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American Eagle Says Spinoff for Aerie Could Happen

A potential split of the successful intimates brand could come “maybe one day, but not today,” chief financial officer Bob Madore said in an interview on Bloomberg TV.
American Eagle Outfitters | Source: Store Appeal
By
  • Bloomberg

NEW YORK, United States — American Eagle Outfitters may spin off its highly successful Aerie lingerie brand -- but not yet.

A potential split of the successful intimates brand could come “maybe one day, but not today,” chief financial officer Bob Madore said in an interview on Bloomberg TV.

Investors' attention has turned to potential spinoffs after Gap announced about a month ago that it plans to split its Old Navy chain into a standalone company. The move provided a big, albeit temporary, stock boost and prompted calls for other apparel chains to carry out similar strategies.

Aerie, which has captured consumers from Victoria’s Secret with its body-friendly marketing, has given American Eagle a significant boost in recent quarters. Its comparable sales jumped 23 percent in the fourth quarter -- well above the namesake brand’s 3 percent growth.

“You’d have to think about it, in light of a lot of the other announcements that have come out fairly recently,” Madore said. “It’s not the right time for us.”

The underwear brand has more room to grow before any potential split, Madore said.

“They really only have a retail presence in 17 states. There’s a lot of white space out there for them to continue to grow, in addition to growing other product categories,’’ he said. Right now, the chain is focused primarily in the U.S., with a small international presence in Mexico and Canada.

“We definitely want to establish brand recognition a little heavier in the US before we venture out with Aerie internationally,’’ he said. “Expansion like areas into Europe and Asia, we’re going to wait a little while to get a little more scale and scope in the United States.’’

By Emma Chandra and Jonathan Roeder; Editor: Anne Riley Moffat

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