Taking a look at what happens with American Eagle, a popular clothing retailer among youth culture in North America, according to Label Networks’ Spring Youth Culture Study 2011, and its current challenges can provide a glimpse of what 2011 may be all about for other similar retailers such as Aeropostale and Abercrombie & Fitch.

While American Eagle Outfitters just announced their Q4 financials with a successful net income rise of 47%, the CEO has retired and speculation surrounds the brand that they may be acquired. Overall, their earnings for Q4 climbed to $87 million, which is up from $59.3 million last year at the same time.

You may also recall previous reports from Label Networks about the various plays that American Eagle, and competitors Abercrombie & Fitch, and Aeropostale took during the recession: Aeropostale provided more discounts and lower price points, whereas Abercrombie kept prices higher (which they are doing now again) for a longer of period of time before discounting slightly later on. American Eagle started targeting an older demographic, including twentysomethings, and moving away from the competitive space of teens in order to try and differentiate.

Roger Markfield, the Vice Chairman and Executive Creative Director, also admitted that some things in the fourth quarter were not up to expectations, such as relevant designs for women’s tops, sweaters, and some key items in menswear. He admitted to “missing an opportunity” and not investing enough in key items that were trending with the young males fashion market.

Like other retailers, American Eagle is bracing for higher costs of production as the costs for cotton and other materials continues to increase, which is changing the forecast for the second half of 2011.

American Eagle now has 929 stores in the U.S. and Canada, and they, along with Aeropostale are targeted as potential takeover prospects for 2011.