Ken Pilot has resigned as president of Martin + Osa, the American Eagle Outfitters division launched in September to appeal to 25- to 40-year-old men and women. Pilot, who joined American Eagle in February 2005, left to pursue other opportunities, the company said on Wednesday.
Roger Markfield, the former president of American Eagle and currently the company's vice chairman, has been named interim president. Markfield, who led the creation and development of Martin + Osa, joined American Eagle in 1993. The Martin + Osa management team will report to Markfield.
In a telephone interview, American Eagle's chief executive officer Jim O'Donnell said Pilot's departure will have no material effect on Martin + Osa's rollout. "Martin + Osa is still in its embryonic stage," he said.
Before joining Martin + Osa, Pilot spent three years at Polo, which he joined in September 2003 as president of factory stores and retail concept development. One development he was responsible for was Rugby. Pilot has an extensive background in specialty retail. He spent 13 years at Gap Inc. in various merchandising roles on a global basis, including president of Gap International. He exited Gap in August 2002 to try to turn around J. Crew as ceo, but left after just a few months when his former boss at Gap, Millard Drexler, took his place. Despite the short run at J. Crew, Pilot was reportedly well compensated, receiving about $4 million to leave, according to one source.
The circumstances of Pilot's departure could not be learned. O'Donnell said he hopes to name Pilot's replacement by the beginning of the year.
"Pilot wasn't the conceptual force behind the project," said Laurence C. Leeds, chairman of Buckingham Capital Management. "He is a wonderful guy and a fine executive, but the business will not be particularly adversely affected. Let's face it, this concept has had the gestation period of an elephant."
"I wish Ken well and wish things would have worked out differently," O'Donnell said. "Some people are up for the task of a start-up and some aren't. The team is passionate."
O'Donnell musters considerable excitement for Martin + Osa. "Overall, I like what I see," he said.Retail analysts, however, weren't quick to agree. "My guess is that they're not off to a great start," said Robert Buchanan, a retail analyst at AG Edwards & Sons Inc. "The business is still salvageable. It's always difficult to succeed with a new concept because the odds are heavily stacked against you. I've been in two of the three stores and haven't seen the foot traffic I'd like to see at this stage. Also, I wonder if the women's product is feminine enough to have a compelling appeal to the customer."
O'Donnell didn't take issue with Buchanan's comments. The women's apparel not being feminine enough "is a very accurate call out," he said. "[The second half of fall] shows that that comment was correct and we've corrected it now. Our holiday set will show that more, and spring will show it even more. We'll also have more opening price points like graphic T-shirts for men and women. I want to get more apparel in more people's hands."
As for foot traffic in Martin + Osa stores, "two of the three stores are doing quite nicely," O'Donnell said. "One is a little slower than I expected. It's in a new wing of an established shopping center." The traffic will increase once consumers become aware of the new wing, he said.
On Friday, Martin + Osa will open a store at the San Francisco Center and in early November, a unit will bow in Woodfield Mall in Woodfield, Ill.
"The rollout is not going as quickly as I'd like," O'Donnell admitted. "We ran into these logistical snags with the shopping centers. On Tuesday, we have a real estate meeting and we'll finalize the last of the 15 stores we'll open in 2007."
O'Donnell blamed the slow rollout on "a number of things that were external. I'm not the least bit disappointed. This is my fourth start-up, so I know the bumps."
Shares of American Eagle closed at $45.37, down 45 cents in Nasdaq trading.
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