Industry and Business Structure- Case of American Eagle Outfitters

Industry and Business Structure: Case of American Eagle Outfitters

American Eagle Outfitters is an American Multinational Corporation that was started in 1977. The company, which is commonly referred to as American Eagle, is well known for its clothing brands. American Eagle was listed for the first time on the New York Exchange in 2006. Some of its most famous products include Aerie, which offers young women a welcoming and safe space to purchase delicate-fitting clothes such as bras and underwear. Currently, the company operates globally with over 1000 stores in the United States, Hong Kong, Canada, and Mexico. The outlet in New York serves as the company’s capital, where fashion is created and designed. For this assignment, the company will be held at the center stage for analysis. Notably, this will be done by covering the industry in which the company operates, its competitors, the company’s history, its significant policies, milestones, and obstacles that the company has faced in its operational time.

The industry in which American Eagle Outfitters Operates

The American Eagle Outfitters Company functions in the retail clothing and apparel sector. Notably, this is so because it operates as a specialty store, offering accessories, apparel, and individual care items under the American Eagle and Aerie brands domestically and abroad. The brand sells swimwear, intimates, clothing, activewear, and denim, in addition to personal care goods, gear, and accessories for both men and women. Additionally, it sells fashion apparel and accessories under the unsubscribed brand and menswear under the Todd Snyder New York brand. Consideration of these aspects requires an outlook of the sector. Essentially, it is of no surprise that the US fashion business is one of the largest internet buying sub-categories among consumers. It’s currently worth dollars that run into hundreds of billions, which could imply great potential for American Eagle Outfitters.

Overall revenues are expected to reach $494.89 billion by the end of 2023. Compared to 2022 sales figures, this indicates a growth rate of 4.5% for the fashion sector. Notably, the 2023 growth rate for the US fashion retail industry is less than it was in previous fiscal periods. The sector grew by 8.3% in 2022, which came after a growth of 18.4% in the previous year, which was the highest growth rate for the US fashion industry from 2019 to 2023. The sharp decline in US fashion sector sales in 2020—a 21.9% decline that represented a more than $100 billion loss from 2019—was followed by a sharp uptick in growth.

The coronavirus epidemic, which had impacted sales data and the growth rate of the US fashion sector, is to blame for this decline. A decline in visitation and sales resulted from the closure of physical fashion businesses due to local coronavirus legislation. The US fashion sector grew at a negative pace in 2020 because of consumer cuts to inessential products and a greater emphasis on domestic basics. Since 2021, the US fashion industry’s revenues have increased and are now above $400 billion annually. There is great potential for an upward trajectory in the growth of the industry going into the future, which offers a positive prospect for the company to be analyzed.

Company Competitors

The major competitors for American Eagle include Aeropostale, Gap Inc., Latch, Abercrombie & Fitch Company, and H&M. Notably, these are the major competitors in the industry, notwithstanding the many industry operators such as local retailers and online stores. Therefore, the industry in which American Eagle operates is highly competitive due to the many sellers that exist in the market. It is important to consider how the company compares with other industry participants to evaluate its performance. The scores are given comparably by a competitor score channel where customers freely vote for different brands based on how they perceive them. Regarding the product quality score, the company ranks first, scoring 4.2 out of 5. Notably, the quality of a product is a significant competitive advantage in the clothing retail industry. Regarding the employee net promoter score, the company ranks fifth. On the part of culture, the company ranks fourth, scoring a culture score of 63%. Further, the company ranks first in terms of customer service and pricing scores. Lastly, the company ranks first in terms of the net promoter score. Notably, these are essential elements of success in any given industry, offering an insight into the company’s good performance.

History of the Company

For over 50 years, American Eagle Outfitters, sometimes referred to as American Eagle, has been a mainstay in the retail fashion sector. Mark Silverman and Jerry launched the firm back in 1977. It was established as a branch of Silverman’s Menswear, which was previously run and owned by the two brothers. In 1977, the first shop opened for business in Novi, Michigan. Before Schottenstein Stores Corp. acquired American Eagle in 1990 and started selling AE private label goods, American Eagle was a business owned by Retail Ventures Inc. Young ladies looking to purchase undergarments and bras that not only fit but also gave them confidence were the target market for Aerie. Both companies have always tried to create and sell stylish yet timeless clothes, giving young people a sense of confidence and coolness. Since the company’s first shop opened about 50 years ago, it has been at the forefront of the lifestyle retail sector for consumers aged 15 to 25.

The company’s objective to create traditional, casual apparel that exudes confidence in its wearer—rather than merely following trends—has allowed it to stay at the top of its game. The firm prefers to design lines and items that are stylish and provide the consumer something they can use for many years to come, rather than producing apparel in large quantities to follow the newest trends. Beyond just being a fashion retailer, its goal is to become a part of the lifestyle that appeals to consumers aged 15 to 25. Known for their hoodies and t-shirts but established on the legacy and denim quality, the company seeks to remain consistent in young women’s and men’s lives.

The Company’s Significant Accounting Policies

The company has various significant accounting policies that govern the preparation of financial statements, as provided in American Eagle Outfitters, Inc. (2020). One policy relates to the principles of consolidation, which provides that the company’s consolidated financial statements are composed of the accounts of wholly owned subsidiaries and the parent company accounts. Second, the company operates a fiscal period of 52 or 53 weeks that ends on 31 January of every year. Third, the preparation of the company’s financial statements is done in line with the requirements of the Generally Accepted Accounting Principles. Based on these principles, the company operates a general rule to disclose all assumptions and estimates that affect the items that are reported in the company’s financial statements. Notably, this is done for every item that is reported, such as inventory, receivables, and intangible assets. The policy regarding revenue recognition by the company is worth mentioning. It provides that under ASC 606, revenue raised from customer purchases is recorded for torn sales. For the company’s online outlets, revenue is recorded upon receipt of the customer’s purchase. The total revenue for the company is recorded net of promotional price reductions and actual return of sales. However, there is no recording of revenue for issued gift cards.

The Company’s Milestones

Obstacles or Challenges Facing the Company

The company has a fair share of challenges that it has to handle. First, it has the challenge of maintaining a significant physical store footprint, which is costly to attain. Notably, this is so because consumer preferences keep on changing, prompting the company to struggle to optimize its operational strategic plan. Further, the company faces supply chain problems, which are common for all industry participants. The supply chain was disrupted in the event of Covid-19, and it has yet to return fully to where it was before the pandemic. Lastly, the company faces an obstacle in the competitive nature of the industry. Every day is a day of competition in the market, which requires the company to remain focused on industry trends to maintain its revenue margins.

  Reference

American Eagle Outfitters, Inc., (2020). Annual report. https://www.sec.gov/Archives/edgar/data/919012/000156459020010469/aeo-10k_

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

For the next five weeks, you will have a project that will begin in Unit 1, continue throughout all of the units, and end in Unit 5. Your Discussion Boards and Individual Projects will be connected each week, so you must complete your discussion work on time.

Industry and Business Structure- Case of American Eagle Outfitters

The following is a schedule of each week’s deliverables:

In this Individual Project, you will be analyzing and interpreting American Eagle Outfitters (located in Appendix A: American Eagle Outfitters, Inc., 2020 Annual Report of the required textbook: Financial Accounting), a publicly traded company.

Textbook citation in APA Format:

Spiceland, D. (2021). Financial Accounting (6th ed.). McGraw-Hill Higher Education (US). https://aiu.vitalsource.com/books/9781264140336

Complete the initial company evaluation (Industry and Business Structure) by answering the following:

• Determine the industry in which the company operates.
• Who are the competitors?
• What is the history of the company?
• What are the company’s significant accounting policies?
• What are the company’s milestones?
• What obstacles or challenges is the company facing?

Deliverable Requirements: Your industry and business structure analysis should have at least 5 pages (the title and reference pages are not counted in these 5 pages) as well as follow the requirements below for using the APA style. Your analysis should include the following:

• In 5–7 double-spaced paragraphs, introduce and describe the company.
• Address the questions above, and consider their implications to American Eagle Outfitters, Inc.
• Do not forget to review the notes to the financial statements for additional information about the company’s background and accounting policies.

Submitting your assignment in APA format means that you will need the following at a minimum:

• Title page: Remember the running head. The title should be in all capitals.
• Length: There should be at least 5 pages.
• Body: This begins on the page following the title and abstract pages and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-point Times New Roman or 12-point Courier in regular black type. Do not use color, bold type, or italics except as required for APA-level headings and references. The deliverable length of the body of your paper for this assignment is 5 pages. In-body academic citations to support your decisions and analysis are required. Using a variety of academic sources is encouraged.
• Reference page: References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format and use appropriate spacing, hanging indentation, italics, and uppercase and lowercase for the type of resource used. Remember that the reference page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.