Investing in 2020 was all about spotting opportunities in companies benefitting from consumers staying close to home. ZM. PTON. ROKU.
This year, we’re taking the flipside of this view to spot potential winners.
What companies are positioned to thrive now that communities are finally opening back up?
One name on our radar may surprise you: American Eagle (AEO).
Not the airline, but the clothing retailer.
We dug into real-time consumer data ahead of American Eagle Q4 earnings.
And boy, was the data spot on.
Here’s how we did it:
LikeFolio Prediction: AEO’s e-commerce is critical… and still growing
Online sales comprised 45% of AEO’s top-line revenue in the first nine months of 2020.
Translation: E-commerce is very important to this company. A shift in growth trajectory may be positively or negatively perceived by investors, depending on the direction.
LikeFolio data revealed that digital purchases surged over the holiday season for both of American Eagle’s core brands.
While e-commerce mentions displayed strength across the board, Aerie was flexing.
Earnings Result: American Eagle reported that online sales grew by 35% YoY.
Even better? Aerie digital growth outpaced the AE brand… exactly what our data predicted.
And that brings us to our next key takeaway.
LikeFolio Prediction: AEO’s Aerie brand is leading growth
LikeFolio in-store shopping mentions revealed strength in the Aerie brand, comparatively… by nearly 20 points.
And this was abundantly clear in Digital Purchase Intent growth. Check out an excerpt from our daily note to members:
Earnings Result: Aerie outperformed the American Eagle brand, posting +25% YoY revenue growth vs. an American Eagle revenue decline of -9%.
The company emphasized Aerie’s “exceptional growth” on its earnings call, and noted a key growth objective is to double the brand’s revenue to $2 billion by 2023.
We’ll be monitoring brand traction moving forward.
But for now, it’s a clear consumer favorite.
What is another area of potential growth for American Eagle?
LikeFolio Prediction: Shifting denim preferences will drive sales for AEO in 2021
While 2020 was all about yoga pants, 2021 may be all about jeans. Seriously.
LikeFolio data shows the typically stable “buying new jeans” trend is gaining steam this year.
Mentions of buying a new pair of jeans have increased +36% YoY.
Qualitative analysis reveals key fashion shifts (like a preference for “mom jeans” vs. “skinny jeans”) are driving consumers to update their wardrobe.
Couple this with the fact that consumers are actually leaving the house…
You can see how this is setting up to be quite an opportunity for a company that prides itself on its jeans franchise.
Earnings Result: American Eagle confirmed its jeans franchise was, “…yet again a stand-out in the quarter. We gained share even as we meaningfully reduced holiday promotions and saw AUR growth.”
In addition, the company acknowledged retail is headed into a “fashion cycle.” This phrase was used six times on its earnings call.
Interesting. The company is benefitting from comfort and shifting denim preferences.
Ultimately, AEO shares popped at market open, and eventually closed +8% on the day.
Looking ahead, we’re watching to see if American Eagle can continue to make progress.
And, of course, we will also be keeping an eye out for other names in the athleisure and fashion space that present as opportunities for investors.
When we spot these, we let our members know immediately.
In fact, we’re watching a few right now…
Andy Swan,
Founder, LikeFolio
