The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
The divergence between American Eagle Outfitters’ brands continues to widen, with the retailer expecting its Aerie intimates line to double in size to become a $2 billion brand at the same time its namesake label stagnates.
The retailer, which will host a virtual investor meeting Thursday to lay out its long-term plan through fiscal 2023, said Aerie’s revenue will grow by more than 20 percent a year, while the American Eagle brand’s sales will be “roughly flat” from 2019 levels at about $3.5 billion.
Aerie, while smaller, has outperformed American Eagle consistently in recent years, which has fueled questions from investors about a possible spinoff in the past. The company, which has aggregated its American Eagle brand and Aerie brand’s performance in filings, said Thursday it would start to report the operating segments separately.
A representative of the company didn’t immediately provide comment.
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The differing performance between the two brands was clear in the latest quarter, which included the critical holiday period. American Eagle Outfitters said Thursday it expects its total fourth-quarter revenue to decrease by a low single-digit percentage, noting weak mall traffic and disrupted store hours because of the pandemic. The company’s main brand is expected to fall in the low double-digit range, while Aerie’s fourth-quarter revenue will rise in the high-20 percent range. It officially releases results on March 3.
American Eagle’s sales forecast for the fourth quarter fell short of Wall Street’s expectations. Analysts had seen revenue of $1.32 billion on average, suggesting a small increase from a year ago, while the company anticipates a decline.
American Eagle’s holiday update follows Abercrombie & Fitch Co.’s report last week that showed signs of a better-than-expected — though still subdued — season. While Abercrombie expects fourth-quarter sales to decrease, it narrowed its forecast to the top end of the range.
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