SWOT and Recommendations

Strengths:

American Eagle is well known company that is growing every day. With great advertisement, a strong mission statement, networking skills, and a financial plan, American Eagle creates a stable platform for consumers. American Eagle uses many different types of models to showcase their brand. All sized women of different race and ethnicity are accepted as models to relate to their target audience. The clothes are designed to make women feel comfortable and confident which is proven through all of the models and people on social media who support American Eagle Outfitters. The mission statement created is very strong and reflects on the companies values as whole. When customers see that American Eagles values are to make everyone feel safe and healthy in the environment they work or shop in, that means a lot. American Eagle also has strong networking system and Public Relations, as they reach out to so many consumers as well as provide internships and camps for young adults. They have MANY CSR programs in place to promote sustainability and inclusivity. They are also relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Weaknesses:

One weakness for American Eagle is their limited market share and advertising as compared to some other global brands. They also have a limited global presence as compared to bigger popular clothing brands. American Eagle has a high turnover rate in the workforce. Since they have a high turnover rate they have to spend a lot more time compared to its competitors on training and development of its employees. They don’t have a wide range for the target audience which is mostly women, ages 15 to 25. They have also had inconsistent sizing throughout the years. They also need more investment in new technologies and their investment in research and development is below the fastest growing players in the industry.

Opportunities:

One opportunity for American Eagle is that they have been expanding their presence more. For the fiscal year of 2018, American Eagle planned to open many new stores, including approximately 20 American Eagle stores, 15 Aerie stores, and opening 45-50 international stores. Previously, in 2017, AEO extended their presence into Mumbai and Delhi, India. Another opportunity for American Eagle is the growing opportunities is E-retailing or online shopping. Reported by the Census Bureau of the Department of Commerce in May 2018, estimated e-commerce sales had a 16.4% increase from the first quarter of 2017 and e-commerce sales for all businesses accounted for approximately 10% of all total sales. This means that if American Eagle continues to use online shopping, they will increase their revenue by continuing to use online shopping. Their CSR programs have also provided opportunity for their customers, workers and community and will continue to provide opportunities for growth as they increase their CSR.

Threats:

One threat to AEO is their competitors. Similar designs for a lower cost available at other brands makes the switching cost for customers low. The expansion of raw materials will much likely pose risks to AEO cost-effectiveness. There is intense competition. Stable profitability has increased the number of players in the industry over the last two years which has put downward pressure on both profitability and overall sales. Their international operations can be affected by recession and economic slowdown.

Recommendations:

One recommendation that we have for American Eagle is to acquire a marketing campaign to aim clients seeking a better customer service. Also reducing the transportation fee. It will result in lower product prices and enhance AEO profitability and authorize the profits to customers to increase market shares. The last recommendation it to make more plus size clothes so reach a wider audience, which would therefore increase revenue.

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