American Eagle Closing Up to 225 Stores

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American Eagle Outfitters Inc. plans to close between 200 to 225 stores at its core brand, while it hatches a plan to get Aerie to $2 billion in revenues by 2023.

The core American Eagle brand operates about 880 stores, about 95 percent of which are four-wall positive, according to chief operating officer Michael Rempell. After the closures, the brand will have between 600 to 700 locations across the U.S. and Canada, with average lease terms of 2.8 years. Rempell, who spoke at an investor day presentation on Thursday, said the clothing company plans to speed up store closures, negotiate rent reductions and use industry-wide closures as a springboard into desirable locations. And while it plans for a smaller American Eagle footprint after 52 locations were shuttered last year, Rempell said the company is also looking at short-term lease renewals while leaning into smaller-format stores.

Despite all the changes on the brick-and-mortar front, Rempell said stores remain an important vehicle for customer acquisition, engagement and retention. Aerie, which began as a digitally native brand, is looking at reaching 550 locations by 2023, he said, up from 342 now.

In just six months, the retailer opened regional hubs for greater agility that has driven greater efficiencies, like two- to threefold improvements in store replenishment times, thus enhancing in-stock positions. AEO Inc. offers curbside pickup, buy online and pick up in store, buy online and ship from store, ship from store to door and alternative payment options. It’s currently testing two pilots in customer self-checkout and same-day delivery.

The company’s new “Real Power. Real Growth.” plan aims to reignite the core brand for profit growth.

Chief creative officer Jen Foyle, who doubles as Aerie’s brand president, said the American Eagle brand is “a bit under appreciated.” After posting $3.5 billion in 2019 revenues, it’s expected to report $2.7 billion in 2020, a dip due to Covid-19. Though it has always had a strong cash flow, margins aren’t are what they once were, she said, and the three-year plan to refresh the brand DNA aims at strengthening the point of view. The company will continue to leverage its dominance in jeans, while optimizing inventory and right-size the store fleet.

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