, refuse to blame Johnston
- 2 New Kensington-Arnold candidates removed from primary ballot
- West Virginia basketball great Hundley dies at 80
- Roundup: Sunoco gas station at Pittsburgh airport to close for upgrades; Google, Johnson & Johnson team up to build robot surgeons; more
- Budget work ahead for Southmoreland School District
- Man in New Kensington standoff charged
- Rogue Catholics in Society of St. Pius X to reopen West End church
- Vandergrift Sons of America gives back to the community
- Budget work ahead for Southmoreland School District
- Credit card use reflects confidence, flat wages