American Eagle Outfitters Inc. is headed to the Land of the Rising Sun.
Under a franchise agreement with Sumikin Bussan Corp., the company will open aerie and American Eagle stores in Japan, with the first slated to open in Tokyo’s Harajuku district in the first half of 2012.
The retailer noted that since opening its first stores outside of North America in Dubai and Kuwait earlier in the year, it has been “steadily pursuing” an international strategy, with agreements for stores in China, Hong Kong and Israel, “as well as plans for other countries.”
“American brands expanding to Japan have had a good degree of success,” said Morgan Stanley analyst Kimberly Greenberger. “The Japanese consumer, like the American consumer, is asking for and demanding more value.”
“There is tremendous opportunity for sportswear brands in Japan, both domestic and international,” said Sumikin president Gashun Amaya. “American Eagle Outfitters is increasingly popular among Japanese customers, who have experienced it in their travels to the U.S. and Canada, as well as online.”
“Japan is one of the most important international markets for retail and home to millions of fashion-conscious young people,” said AEO chief executive officer Jim O’Donnell. “Sumikin Bussan Corporation is the ideal partner for this region, given their extensive experience, industry leadership, and commitment to creating lasting value for customers.”
Compared with rivals like Abercrombie & Fitch Co. and Aéropostale Inc., American Eagle is a bit late to the international expansion game. As a result, the shift to international is logical for the Pittsburgh-based firm, which has a 934-store fleet in the U.S. and Canada.
Greenberger gives Abercrombie & Fitch credit for seeing an opportunity to expand abroad before other teen retailers. “Abercrombie learned a lot from its Fifth Avenue flagship [in New York],” the analyst said. “They discovered that the lion’s share of that business was done by tourists.” The retailer also realized it had a strong following in Japan after it shut down a reseller, who ordered A&F clothing to sell in Japan a few years ago.
While competitors were opening new locations abroad, American Eagle was embroiled with its struggling and now-defunct Martin + Osa division, as well as with working to fine-tune its aerie brand.
“They are still working on turning the aerie division to profitability. It’s a more manageable challenge now,” Greenberger said, adding that partnering with Sumikin will help the company navigate the Japanese retail market more easily than if it had decided to open stores on its own.
“The franchising model allows for more rapid penetration internationally…and a rapid expertise,” the analyst said, explaining that, on the downside, “the revenue and profit from franchising or licensing agreements is substantially smaller.”
Limited Brands Inc.’s Bath & Body Works and La Senza, as well as Gap Inc. and Coach Inc., use franchising to help grow their brands abroad. Of the 3,369 units open as of Oct. 30, Claire’s Stores Inc.’s portfolio included 398 stores operated under franchise or license agreements, spanning markets such as Japan, the Middle East, Turkey, Russia and South Africa. Others, like Urban Outfitters Inc., The TJX Cos. Inc. and Abercrombie, don’t franchise their businesses.
Japan’s economy has been soft this year and there are concerns it could backtrack financially in the new year. In the third quarter, its gross domestic product grew at an annual rate of 1.1 percent, up from about 0.4 percent in the second quarter but below the first-quarter rate of 1.2 percent, according to TradingEconomics.com.
Shares of American Eagle closed Tuesday at $14.77, up 1 cent or 0.1 percent.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews