American Eagle to close more stores, but still sees value in them
American Eagle Outfitters plans to get “more aggressive” in closing stores throughout the country, but the South Side-based apparel company still sees value in its brick-and-mortar stores.
This year, American Eagle plan to close between 25 and 40 store locations, executives said on the company’s first-quarter earnings call with analysts Wednesday.
Meanwhile, the retailer is “selectively opening” new Aerie stores and a handful of American Eagle stores in the U.S. and Mexico, executives said. Internationally, the company plans to open 45 and close two licensed store locations.
“We are looking to get more aggressive with store closings,” said Charles Kessler, global brand president. “We’ve been experimenting with closures of stores where we are able to really track sales migration and really analyze the relationship of the stores to our digital business.”
Still, the store base is “the best place for us to drive new customer acquisitions” and 80 percent of online returns are taken back to stores, Mr. Kessler noted.
“There’s a very close interplay between brick-and-mortar and digital,” he said. “Although you may be seeing continued traffic declines in stores and comp decreases in certain stores, those stores are still very profitable.”
“We want to do it in a smart way so when we do close a store we pick up those sales and pick up those profits. We just don’t want to close stores to close stores,” he said.
American Eagle’s stock closed at $11.05 Wednesday, down 14.7 percent.
American Eagle’s profit fell during the first quarter, reporting net income of $25.2 million, or 14 cents per share, compared to $40.4 million, or 22 cents per share, in the same period last year.
Consolidated comparable sales, a key measure for retailers that tallies only sales from stores open at least a year, were up 2 percent, following a 6 percent increase last year.
American Eagle reported total revenue rose 2 percent to $762 million from $749 million during the same period last year.
In the first quarter, the South Side-based teen retailer reported charges of $5.4 million, related to severance and related charges due to corporate restructuring. The company did not go into details about cutting personnel.
The charges also include an initiative to explore the closure or conversion of stores in Hong Kong, China and the United Kingdom to licensed partnerships.
“The first-quarter results reflected mall traffic headwinds, especially early in the quarter, with improved trends over Easter and a strong digital business throughout,” said Jay Schottenstein, CEO.
“As we look ahead, we are taking the right steps to improve our results and adjust our business for today’s rapidly evolving retail environment,” Mr. Schottenstein said.