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Real Power. Real Growth.2021 Investor Meeting
Welcome Jay SchottensteinExecutive Chairman & Chief Executive Officer
Brand GrowthJen FoyleChief Creative Officer & Aerie Global Brand President
Customer Focus & Operational ExcellenceMichael RempellChief Operations Officer Financial OutlookMike MathiasChief Financial Officer
ESG & Closing RemarksJay Schottenstein
Today’s Agenda
2
Safe Harbor Statement Under The Private SecuritiesLitigation Reform Act Of 1995
This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including our long-term financial
outlook. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company’s control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," “potential,” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of newinformation, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or
implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and in our Quarterly Reports on Form 10-Q for the fiscal quarters ended May 2, 2020, August 1, 2020, and October 31, 2020, and in any other filings that we may make with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results for the fourth
quarter 2020 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in thisrelease or otherwise made by management: the negative impacts of the COVID-19 pandemic and related operational disruptions; the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing
fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financialperformance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems,
including safeguarding against security breaches; and global economic, public health, social, political and financial conditions, and theresulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits,
which could have a material adverse effect on our business, results of operations and liquidity.
Historical consolidated operating income and EBIDTA reflect adjusted results, which are reconciled in the Form 8-K filed with theSecurities and Exchange Commission (SEC) on January 21, 2021.
3
Real Power. Real Growth.
4
Double Aerie to $2 Billion
Reignite American Eaglefor Profit Growth
12
5
2020 Demonstrated2020 Demonstratedthe Power of AEOthe Power of AEO
6
Protect Our People
2020 AEO Priorities
Preserve Financial Health
Prepare For a New Future
123
7
8
9
Photos by Andrew Spear for The Washington Post10
AEO’s Strong HeritageAEO’s Strong HeritageSince 1977Since 1977
Optimistic Innovative
True
Resilient AuthenticIndependent
InclusiveRealOpen-Minded
11
FundamentalsTo Drive Success
Great ProductCompelling MarketingStrong Customer ConnectionsUnique Brands
12
Prioritize ProductQuality & Innovation
FabricFitWashConstructionTechnologySustainability
13
REAL GOOD products are made with the planet in mind. Durable eco-friendly,
and made to last.
Everyday more and more of our products are getting the REAL GOOD treatment.
14
Product Superpower:Category Focus Drives Loyalty &Creates Brand Opportunities
Jeans#1 Position Drives AE’s Success
IntimatesLaunched Aerie’s Incredible Growth
Leggings / Sports BrasPlatform for Aerie’s Activewear Opportunity
15
The Most ExcitingConcept in Retail
• Accelerating Growth to $2 Billion
• Unique Brand Platform
• Massive $65B Market Opportunity
• Double-Digit Customer Acquisition
• Scale Fueling Profitability
16
A DominantAmerican Brand
• Leading Apparel Brand
• #1 Jeans Brand1
• Strong Profit & Cash Flow
• Product Leadership
• Optimize Profitability
1 NPD – U.S. Market, Ages 15-25
17
Value Creation Plan
18
• Double Aerie to $2 Billion
• Reignite American Eagle for Profit Growth
• Leverage Customer-Focused Capabilities
• Strengthen ROI Discipline
• Power of People, Culture and Purpose
Driving Strong Financial Results 2023 Targets
REVENUE 2019 2023E CAGR
AE AERIETOTAL AEO
$3.5B $0.8B$4.3B
$3.5B$2.0B$5.5B
0%26%6%
2019 2023E
TOTAL AEO 7.3% 10.0%
OPERATING MARGIN
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
OPERATING INCOME 2019 CAGR2023E
AE AERIECORPORATE UNALLOCATEDTOTAL AEO
$526M $68M$280)M$314M
2%46%3%15%
$560M$310M$320)M$550M
( (
19
AEO is Well-Positioned to Thrive
UNIQUE ADVANTAGES
+FAVORABLE MACRO
Strong Brands
Leading Customer CentricOmni-Experience
Agile Suppy Chain
Financial Strength
Disrupted Competitive Landscape
Shifting Consumer Behavior to Digital
Growing Casual, Cozy & Activewear
Real Estate Opportunity
20
Fueling Aerie’sMomentum...Doubling to $2 Billion
[Placeholder] Aerie Sizzle Reel
#AerieREAL is...• No Retouching
• Positivity
• Empowerment
• Confident on the Inside & Out
• Inclusivity
Let The Real You Shine.TM
Aerie is More Than a Brand, It’s a Movement
23
Aerie’s Growth hasBeen Strong & Consistent24 Consecutive Quarters of Double-Digit Growth
2015 2016 2017 2018 2019 2020E
$0.3B
$0.4B$0.5B
$0.6B
$0.8B
$1B+25% CAGR
AERIE REVENUE
24
Aerie's Roadmap to $2 Billion
Market Expansion
Activewear Product Extension
1234
Winning in Intimates & Lounge
New Customer Acquisition
25
Aerie’s Massive Runway in anAttractive Addressable MarketTOTAL WOMEN’S APPAREL
INTIMATES, SOFT APPAREL, SWIM, ACTIVEWEAR
INTIMATES,SOFT APPAREL, SWIM
AERIE TODAY
$123B
$65B
$44B
$1B
U.S. Market Only; Source: NPD; Category Data T12M Through Dec 2019 (Pre-COVID)
26
INTIMATES
SOFT APPAREL
ACTIVEWEAR/OFFLINE
SWIM
BEAUTY & ACCESSORIES
2015 2020E
60%31%
33%
21%5%
10%
20%
13%
4%
2%
$0.3B
$1B
Expanding All Major Categoriesto Complete the Aerie Lifestyle
27
Aerie Undies Build Loyalty
FeaturingThe Original Boy BriefThat Started It All...
Over 130M Sold!
28
Bras &Bralettes Build
Loyalty
29
REAL Sunnie Bralette
30
31
REAL Sunnie Bralette
Soft ApparelDrives Repeat
Purchase
32
SwimBrings New Customers
33
Swimwear
34
Swimwear
35
This Spring, Aeriewill Introduce Intimates,
Apparel & Activewear to the Sustainable
REAL GOOD Collection 36
is a celebration of the hell yeahs andthe aww mans, the oms and the ughs,
the trips and the triumphs.
No matter where you are on yourjourney, keep moving forward with love.
And remember sweat looks good on YOU. OFFLINE™ by Aerie.
Activewear made for REAL life.
37
Clear Opportunity forAerie in Activewear
$21B Market1
...and growing
~$200MOFFLINE by Aerie2
1Market Size from NPD2OFFLINE by Aerie Revenue Reflects FY 2020E
38
39
40
15%
8.5 Million +1400 BPS
10% =+ 25%Annual
Spend 5-YearCAGR
5-Year SalesCAGR
Customer Count 5-Year
CAGR
Identified Customers 5-Year CustomerRetention Increase
Aerie’s Strength is itsREAL & EmotionalConnection to Customers
41
Customers Love How Aerie Makes Them FEEL
Most people have suffered from body image issues, includingmyself. But through #AerieReal,I’m able to help other women learn how to love themselves."
“ “ The first time I walked into Aerie in 6th grade, I remember never having seen someone who looked like me model clothes before and have it be seen as completely normal not like a special exception... Aerie has really had a real positive impact on my confidence."
“ The first time I saw a model online with beautiful stretch marks I cried, that is not something I grew upseeing as a good thing in themedia, so thinking about future generations getting to see thatportrayed in a positive way makes me so happy."As someone who has struggled with
body dysmorphia, it's nice to see models with cellulite who look like me and are not airbrushed and fake.It’s empowering to see others with the same body types and all size ranges represented."
“
#AerieReal has made me feel more accepted and included with the representation of different races and body types."
“
Aerie has made me feel inspired and more confident in myself."
“
It’s empowering to see others with the same body types and all size ranges represented."
“
42
Has Built OurCommunity Around EmpoweringPeople To LoveTheir REAL Selves
43
The Connection WithOur Customer is REAL
44
45
Aerie’s Powerful MomentumFueling Strong Growth:2023 Financial Targets
Operating Income Excludes UnallocatedCorporate Expense
REVENUE OPERATING INCOME
2019A 2019A2023E 2023E
$68M
$801M
$310M$2.0B
+26% CAGR +46% CAGR
46
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
Reignite forProfit Growth
Everyone Is Welcome
48
[Placeholder] AE Sizzle Reel
American Eagle is a Powerful$3 Billion+ Brand
2015
1 CAGR 2015 - 2019
2016 2017 2018 2019 2020
AMERICAN EAGLE REVENUE
+2% CAGR PRE-COVID1
$3.2B $3.2B $2.7B$3.3B $3.4B $3.5B
COVIDIMPACTED
50
Reignite AE for Profit Growth
Optimize Inventory
Refresh Brand DNA
Complete the Outfit
Right-Size Store Footprint
1234
51
A Favorite BrandRANK
#2
#3
RETAILER
WITH FEMALES
WITH MALES
%
1
3
4
5
6
7
8
9
10
27%
5%
4%
4%
3%
3%
3%
2%
2%
2Nike
AdidasPacsunHollisterlululemonH&MUrban OutfittersVansForever 21
8%
Source: Piper Sandler Fall 2020 “Taking Stock With Teens”; Data Reflects % of Surveyed Teens Preferring the Brand
52
A Strong ConnectionTo The Most In-DemandGeneration
Targeted Demo Spends2X the PopulationAverage on Apparel
Source: NPD
53
TRUEWE ARE
Our relatability, integrity,consistency and positivity
are the cornerstones of ourtrusted relationship with
our customer.
54
We AreAn AmericanYouth Culture
Brand.
ICONIC
RELEVANT
CURRENT
YOUTH
CULTURE
MODERN
LIFE
MEETS
TIMELESS
STYLE
55
Marketing Aimed atDeepening EmotionalConnection to Customers
• Storytelling• Influencers + Social• RealRewards
Brand Love
56
We Are AYouth Culture
Brand.AE is passionate about our
customers' passions, and weengage with how and where
they spend theirtime.
57
American Eagle isFamous for Jeans
Jeans Brand
Women’s Jeans Retailer
Men’s Jeans Retailer
U.S. Market Only; Source: NPD, 12 Months Ended November 2020
Ages 15-25
All Ages
Ages 15-25
#1#1#1
58
7.3
6.4
5.2
4.3
4.3
3.4
3.2
2.8
2.8
The Clear Leader in JeansMen’s & Women’s Jeans Brands | Ages 15-25 Women’s Jeans Retailers | All Ages
RANK RANK
2
3
4
5
6
7
8
9
10
2
3
4
5
6
7
8
9
10
10.5
7.2
4.9
2.3
1.7
1.4
1.2
1.2
1.1
Hollister Old NavyLevis Walmart
Old Navy Kohl’sForever 21 Ross Dress For LessAeropostale Target CorpWrangler NordstromPacific Sunwear Amazon.comExpress Macy’sFashion Nova Marshalls
BRAND BRANDMARKET SHARE MARKET SHARE
1 118.2 9.9
U.S. Market Only; Source: NPD, 12 Months Ended November 202059
60
Jeans are Foundationalto Our Customer Bond
• New Customer Acquisitions• Retention• Customer Lifetime Value
61
American Eagle ProductFocus: Complete the Outfit
Design, Buy and Market Big Ideas
Build on Jeans
Quality is Paramount
Emotional Details are Remembered
62
Tees
Fleece Sweaters
Flannels
Prioritize TopsQuality & Innovation
FabricFitWashConstructionTechnologySustainability
63
Love Your Jeans. Love Your Planet.
REAL GOOD products are made with the planet in mind. Durable eco-friendly,
and made to last.
Everyday more and more of our products are getting the REAL GOOD treatment.
64
Operating Income Excludes UnallocatedCorporate Expense
Reignite Profit GrowthThrough Margin Expansion
REVENUE OPERATING INCOME
2019A 2019A2023E 2023E
$526M
$3.5B $3.5B $560M
+0% CAGR +2% CAGR
65
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
OperationalExcellence &Customer FocusEmerging From 2020 Strong,Positioned for Growth
67
Leverage Insights to DriveCustomer Value
• 19 Million Customers• 85-90% Identified Sales Rate • Multi-Channel Engagement
• 3X Average Spend• Higher Retention• Superior Margins
RELAUNCHED July 2020Loyalty Program –
Brought Loyalty Program In-House From Third Party
• Greater Speed & Flexibility • Direct Control Over Customer Data
New Program Delivers More Frequent Rewards
• Increased Redemption Rate • Higher Sales Lift • Margin Improvement
68
Leading withCustomer CentricOmni-Experience
Buy Online,Ship From
Store Buy Online, Pick-Up From
Store
Store ToDoor
SocialCommerce
CurbsidePick-Up
PopularMobile
App
Customer Self-Checkout
(Pilot)
AlternativePaymentOptions
Same DayDelivery
(Pilot)
Digital + Stores =Frictionless, Convenient
Shopping
69
Transforming Supply Chainfor Accelerating Demand, Speed and Efficiency
• Regional Distribution Nodes
• Organizational Changes, System Upgrades and Enhanced Analytics • Strengthened Factory and Logistics Network Linkage for Speed & Efficiency
• Inventory: Right Place, Right Time
• Improved Inventory Turns
EFFICIENCY SPEED
• Product Closer to Customers
• Faster Store Replenishment
AGILITY
• Capital Light Model
• Better In-Stocks & Less Trapped Inventory
• Delivery Carrier Diversification
70
$0.7B
$0.6B
$0.8B
$1B$1.1B
$1.3B
$1.7B
$0.1B
$0.1B
$0.5B
$0.2B$0.3B
$0.4B
$0.6B
$0.8B $0.8B $0.9B $1.1B
2015 2016 2017 2018 2019 2020E
Strong and ConsistentDigital Growth
+22% 5-Year CAGR
AE AERIE
71
72
$0.1B$0.3B
$0.4B $0.6B$0.8B
$1.1B
$0.5B $0.5B $0.6B $0.5B $0.5B $0.6B
2015 2016 2017 2018 2019 2020E
Strong and ConsistentDigital Growth
+22% 5-Year CAGR
DESKTOP APP & MOBILE
$0.6B
$0.8B
$1B$1.1B
$1.3B
$1.7B
73
Store Fleet is a Positionof Strength
• 95%+ of stores were 4-Wall positive in 2019
Store counts for U.S. and Canada only; updated 3Q20
• Average lease term of 2.8 years, with significant near-term maturities
880 Stores
U.S. B Mall
U.S. C Mall
Canada
Factory
U.S. A Mall
Flagship/Street
188 83
161
6
302140
74
64
Store Closures to MaximizeProfit Transfer
LEASE TENURE
4-WALLPROFITABILITY
MALL PROSPECTS
DEMOGRAPHICTRENDS
PROXIMITY TONEARBY STORES
Financial
Customer
Market
CUSTOMER PROFILE & CROSS-CHANNEL
ENGAGEMENT
IMPORTANCE FORACQUISITION
75
Evolving AE’s Store Footprint
• 52 Closures in 2020
• Negotiated Rent Reductions &
• Testing Smaller Formats
• Variable Cost Structure & Capital Efficient
Short-Term Renewals
TARGETING 600-700 U.S. AND CANADA AE STORES
76
Huge Aerie CustomerOpportunity
Customer Penetration5 - 8% 3 - 5% < 3%8%+
Customer penetration = Aerie customers as a % of female populationCurrent customer and digital penetration reflects FY 2019 data
Aerie store count includes standalones, side-by-sides and OFFLINE; updated 3Q20
342
550 >50%
43%+
+
Aerie Stores
Aerie Stores
Digital Penetration
Digital Penetration
CURRENT
2023 PROJECTED
77
AEO Revenue is Concentrated inU.S. & Canada (94%)
Disciplined Approach to International Expansion
International: Long-Term OpportunityAEO’S REVENUE MIX
• Focused on Mexico and Hong Kong • Capital Light and Digital-Led Approach • Tailored Commercial Model for Each Market
Franchise Strategic Wholesale Concession Selective DTC
UNITED STATES
CANADA
MEXICOHONG KONG
LICENSE
78
AEO 2020 PriorityPreserved Financial Health and Emerged with Strength
Fourth Quarter Outlook Fueledby Aerie, Digital & Strong Margins
Operating Income of$95M+ vs. $77M LY
Aerie Revenue: Up High 20%'sAE Revenue: Down Low Double DigitsAEO Revenue: Down Low Single Digits
80
4Q19 results presented on an adjusted basis; 4Q20 outlook excludes potential assetimpairment and restructuring charges
• Double Aerie to $2 Billion
• Reignite American Eagle for Profit Growth
• Leverage Customer-Focused Capabilities
• Strengthen ROI Discipline
• Power of People, Culture and Purpose
Value Creation Plan
81
2017 2020E
StoreComps
UnderlyingDigital Growth
NewStores
DigitalHalo
2023E2023E2020E
Aerie’s Momentum to Continue– Roadmap to $2 Billion
+27%CAGR
+26%CAGR
STORES
DIGITAL
$0.5B
$2B $2B
$1B $1B
82
Aerie’s New Stores Generate Strong Returns
Less than 3 Years
At least 15%
Payback period on new stores
Return hurdle on new Aerie openings
83
Aerie’s Financial PlanOperating Income Excludes Unallocated Corporate Expense
2019A 2019A2023E 2023E
$68M
8.5%
$310M 15.5%
+46% CAGR +700 BPS
REVENUE
2019A 2023E
+26% CAGR
$801M
$2.0B
84
Aerie’s Financial Plan
OPERATING INCOME OPERATING MARGIN
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
AE’s Financial Plan
$526M
$3.5B $3.5B $560M15.1% 16.0%
+0% CAGR +2% CAGR +90 BPS
85
Operating Income Excludes Unallocated Corporate Expense
REVENUE
2019A 2019A2023E 2023E2019A 2023E
OPERATING INCOME OPERATING MARGIN
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
Opportunity to Rebuild AE’s Merchandise Margins
2016 2017 2018 2019
AS CC COUNTS HAVE INCREASED,MERCHANDISE MARGINS HAVE DECREASED
CHART DATA SCALE IS APPROXIMATE
AE MERCHANDISE MARGINS
Inventory Discipline
Controlled Promotions
Improving Competitive Landscape
New Leaders in Place
AE CC COUNT
86
Inventory Optimization
Reduce Assortment Breadth
Deeper Product Buys
Flexible Systems andOperations
CHART DATA SCALE IS APPROXIMATE
REVENUE CONCENTRATEDIN 40% MOST
PRODUCTIVE CCS
OPPORTUNITY FORREDUCTION IN LEAST
PRODUCTIVE CCS
87
Driving Strong Financial Results 2023 Targets
88
REVENUE 2019 2023E CAGR
AE AERIETOTAL AEO
$3.5B $0.8B$4.3B
$3.5B$2.0B$5.5B
0%26%6%
2019 2023E
TOTAL AEO 7.3% 10.0%
OPERATING MARGIN
2019 results presented on an adjusted basis; 2023 targets exclude potential asset impairment and restructuring charges
OPERATING INCOME 2019 CAGR2023E
AE AERIECORPORATE UNALLOCATEDTOTAL AEO
$526M $68M$280)M$314M
2%46%3%15%
$560M$310M$320)M$550M
( (
Path to 10% Operating Margin
+270 BPSIMPROVEMENT
+Aerie Growth Leverage
Inventory Optimization
Right-Sized Store Fleet
Product Mix
Delivery & Distribution
Labor Inflation
89
Financial targets exclude potential asset impairment and restructuring charges
Long History of Financial Strength andReturns to Shareholders
$1.6B
$0.8B
$1.1B
$1.9BReturns toShareholders
DIVIDENDS
SHAREREPURCHASE
2011 - 2019 CAPITAL ALLOCATION
2015 2016 2017 2018 2019
$342M$366M
$415M$394M
$457M$472M
$514M $512M$485M
$499M
CAPEX
OPERATING CASH FLOW EBITDA
90
Capital Allocation Priorities
Investments to Fuel Aerie’sGrowth & Build Capabilities
Preserving Balance Sheet Strength
Direct Shareholder Returns
123
91
AEO’s Value Creation Model
Mid-Single DigitRevenue Growth
Dividends & Share Buybacks
Healthy Free Cash Flow
Compelling Shareholder Returns
10% OperatingMargin
92Financial targets exclude potential asset impairment and restructuring charges
ESG & Closing RemarksJay Schottenstein, Executive Chairman and CEO
EnvironmentAEO’s Sustainability Goals Include a Comprehensive Plan to be Carbon Neutralin AEO-Owned Facilities by 2030 with a Commitment to:
Reduce water use per jean by 30% by 2023
Recycle 50% of our total water used in denim laundries by 2023
Apply AEO Wastewater Management Standard to 100% of water-intensive factories, mills and
laundries by 2023
Reduce carbon emissions 40%by 2030 and 60% by 2040 in
manufacturing from a 2018 base year
Achieve carbon neutrality in all owned and operated facilities
(offices, stores, distribution centers) and employee business travel
by 2030
Reduce carbon emissions inmanufacturing 40% by 2030 and
60% by 2040 from a 2018 base year
100% sustainably sourced cotton by 2023
50% sustainably sourced polyester
50% sustainably sourcedman-made cellulosics
Divert apparel waste from landfill
Reduce plastic packaging
Reduce labeling and convert all
labels to sustainably sourced materials by 2021
Water Reduction Energy Reduction Sustainable Materials Reduce & Reuse
94
79
At AEO, we have aresponsibility to do better, to be better, to build abetter world.
Through theAEO Foundation we give back to our communities and support numerouslocal and national causes.
95
96
Our Brands Sponsor a Number of Causes thatare Important to Our Customers
97
Social & GovernanceAEO is Committed to Strong Social Programs, Effective Corporate Governanceand the Highest Ethical Standards
Robust policies and programs tosupport well being of our people
Prioritize empowerment,career development and rewards
Committed to responsible sourcing, vendor compliance code with regular
factory inspections
Effective HumanCapital Management Highly engaged, talented Board of
Directors with breadth of experience and expertise
4 of 9 Directors are diverse ingender and/or ethnicity
Except for Executive Chairman,all directors and committees are
100% independent
Strong oversight across allfunctions, including ESG
Strong Governance
Optimism and being Real are thefoundation of our culture with a strong
set of values at the core
Inclusion and Diversity is at the centerof our culture
Named Chief I&D Officer in 2020
Launching $5M commitment to REAL Change Scholarship for Social Justice
Company Culture isa Differentiator
98
Double Aerie to $2 Billion
Reignite American Eaglefor Profit Growth
12
99
Our PEOPLECome First
Thanks TEAM!
100
Q&A Session