American Eagle Enters Japan - Analyst Blog

American Eagle Outfitters Inc. (AEO), in its endeavor to expand its geographical footprint announced the opening of its namesake brand and Aerie by American Eagle stores in Japan. The company has targeted Tokyo Harajuku shopping district for the launch of its first store in Japan in the first half of 2012.

American Eagle has entered into a franchise agreement with one of the primary marketer, importer and exporter, Sumkin, which has an in-depth experience in the fashion industry.

As per the agreement, American Eagle will be responsible for the merchandising and marketing department while Sumkin will take care of all the operational issues. The company will offer seasonal assortment coupled with merchandise specially designed for Japanese customers.

American Eagle has of late been keen on pursuing the overseas markets in order to expand its geographical footprint and boost growth. The company has recently opened its first store outside North America in Dubai and Kuwait. After Japan, the company has plans to expand in China, Hong Kong and Israel.

Japan, the home of fashion-conscious youth, is supposed to be one of the hottest destinations for retailers now. American Eagle is a known brand in Japan, which gives it an added advantage.

The international foothold may provide a boost to AmericanEagle's brand image, particularly in a difficult and intensely competitive scenario where the company lags peers like Abercrombie & Fitch (ANF) and Zumiez Inc (ZUMZ) on pricing and fashion.

American Eagleshares maintain a Zacks #3 Rank, which translates into a short-term Neutral rating. Our long-term recommendation on the stock remains Hold.

 
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