American Eagle Outfitters Inc. opened its third store in Mexico today in Guadalajara, less than one week after opening its second store in that country in the Santa Fe district of Mexico City, where the Santa Fe mall is the third largest in Latin America.
This story first appeared in the June 7, 2013 issue of WWD. Subscribe Today.
The plan is to have six stores in Mexico by yearend, according to Simon Nankervis, senior vice president, Americas and global country licensing. The first store opened in Mexico City in January. The stores will include an aerie presence either as a shop-in-shop or a side-by-side format.
“Mexico has been a phenomenal business for us. We have over 1.5 million Facebook fans. When we enter a market [where the stores are] company owned, we launch our direct-to-consumer business first, then our brick-and-mortar store,” Nankervis said.
In addition to the three stores planned for later this year, the company has inked deals for two store sites for next year in Mexico. Nankervis said the market can support 40 to 50 American Eagle stores, which will be opened over the next three to four years provided the global economic backdrop remains stable.
In Latin America, the biggest market opportunity is in Mexico, largely because the country has the largest population and is the most developed in the region. There are also opportunities in Colombia, Panama and Brazil, according to Nankervis. He said “Brazil is one of the biggest for growth potential; it’s a matter of timing,” explaining that right now customs and import duties require companies to work with different business models, such as a joint venture or licensing to enable scalability. How fast the Brazilian market can develop will depend on what “approach the Brazilian government takes to become a global player,” Nankervis said.
The licensing model is used in Japan, the Philippines, Israel and Poland, with deals structured for either five, seven or 10 years. The joint venture model has greater potential for India and Brazil due to the size and scope of the local markets, Nankervis said. American Eagle is also in China, where it owns and operates its stores.
While U.S. stores can be more than 7,000 square feet on average, the overseas stores have a wider square-footage range. Three in Japan are more than 7,000 square feet and three are under that size. Some stores in Israel are as small as 4,000 square feet. The store concept is adjusted to fit the particular space range and still maintain the same shopping experience.