US: American Eagle to drop 77kids children's brand
Teen apparel retailer American Eagle Outfitters is looking at selling part or all of its loss-making children's brand 77kids, after revealing plans to exit the business.
The company is exploring options for the division, which includes 22 stores and an e-commerce site. It generated an after-tax loss of around US$24m on sales of $40m in fiscal 2011, and charges linked to its disposal are likely to be incurred in the second and third quarters.
Launched in October of 2008 as an online-only brand, the 77kids brand sells on-trend clothing and accessories for kids aged two to ten. It moved from the internet to the high street for the first time in 2010.
"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," said CEO Robert Hanson.
Earlier this month American Eagle Outfitters raised its first-quarter earnings outlook after achieving stronger sales of full-priced spring merchandise. Net sales for the quarter jumped 18% to $719m, while comparable store sales increased 17%, including sales from American Eagle Outfitters direct.
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