American Eagle Rises on Strength of Aerie Lounge-Wear Brand
(Bloomberg) -- American Eagle Outfitters Inc.’s Aerie line continues to carry the company, with the intimates brand posting a sharp climb in revenue, even as the namesake American Eagle line took a page from rival retailers and posted tumbling sales in the summer quarter.
- Aerie’s revenue in the period ended Aug. 1 climbed 32%, while American Eagle brand revenue slipped 26%, accelerating a divergence already apparent last year. Overall, the parent company reported net revenue for the second quarter that beat the average analyst estimate.
- The results underscore the ways retailers are turning to their strongest business lines as the coronavirus pandemic upends the industry. Demand for loungewear has been a bright spot in an otherwise challenging period for apparel sales.
- The stark divide between the two brands has had some investors in the past consider if a spin off of the high-performing Aerie line would be beneficial. The split was especially pronounced on the digital front, where Aerie grew 113% and AE rose just 21% during a quarter when many more Americans were shopping from their couches.
- American Eagle said on a conference call that “uncertainty and delayed starts to back to school” have hurt sales during the period. The retailer is trying to extend its back-to-school sales out later in the year, while simultaneously pulling some holiday sales earlier.
- Chief Executive Officer Jay Schottenstein said the retailer improved its business from the first quarter. Aerie largely helped that process and Schottenstein called its performance “simply outstanding.”
- Jennifer Foyle, who led the fast-growing Aerie line, was promoted to American Eagle’s chief creative officer, the company said in a separate statement. She will continue to oversee Aerie and also merchandising, design and marketing for the company’s namesake brand.
- The shares climbed as much as 4.3% to $13.77 in New York. American Eagle fell 10% this year through Tuesday.
- Read the company’s statement here
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