The US-based clothing retailer American Eagle Outfitters (AEO), influenced by the terrific digital sales growth in Q2, has plans to permanently shut down lots of its bricks-and-mortar stores.
The e-commerce sales for the retailer during the quarter rose by an impressive 48 per cent, with one of its intimatewear brands Aerie showing a digital growth of 113 per cent.
With focus on investing more on e-commerce, AEO company executives said on Wednesday (9 September) that it plans to close down 40 to 50 stores forever.
Besides, it is scrutinising to permanently shut down another 500 stores in next 2 years as leases expire.
Reportedly the 40 to 50 stores to be closed this year were chosen on the basis of lease tenure, mall profile, customer engagement levels as well as closeness to other stores.
Explaining further on the same, Mike Mathias, CFO, AEO, stated that around 250 leases are set to expire in 2020 and then next year as well. He also said that the store portfolio has an average lease term under 3.5 years.
The CFO added “our flexible lease portfolio will allow us to quickly exit locations that no longer make sense.
The store closures are, reportedly, expected to hit the American Eagle brand the most as it’s not been doing well compared to Aerie.
The American Eagle brand had seen its revenue fall by 26 per cent in the second quarter.