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American Eagle expects low single digit drop in holiday sales, announces growth strategy

By Prachi Singh

Jan 21, 2021


American Eagle Outfitters (AEO) has announced that the company expects fourth quarter adjusted operating income to exceed 95 million dollars compared to reported operating income of 0.5 million dollars and adjusted operating income of 77 million dollars last year and fourth quarter revenue is expected to decrease in the low single digits. The company separately also presented its “Real Power. Real Growth” value plan that envisages doubling Aerie to 2 billion dollars in revenue, while reigniting American Eagle for profit growth.

“Compelling holiday product and marketing, combined with a disciplined approach to promotional activity drove very strong margin results,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.

American Eagle Outfitters updates on Q4 expectations The company said in a statement that anticipated adjusted operating income growth is driven by strong margins, reflecting reduced promotions, higher full-priced selling and well-received holiday product assortments.

Fourth quarter revenue decline will be a result of store revenue declines from weak mall traffic, store closures and reduced hours related to the pandemic. Digital channel it expected to witness double-digit growth across brands. The company added that Aerie’s fourth quarter revenue is expected to increase in the high-20 percent range, while American Eagle is expected to decline in the low double-digit range, as a result of its higher store penetration.

American Eagle Outfitters announces growth plan As part of its “Real Power. Real Growth” plan, AEO targets revenue of approximately 5.5 billion dollars and operating income of 550 million dollars in fiscal 2023, with the operating margin expanding to 10 percent.

“2020 demonstrated the strength of our organization, our brands and our capabilities – and we are emerging with momentum. Today, I am pleased to provide greater transparency to our leading brands, our strategies and our long-term financial targets, aimed at creating lasting value for shareholders,” added Schottenstein.

Aerie revenue is expected to grow at a mid-20 percent compound annual growth rate to approximately 2 billion dollars, providing significant profit flow through. American Eagle revenue is expected to remain roughly flat to fiscal 2019, at approximately 3.5 billion dollars, with improved profitability.