Apparel stores are generally not a place to put your money given the trends in mall store traffic, how aggressive the competition is, and how fickle the customer base can be. Even the premium names have dealt with diseconomies of scale given the impact of online sales. And even worse, there were a handful of businesses in apparel retail that filed for bankruptcy throughout 2016, and it appears that will be a repeat theme in 2017.
Wowing The Crowds?
American Eagle (NYSE:AEO) however has been doing very well over the last few years. What's the story behind it? In our view, it appears to be the solid execution from the product teams and powerful marketing schemes. American Eagle and Aerie have an exceptional and yet simple store layout, offer the product appeal of the "natural look" (which many consumers identify with), and lastly "provide quality at a reasonable price" as some customers put it. By consequence, sales are up from $2.9 billion in 2011 to $3.6 billion in 2016.
