American Eagle’s Digital Demand Jumps 33 Pct In Q1

American Eagle's Digital Demand Jumps 33 Pct

American Eagle Outfitters, Inc.’s digital demand accelerated in the first quarter, powered by brand health and formidable shopper engagement. Management reported that online sales jumped 33 percent, and that store closures and inventory liquidation had a substantial impact on the company’s Q1 results.

Due to the coronavirus pandemic, the company said it had lengthened store closures in places where local and state governments enacted stay-at-home mandates. It has also put special procedures in place for retail locations that have reopened. Those measures include plexiglass shields at registers, a sanitization station, masks for all shoppers, bolstered cleaning procedures and routines, and marketing to promote social distancing.

American Eagle also said it was decreasing capital expenses and “prioritizing strategic customer-centric and supply chain investments aimed at further strengthening its competitive position.” The company is also halting its share repurchase initiative and has suspended its Q2 cash dividend.

The company borrowed $330 million from a revolving credit facility made $406 million in proceeds from convertible notes due 2025.

Jay Schottenstein, AEO’s chairman and CEO, said in the announcement, “In the midst of this unprecedented crisis, the strong character of our company and associates has been apparent. I’m extremely proud of the team’s agility and humanity as we have taken immediate actions to ensure the health and safety of our people, preserve financial strength and prepare AEO for a new future.”

American Eagle’s total net revenue for the 13 weeks that concluded May 2 was $552 million, in comparison to $886 million for the 13 weeks concluding May 4 of last year. The company also reported gross profit of $28 million, in contrast to $325 million in 2019. 

In separate news, Target Corporation’s digital sales jumped in Q1, increasing 141 percent and comprising 9.9 percentage points of its comparable sales growth. The retailer had said stores fulfilled nearly 80 percent of Q1 digital sales.