American Eagle CEO Resigns After Short Tenure

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Robert Hanson leaves in the midst of a tough year for company and teen retail industry

Following the close of the market last Wednesday, American Eagle announced that CEO Robert Hanson is leaving his post after a short two years with the company. This move came as a surprise to Wall Street analysts, like RBC Capital Markets’ Howard Tubin, who says, “He had been implementing meaningful and positive changes to the business. We are a fan of Mr. Hanson, and he was, generally speaking, liked by Wall Street.”

While the company has not given a reason as to why Hanson is leaving, it says that executive chairman and former CEO Jay Shottenstein is taking Hanson’s place in the interim as the company searches for a new CEO. In an effort to keep the company running smoothly and reassure investors in the midst of these changes, executive creative director Roger Markfield has postponed his planned retirement. Since he joined the company in 1993, Markfield has stepped in during other challenging times for the retailer.

And this is certainly looking to be an increasingly difficult time in both the teen apparel industry and for American Eagle. Last week, Hanson told analysts that American Eagle had a troubling 2013, not only because of the state of the economy, but also because of the company’s execution. He told investors, “The first thing we want to talk about was execution because we did not execute as we should have in 2013 and we would attribute at least half of our underperformance to weak execution.”

Though American Eagle has often been regarded for building a strong and unique brand, it has not proven immune to competition from rivals Forever 21 and H&M, as well as a stingier customer base. As the Los Angeles Times reported back in September, teen retailers had a tepid back to school season, in part because of a sluggish job market for teens, which has impacted their available spending money. Not to mention parents still find themselves struggling with their own finances in a difficult economy. The teen retail sector is also a difficult sub-sector because fashions and customer tastes are constantly changing.

Despite the fact it had a solid Thanksgiving weekend, American Eagle lowered its outlook following the holidays, like many other retailers, attributing its difficulties to slower traffic and sales nearing Christmas. The company’s total net revenue for the 9 weeks ended January 4 was $882 million, a 2 percent decrease from last year’s $904 million. Comparable store sales were down 7 percent compared to a 5 percent increase in 2012.

Read: “Consumer Expectations vs. Retail Reality”

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