American Eagle Outfitters to Exit China Market
SHANGHAI — American Eagle Outfitters has officially closed its Tmall store, prompting speculation that the brand is exiting the Chinese market.
The American retailer posted on its WeChat official account recently that the brand is going through a “temporary break.” Chinese shoppers can still purchase American Eagle and Aerie products on its official website, but it appears that all products ordered will be shipped from the U.S.
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The company, founded in 1977 by Jerry and Mark Silverman brothers, currently includes American Eagle, Aerie, Offline by Aerie, Unsubscribed, AE77 and Todd Snyder in its brand portfolio. Plagued by rising supply chain costs, increased inventory, and inflationary pressures, profits logged $31.7 million, down from $95.4 million a year ago in its most recent first-quarter earnings report.
“As AEO Inc. continues to deepen the global footprint of its signature American Eagle and Aerie brands, the company has made a strategic business decision to refocus its priorities on a sharper set of geographies where it has an established presence across brick-and-mortar and digital channels,” an American Eagle Outfitters spokesperson told WWD. “As such, the digital-only business within mainland China operated by Tmall has been retired. This exit does not impact the [Hong Kong] operations, which are an important part of our [Asian Pacific region] growth strategy.”
AEO entered the Asian market with the American Eagle brand. It opened a store in Hong Kong in 2011. In May of the same year, the brand opened an Asian flagship store in Shanghai, followed by stores in Beijing, with Dickson Concepts as its local retail partner.
In 2014, the company launched an official Tmall flagship store featuring American Eagle and its sister brand Aerie. With a focus on online, the retailer slowly shrunk its offline retail presence. In June 2019, it closed all brick-and-mortar stores in mainland China. The American Eagle and Aerie brands still operate more than 10 brick-and-mortar stores in Hong Kong.
Known for its denim and accessible casual wear products, the American retailer has shifted its focus onto the Indian market this year, with plans to open 50 stores in partnership with Aditya Birla Fashion and Retail.
Joining the likes of Urban Outfitters, Topshop, Asos and New Look that left the Chinese market in recent years, AEO’s potential exit is further evidence that the Chinese market is becoming increasingly tough. Compared to international fast-fashion players, domestic brands offer items at an even lower price point at a faster pace.
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