American Eagle Outfitters Aims to Achieve a $6 Billion Valuation, According to WWD

American Eagle Outfitters Inc. is experiencing a resurgence, surpassing expectations in the fourth quarter and unveiling a strategic three-year plan to achieve a steady annual growth rate of 3 to 5 percent.

The retailer, focused on refocusing its efforts, streamlining operations at American Eagle, and energizing Aerie, reported robust performance in the fourth quarter, with adjusted earnings surpassing projections and a 12 percent growth in sales. Buoyed by this momentum, the company aims to profitably increase sales by over $700 million in the next three years.

With total revenues reaching $5.26 billion last year, American Eagle Outfitters now sets its sights on achieving $5.7 billion to $6 billion in the next three years, targeting an operating margin rate of approximately 10 percent.

Mike Mathias, the Chief Financial Officer, highlighted the company’s commitment to sustained revenue growth, emphasizing ongoing initiatives in cost management, expense reduction, and strategic investments to enhance brand capabilities.

In the fourth quarter, American Eagle Outfitters experienced a significant revenue boost, reaching $1.68 billion, aided by a favorable extra week. Sales for American Eagle and Aerie grew by 11 percent and 16 percent, respectively, with adjusted gross margin rate improvement attributed to increased consumer demand and lower costs.

Despite a $131 million impairment and restructuring charge impacting the bottom line, adjusted earnings per share exceeded analysts’ expectations at 61 cents, 11 cents higher than projected.

Jay Schottenstein, Executive Chairman and CEO, expressed confidence in the company’s trajectory, citing a healthy balance sheet and promising early results of their long-term strategy for industry-leading earnings growth.

The driving force behind American Eagle’s momentum is credited to Jennifer Foyle, President, and Executive Creative Director of American Eagle and Aerie. Foyle highlighted successful initiatives in the women’s business, unveiling plans for new brands and categories within American Eagle.

Foyle outlined the company’s commitment to evolve American Eagle stores, introducing the “Lived In concept” and emphasizing core categories. Aerie, still in a growth phase, eyes expansion into new markets, particularly on the West Coast, with the active offshoot Offline gaining traction.

Foyle emphasized a strategic focus on delivering compelling products year-over-year while avoiding over-assortment, positioning both American Eagle and Aerie for sustained success.

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