American Eagle Outfitters Audit Report

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Project Phase I

American Eagle Outfitters, Inc. (AEO)
David Jones

I. Business Description
Founded in 1977, American Eagle Outfitters (NYSE: AEO) is a retailer that designs and develops fashionable girls’ and boys’ apparel and accessories. The company’s target audience is boys and girls between the ages of 15 and 25 years old. The target audience seeks trendy and fashionable apparel product that meets a high standard of quality at an affordable price point. As of the most recent fiscal year, ended January 30, 2010, American Eagle held 1,103 retail stores in total, operating under the “American Eagle”, “Aerie”, and “Martin+Osa” brand names respectively. In addition to the retail stores, American Eagle also operates an online store in which customers can ship product from all AEO brand names direct to their home or to a specified retail store. The various brand names used by AEO are segregated by the intended target market. For example “Aerie” is the brand name, which supplies underwear and fragrance products to the female market whereas Martin+Osa is the brand name which supplies apparel for men aged 25+. The main operating name “American Eagle Outfitters” is the brand name most of the retail stores operates under which supplies apparel and accessories to boys and girls age 15-25.

II. Greatest Business Risks
AEO relies heavily on their ability to anticipate and respond to changes in consumer preferences and fashion trends in a timely manner. The retail apparel business is extremely seasonal and can fluctuate according to changes in the economy and consumer preference. AEO does not produce their products; they utilize mostly non North American suppliers to manufacture their products according to their specifications. As a result, AEO must enter into production agreements with suppliers long before the inventory is needed on the shelves, and abrupt changes in consumer preference or the economy could...
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