It’s a tough time to be a teen retailer.
But American Eagle appears to be defying the curse that’s been plaguing other brands.
The brand posted positive results for the first quarter of fiscal 2016 — 4%. Even though the company posted a 7% increase in comparable sales this time last year, the positive number stands out in a time that appears to be defined by a metaphorical bloodbath in the mall.
So what makes American Eagle stand out from competitors?
The company credits its signature apparel. In a time when Amazon is threatening most traditional retailers and malls are closing, the company argues that a brand needs solid merchandise and good branding to stay afloat…or else.
“I think the best things for us is it really is about having a strong brand and exclusive compelling merchandize and is really build around our leading denim,” American Eagle’s Executive Vice President and Chief Operating Officer Michael Rempell said on a conference call with analysts. “I think a lot of the brands, if you are retailer, my belief is if you’re retailer who is selling product you can get multiple channels than good luck, Amazon is going to eat you alive.”
“But if you have a strong brand and you have good product than you have an opportunity to sell through your vertical channels. You can engage with your customer in compelling ways and get paid for the value you’re delivering there. And that’s really I said in the prepared remarks, that’s really what we’re focused on,” he said.
Its Instagram account serves as veritable proof that it understands its customer. The customer is laid back and carefree, and its target female audience has a somewhat bohemian flair, too.
Further, its women’s business is currently stronger than its men’s business.
The company said on an earnings conference call that the women’s business saw comps go up in the “high single digits,” but that the “demand from men’s was not as strong” and comps declined in the low single digit,” though the company clarified that sales were positive for men’s pants, tee-shirts, woven shirts, and underwear.
Interestingly, American Eagle’s assortment bears most of a resemblance to Abercrombie & Fitch’s Hollister brand, which has quietly helped bring its parent company back from the grave.
At the end of fiscal 2015, Hollister reported a 4% increase in comparable sales for the fourth quarter, compared with a slight decline for Abercrombie’s namesake brand. The parent company was able to post its first positive quarter since 2012 as a result.
“Hollister is benefiting from a consistency of positioning in … both in terms of target customer, lifestyle [and] life stage,” Abercrombie & Fitch Chairman Arthur Martinez said to Business Insider in March, adding that the “product is designed for that customer in that place.”
The same could be argued for American Eagle: it knows its customer and sells clothes that the target demographic wants, and at a time when fast fashion and Amazon are taking over, that’s more important than ever.
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