American Eagle (AEO 0.85%) is a staple in malls, with its namesake brand along with the fast-growing Aerie brand. These two businesses are the main driving force at the company, but not the only divisions worth keeping an eye on. American Eagle’s purchase of Quiet Logistics has pushed it into the distribution business as well. Is that working out?
What really matters
Before we answer that question, it is important to stress that American Eagle and Aerie are far more important divisions. American Eagle has 867 stores and Aerie 297. In fact, even the relatively tiny Todd Snyder business, with just 11 stores, is probably more impactful than the Quote Platform.
It shouldn’t be too shocking that a retailer’s top and bottom lines would be driven by its retail brands. Indeed, American Eagle had a touch over $1 billion in revenue in the first quarter. American Eagle is the larger brand, producing roughly $670 million in sales, with Aerie at about $360 million (Todd Snyder isn’t broken out).
That said, the big trend to watch here is the general decline in the American Eagle brand as the company looks to “right-size” that operation while it also seeks to grow Aerie. American Eagle’s sales fell roughly 2% year over year in the quarter, while Aerie’s sales increased by about 10%.
On the bottom line, American Eagle posted earnings of $0.09 per share in the first quarter, down from $0.16 in the first quarter of 2022. There are a number of moving parts, but two key issues in the quarter were increasing costs and a one-time impairment charge for the company’s investment in Quiet Platform. They are connected issues.
A work in progress
In 2021, American Eagle bought Quiet Logistics, which is basically the foundation for its