Introduction to Business
December 8, 2010
American Eagle Outfitters, Incorporated
“American Eagle Outfitters, Inc. is a chain of mall-based stores that sells casual, outdoor-inspired fashion apparel” (American Eagle Outfitters, Inc.). This company operates 846 stores in the United States and Canada (McDonnell). American Eagle Outfitters first began in 1977 and was a division of Silvermans Menswear, Inc. As a family owned and operated retail business, Silvermans Menswear, Inc., sold accessories and attire for young men. When the business was in the third generation, the Silverman brothers thought it was necessary to add a new element in order for the company to prosper. This business move would allow the brothers to open additional stores in the same venue. As a result, American Eagle Outfitters was born. This company started out selling “brand-name leisure apparel, footwear, and accessories for men and women.” American Eagle became an infamous mall attraction overnight. The branch also provided a nationally distributed mail-order catalog service which ignited immediate competition between themselves, The Gap, L. L. Bean and Lands End (American Eagle Outfitters, Inc.).
Silvermans Menswear changed their name to Retail Ventures, Inc., in 1980. During this same time period, due to financial hardships, the owners were forced to sell a 50 percent stake in their company to the Schottenstein family. By 1986 American Eagle was achieving rapid success due to the concentration of Retail Ventures Inc.’s resources being focused mainly on their store. Stilling hoping for a bigger and better business, the optimistic Silverman brothers planned to expand American Eagle with the addition of nearly 120 stores over the course of three years (American Eagle Outfitters, Inc.).
By the 1990s, American Eagle had successfully prospered to 153 stores. Although these additions were made, sales remained dormant. “High management turnover also contributed to the chain’s difficulties during this period.” To further develop growth, the Silverman family sold the remaining 50 percent of Retail Ventures to the Schottenstein family, giving them total control of Retail Ventures, Inc. and their only chain, American Eagle (American Eagle Outfitters, Inc.). The new owners hired Roger Markfield, formerly of Macy’s and The Gap, as president to assist in locating their target audience. The new owners directed their focus to private-label informal attire for both men and women. These administrators began to develop private-label clothing by hiring their own designers. Another key strategy they implemented was opening American Eagle Outlet stores. The Outlet stores were created to alleviate the surplus of out-of-season merchandise (American Eagle Outfitters, Inc.). In 1994 American Eagle made the decision to become a publicly traded company (Fidlin). When the company made this decision it was a 167 store chain with nine outlet stores and locations in 34 states. The initial public offering raised approximately $37 million which was dispensed back into the company for renovations and expansions. By 1995, approximately 90 new stores had opened although several of these stores were unprofitable. The conclusion was drawn that the chain had progressed too quickly with its expansion (American Eagle Outfitters, Inc.). During this same time frame, American Eagle also underwent several management changes. Forman was named vice chairman but very quickly resigned and sold his ten percent stake in the company. In 1995, he purchased 32 American Eagle outlet stores in 18 states for between $14 and $16 million at which time American Eagle closed its remaining outlet stores. The company planned to focus on their mall locations. Forman signed a licensing agreement with American Eagle, whereby the outlets he purchased would operate under the American Eagle Outlets name and would sell merchandise made specifically for the outlets (American Eagle...