American Eagle acquires Tailgate as Q3 sales climb
American Eagle saw comparable sales grow 9% in the third quarter
American Eagle Outfitters has acquired Tailgate Clothing Company, owner of the Todd Snyder New York premium men's wear brand, as it revealed an increase in third-quarter comparable sales.
The deal, for around US$11m paid in cash and stock, includes the Tailgate vintage, sports-inspired apparel brand. Founder and creative director, Todd Snyder, will join American Eagle as executive vice president, reporting to global brand president Chad Kessler.
Jimmy Olsson joins as vice president and will continue to lead the day-to-day operations of Tailgate and Todd Snyder New York.
“We are thrilled to add these unique brands to our portfolio, which provide exciting new business opportunities,” said Jay Schottenstein, interim CEO. “Todd and Jimmy bring exceptional creative talent and operational skills. They will continue to lead the business, as our organisation remains focused on driving continued momentum and profit improvement. Capital investments in the Tailgate and Todd Snyder brands will be paced, with a test and scale approach based on profitability and return on investment.”
In its third-quarter, American Eagle reported a comparable sales increase of 9%. The company has raised its third-quarter EPS expectation to around $0.34 per diluted share, representing growth of 55% from adjusted EPS of $0.22 last year. The previous EPS guidance range was $0.28 to $0.31.
Stifel analyst Richard Jaffe noted: “Despite a challenging retail environment and unfavourable weather in the quarter, American Eagle achieved above plan results in the third quarter. Favourable customer response to the company’s improved merchandise, better quality product, and a more compelling shopping experience fuelled full-priced sales and less promotional activity, driving margin expansion. We believe strength was broad-based with men’s, women’s, and Aerie all performing well.”
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