2010 Business Challenges

The retail business has gone through an enormous change over the past few years. In 2008, the economy suffered major upheaval. While recovery has begun, the challenging times are not yet over. The result of this turmoil has brought about a dramatic change in the consumer mindset toward shopping and value. Our 15- to 25-year-old customer has been particularly affected.

While 2009 and 2010 were difficult in many ways, we also learned valuable lessons that might not have been so clear in better times. For example, we have a deeper understanding of our customers, their perception of our brand, and their expectations in terms of fashion and value pricing. Additionally, we've made pivotal changes in our leadership teams, especially in merchandising and design.

In 2010, we launched a company-wide initiative designed to resurrect the fundamental principles that brought about past success and create new success and growth through innovation. The goal is to work together to simplify and streamline our organization and maintain a laser-like focus on the elements that drive our business forward. We invited every associate to submit his or her ideas about ways the company can become more efficient and effective. As of summer 2011, we had received more than 250 ideas from nearly 200 associates representing every office, distribution center location and store region - and ideas continue to pour in. Every idea is responded to, evaluated and tracked to completion - and many have already been implemented.

Unfortunately, this project did include some reductions in staff in 2010. However, in each area, we have worked hard to minimize the number of people affected and treat those who left the company as fairly as possible.

We believe that, at the end of these business challenges, American Eagle Outfitters, Inc. will emerge an even better company, with an even brighter future. That future will create more career and growth opportunities for everyone involved.