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American Eagle’s Denim Expansion Plans Set to Bolster its Jeans Domination With Teens

American Eagle Outfitters Inc. has plans for greater expansion in its denim offerings, including new innovations and fits, which will help it offer its broadest jeans collection ever for the back-to-school selling season.

The company revealed its plans during Wednesday’s conference call to Wall Street analysts following the company’s report of first-quarter earnings results. Chairman and chief executive officer Jay Schottenstein opened the call citing two factors that drove growth for the company: the emotional connection the intimates concept Aerie had with its customers, and how “American Eagle has solidified its leadership with a winning signature jeans collection and customer first brand platform.”

According to Chad Kessler, president of the American Eagle brand, the brand’s comps were up 4 percent on top of the 4 percent gain in the year-ago quarter. That’s also up from the 3 percent rise in the fourth quarter.

“American Eagle jeans continue to show incredible strength and consistency with positive comps and record performance across genders. This was the 23rd straight quarter of record jean sales,” Kessler said. “AE is the number one women’s jeans brand in America. We are the number two jeans brand overall.”

And the company will continue investing in the denim category.

“This back-to-school, we will offer our broadest, most inclusive jeans collection ever,” Kessler said. While the brand is No. 1 its core 15-to-25-year-old age group, there’s still more room for growth. The brand president cited “significant runway” for raising the bar with new fits, fabrics and innovation.

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As for what’s ahead for fall, Kessler said American Eagle will launch a new curvy jean collection in women’s. The collection, he said, is “an innovation that answers a previously unmet need and we are expanding our size range to include double zero to size 24 in every jean style in every store, which will attract new customers to our brand.”

In men’s, the brand plans to roll out new fabric innovations and new fits, as well as broadening the size range up to a 48-inch waist, with more offerings and lengths across all sizes, Kessler said.

The idea of inclusivity has been a hallmark of sister brand Aerie, the intimates concept led by brand president Jennifer Foyle. Its focus on body positivity has resonated well with customers, which saw a 14 percent comps gain in the first quarter.

And in taking a page from Aerie’s playbook, Kessler said the “size expansion will deliver on our brand promise of inclusivity and will drive share gains by making us more relevant to more customers than ever before.

With complementary tops and accessories to complete the outfits teens choose, the plan is to have American Eagle become the shopping destination of choice for back-to-school and beyond, the brand president said. And to help drive innovation, the company has been focusing on new fabrics, Kessler explained, “and also continually seeking the best manufacturing techniques to maintain our dominance. This means delivering consistent quality and improving sustainability.”

American Eagles factories, according to Kessler, have made “significant investments” in laser processing and updated techniques to reduce water usage so and to minimize the impact on the environment. “We are increasing our use of more sustainable fabrics and more responsibly sourced raw material. In fact, every single one of our jeans is made in part with recycled polyester,” Kessler said.

In a similar vein, American Eagle’s jeans recycling initiative has seen so much success, that the company will now extend the service so that it’s offered all throughout the year.

“We will be turning some of these jeans into apparel in future seasons. And because we sell directly to our customers, we offer all of this jean innovation at a better value than our wholesale competitor,” Kessler said.

Dana Telsey of Telsey Advisory Group has an “Outperform” rating on shares of American Eagle, noting that the “jeans business continues to perform well, and the company is further investing in its offering.” Susan Anderson at B. Riley FBR has a “Buy” rating, noting the retailer’s strong denim presence and growth opportunity with Aerie.