American Eagle Outfitters, Inc. (AEO) is embarking on an ambitious growth plan for its Aerie intimates and lifestyle brand. The Pittsburgh-based fashion retailer aims to double Aerie’s revenues to $2 billion by fiscal 2023 as part of its new “Real Plan. Real Growth.” strategy. At the same time, AEO plans to return its flagship American Eagle brand to profit growth and reorganize its physical store network.

To achieve these goals, AEO will capitalize on its customer-focused capabilities and enhance its return on investment discipline. The company will also prioritize talent development, culture, and purpose. AEO projects that Aerie’s revenues will grow at a mid-20% compound annual growth rate over the next three years. However, American Eagle’s sales are predicted to remain flat at around $3.5 billion, but with improved profitability.

AEO’s CEO and chairman, Jay Schottenstein, is optimistic about the company’s prospects. He believes that the rapid pace of change and innovation in 2020 has created more opportunities for AEO than ever before. Schottenstein is confident in the strength and momentum of the organization, its brands, and its capabilities.

In order to optimize its retail footprint, AEO plans to close 200 to 250 stores over the next three years, primarily in malls. Simultaneously, the company intends to expand Aerie’s physical presence by opening 50 additional stores, bringing the total to around 400 by the end of 2021. By the end of 2023, AEO aims to have between 500 and 600 Aerie locations.

AEO provided its financial outlook for the fourth quarter, anticipating high-20% growth in Aerie’s sales, while predicting a low double-digit decline in revenue for American Eagle. Overall, the company expects a low-single-digit decrease in quarterly revenues, with adjusted operating income surpassing $95 million, driven by improved margins.

The ongoing Covid-19 pandemic has had a negative impact on AEO’s physical stores, resulting in weak mall traffic, temporary closures, and reduced operating hours. However, the company has reported strong digital sales throughout the quarter. AEO, due to its higher store penetration, has been more vulnerable to these challenges, primarily within the American Eagle brand.

AEO is set to release its full fourth-quarter and fiscal 2020 financial results on March 3, 2021. With its growth strategy and focus on Aerie, the company aims to position itself for long-term success in the continually evolving retail landscape.

Useful Links:
1. American Eagle Outfitters Official Website
2. Aerie Official Website