American Eagle Outfitters Inc. plans to launch a beauty business before the upcoming holiday season, citing a big opportunity lying ahead for the company in this sector.
The apparel retailer’s decision was announced by CEO Jay Schottenstein on Wednesday during an earnings call with analysts.
“We have a special name for it. We have a special kick-off and we’re going to surprise everybody. So we’re not going to tell you now and it will be very exciting,” Schottenstein said.
The retailer did not specify whether its beauty business will be an acquired one or internally developed. It already sells some beauty products, including makeup bags, eye shadow palettes and concealers.
The NPD Group had reported in January that the U.S. prestige beauty industry sales grew 6 percent year-over-year to reach $18.8 billion in 2018. While growth is expected to continue in 2019, it may be at a slower pace due to the current economic uncertainties, the NPD Group projected.
Shares of American Eagle had declined more than 11 percent in Wednesday’s regular trading session after the company reported same-store sales for the second quarter that missed analysts’ expectations.
CEO Schottenstein said that the company was disappointed to report operating results below its own expectations, noting that it faced challenges largely stemming from under-performance in certain seasonal categories and a delayed start to back-to-school.
Recently, American Eagle also announced plans to enter the booming cannabidiol or CBD business, following the path of rival Abercrombie & Fitch Co.
In July, the retailer had said it would start selling hemp-derived CBD-infused personal care products in nearly 500 stores in the U.S. and online later this year. The products will be sourced from Ohio-based cannabis company Green Growth Brands Inc. or GGB.
According to GGB, the products were exclusively developed for American Eagle and include CBD-infused personal care items such as lotions, muscle balms, and aromatherapy.
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