Icon axes children's concept | IR News

Icon axes children's concept

Posted Date: 21/05/2012

By Emilia Terzon

In a double whammy, US retailer American Eagle Outfitters is losing both its CEO and the four-year-old children's venture, 77Kids.

The company will exit the children's concept, which has opened 22 stores since being introduced as an online-only brand in 2008, and is now "exploring options".

CEO Joan Hilson is also stepping down in July to be replaced by her VP and controller, Scott Hurd, until a replacement is found.

American Eagle, which itself has 1000 mainline stores, is exiting 77Kids after it reported a net loss of US$24 million for the year ending January 28 off sales of $40 million.

“Although making this decision is disappointing, it is in the best interest of the company and our shareholders to prioritise and focus our efforts on businesses with the highest return potential,” says Hanson.

Estimates for the chain's purchase are as yet unknown, with a charge tied to the 77kids brand sale to be taken “primarily in the second and third quarters".

Hanson says that 77Kids, which targets babies and children up to the age of 14, had cut inventory and improved product assortment to boost profitability.

American Eagle is due to announce its first-quarter results on May 23, with it reporting sales of $3.16 billion and net income of $151 million that time last year.

The 77Kids concept was remarkable for its use of technology in encouraging kids to try different clothing combinations and share images with their friends, and engendering a community feel with features like a wall of photographs of child customers.

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Comments:

Tuesday, May 22, 2012 by carmel

remarkable??? there's nothing remarkable about losing $24 million!

Monday, May 21, 2012 by Jim

How can any so called corporate business loose $24 Million on sales of $40 million ?? Does not seem possible to me unless unless someone took their eye seriously off the ball OR PERHAPS someone stole it whilst they
were not looking !!!!
Just seems ludicrous.

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