Aerie Is One Of The Fastest Growing Brands In The Apparel Industry
Aerie has been the standout performer for American Eagles over the last few years - growing approximately 27% annually between 2015-18. The brand continued its impressive performance in Q3 2019, with comps increasing 20% - marking the brand's 20th consecutive quarter of double-digit comp growth. The brand’s revenue surged 26% in Q3 2019 led by strong sales volumes across product categories as well as the contribution from new stores.We expect this segment to continue its growth trajectory, with revenues increasing at a rate of 28% to more than $827 million in FY 2019. Aerie is expected to achieve significant growth from both the digital channel and retail stores, as the company’s store traffic continued to outpace mall averages. Moreover, the brand’s average transaction size has increased led by higher average unit retail prices.Aerie is also expected to achieve significant retail channel growth, as the company has opened 29 exclusive Aerie stores in year-to-date 2019 and plans to add another 5-10 stores in Q4 2019. Going forward, we expect the Aerie brand to continue to post double-digit comparable sales growth for the foreseeable future - helping drive the company's top line.
Digital Channel Continues To Expand
Digital channel has been pivotal to American Eagle Outfitters’ growth over recent quarters. American Eagles’ digital sales were strong in Q3 2019 and increased to 28% of total revenue for the period - an increase of 100 basis points from the prior-year quarter. This growth can be primarily attributed to an increase in user sessions and better conversion rates.Moreover, the company’s digital traffic continued to see robust growth in Q3 from its app and mobile channels, which now represent more than half of the retailer's digital business. American Eagle continues to invest in technology and its omni-channel capabilities, which should ensure sustained growth from the digital sales channel.