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American Eagle to Close 50 to 100 Stores

Sometimes the economy feels okay again, like when LVMH and PPR's profits soar, but then you keep reading and realize that's because discretionary spending in Asia is on the rise, not necessarily because people feel flush and wallet-confident here. When Tiffany's decides to add handbags to its merchandise, ranging in price from $400 to $17,500, you think, Hey, they're making more stuff because people want to buy it! But then you reason maybe they're doing bags because no one can afford to buy their diamonds in white-gold settings or $2,000 sailboat banks to store their pennies anymore. And then you come across your daily "American Apparel is going under" story and remember, things aren't so dandy for everyone everywhere. American Eagle's latest earnings report of losses of 66 percent are another reminder of the lingering uncertain economic mood.

Part of the store's plan to return to profitability is to close 50 to 100 stores over the next two to five years. (The brand currently operates 934 stores after closing twenty over the past year.) While the brand plans to close its Martin + Osa division, it also plans to start selling its 77kids in physical stores, not just online. But though sales actually rose 0.8 percent, production costs are rising, and retailers like American Eagle seem to be having trouble passing them onto consumers who are afraid to spend money. Maybe there is a curse in this recession, and retailers with "American" in their titles are just screwed.

American Eagle's Net Slumps; Store Closings Planned [WSJ]

Photo: Shanna Ravindra

Copyright © 2013, New York Media LLC. All Rights Reserved. The Cut® are registered trademarks of New York Media LLC.

Copyright © 2013, New York Media LLC.
All Rights Reserved.

Copyright © 2013, New York Media LLC. All Rights Reserved.

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