In 2002, American Eagle Outfitters made a fashion faux-pas when the youth-focused clothing retailer missed the spring??s hottest trends, leading to steep markdowns. At the same time, American Eagle had grown through the purchase of a Canadian clothing chain and by expanding existing stores. The result was disappointing margins and weak comparable-store sales. After a management shakeup, American Eagle changed its merchandising strategy, improved its financial performance, and scaled back markdowns. By 2004, signs emerged the company was on the right path, but its chief financial officer pondered how American Eagle might extend those gains. In this case students examine American Eagle's financial data and its growth history to consider how the company might leverage its operational strengths and growing cash balance.
Case ID: 090512