American Eagle logo.
American Eagle Doesn’t Soar
For many brands and retailers dealing with the current economic double-dip, recent strategies often center around aspects of discounting. American Eagle Outfitters announced August 25 a 66% drop in its second quarter net earnings, which they account to a number of factors including having to discount prices heavily on summer apparel, and the weak forecast for back-to-school.
According to CEO Jim O’Donnell, “Given the inconsistencies in business trends and unpredictable consumer behavior, we have intensified our actions to improve efficiencies, streamline our processes, and strengthen profitability.”
American Eagle, which Label Networks has tracked among other teen retailers for the past 10 years, in terms of consumer preferences for the brand-retailer, it has changed within the last year, especially within the last 6 months as seen in our Summer Youth Culture Study -Back %u2013to-School. From this data, you can also see shifts in preferences and expectations based on price points and where certain areas of discounting are helping and where it’s hurting in other areas. By comparing for example, consumer insights on favorite brands, places to buy fashion, with frequency of buying certain key items such as T-shirts and denim, with changes in spending patterns, you can see where certain brands within specific categories would do better to discount if possible compared with other areas. And while this may seem unrelated, there is a strong correlation between spending patterns of fashion with changes in preferences in technology including spending on specific electronics and cell phones.
In the three months ending in July, American Eagle earned $9.7 million, which is down from $28.6 million. American Eagle, which is based out of Pittsburgh and has 935 stores in the U.S. and Canada, estimates same-store sales for the 3rd quarter, which includes back-to-school to be flat to down.
Delias In a Slump
Delais, the popular retailer for youth culture, announced their 2nd quarter financials on Wednesday also. The retailer chain lost $6.9 million which is higher than the amount they lost a year ago in the same period which was $4.7 million. Revenues overall fell 6%.
In a statement, CEO Walter Killough said, “Trends with our new back-to-school floorset improved in July, but there were still negative as traffic remained inconsistent.”
The retailer states that they are “cautiously optimistic” the new catch-phrase in financial reports that things will improve with back-to-school sales.
Billabong’s Acquisition Spree
Billabong has been in the news quite a bit lately for their recent acquisitions and fiscal year results. First, they announced that they will acquire Rush Surf, a 36-store chain in Australia which carries a lot of Billabong apparel. They plan to keep the chain store multi-branded.
This came right after news that the company was buying RVCA, the independent art-inspired action sports brand and darling of the alternative media world. Billabong, which already owns Nixon, Swell, Von Zipper, Sector 9, Tigerlily, Element, and DaKine, admitted that Nixon has been a standout performer in North America. However Billabong and Element were impacted negatively in part due to law sales in PacSun, where the brands are carried. Sales with PacSun declined some 40%.
In Label Networks’ consumer insights data currently comparing the Summer Youth Culture Study results and preferences for the brand Billabong, and the upcoming release of the Fall Youth Culture Study, North America, it’s clear just where Billabong stands in terms of youth culture preferences, compared with other brands, and more specifically, where it stands based on gender and age groups 13-14, 15-17, 18-20, and 21-25-year-olds.
One reason for these acquisitions with stores and brands, if you read through the lengthy financials currently released, is to protect and preserve the Billbong Group’s “route to market.”
J.Crew -Riding the Wave of Prep
J.Crew has made headroads in youth culture in part due to the resurrection of preppy styles back in vogue for fall and winter, announcing on August 26th, a revenue increase to $407.5 million, with same store sales up 14% to $295 million. Their gross margin increased 44.6% in the second quarter.
Millard Drexler, J. Crew’s Chairman and CEO stated: “While we are really pleased with the second quarter, it is more critical than ever to continue to move forward and invest in our business for quality, long term, earnings growth. It’s about moving, doing, creating – it never stops.”
K-Swiss’ Pop-up plans with Planeshop
Pop-up shops continue to redefine the concept of traditional retail, but this time its taking place in an airport with a unique concept called Planeshop by Russ Miller (founder of Vacant -one of the original pop-up shops created years ago). As we wrote about last fall regarding Planeshop, Miller’s concept of “flexible retailing” allows brands to take over a store for a limited time, and to find out who’s there, it refers you to their very interesting website made of signage stick figures.
The first guest brand to pop-in the Planeshop pop-up is K-Swiss with their sneakers and branded apparel in one of the UK’s busiest airports, Glasgow. Because it’s at an airport, Planeshop also provides airport and flight information and cool tips on what to do while you’re waiting.
Pop-up shops are no longer all that new, but the concept of new brands and ideas constantly rotating in a store does give a fresh edge to help satisfy consumers who are far more prone to new, limited-edition finds. Doing this in an airport however has i’s challenges, but also advantages as the consumer is always changing on an international scale.
In a nod to m-commerce and mobile communication, planeshop.net also offer ups a QRcode at the bottom of their page in case you’re one of the lucky ones to have a Japanese cell phone that can read it and you want to download everything there is to know about Planeshop via your phone.
Planeshop is planning it’s pop-up concept to appear in more airports around the world, but first, it’s K-Swiss to bat.