PITTSBURGH, Mar 09, 2010 (BUSINESS WIRE) -- American Eagle Outfitters, Inc. (NYSE: AEO) today announced that after
an extensive evaluation and review of strategic alternatives, it plans
to close its MARTIN+OSA concept, including all 28 stores and the online
business. Although performance improved from fiscal 2008, management
determined that the brand was not achieving performance levels that
warrant further investment. In fiscal 2009, MARTIN+OSA generated an
after-tax loss of approximately $44 million, including a non-cash
impairment charge of approximately $11 million, net of tax. The company
will focus its efforts and resources on the American Eagle family of
brands including, AE, aerie and 77kids, which have a greater potential
of creating long-term shareholder value.
"Closing MARTIN+OSA was a difficult decision, particularly in light of
the progress that was made over the past year," said Jim O'Donnell,
chief executive officer. "However, it is in the best interest of our
company and stakeholders to focus our efforts on the brands that
capitalize on our strengths and have the highest potential. I am
extremely proud of the innovation, hard work and dedication displayed by
the MARTIN+OSA team, and I am grateful for their achievements. I want to
personally thank our associates and external partners for their
contributions. Creating new brands is never an easy endeavor. The
valuable lessons and experiences we gained will serve us well, as we
continue to develop and launch new lifestyle brands."
Store closures are expected to be substantially complete by the end of
the second quarter of fiscal 2010. In conjunction with the closing of
MARTIN+OSA, the company expects the fiscal 2010 cash outflow, net of
associated tax benefits, to be approximately $10 to $40 million. This is
comprised of pre-tax charges of $32 to $77 million for lease-related,
severance and other charges. In addition, the company estimates
approximately $29 million of non-cash, pre-tax impairment charges and
inventory write-downs. These charges are expected to be recognized
primarily over the first and second quarters of fiscal 2010. These
estimates are preliminary and based on a number of significant
assumptions and could change materially.
American Eagle Outfitters, Inc., through its subsidiaries, ("AEO, Inc.")offers high-quality, on-trend clothing, accessories and personal
care products at affordable prices. The American Eagle Outfitters(R)
brand targets 15 to 25 year old girls and guys, with 939 stores in the
U.S. and Canada and online at www.ae.com.
aerie(R) by american eagle offers Dormwear(R) and
intimates collections for the AE(R) girl, with 137 standalone
stores in the U.S. and Canada and online at www.aerie.com.
The latest brand, 77kids(TM) by american eagle(TM), is available online only
at www.77kids.com.
77kids offers "kid cool," durable clothing and accessories for kids ages
two to 10. AE.COM(R), the online home of the brands of AEO,
Inc. ships to more than 60 countries worldwide.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements, which
represent our expectations or beliefs concerning future events,
specifically regarding our closure of the Martin+Osa business and the
development of new lifestyle brands. All forward-looking statements made
by the company involve material risks and uncertainties and are subject
to change based on factors beyond the company's control. Such factors
include, but are not limited to, the risks that the expense of closing
Martin+Osa is greater than expected and that the company will not be
successful in developing new lifestyle brands, and the risks described
in the Risk Factor Section of the company's Form 10-K and Form 10-Q
filed with the Securities and Exchange Commission. Accordingly, the
company's future performance and financial results may differ materially
from those expressed or implied in any such forward-looking statements.
The company does not undertake to publicly update or revise its
forward-looking statements even if future changes make it clear that
projected results expressed or implied will not be realized.
SOURCE: American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc.
Judy Meehan, 412-432-3300