Holiday season

AEO Raises Financial Targets After Strong Holiday Season – Sourcing Journal

American Eagle Outfitters (AEO) announced this week that it is raising its financial targets for 2023 after a successful holiday season.

The company, which owns teen retailer American Eagle and intimates brand Aerie, said it was on track to generate $600 million in operating profit in 2021, beating its $550 million target. dollars for 2023 two years ahead of schedule. New targets for 2023 include operating profit of $800 million and revenue of $5.8 billion, up from $5.5 billion previously. Operating margin targets will increase from 10% to 13.5%.

The new targets directly reflect a holiday season that topped pre-pandemic levels for many in the retail industry. According to a recent Mastercard holiday spending report, holiday retail sales in the United States are up about 11% from the 2019 holiday season.

“Real Power. Real growth. plan has been a key driver of its success. The company launched the initiative in January 2021 to double revenue from its Aerie brand and “reignite” its American Eagle label for significant profit growth. The plan focused on improving the brands’ connection with customers through its multi-channel platform.

“I am extremely proud of the team’s outstanding execution throughout the past year, which has driven real structural improvements within our company,” said Jay Schottenstein, Executive Chairman of the Board and CEO of AEO. “As I look to the future, I see enormous potential for growth and opportunity throughout the organization. I’m excited to see us build on our successes as we strive to reach greater heights and create lasting value for our shareholders.

This growth was fueled by strategies related to inventory and real estate optimization. In January 2021, AEO said it would close between 200 and 225 American Eagle stores in malls and open 50 new Aerie stores, bringing its total of intimate-focused stores to nearly 400 locations in 2021. In 2023, the company aims to bring that number to between 500 and 600.

Improved products and strong demand also contributed to the company’s success. In September 2021, AEO launched AE77, a premium denim line focused on reducing the company’s environmental impact through more sustainable techniques and machinery. The denim boom fueled by new fashion trends has also helped give the American Eagle brand renewed relevance.

And as the global supply chain experienced pandemic-related disruptions, AEO acted quickly to mitigate their effects on logistics.

“We closed a pivotal year for our supply chain, anchored by two key acquisitions, which secured cost savings, locked in key strategic advantages and created a new platform for future growth,” Schottenstein said.

Late last year, AEO acquired AirTerra, a Seattle-based logistics startup founded by Nordstrom’s former supply chain chief, and Quiet Logistics, a company that uses advanced technology and robotics to manage order fulfillment for consumer brands like M .Gemi, Outdoor Voices and Bonobos. The acquisitions help realize Schottenstein’s vision to “create an on-demand, large-scale operations platform that enables brand success” and further help the company achieve its new financial goals.

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