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American Eagle Charts a New Course

American Eagle Outfitters outlined growth plans for 2006 and beyond, which include rolling out its new intimates subbrand and entering Japan.

NEW YORK — Specialty retailer American Eagle Outfitters Inc. outlined on Friday its growth plans for 2006 and beyond, which include rolling out its new intimates subbrand and entering Japan.

The retailer also hinted at another new concept. “It’s important for you to know that we are going to throughout 2006 be developing a strategic plan for what our third concept will be, so we certainly have our eye on the future,” Susan McGalla, president and chief merchandising officer of American Eagle, told attendees on Friday at the ICR XChange conference in Naples, Fla.

The company’s second concept was Martin + Osa, announced last year.

McGalla said the company’s first subbrand in intimates could be a $1 billion sales opportunity, to be launched this fall. American Eagle said it would go after market share in panties and would launch personal care items in the second half of the year.

The company is already piloting bras. McGalla said, “To be serious about this [intimates] business, you have to be in the bra business.” The company has a “mega [bra] pilot this spring, and based on the results of that, we will be expanding it on the year forward.”

American Eagle’s new sportswear brand, Martin + Osa, which targets shoppers 25 to 40 years old and will pick up where the American Eagle brand leaves off, according to McGalla, is also seen as a $1 billion sales opportunity. As previously reported, three to five Martin + Osa stores will open in the fall.

Internationally, American Eagle has its sights set on Japan, having announced in November that it was in partnership with an unnamed firm to open stores there. American Eagle, however, will retain control of the brand’s international identity, McGalla stressed.

The first American Eagle stores should open there in 2007. The retailer expects to operate about 100 stores in Japan. McGalla said expansion there prepares the retailer to open sites in other parts of Asia, too.

American Eagle said stores are performing well in A-level malls, but the retailer sees more growth opportunities in lifestyle centers, where it currently has 45 stores. The company will test stand-alone intimates stores in one to three locations this year.

Overall square footage growth is seen at 5 to 6 percent annually, and denim remains a strong performer, McGalla added.

Commenting on the holiday fourth quarter, McGalla admitted American Eagle’s assortment “was not our best.” She added, however, that the team “had confidence in our brands, we had confidence in our products…and what we did was, we came out with a projected record season based on our holiday collection.”

American Eagle’s annual sales will surpass $2 billion in 2005 for the first time.

Shares of the Warrendale, Pa.-based company, which operates 868 American Eagle stores in the U.S. and Canada, ended Friday trading up 0.8 percent at $25.43 on the Nasdaq.