Teen apparel retailer American Eagle Outfitters (AEO) outlined plans to close hundreds of stores in the coming years, while it looks to grow it lingerie and activewear brand Aerie to a $2 billion business. Chief Financial Officer Mike Mathias said during a virtual meeting with investors that AEO, which has about 880 stores, is looking to shut between 200 and 250 mostly mall-based locations in the next two years to three years. Meantime, it plans to grow the number of Aerie stores by 50, to about 400 at the end of 2021, and is targeting having 500 to 600 Aerie locations in 2023.
Total Retail's Take: This news falls in line with what we've seen in the industry for the last couple of years. Traditional retailers, particularly specialty apparel brands, have been looking to minimize their footprints in shopping malls, and redirect those investments into growing their digital businesses. This trend has only been exacerbated by the COVID-19 pandemic, as consumers have opted to shop online rather than venture into stores. In the case of American Eagle, the company is cutting its losses with its namesake brand, and doubling-down on its profitable lingerie and activewear brand Aerie. The strategy seems to be well reasoned, and if successful will lead to a healthier organization, with Aerie propelling AEO forward.