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American Eagle On a Tear Following Surprise ‘Record Performance’

The fashion label has been a bright spot in the retail world.
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American Eagle Outfitters  (AEO) - Get Free Report has long been a favorite clothing brand among teens and young adults. It's been ranked as a top retailer among teens in surveys for years. And it uses some pretty crafty methods to maintain its staying power.  

Take, for example, American Eagle's 2021 Snapchat  (SNAP) - Get Free Report marketing campaign. Snapchat users, who skew largely between the ages of 15-25, could use augmented reality lenses to try on American Eagle jeans (and post about them on social media), all from the comfort of their home. 

American Eagle also partnered with social media sensations and hit TV show stars like Addison Rae and Jenna Ortega on the platform, where users could see stars in American Eagle jeans and connect over fashion. 

"We’re having so much fun and so much success from Snapchat right now," American Eagle's Chief Marketing Officer Craig Brommers said

Repeating Your Successes Is Hard to Do

What makes American Eagle so unique is its staying power. The brand was ranked the top most popular spot for denim sales in 2007 and still ranks as a top teen brand 15 years later. 

Part of its recipe for success has been a forward-thinking diversification. American Eagle launched Aerie, a body-inclusive loungewear brand targeted at mostly females in 2006 and now regularly vies with Victoria's Secret  (VSCO) - Get Free Report for the top bra sales spot in malls and retail plazas around the U.S. (in 2021, Aerie was the #2 spot, behind only Victoria's Secret). 

Not bad for a subsidiary brand with fewer than one-third of the locations that Victoria Secret has. (Aerie has 356 stores, compared to Victoria's Secret's 1,350.) Many analysts credit Aerie's success with two factors: it's backed by an already strong brand in American Eagle and its body-inclusive business model, which was considered counter-culture at the time. 

American Eagle Just Had Bumper Earnings...And an Even Better Holiday

But American Eagle's story doesn't stop here. 

"Following record performance last year, we achieved our second highest holiday sales period in company history," American Eagle CEO Jay Schottenstein said

For reference, in its most recent quarter, which ended in October, American Eagle saw $1.24 billion in revenue and beat earnings-per-share estimates by 89%. 

And its upcoming earnings may look even rosier, as it just had its second-best holiday sales in company history.

American Eagle's logistics firm, Quiet, said it would be adding 2% to its revenue expectations for the upcoming quarter, which is expected to be released in March. It also added it expects gross margins to come in on the higher side, around 33%. 

This news remains a bright spot amid a batch of brick-and-mortar retailers bracing for muted earnings following the holiday season. Both lululemon LULU and Macy's  (M) - Get Free Report were down yesterday following reports that profits may clock in lower than expected.