American Eagle Outfitters/Aerie to close 40 or more stores

Another apparel-oriented retailer with Idaho locations is announcing store closures in the endless horror of the brick-and-mortar retail apocalypse. A list of stores headed to the gallows is not yet available.

American Eagle Outfitters, which operates around 1,000 American Eagle clothing and footwear stores and approximately 150 Aerie lingerie stores, announced it plans to close 40 to 50 stores in the short term at its second-quarter earnings call on Sept. 9, whose transcript was posted to the Seeking Alpha financial information website.

In the next year and a half, hundreds more stores in the chain will be reviewed for possible closure.

During the earnings call, CFO Mike Mathias shared that: “We expect to close 40 to 50 locations, which have been specifically chosen based on lease tenure, mall profile, proximity to other stores, and customer engagement levels.”

Despite announcing the closures, American Eagle did not disclose which of its locations were on the chopping block. The chain has American Eagle stores in Boise, Twin Falls and Idaho Falls and a combined American Eagle and Aerie store in Meridian. Two Spokane locations are the closest to consumers in the Panhandle.

Mathias also revealed that even more closures may be in the works: “Our real estate team (will be) reviewing our market studies again for post-COVID expectations, store by store, market by market. We have 250 leases expiring at the end of this year and another 250 in 2021. So those 500 stores are definitely a focus of those market studies. And we believe there will be some rationalization in place in terms of number of doors (closing) within that 500 … We’ll have more answers down the road, but we don’t have a specific number as of today.”

The firm is downsizing to adapt to lower earnings since the beginning of the pandemic. Mathias explained: “Store revenue declined 43% (compared) to last year. As a result of (COVID) closures, we have the equivalent of 32% fewer selling days in the second quarter relative to last year. Reduced store hours and weak mall traffic were also headwinds, offset by a very strong conversion rate. Open stores during the second quarter delivered roughly 85% sales productivity (compared) to last year, with May and June over 95% and July coming in lower as we lapped our historical high volume back-to-school peak weeks. For the total company, gross profit declined 31%, reflecting a reduction in store revenue and higher delivery and distribution center costs.”

The Pittsburgh-based chain makes most of its sales to its target market of teenagers and young adults. It has most of its stores in the United States, Canada and Mexico, with international locations in over 30 other countries.