Last week, American Eagle Outfitters Inc. (AEO) guided first quarter expectations to over $1 billion in gross sales. It’s optimistic information for any retailer working to rebound from losses accrued in the course of the pandemic, not to mention one that focuses on some of the ostracized clothes throughout quarantine: the traditional blue jean.
Behind this denim rejuvenation, based on AEO executives, is pent-up demand for pre-pandemic trend and the much-touted new denim cycle. Echoing Levi Strauss & Co. president and CEO Chip Bergh’s latest feedback concerning the jeanswear class biking out of its decades-long skinny jean part and into one which requires wider matches, Jennifer Foyle, AEO chief inventive officer, mentioned the American Eagle (AE) model is seeing a particular shift into looser ladies’s denim shapes, similar to flare denims.
It’s a change that Foyle likened to denim’s final cycle into skinny, throughout which she was at competitor Gap. “I definitely have been there and have experience in that shift and that transition. So, I’m pretty excited about what we’re about to face,” she mentioned throughout a name concerning the quarter.
The one caveat now on this new cycle is that demand for consolation is at an all-time excessive, however Foyle isn’t involved about what which will imply for AE’s denim collections. “Comfort is at the forefront of everything we do,” she mentioned. “Our jeans are the most comfortable jeans.” The model’s “great results” in each its males’s and girls’s denims companies are indicative of this. “I think it speaks volumes for this time period where everyone assumed that we were only selling sweatpants. We really had a nice run in denim as well,” Foyle mentioned.
AE’s fourth quarter’s outcomes sequentially improved from the third quarter. With continued stress on shops, AE’s income declined 9 %, but digital grew 20 %, and total adjusted working revenue elevated 29 %. “We ran a very healthy business, and that remains a major priority as we look to the future,” mentioned Jay Schottenstein, AEO chairman and CEO.
Schottenstein added that “our leading jeans franchise was yet again a standout in the quarter” regardless of decreasing vacation promotions. For spring, nonetheless, the model is dialing up the advertising for its denim vary with the “Jeans Are Forever” marketing campaign that includes stars of the hit Netflix present “Outer Banks.” AE additionally launched a brand new revolutionary procuring expertise in partnership with Snapchat.
“We are really excited about this launch as we continue to introduce new ways to fuel customer engagement,” Schottenstein mentioned.
New knowledge by UBS retail estimates that American Eagle has “strong leverage” to learn from shoppers’ renewed curiosity in denims, given 15 to 25 % of its gross sales is probably going within the denim class.
“It goes without saying, but a change of trend in bottoms is great for the AE business,” mentioned Michael Rempell, AEO EVP and COO. “Anything that gives people a reason to go out and refresh their bottoms wardrobe, should be really, really strong for the AE business.”
The future, Foyle mentioned, spells alternative, particularly for manufacturers with sturdy denim roots and “assortments that are well-oiled.” The back-to-school assortment, she famous, isn’t about fast-fashion. “It’s just the right fashion,” she mentioned.
“I think the brands that thrive and that have longevity also have a nod to timeless. And you see it, the fast fashion retailers come and go, but the ones that survive are the ones that balanced,” she mentioned. “We’re a heritage brand, and I’m pretty excited because I feel like that’s part of the trend that’s happening right now.”
With vaccinations within the U.S. transferring at a speedy tempo, Schottenstein mentioned he expects the retail panorama to enhance within the coming months, which can tee up alternatives to nab new retailer areas at reasonably priced rents for the corporate. “I think going into next year, we’re going to see a boom in this country,” he mentioned. “It’s going to be like a roaring ’20s. You’re going to see a lot of excitement. You’re going to see people getting out.”