American Eagle Outfitters to Close Up to 225 Stores, Bolster Aerie Brand to $2B Revenue
PITTSBURGH — American Eagle Outfitters, Inc. (NYSE: AEO) has announced plans to close hundreds of its flagship American Eagle stores over the course of the next few years, while seeking to grow the company’s more successful lingerie and active-wear brand, Aerie, into a $2 billion business.
The Pittsburgh-based company’s chief financial officer, Michael Mathias, announced plans to close 200 to 225 of the company’s 880 existing American Eagle locations over the next two to three years during a virtual investor meeting held Thursday, Jan. 21.
“Our primary focus for the next few years with American Eagle will be to build on our large cashflow base by focusing on inventory efficiency, improving merchandise margins, managing expenses and closing stores to strengthen profit flow-through,” said Mathias.
The company’s American Eagle banner anticipates roughly flat growth compared to 2019, with an expected revenue of approximately $3.5 billion.
By contrast, Aerie revenue is anticipated to grow at a mid-20 percent compounded annual growth rate. The company hopes to open 60 to 75 brick-and-mortar Aerie locations each of the next several years, with Houston and Los Angeles listed as targeted growth markets.
“Plans for the Aerie brand through 2023 include doubling revenue to $2 billion, assuming comparable sales growth in the high teens led by digital and new market expansion,” noted Mathias.
In total, American Eagle Outfitters is targeting revenue of $5.5 billion and operating income of $550 million by fiscal year 2023, with its operating margin expanding to 10 percent. Investors reacted positively to Thursday’s call, as the company’s stock price rose from $22.72 per share on Wednesday to a peak of $24.74 per share on Thursday before closing at $23.93. The stock price was $14.29 per share one year ago.
— Katie Sloan