American Eagle now expects to hit $5.8 billion in annual revenue in fiscal 2023.
American Eagle Outfitters is starting the new year with plenty of momentum.
The apparel retailer raised its 2023 financial targets, saying it’s on track to reach its fiscal 2023 operating income and margin targets two years earlier than scheduled. Citing strong holiday sales, American Eagle expects record fourth quarter revenue with growth in the mid-to-high teens compared to the year-ago period, and up in the mid-teens from the fourth quarter of 2019. Operating income is expected to be in the range of $90 to $100 million including approximately $80 million in higher freight costs, due to supply chain disruptions.
“I am extremely proud of the team’s outstanding execution throughout the past year, which has instilled real structural improvements within our company. Inventory and real-estate optimization combined with strong demand fueled by product improvements have reignited profitability at the American Eagle brand,” said CEO and chairman Jay Schottenstein. “Aerie cemented another year of industry-leading growth and achieved a substantial inflection in profitability as its powerful brand platform continued to scale. Operational excellence drove solid results amidst external disruptions.”
American Eagle made key investments in its supply chain in 2021, including the acquisition of Quiet Logistics, which operates a network of fulfillment centers. It also acquired AirTerra, a new logistics startup that aggregates packages from multiple shippers through its own network in major metropolitan areas.
“We closed out a milestone year for our supply chain, anchored by two key acquisitions, which secured cost efficiencies, locked in key strategic advantages and created a new platform for future growth,” said Schottenstein. “As I look forward, I see tremendous growth potential and opportunities across the organization.”
American Eagle had previously said that it would hit $550 million in operating income by 2023. It now expects to reach $800 million in operating income in fiscal 2023. The retailer also raised its annual revenue target for fiscal 2023, to $5.8 billion from $5.5 billion, and operating margin, to $13.5% from 10.0%.
Revenue at Aerie is expected to reflect a high-20%’s compound annual growth rate to fiscal 2019, reaching approximately $2.2 billion in fiscal 2023. American Eagle revenue is expected to be up slightly to fiscal 2019, at approximately $3.6 billion, with improved profitability.
In an interview with WWD, American Eagle CFO Michael Mathias said the company continues to open more Aerie and Offline locations in the near term, while optimizing the American Eagle store fleet. He said that an ideal store count would be 600 to 700 American Eagle stores in North America and a combined 500 Aerie stores. He also said that leases for some American Eagle locations, many of which were previously slated to close, are being renegotiated due to a return to stores in 2021.