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.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)