This year has proved to be a tough one for retailers across the globe. With mandatory closures of physical locations in the first half of the year, we’ve seen companies both big and large choose to shutter a number of storefronts.
During a recent Q2 result call, American Eagle announced that it would be closing 40 to 50 stores by the end of the year.
According to the call transcripts, the company has carefully selected the stores that will shutter based on “lease tenure, mall profile, proximity to other stores, and customer engagement levels.” Based on the learnings, American Eagle plans on selecting even more locations to close. There are 500 locations with leases up for negotiation in the next two years, so those locations will be the main focus for closures.
At this time, there is no clear communication about which locations will shutter, but according to the brand’s website, American Eagle has over 1,000 locations in the United States, Canada, Mexico, China and Hong Kong.
Luckily, it doesn’t seem like the closures mean that the company is struggling.
The company currently has 90% of its stores open worldwide and has reset the organization in what they think puts them in a better position for sustained success. During the second quarter, Mike Mathias, American Eagle’s Executive Vice President and Chief Financial Officer, said that the company has made progress in inventory and expense management and capital efficiency, with more changes are underway. Additionally, the company’s online channel continues to perform well.
Aerie has been a top performer for the company.
Of the brand, Mathias said, “we had a five-year plan to get to $1 billion and we’re pretty much on that plan at the end of this year.” Additionally, the company plans to expand its athleticwear brand OFFLINE with its own standalone stores, which American Eagle thinks it can grow into a $16 billion brand.
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