American Eagle Outfitters SWOT & PESTLE

SWOT

SWOT Matrix for American Eagle Outfitters

Detailed SWOT Analysis of American Eagle Outfitters

The detailed SWOT analysis for American Eagle Outfitters is presented below:

Strength

1. Strong portfolio of highly recognized and trusted brands: American Eagle Outfitters (AEO) operates on a very strong and robust portfolio of highly recognized and trusted brands, including the two of most popular brands nowadays, American Eagle and Aerie. Targeting people falling in the age group of 15 to 25 years old, the brand American Eagle is renowned for its broad assortment of clothing and accessories as well as a leading jeans collection. The second most renowned brand, Aerie derives its uniqueness from promoting body positivity and empowerment and can be considered as one of the fastest growing specialty retail brands. The brand offerings include intimates, soft apparel, sleepwear, swim and personal care products. In the fiscal year of 2019, these two brands contributed 3.5 billion and 800 million dollars to the overall revenue of that year. In 2019, Aerie continued record breaking momentum and became a market leader for intimates and feel-good apparel.


2. Wide customer reach through digital, omni and retail: Years and years of experience has enabled American Eagle Outfitters to broaden its customer reach with a particularly strong presence in the core North American markets. The company operates on a fleet of 1,095 company-owned stores and 217 licensed store locations spread across 24 countries. This healthy store fleet operations leverages the benefits of AEO’s highly compelling omni-channel platform. Moreover, AEO runs a strong digital business with the help of its leading omni-channel capabilities. This omni-channel platform enables the company to ship to over 80 countries globally along with aiding the firm to pilot same day deliveries in the US in 2019. Running a cross country platform was made possible by AEO with a few key global partnerships.

Weakness

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Opportunity

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Threat

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POLITICAL

1. US-China trade war leading to imposition of import duties on foreign imports American Eagle Outfitters is an American company with a worldwide presence. A large slice of sourcing for the purpose of production as well as brand merchandising is done from domestic suppliers but manufactured overseas. This makes the company subject to uncertainties ensuing from the constantly changing import duties, quotas, taxes, delays in shipment, port constraints, economic instability, currency fluctuations etc. both in domestic and foreign fronts. The loss of "most favored nation" status by the US had a negative impact on prices of goods produced domestically. The general tension looming between the US and Chinese nations has occupied the center stage for quite some time in the global trade scenario. The Trump administration levied several new and increased tariffs on goods imported from China in 2018. Most of these tariffs were placed on the apparel industry affecting AEO’s sales greatly. Since most of its manufacturing was done abroad, the cost of the product was bound to increase. In response to the increase in tariffs by the US, China and other countries imposed retaliatory trade measures on the US in response. Though the Biden administration has tried to repair some of the damage done by his predecessor, a complete easing of tensions between the two nations hasn’t taken place. A continuation of this condition may cause AEO to look for alternative sources, increase prices, or change its operation strategy. It may have to reduce its inventory levels or increase the cost of its products, both of which are unwanted scenarios for the company.


2. Leveraging political activism as part of everyday marketing strategy: For some brands, particularly those focused on younger consumers, political activism has become part of their everyday marketing strategy–and it’s paying off. After the deadly February 2018 massacre at Stoneman Douglas High School in Parkland, Florida, students there began organizing to demand gun control. Their voices led to the massive March for Our Lives national movement, one that has left the National Rifle Association and conservatives apoplectic. The company sent an email blast to its database of millions of customers urging them to RSVP for the march and posted an image about the event to its 2.7 million Instagram followers. American Eagle has also been unabashed in its support for LGBTQ youth and has used trans models and same-sex couples in its ads.

ECONOMIC

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SOCIAL

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TECHNOLOGICAL

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LEGAL

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ENVIRONMENTAL

1. Long strides towards circular economy by promoting reduce and reuse: The rise in the middle-class segment of the society has given birth to the challenge of resource overconsumption, to deal with which requires long steps to be taken towards a circular economy. To prevent tons of apparels from ending up in landfills, American Eagle Outfitters aims to be a part of the movement towards a circular economy. It entered into a partnership with the Cotton Inc. program “Blue Jeans Go Green”, which collects jeans from the AE stores, and turns them into home insulation. Also, in order to reduce and eliminate the plastic usage in the supply chain, AEO has been able to save 4.3 million square meters of plastic every year since 2018, by using shopping bags made up of a higher percentage of recycled content. Moreover, the company has been using sustainably sourced labels for its brands, Aerie and American Eagle.