3 Reasons You Should Own American Eagle Outfitters

The COVID-19 pandemic accelerated e-commerce adoption while wiping out many of the retail businesses that struggled to adapt. American Eagle Outfitters (NYSE: AEO), however, is in a position to survive and ultimately thrive for three reasons.

Prior to the pandemic, American Eagle Outfitters already had the systems and logistics in place to deliver products straight to shoppers' doors -- a division it dubbed AEO Direct. Its digital sales accounted for 29% of overall revenue in 2019.Having a successful online business already in place entering the pandemic allowed customers easy access to American Eagle Outfitters' various apparel brands without having to venture into a retail store. This was made clear in its most recent quarter, as in-person sales fell 16% year-over-year, but overall sales were buoyed by online strength, only dropping 3%.

American Eagle Outfitters had an even easier time transitioning to online sales thanks to the age demographic of its target customer. Its two primary brands, American Eagle and Aerie, both target high school and university-age students ages 13-29 -- a demographic group that's also the most active on social media. As stores began shutting down and customers stayed home, these customers were still able to connect and interact with the American Eagle and Aerie brands. American Eagle Outfitters Chief Creative Officer Jennifer Foyle even commented on its social media initiatives in its latest conference call, stating that TikTok fuels demand for the Aerie brand.

Source Fool.com