Source: CNBC
Summary
American Eagle Outfitters plans to close around 150 stores, primarily in malls, over the next two years. The company also aims to open 200 new locations in off-mall settings, such as strip centers and outlet malls. According to Jay Schottenstein, American Eagle’s CEO, the goal is to focus on full-price sales and reduce promotions.
Our Reading
The trend returns with a new name.
American Eagle’s strategy shift echoes the retail cycle of the early 2000s, when brands like Abercrombie & Fitch and Gap Inc. expanded rapidly, only to later contract and reposition. The focus on full-price sales and reduced promotions follows a similar path. Brands like J.Crew and Madewell have also attempted this approach. The off-mall expansion mirrors the growing popularity of strip centers and outlet malls in the 1990s. American Eagle’s move is a calculated rebalancing act.
Rebalancing Act
American Eagle’s decision to close underperforming stores and focus on full-price sales is a strategic rebalancing act. By shedding unprofitable locations and emphasizing full-price sales, the company aims to improve profitability and regain market share.
Retail Cycle
The retail cycle is a familiar pattern. Brands expand rapidly, only to later contract and reposition. American Eagle’s shift is a response to changing consumer behavior and the rise of e-commerce.
Off-Mall Expansion
The off-mall expansion is a deliberate move to capitalize on the growing popularity of strip centers and outlet malls. This shift mirrors the 1990s, when these types of locations gained traction.
Focus on Full-Price Sales
American Eagle’s focus on full-price sales is a calculated move to reduce promotions and improve profitability. This approach follows a similar path taken by brands like J.Crew and Madewell.
Calculated Risk
American Eagle’s strategy shift is a calculated risk. By rebalancing its store portfolio and focusing on full-price sales, the company aims to regain market share and improve profitability. Only time will tell if this approach pays off.
Author: Evan Null
