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11/02/2021

American Eagle acquires robotic logistics firm for $350 million

Dan Berthiaume
Senior Editor, Technology
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American Eagle is acquiring another logistics company.

American Eagle Outfitters is continuing to transform its supply chain.

The specialty apparel retailer has agreed to acquire Quiet Logistics Inc. and strategic investments for $350 million in cash. Quiet Logistics operates a network of logistics centers, which utilize state-of-the-art technology including robotics, in Boston, Chicago, Los Angeles, Dallas, St. Louis and Jacksonville.

The centers are designed to locate products closer to need, create inventory efficiencies, and provide affordable same-day and next-day delivery options to customers and retailers. Quiet Logistics is also the creator of Locus Robotics warehouse automation systems.

American Eagle is purchasing Quiet Logistics following the September 2021 acquisition of Terra, a brand-new logistics startup cofounded by Brent Beabout, who served in executive supply chain roles at Nordstrom and Walmart. AirTerra’s system aggregates packages from multiple shippers through its own network in major metropolitan areas.

American Eagle expects to utilize Terra to further leverage its network of stores and distribution centers to more efficiently fill orders and offer same-day services.  The retailer has been making increased investments in its supply chain capabilities, In June 2021, it said it cut 1.5 days off its average shipping time.

It is also interesting to note that the American Eagle-Terra deal was the first time a specialty retailer purchased its own last-mile delivery service, enabling it to compete in terms of same-day and last-mile delivery.

According to American Eagle, acquiring Quiet Logistics marks the next step in its “ongoing supply chain transformation.” Quiet Logistics has provided in-market fulfillment services for American Eagle, as well as for numerous other consumer brands.

The Quiet network will support American Eagle’s continued growth (revenues rose 35% in its most recent fiscal quarter as it swung from net loss to profit), while also driving economies of scale as it expands its customer base to other brands and retailers. American Eagle expects the transaction to be accretive in the first full year post-closing. Quiet Logistics will be a wholly-owned American Eagle subsidiary and will continue to run its business independently. The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Act and is expected to close prior to year-end.

“We continue to be extremely pleased with the pace of our business and are executing well against our ‘Real Power. Real Growth.’ plan. An important pillar of our strategy is transforming our supply chain to create greater agility, speed and diversification. Our vision is to create an on-demand, hyper-scaled operations platform that enables brand success,” said Jay Schottenstein, American Eagle executive chairman and CEO. “Quiet Logistics has provided significant benefits to AEO over the past year and we are leveraging our healthy cash position to ensure ongoing advantages. Also, as we continue to expand these services to other brands and retailers, we believe the business will scale, generating incremental value for our shareholders.”

“A reliable and consistent in-market fulfillment network is vital in today’s marketplace. The Quiet Logistics team shares our vision for an asset-light, technology-led supply chain network and brings strong expertise,” said Michael Rempell, American Eagle COO. “This transaction will formalize our successful partnership, provide control and flexibility within our operations and accelerate the growth of Quiet Logistics. We look forward to driving ongoing advantages for our brands and its high-value customer base.”

“We’re excited to join forces with American Eagle, a fellow industry innovator, to accelerate the adoption of leading-edge fulfillment solutions,” said Eugene (“Gene”) Gorab, Quiet Logistics executive chairman. “Through a shared distribution network, our customers gain significant operational advantages, enabling them to focus more intently on increasing the value of their brands and products.”

Centerview Partners served as the financial advisor to American Eagle Outfitters Inc., with Wachtell, Lipton, Rosen & Katz and Dentons Cohen & Grigsby serving as legal counsel.

American Eagle Outfitters Inc. operates stores in the U.S., Canada, Mexico, and Hong Kong, and ships to 81 countries worldwide through its websites.