American Eagle Reports Technology Bright Spot During Slow Quarter

New technologies designed to enhance the retail shopping experience have been delivering successful results at American Eagle Outfitters (AEO), which otherwise had flat revenue results during the second quarter, executives said Wednesday (Sept. 7) during the company’s quarterly earnings call.

During the second quarter, AEO introduced a mobile point of sale (POS) system in its stores that enables employees to help customers check out or return items anywhere in the store — not just at the registers.

“We expect this to improve transaction speed and minimize wait time, especially as we head into our peak fall and holiday selling seasons,” AEO Executive Vice President and Chief Operating Officer Michael Rempell said during the earnings call.

In addition, AEO’s mobile app had a strong quarter and is now the largest source of revenue in the company’s direct channel.

Overall, the company’s digital channels have recorded a 20% five-year compound annual growth rate (CAGR) and now account for $1.8 billion of AEO’s $5 billion in revenue, according to the presentation.

The company also highlighted in the presentation its nine-pronged omnichannel shopping offer, which gives customers the convenience of shopping and getting the products when and where they choose. Newest among these are same-day delivery and customer self-checkout, two offerings that are now in the pilot stage.

In other news, consumers’ concerns about the economy took a toll on this year’s back-to-school shopping season, AEO executives said during the call.

After enjoying a record second quarter last year in which revenue was up 35% year over year, the clothing, accessory and personal care product retailer saw revenue go flat during the same quarter this year, according to the company’s second-quarter 2022 investor presentation.

Executives attributed these results to last year’s demand being driven by the last of the pandemic-era stimulus checks, and this year’s being impacted by the uncertain economic environment.

“This is an unprecedented time in retail,” AEO Executive Chairman of the Board and CEO Jay Schottenstein said in a Wednesday earnings release. “As we cycle exceptional demand from last year, a tougher macro environment is impacting consumer spending behavior.”

In response to the drop in demand, the company cleared out excess spring and summer inventory at lower-than-expected margins, Schottenstein said.

Going forward, AEO will continue investing in new technologies and reducing expenses and capital expenditures, right-sizing inventory and carrying products that are right for the current season and trends.

“In a shifting macro environment, we are focused on controlling the controllables,” Schottenstein said in the earnings release.

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