Posted on: Sunday, October 19, 2003

American Eagle tries to regain youth sales

By Judy Lin
Associated Press

PITTSBURGH — High school student Mike Davis recently walked out of an American Eagle Outfitters store empty handed after finding nothing new to add to his wardrobe of bootcut jeans, cargo shorts, screen T-shirts and polo shirts.

"I pretty much had everything. That's the problem," said Davis, 17.

Just a few seasons ago, teens were flocking to American Eagle Outfitters for their latest fashion fixes, helping the company's stock rise above $40 a share. But after several seasons of fashion missteps and disappointing back-to-school sales this year, the Warrendale, Pa.-based retailer is struggling to stay in favor with 16- to 24-year-olds.

Specialty stores such as American Eagle and Abercrombie & Fitch were hurt by a spotty back-to-school sale season as teens gravitated toward lower-priced stores for casual basics or themed stores such as skate shops.

American Eagle reported a 10.4 percent decrease in same-store sales for the month of August and a 3 percent drop in September.

"I think it would be fair to say we've been disappointed with our results thus far," said chief financial officer Laura Weil.

Despite its reputation as a classic American clothier with broad appeal, American Eagle failed to stock up this season on enough staples such as T-shirts and hooded sweat shirts, one analyst said. The company found fashion denim in different washes didn't sell as well as standard five-pocket bootcut jeans. And company officials say its vintage-wear message simply wasn't strong enough and failed to connect with the high school and college crowd.

American Eagle has been trying to correct its problems by presenting a more streamlined image in stores to compete in the crowded teen retail segment. The company is introducing a line of colorful sweaters and knits alongside corduroy blazers and pants that the company hopes will fit in with the current trend of combining preppy fashions with a more utilitarian look.

It doesn't help that the current surf-and-skate trend is boosting sales at Pac Sun and Hot Topic, which carry popular labels such as O'Neill and Hurley, said Dawn Stoner, a specialty retailing analyst with Pacific Growth Equities. Those retailers have the advantage of changing merchandise according to trends faster than one-label shops like American Eagle, which has to design, manufacture and distribute its own line, Stoner said.

The company is planning to open stores in Hawai'i and Puerto Rico with a goal of 900 to 1,000 stores in North America.