American Eagle Closing Martin & Osa
Back in 2006, as American Eagle was getting ready to launch
its Martin + Osa concept, the chain was hoping the new format would give it
a bridge to consumers (25 – 40) that had outgrown its teen and young adult
American Eagle line.
On Monday, the company pulled the plug on the concept
when it announced it was closing all 28 Martin + Osa stores and its website.
The chain lost $44 million in fiscal 2009.
“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, in a press release. “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.”
Brian Sozzi, an equity research
analyst with Wall Street Strategies, wrote in a client note that American Eagle
Outfitters’ “financial resources would
be better served cultivating the core AE brand and to develop 77 kids both
online and in the malls (perhaps through pop up locations).”
According to Mr.
Sozzi, the 77 kids business will help “create early stage
mind share of the American Eagle brand, with this core customer essentially
growing with the company into the teen years.”
Cutting Martin + Osa was a signal
that American Eagle had decided “not to throw
good money after bad,” wrote Mr. Sozzi.
Discussion Questions: What is your reaction to American
Eagle’s decision to close Martin + Osa? Why do you think the chain failed? Do
you agree about the upside potential of the 77 kids’ business?
- American Eagle Outfitters Announces Plans to Close its MARTIN+OSA Concept
– American Eagle Outfitters, Inc./Business Wire/MarketWatch
- Eagle closing Martin + Osa, Street cheers – Reuters
- American Eagle Kills Martin, Ending Older Demographic Experiment – Barron’s (sub.